Law And Policy

1. Origin and Purpose of Labour Law

Labour law, often described interchangeably as industrial relations law or employment law, has evolved as a distinct legal discipline primarily to regulate the relationship between employers, employees, and their organisations. At its core, it seeks to address the limitations of traditional contract law when applied to employment relationships. In theory, contract law is premised on the idea of freedom of contract where both parties voluntarily and autonomously agree upon terms. However, in the real world, especially in employment relations, this freedom is often illusory because of the inherent inequality of bargaining power between employers, who control resources and capital, and workers, who depend on their jobs for livelihood.

Labour law emerged as a response to this imbalance. It recognises that contractual autonomy alone cannot protect workers adequately, as employees may be compelled to accept unfair or exploitative terms simply to secure employment. This recognition shifted the emphasis from purely contractual regulation to statutory intervention, thereby introducing minimum labour standards to protect workers.

The foundational purpose of labour law can be summarised as threefold:

1. Protection of workers: By ensuring minimum standards of wages, working conditions, and social security.
2. Regulation of industrial relations: By providing mechanisms for collective bargaining, trade union recognition, and dispute settlement.
3. Promotion of social justice: By addressing structural inequalities in the labour market and ensuring dignity at work.

Scholars have long debated whether labour law is compatible with economic efficiency. Some critics argue that regulation stifles flexibility and efficiency in labour markets. However, an equally strong school of thought points out that well-designed labour law reduces transaction costs, corrects market failures, and can actually enhance productivity by creating stable and motivated workforces. Thus, labour law is not only a vehicle for equity but also a contributor to efficiency when crafted thoughtfully.

2. Labour Economy in India and the Challenge of Informality

A unique feature of the Indian labour market is the overwhelming dominance of informal employment. Data from the National Sample Survey (NSS) and the Periodic Labour Force Survey reveal that about 83% of the workforce is engaged in the unorganised sector, leaving only 17% in the organised sector. Furthermore, of the total workforce, nearly 92% are informal workers, even within the organised sector.

Features of Informal Labour

• Lack of formal contracts and written terms of employment.
• Exclusion from social security schemes such as provident funds, gratuity, or health insurance.
• Low wages, irregular working hours, and hazardous conditions.
• Precarious work with little or no legal recourse against unfair practices.

The terms unorganised and informal are often used interchangeably, but both denote work characterised by low regulation, absence of employer accountability, and casual arrangements. The International Labour Organization (ILO) has broadened the understanding of informal labour to include unpaid family work, home-based work, platform work (such as gig workers), and other non-standard forms of employment.

Sliding Slope of Informality

The porous boundary between formal and informal sectors creates challenges for regulation. Economic growth and industrialisation, instead of reducing informality, have often resulted in an increase in contract labour, outsourcing, and casualisation of jobs. Workers previously employed in the formal sector are being pushed into informal arrangements without job security or benefits.

Sociologists like Jan Breman have highlighted that informal labour cannot be treated as a homogeneous category; rather, it consists of varying degrees of formality and informality, creating a dualistic labour system. This dualism perpetuates inequality, as workers in the informal economy lack social security, fixed wages, or even recognition as “employees” in the eyes of the law.

Case Studies of Vulnerable Informal Work

• Forest Workers: Many tribal and rural workers engage in collecting forest produce such as tendu leaves or mahua. They depend on traders or corporations but are not recognised as employees, thereby remaining outside the protective ambit of labour law.
• Waste Pickers: Predominantly unskilled and marginalised, waste pickers play a vital role in urban waste management. Yet, they face hazardous conditions, chronic illnesses, and exploitation by contractors or middlemen. They too fall outside the protective framework of employment law, despite their economic contribution.

The persistence of informality underscores the need for labour law not only as a regulatory mechanism but also as a tool for extending social security and dignity to millions of workers.

3. Overview of Labour Legislations in India

India’s labour law framework is deeply rooted in the Constitution of India. Fundamental Rights, such as equality before law (Article 14), prohibition of discrimination (Article 15), and freedom of association (Article 19), provide the bedrock for workers’ rights. Additionally, the Directive Principles of State Policy (Part IV) obligate the State to promote just and humane conditions of work, living wages, and participation of workers in management.

Over the decades, more than 60 central legislations were enacted to regulate diverse aspects of employment. To streamline and modernise these, the Government has consolidated them into four major labour codes between 2019–2020.

a) Collective Bargaining & Industrial Relations

These legislations seek to empower workers to negotiate with employers on an equal footing and to provide mechanisms for dispute resolution. Key statutes include:

• Trade Unions Act, 1926 – regulates registration and rights of trade unions.
• Industrial Disputes Act, 1947 – provides procedures for resolving industrial disputes through conciliation, arbitration, or adjudication.
• Industrial Employment (Standing Orders) Act, 1946 – standardises terms of employment in industrial establishments.

These have been consolidated into the Industrial Relations Code, 2020.

b) Safe, Secure, and Decent Conditions of Work

This branch deals with ensuring workers’ safety, health, and welfare at the workplace. Examples include:

• Factories Act, 1948 – comprehensive provisions on working hours, safety equipment, and welfare facilities.
• Mines Act, 1952 – regulations for miners’ safety and working conditions.
• Plantations Labour Act, 1951 – provisions for plantation workers’ welfare.

Such legislations mandate facilities like clean drinking water, crèches, canteens, restrooms, and medical care. They also regulate working hours, holidays, and leave entitlements.

Thirteen such legislations were consolidated under the Occupational Safety, Health and Working Conditions (OSH) Code, 2020.

c) Wages and Monetary Benefits

Wages are central to the employment relationship. Legislations in this category aim to ensure fair remuneration and prevent exploitative practices such as forced labour. Notable statutes include:

• Minimum Wages Act, 1948 – guarantees a minimum subsistence wage.
• Payment of Wages Act, 1936 – regulates timely payment and permissible deductions.
• Equal Remuneration Act, 1976 – mandates equal pay for equal work regardless of gender.
• Payment of Bonus Act, 1965 – provides for profit-sharing with workers.

These have been merged into the Wage Code, 2019.

d) Social Security Legislations

These provide income and welfare protection against contingencies like sickness, maternity, injury, or unemployment. Examples include:

• Employees’ State Insurance Act, 1948.
• Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
• Maternity Benefit Act, 1961.
• Payment of Gratuity Act, 1972.

Nine such legislations have been merged into the Social Security Code, 2020.

e) Prohibition and Regulation of Offensive Work

This category addresses exploitative practices:

• Bonded Labour System (Abolition) Act, 1976.
• Child and Adolescent Labour (Prohibition and Regulation) Act, 1986.
• Prohibition of Employment as Manual Scavengers Act, 2013.

Such laws either completely prohibit these practices or regulate them strictly.

f) Gender Discrimination and Equality

Labour law also includes statutes guaranteeing equality for women in the workplace and protection from harassment. Examples include:

• Equal Remuneration Act, 1976.
• Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

These legislations collectively aim to ensure a workplace free of discrimination and conducive to equality.

4. Codification and Reform through Labour Codes

Recognising the complexity of multiple overlapping legislations, the Indian government undertook a major reform exercise, culminating in the enactment of four comprehensive labour codes:

1. Industrial Relations Code, 2020.
2. Occupational Safety, Health and Working Conditions Code, 2020.
3. Wage Code, 2019.
4. Social Security Code, 2020.

The objectives of codification include simplification, compliance efficiency, expansion of coverage to informal workers, and harmonisation with global standards.

However, criticisms have been raised:

• The codes may dilute workers’ rights by increasing thresholds for applicability.
• Implementation challenges remain, particularly in extending protections to informal and migrant workers.
• Trade unions argue that the codes tilt the balance of power in favour of employers by restricting the right to strike and easing retrenchment norms.

Thus, while codification is a step toward modernisation, its real impact depends on effective enforcement and genuine inclusion of the most vulnerable sections of the workforce.

Labour law in India has evolved as a response to the fundamental inequality of the employment relationship. It has sought to address not only industrial disputes but also broader issues of social justice, working conditions, and human dignity. The Indian labour market, however, is characterised by deep informality, where millions of workers remain outside the protection of law.

The vast array of legislations from those regulating collective bargaining to those prohibiting child labour reflects the diversity and complexity of India’s labour issues. The recent codification into four labour codes is an attempt to rationalise this framework. Yet, whether these codes can meaningfully extend rights to informal workers and balance equity with efficiency remains an open question.

Ultimately, labour law in India is not merely a set of legal rules but a reflection of the country’s commitment to constitutional values of justice, equality, and dignity of labour. The future of labour law lies in expanding its reach to the informal economy and ensuring that growth and development are inclusive, equitable, and respectful of workers’ rights.