Labour in India:

The word Labour is an attribute of physical, social, and mental effort used to produce goods and services in an economy. Labour is considered one of the factors responsible for the production and supply of goods. India is a country that has a vast demographic dividend and a huge labour market, which can actually be a factor for rising in the Indian economy and poverty alleviation. But, the labour market in India is highly selective in respect of gender, rural-urban, region, language, caste, and religion, education and skill, etc, and because of which, even after being diverse in amount and quality, India was not able to achieve those expected heights. Therefore, for this reason, Indian labour laws are also diverse and attempt to regulate the labour policies in India.


The legal position of Labour in Indian Laws:

Labour and employment regulations in India are significantly different from other similar jurisdictions with their very own distinctive features. Labour laws, regulations, rules, and policies are constantly evolving to adapt to the rapid changes in the workplace due to technology advancement, digitalization, and mobility in general and in the Indian context all the more in the backdrop of the Indian Government’s initiative to make the Indian business environment investor-friendly.

There is no single code for labour in India. There are separate laws for different areas of labour regulations. In India, both the central and state government has the power to legislate laws on labours.

The legislations can be categorized as follows:

  1. The Labour laws enacted by the Central Government, where the Central Government has the sole responsibility for enforcement.
  2. Labour laws enacted by the Central Government and enforced both by Central and State Governments.
  3. The Labour laws enacted by the Central Government and enforced by the State Governments.
  4. Labour laws enacted and enforced by the various State Governments which apply to respective States.


Classification of LABOUR LAWS in India

  • laws relating to working conditions, conditions of service, and employment;
  • laws relating to wages;
  • the laws relating to social security; and
  • Laws related to industrial relations.


Problems with Indian Labour:

  1. Surplus labour force
  2. Unskilled labour
  3. Lack of absorption of skilled labour
  4. Imperfections in the market
  5. Work culture
  6. Militant Unionism
  7. Unemployment
  8. Lack of labour reforms


Implications on Labour and Employees:

India being a developing country with a developing economy, is apprehended that due to Covid 19, India might face a huge depression and high unemployment. The lockdown measures even though was the need of the hour, but has impacted the economy. It has slowdown the supply side and in fact, jeopardize the economic well-being of millions.

COVID-19 will have far-reaching impacts on labour market outcomes. Beyond the urgent concerns about the health of workers and their families, the virus and the subsequent economic shocks will impact the world of work across three key dimensions:

  1. The number of jobs (both unemployment and underemployment);
  2. The quality of work (e.g. wages and access to social protection); and
  3. Effects on specific groups who are more vulnerable to adverse labour market outcomes.

International labour organization estimates that there will be a significant rise in unemployment and underemployment in the wake of this pandemic disease. The ILO further stated that there shall be a decline in economic activity due to constraints on people’s movement which will impact both the manufacturing and service sectors.


Measures were taken by the Government to help labour and employees to fight with Covid 19:

The COVID-19 pandemic, which has already infected almost 38002699 people in 148 countries, resulting in more than 1083234 deaths, has the potential to reach a large proportion of the global population. This crisis has misbalanced the chain of supply and demand, i.e. greatly impacted on the production of goods and services but also consumption and investment. For this, the government needed swift and coordinated policies with strong and multilateral leadership to limit the direct effects of Covid 19 on workers and their families.

In the context of COVID-19, there are two relevant notifications issued by the Government that deals with it.

  1. O. No.M-11011/08/2020-Media which is an advisory issued by the Ministry of Labour and Employment advising employees not to terminate the employment or reduce wages of employees.
  2. Order No. 40-3/2020-DM-I(A) issued by the Ministry of Home Affairs in the exercise of its powers under Section-10(2)(l) of the Disaster Management Act, 2005 directing all employers whether in industries or shops and commercial establishments to make payment of wages on the due date without any deductions for the period their establishments are under lockdown.


Policy Framework provided by ILO to fight Covid 19:


  1. Protect workers in the workplace to minimize the direct effects of the Coronavirus, in line with WHO recommendations and guidance.

    • Improve OSH measures, including social distancing, provision of protective equipment (especially for health and allied workers, volunteers, and others in permanent contact with people), hygiene procedures and forms of work organization (supported by information and awareness campaigns), and through social dialogue between employers and workers and their representatives, using, for example, OSH committees;
    • Encourage appropriate flexible working arrangements, such as teleworking;
    • Prevent discrimination and exclusion relating to COVID-19;
    • Enhance universal access to collectively-financed health services for all, including uninsured workers and their families;
    • Expand access to collectively-financed paid sick leave, sickness benefits, and parental/care to leave to ensure income security for those who are sick, quarantine, or caring for children, elderly, or other family members.
  2. Stimulate the economy and labour demand through economic and employment policies to stabilize economic activity.

    • Active fiscal policies, particularly social protection measures, including targeted transfers and automatic stabilizers, such as unemployment benefits, along with public investment and tax relief for low-income earners and Micro, Small and Medium Enterprises (MSMEs);
    • Accommodative monetary policy (interest rate reductions, reserve rate relaxation, targeted liquidity provisions);
    • Targeted lending and financial support for specific sectors to protect enterprises, especially MSMEs. Investing in health systems is crucial in building resilience against COVID-19 but also offers an opportunity to create decent jobs.
  3. Protect employment and incomes for enterprises and workers negatively impacted by the indirect effects (factory closures, disruption to supply chains, travel bans, cancellation of public events, etc.)

    • Social protection through existing schemes and/or ad-hoc payments for workers, including informal, casual, seasonal and migrant workers, and the self-employed (e.g. through access to unemployment benefits, social assistance, and public employment programs);
    • Employment retention schemes, including short-time work arrangements/partial unemployment benefits and other time-bound support for enterprises, such as wage subsidies [and temporary cuts to payroll tax/exemptions from social security contributions], provision of paid leave and extension of existing entitlements to workers, and training leave, grants, and related schemes;
    • Time-bound financial/tax relief and income smoothing measures to support business continuity, especially MSMEs and the self-employed (e.g. subsidies, credit mediation/refinancing to overcome liquidity constraints).


The Code on Wages, 2019

The Parliament has passed the “The Code on Wages, 2019” on 8th August 2019 and came into effect from September 2020. This code merges these following four laws into one law: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976.


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