Government of India’s new labour code, covering wages, industrial relations (IR), social security, and occupational safety, replaced 29 older laws in one sweeping stroke. The front-page ads of the government self-praised this restructuring as a landmark moment promising universal minimum wages, wider social security, reduced compliance burdens, and a more formalised labour market.

Behind this grand narrative lies a system that looks modern but weakens the very rights it claims to protect. Many of the new “protections” are diluted, conditional, or drafted in ways that expand employer discretion while shrinking worker security, at a time when global labour standards are moving in the opposite direction.

The most jarring shift occurs in job security. The IR Code raises the threshold for mandatory government approval of layoffs from firms with 100 employees to those with 300. This is giving employers more freehand to retrench without oversight. The government is playing both socialism and capitalism at the same time by giving tax sops and freehand to employers! Isn’t this code encouraging hire-and-fire culture? Even the inconsistent definitions of “worker” and “employee” deepen legal ambiguity.

The promise of a universal minimum wage proves equally hollow. The average floor wage nationally is anchored at a low threshold. The wage-ceiling is set at Rs. 18,000 per month, which the trade unions argue as far short of ensuring a living wage. Unlike Organisation for Economic Co-operation and Development (OECD) nations that link minimum wages to median incomes or cost-of-living indices, India’s mechanism appears symbolic rather than transformative.

Social security expansion is more gesture than guarantee

Social security expansion, too, is more gesture than guarantee. Gig, platform, and unorganised workers are nominally included, yet the proposed contribution rates of 1-2% are far too meagre to deliver meaningful protection. Employees' State Insurance Corporation (ESIC) coverage remains inaccessible to many because the wage ceiling of Rs. 21,000 excludes large numbers of vulnerable workers. Even the reduced gratuity eligibility of one year, though advertised as progressive, often operates in the employer’s favour by easing short-tenure cycles without strengthening long-term security.

Working conditions may deteriorate under the guise of flexibility. Allowing shifts of eight to 12 hours within a 48-hour week may appear modern, but with a  weak enforcement, it risks normalising overwork. The transformation of inspectors into “facilitators,” along with algorithmic scheduling of inspections, threatens meaningful oversight and weakens occupational safety at a structural level.

Collective bargaining power also stands diminished. Trade unions contend that the codes restrict the right to organise and strike precisely when employers have gained unprecedented regulatory ease. This leaves workers with limited leverage in an increasingly unequal labour market, which is typical of this regime.

The reforms in the new code fall far short of global standards. The European Union's (EU’s) Working Time Directive is strict on limiting the number of  hours, rest periods, and night-shift safety. It gets better in Nordic states with some of the lowest working hours in the world. The Dutch are experimenting with four-day workweeks.

Europe’s employment-protection systems, as reflected in the OECD’s EPL index, impose far stronger safeguards against arbitrary dismissal. Their social-security models offer universal, generously funded protections. The best-performing countries on global labour-rights indices embed fair wages, safe workplaces, collective bargaining, and freedom of association in constitutional or statutory foundations.

Against such benchmarks, India’s labour codes resemble an old formula repackaged – modern in presentation, regressive in effect. The reforms streamline compliance, unify laws and improve the Ease of Doing Business – yet they stop short of redistributing power or strengthening worker rights in any meaningful sense.

India seems to have created an elegant administrative framework without the muscular protections found in the world’s best labour policies. Written appointment letters, updated definitions and digital registers are steps forward, but without collective bargaining, empowered unions or a protected right to strike, the new code seems to have been written with a view to quickly improving the Ease of Doing Business ranking,

Global leaders like the EU and parts of Latin America, have paired flexibility with enforceable worker protections: robust severance rules, strong social security, strict working-hour caps and powerful sectoral bargaining. In contrast, India’s codes tilt toward employer convenience. They seek order, not equilibrium.

If the largest democracy is serious about protecting its large workforce bordering on slavery, it must move beyond cosmetic tweaks and embrace structural reform based on justice. The goal should not merely be simplifying compliance for businesses.

Here’s what real reforms should look like:

Strengthen layoff-approval thresholds: Reduce the employee-count threshold that triggers mandatory approval for layoffs so that even medium-sized firms follow due process. Stricter severance, consultation and notification rules, like that of the EU, must become non-negotiable.

Raise the national floor wage: It should be tied to cost-of-living indicators or pegged to a share of median wages through the Kaitz ratio. Move decisively toward a living-wage framework rather than one that merely prevents starvation.

Limit working hours and guarantee rest: Twelve-hour shifts should be exceptional, strictly regulated and contingent on worker consent with premium pay. Mandatory breaks, weekly rest and safe night-shift norms should be enforced. Include gig and Q-commerce workers in this.

Build universal, adequate social protection: Social-security contributions need to rise to levels that can fund real pensions, healthcare and unemployment coverage. Expand the ESIC wage ceiling, and bring informal workers gradually into a unified safety net.

Empower labour for collective bargaining: Legal right to bargain at company and sector levels is a must in democracy. Likewise, the right to strike must be guaranteed with fair legal provisions. Promote worker representation in governance bodies.

Bring stronger enforcement: India needs an empowered, independent inspection body with resources and authority. Bring digital tools to enhance transparency in governance.

Remove legal ambiguity: Define “worker,” “wage,” and employment categories correctly. Gig and platform workers should have legal protection.

Mandate periodic reviews: A permanent tripartite council, representing government, employers and workers, should continuously evaluate wages, compliance mechanisms and social-security structures to align with Viksit Bharat goals.

Californian labour rights are among the strongest in the world, and it hasn’t scared business away. If California were a country, it would be the fourth-largest economy. India must stop pretending that “Ease of Doing Business” collapses the moment workers receive dignity.

It should never be a binary of either/or but always be both/and. People didn’t elect leaders to hand out freebies or corporate favours – they voted for a future where work creates dignity, not desperation. That democratic trust cannot be bartered away at the altar of business convenience.

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