Labour Code’s Signal, Waning Agency for India’s Informal and Migrant Workers
The year 2025 came to a close amidst heated discussions about the changing regulatory landscape of labour and the shifting framework of understanding worker rights in India. The last quarter of the year witnessed the introduction of important labour policy documents in quick succession. The draft Labour Policy was released in October as a prelude to the new labour codes that came into effect in November. This was followed in December by the enactment of the new law replacing the MGNREGA.
With these reforms, the language of statutory dealing with the issue of labour rights has shifted decisively. The four Labour Codes—the Code on Wages 2019, the Industrial Relations Code 2020, the Social Security Code 2020, and the Occupational Safety, Health and Working Condition Code 2020—mark a paradigmatic shift in labour administration in India. They have restructured the existing 29 labour legislations, separately governing aspects of wages, working conditions, industrial relations, industrial safety, and social security, into four codes with the stated intention of aligning the labour ecosystem with the changing economic realities.
The Invisible Majority
The codes do not recognise the overwhelming presence of unorganised or informal workers in non-agricultural production sectors in India. These workers are unprotected, their workplaces are unsafe, real wages have been stagnant over the years, and living conditions are deplorable. A large section of them are inter-state migrants, employed in deliberately fragmented production units across a host of sectors.
A close reading of the four codes together reveals that the status quo of these workers is unlikely to see any improvement. A few gaps seem critical based on experience of working with informal and migrant workers in major migrant destinations across Gujarat and Maharashtra over the past 20 years.
The Threshold Problem
An important feature of the new codes is upward revision of legal employment thresholds across the board to aid compliance. Raising the applicable threshold for factories and contract labour from 20 to 50 workers might end up excluding large segments of workers from the ambit of meaningful legal protection.
Similarly, raising the threshold for mandatory government approval for layoff/retrenchment from 100 to 300 workers might make businesses more agile, but it will compromise the job security of a large number of workers. Furthermore, the legal vigil over increasing informal recruitment practices may get diluted because of the changes in the threshold on licensing of contractors for employment of migrant and contract workers.
These thresholds are not neutral technical adjustments. They are political decisions about who deserves protection and who does not. By raising the bar, the state is effectively saying that workers in smaller establishments—which employ the majority of India’s workforce—do not need the same protections as those in larger ones.
Social Security on Paper
The Social Security Code has many provisions targeted at unorganised sector workers, including gig and platform workers, self-employed workers, and migrant workers. However, these provisions are enabling rather than mandatory. They create frameworks within which benefits may be provided, but do not create enforceable rights.
The experience of the past decades suggests that enabling provisions without mandatory obligations result in limited coverage. When something is optional, it is often not done. Workers who need protection most are least able to demand it.
The Accident Log
A crowdsourced database, the accident-log compiled over the post-pandemic years to record workplace injuries and fatalities, reaffirms this concern. The smaller units that dominate sectors like metal, steel, automobile, and textiles often operate with very low margins and do not have the financial capability to provide basic safety measures to their workers.
Migrant labour works dangerously amidst worn-out machines and hazardous materials in these establishments, constantly facing the threat of life-changing diseases, injuries, and accidents. The state must support such units, technically and financially, to upgrade basic safety provisions and compensate workers in case of injuries or death.
The Fixed-Term Employment Trap
An apparently progressive provision like fixed-term employment is likely to be exploited by employers to deny permanent rights to workers and to dilute the power of unions. Fixed-term workers can be hired and fired without the protections that apply to permanent employees, creating a two-tier workforce.
On the face of it, the flexibility allowed to employers to decide work schedules with the weekly cap of 48 working hours appears to be an enabling provision. However, this provision may introduce a significant degree of arbitrariness in work scheduling without reducing the burden of work for informal and migrant workers.
A 12-hour workday is already the norm in many labour markets despite the apex court in India labelling it as an anti-labour practice. Flexibility, in practice, often means the flexibility to exploit.
The Structural Problem
If, after seven decades of independence, 90% of the country’s workforce is informal without access to social security benefits, the reasons for such entrenched infirmity need to be sought in the structural and institutional bottlenecks that perpetuate informality in the labour market.
The country needs stronger and sensitive worker-facing policies, robust institutional architecture for policy implementation and enforcement, and active state oversight in all matters that concern the rights and dignity of the workforce. Reorienting labour inspectors as inspector-cum-facilitators may further weaken enforcement by diluting the regulatory authority required to ensure adherence to the labour code provisions.
The Widening Schism
The major concern about the new codes is whether they would widen the schism between the state and workers by allowing employers a larger and unequal playing ground to function as they like. When enforcement is weakened, when thresholds are raised, when protections become optional, the balance tilts decisively toward capital and away from labour.
India’s workers deserve better. They deserve a labour regime that recognises their reality, protects their rights, and enables their dignity. The new codes, for all their stated intentions, fall short of that standard.
Q&A: Unpacking the New Labour Codes
Q1: What are the four Labour Codes and what do they do?
The four Codes are: Code on Wages 2019, Industrial Relations Code 2020, Social Security Code 2020, and Occupational Safety, Health and Working Condition Code 2020. They consolidate 29 existing labour laws into four codes, governing wages, working conditions, industrial relations, industrial safety, and social security.
Q2: How do the raised thresholds affect worker protection?
Raising the threshold for factories from 20 to 50 workers and for layoff approval from 100 to 300 workers excludes many workers from legal protection. Smaller establishments, which employ most of India’s workforce, fall outside the ambit of meaningful oversight. This compromises job security and weakens legal vigilance.
Q3: What is the problem with fixed-term employment provisions?
Fixed-term employment can be exploited to deny permanent worker rights and dilute union power. Employers can hire and fire fixed-term workers without the protections applying to permanent employees, creating a two-tier workforce with diminished job security and bargaining power.
Q4: Why are enabling provisions insufficient for social security?
The Social Security Code contains enabling provisions for unorganised sector workers—they create frameworks where benefits may be provided, not enforceable rights. Past experience shows optional provisions result in limited coverage. Workers who need protection most are least able to demand it.
Q5: What structural problems do the codes fail to address?
90% of India’s workforce remains informal without social security access. The codes do not address the structural and institutional bottlenecks perpetuating informality. Stronger worker-facing policies, robust enforcement architecture, and active state oversight are needed—not diluted regulatory authority through inspector-cum-facilitator reorientation.
