Are the Labour Codes Future Ready?

The 4 Labour Codes on wages, industrial relations, social security and occupational safety, welfare and working conditions have been passed in 2019 – 2020 but are pending enforcement. While a few States are yet to frame their draft State-specific rules under one or more Labour Code, the Central Government has already issued the draft Central rules under all the 4 Labour Codes.

The enforcement of the Labour Codes has become essential to adapt the existing standards to the modern workforce, the changing business landscape and evolving focus on legal compliance. If the current ruling party wins the Lok Sabha elections this year, it has plans to enforce the new Labour Codes from 1st April 2025 to sync with the business cycles of enterprises. This would become clearer after the General Elections in June 2024.

With only 10 months remaining in this fiscal year, clarifications are needed on various aspects such as salary thresholds for applicability of the social security laws proposed to be repealed by the Labour Codes; overtime and minimum wage exemptions for white-collar employees performing non-supervisory and/or non-managerial roles; treatment of highly compensated employees or professionals including those designated as consultants; permissible clawbacks; exclusion of stock option plans from the new statutory definition of “wages”; fitness for purpose of the Labour Codes to contemporary, dynamic and flexible work arrangements (including gig and platform work); and issues concerning moonlighting, gender equality, to name a few.

These clarifications will close the loopholes and pave the path for streamlining implementation of the Labour Codes in letter and spirit and aid India Inc. to prepare for the regulatory challenges that lie ahead.

This blog is authored by Partner – Minu Dwivedi and Of-Counsel – Shreya Chowdhury.