Why are trade unions up in arms against new labour codes?

A Capital Beat episode brought together economist Professor Santosh Mehrotra and CITU’s Sudeep Dutta to examine the Centre’s rollout of four labour codes that replace 29 existing workplace laws. The discussion focused on the sweeping changes notified by the government, the strong opposition from trade unions, and the broader implications for India’s workforce. The panel assessed whether the new framework expands rights or undermines protections for millions of workers.

The government has described the labour codes as a long-overdue move to simplify colonial-era regulations and modernize India’s labour environment. However, trade unions and opposition parties argue that the codes weaken safeguards by raising thresholds, easing hiring and firing, and excluding large sections of the workforce from protections.

The debate explored these conflicting claims and the realities of India’s labour market, including declining regular jobs, stagnant wages, and the widening gap between organised and unorganised sectors.

Government rolls out four major labour codes

The labour codes notified by the Centre include the Code of Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020), and the Occupational Safety, Health, and Working Conditions Code (2020). All four were cleared by Parliament five years ago but have now been formally brought into effect.

The government stated that these codes aim to integrate multiple fragmented rules and create a unified structure for wages, safety, social security, and industrial relations. Officials have highlighted provisions such as universal social security, mandatory appointment letters, fixed-term employment, and annual health check-ups for workers aged 40 and above.

The changes also include longer permissible factory shifts, permission for women to work night shifts, and raising the approval threshold for layoffs from 100 to 300 workers.

Trade unions brand the codes a “deceptive fraud”

Sudeep Dutta of CITU said 10 major trade unions, aligned with opposition parties, have condemned the rollout as a “deceptive fraud.” He stated that the codes constitute a “paradigm shift in the restructuring of labour relations,” not just technical amendments.

Dutta cited National Crime Records Bureau (NCRB) data showing 47,170 suicides among daily wage workers in 2023—“129 persons per day”—arguing that workers already face severe distress and limited avenues for survival. In this context, he said, the new codes weaken protections further.

He pointed to changes in the factory definition under the Occupational Safety Code, where the coverage threshold has been raised to 20 workers with power and 40 without power, meaning thousands of small units will fall outside safety regulations. The threshold for contract workers has also been raised from 20 to 50, allowing contractors with 49 workers to avoid legal obligations.

Concerns over exclusion from protections

Dutta said the Industrial Relations Code raises the threshold for permission for layoffs, retrenchment, and closure from 100 to 300 workers. He argued that this gives employers the freedom to dismiss workers or close units “at their wishes.”

Standing orders that define service conditions will now apply only to establishments with over 300 workers. According to Dutta, this will leave “almost 90% of the workers in the organised sector” without basic legal safeguards.

Asked whether consultation took place, Dutta said meetings conducted by the government were “two-hour sessions” where each of the 15 trade unions spoke for five minutes, and none of their suggestions were incorporated. He added that even the Bharatiya Mazdoor Sangh (BMS), affiliated with the ruling party, had earlier expressed dissatisfaction.

Debate on fixed-term employment

Professor Santosh Mehrotra sought clarification on trade union concerns over fixed-term employment. He noted that supporters of the provision argue it improves upon contract labour by offering worker benefits similar to permanent employees and gives employers hiring flexibility.

Dutta responded that fixed-term employment “legalizes all forms of temporariness” even in permanent jobs. He warned that this will erode unionization, eliminate the permanent workforce over time, and leave employees vulnerable to arbitrary wages and dismissal.

He stated that fixed-term employment could mean workers are hired for as little as four to eight months, with no long-term security. He cautioned that core and perennial tasks could also shift to temporary roles, making permanent jobs “disappear in the next ten years.”

Economist outlines structural challenges

Professor Mehrotra said the controversy must be viewed against labour market realities where regular jobs are not growing and real wages have stagnated. He cited this as a foundational cause for distress and the reason for growing anger among workers.

He said raising labour law thresholds expands the unorganised sector, which already represents 85% of India’s workforce. He added that labour laws have historically applied only to the organised sector, leaving the majority uncovered, and that the current changes continue this pattern.

The economist said India still has about 100 state labour laws, making the system complex and fragmented. While reducing 29 central laws to four is a positive step, he said the deeper challenges of implementation remain unaddressed.

Also Read: New labour codes, blow or boost to workers? Expert KE Raghunathan weighs in

Implementation gap and staffing shortages

Mehrotra highlighted what he called a critical structural flaw in India’s labour administration: inadequate staffing. He noted there are roughly 6,000 sanctioned labour inspector posts nationwide, but only about 3,000 are filled, leaving 50% vacancies.

These inspectors are responsible for monitoring millions of enterprises across the country. According to Mehrotra, “How do you run a labour law regime” with such limited enforcement capacity? He argued that the shortage undermines both old and new labour laws.

He said reducing the number of forms and simplifying rules is beneficial, but without adequate enforcement personnel, the system cannot function effectively.

Trade unions plan intensified agitation

Dutta said central trade unions view the codes as “an exclusionary mechanism” and plan to escalate their agitation. A meeting is scheduled for the 8th of the month, where unions will decide the next phase of nationwide protests.

He said unions may call for a national-level agitation culminating in a strike, insisting that the codes must be repealed. He emphasized that only a serious, detailed consultation—“not a two-hour meeting”—can produce amendments acceptable to workers.

When asked whether repeal is possible, Dutta said that if the country’s vast workforce mobilises, any government would be compelled to act, citing past examples of laws being withdrawn under pressure.

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