The New Labour Codes – Ushering in the Era of the “Dictatorship of the Private Employer”

On 21st November, 2025 the Union Government issued notifications bringing into force four Labour Codes - the Code on Wages, 2019, the Occupational Safety, Health and Working Conditions Code, 2020,(OSH Code) the Social Security Code, 2020; and the Industrial Relations Code, 2020 - that had been passed between 2019 and 2021. The four Labour Codes, presented as an anti-colonial “labour reform”, essentially constitute a reorientation of the State’s role in mediating class relations in the country. That corporate India has largely hailed the labour codes indicates whose interests the new Labour Codes serves. Trade unions have taken this as an attack on the working class and indications are that the coming months will see a concerted challenge on the streets.

The very passing of these Codes in Parliament was marked by an undemocratic approach by the Union government – three of the four bills were passed without any debate in 2020 on a day when the Parliament was in a furore over the passing of the farm laws. Trade unions have consistently resisted this codification process and have held 4 nationwide strikes. Yet, ignoring all objections, the Government has proceeded to issue notifications on 21st November 2025, bringing the Codes into force.

The Codes have a serious impact on the rights of workers, while the Union government claims that the Codes are worker-friendly. In this, they are ably supported by the unquestioning  main stream media. Given these distortions, it is imperative to examine the actual substance of the Labour Codes to understand its true impact on the working class in particular, and the socio-economic structure of society at large. Simply put, it grants employers a greater freedom while curtailing even the most basic rights of workers, with the harshest consequences borne by the most marginalized workers.

Pushing Workers Out of the Ambit of the Law

One of the fundamental changes that the Labour Codes make in comparison with the previously existing law, is that it reduces the applicability of the law. Labour laws generally prescribe a worker threshold for their applicability, and the laws apply only to those establishments that employ workers meeting that threshold.

Take the Factories Act, 1948 for instance. Enacted to ensure basic health, safety, welfare facilities, working hours, and leave for workers in factories, it set a threshold of 10 workers for its applicability to establishments operating with power, and 20 workers for those without power. It has now been replaced by the OSH Code, 2020.

This raises the threshold to establishments with 20 workers with the aid of power and 40 workers without power. According to the Annual Survey of Industries 2022–23^[1], 43.2% of factories employ fewer than 20 workers, and the workers in these industries are denied the benefits and protection of this law.

The relationship between workmen and management is inherently unequal. Leaving service conditions entirely to the employer’s discretion opens the door to arbitrary and discriminatory employment practices, with workmen subject to unilateral terms. To address this, the Industrial Employment (Standing Orders) Act, 1946 was enacted, which mandated that establishments employing 100 or more workers must frame standing orders i.e. rules governing conditions of service and these must be certified by the State authorities after hearing the workmen and ensuring that the terms are fair and reasonable. The Industrial Relations Code, which replaces this law, raises the threshold to 300 workers. This means that workers in establishments with less than 300 workers are pushed into a legal vacuum, leaving their service conditions entirely at the mercy of employer discretion.

The Industrial Relations Code makes another shift vis-à-vis the Industrial Disputes Act, 1947. Under the 1947 Act, establishments employing 100 or more workmen were required to obtain prior government permission before effecting any lay-off, retrenchment, or closure, ensuring public scrutiny over decisions that affect livelihood and job security of workers. The Code raises this threshold from 100 to 300 workmen. Employers in units employing fewer than 300 workmen can now lay off, retrench, or shut down operations without any prior approval, effectively granting them unchecked power to terminate employment and exposing workers to sudden and arbitrary loss of livelihood.

The Contract Labour (Regulation and Abolition) Act, 1970 was enacted to protect workers in the exploitative contract labour system by prescribing its abolition under certain conditions, and mandating basic safeguards – timely payment of wages, provision of essential amenities, liability of the principal employer, etc. This Act applied to all establishments employing 20 or more workers. The OSH Code that replaces it, raises this threshold to 50 workers, pushing the workers below this threshold outside the purview of the law.

The overall trend in the Labour Codes of raising the threshold for enjoyment of rights and entitlements under them strip workers of hard-won rights and narrow the scope of regulation, pushing lakhs of workplaces outside of legal regulation.

Blunting workers’ freedom of association and right to strike

The working conditions and enforcement of labour laws in any establishment is contingent on the workers organisation and militancy, a product of the eternal conflict between capital and labour. This explains why, even today, workers who are organised enjoy comparatively greater security, while those in the unorganised (rather consciously disorganised) sector, where workers are actively prevented from organising, are subjected to extreme exploitation.

The right to form trade unions is protected by the freedom of association guaranteed under Article 19 of the Constitution. The Trade Unions Act, 1926, which gave statutory expression to this right, has now been replaced by the Industrial Relations Code.

The Industrial Relations Code empowers the Registrar to withdraw or cancel the registration of a trade union “on the information received by him” regarding an alleged contravention of the Code. While a power of cancellation existed under the Trade Unions Act, the scope of the Industrial Relations Code is far wider, as it now governs strikes and several other aspects of industrial relations. This significantly expands the Registrar’s discretion and exposes trade unions to arbitrary interference.

Under the Trade Unions Act, 1926, office-bearers and members of registered trade unions enjoy statutory immunity from civil proceedings and criminal prosecution under Section 120B(2) of the Indian Penal Code, for actions taken in furtherance of legitimate union objectives. This protection is retained in Section 17 of the Industrial Relations Code, but is rendered meaningless by the Code’s expanded power of deregistration. Once a union’s registration is cancelled, its members lose immunity. The threat of cancellation thus operates as a weapon to intimidate unions and create a climate of fear that undermines the freedom of association

The Labour Codes also attacks the right to strike, an essential component of collective bargaining. For workers, whose only bargaining power lies in their labour, the withdrawal of that labour is often the sole means to be heard in the face of unequal power relations. In his opposition to the Industrial Disputes Bill in 1938, Dr Ambedkar said “…A strike is simply another name for the right to freedom; it is nothing else than the right to the freedom of one’s services on any terms that one wants to obtain. And once you concede the right to freedom, you necessarily concede the right to strike”

The attack on the right to strike under the Industrial Relations Code is two-fold. Firstly, the Code effectively makes strikes illegal through procedural traps. Under the Industrial Disputes Act, 1947, prior notice of strike was required only in public utility services. The IR Code expands this by mandating a 14-day advance notice for a strike in every establishment. The issuance of such notice triggers conciliation proceedings, and once conciliation is underway, strikes are prohibited. This new regime effectively acts as a prohibition on strikes, hollowing out the right to collective bargaining.
 
Secondly, in addition to prohibiting any strikes, the Codes escalates penalties. Under the Industrial Disputes Act, the penalty for an illegal strike was imprisonment up to one month or a fine of ₹50. The IR Code increases this to a minimum fine of ₹1,000 going up to ₹10,000, or with imprisonment or both.
 
The effect is an assault on collective action and the silencing of working-class actions.

Systematic Erosion of the Rights of Women Workers

Article 39(d) of Constitution mandates that the State shall direct its policy towards securing equal pay for equal work for both men and women. This constitutional provision was strengthened in the Equal Remuneration Act, 1976, which prohibited discrimination in wages on the basis of sex. The Code of Wages has effectively dismantled this. While on the face of it, equal wages are mandated, the devil lies in the details. Wages, under the Code, is now redefined to exclude key components, including various allowances, allowing employers to structure wages in a way that appears compliant, but perpetuates gender-based discrimination. In a labour market where women already face discrimination, this redefinition risks legitimizing indirect wage discrimination, directly contravening the guarantee of equality.
 
The second major setback to women workers’ rights is the reduction in maternity benefits payable to women. The Maternity Benefits Act, 1961 is now replaced by the Social Security Code that narrows the very definition of “wages” to exclude various allowances. In practice, employers split wages across multiple heads to avoid liabilities. By excluding these components, the Code legitimizes such avoidance and will result in women workers receiving lower maternity benefits.
 
The introduction of night shift for women, hitherto prohibited under the Factories Act is being heralded as freedom for women. In reality, it does precisely the opposite. It offers greater freedom to employers to extract labour from women under conditions that are inherently unsafe and unequal. Although the provision requires the “consent” of the woman worker, such consent is illusory in a workplace marked by stark power imbalances. Studies have shown that night-shift work exposes workers to serious risks, affects workers health and overall well-being, while adding to emotional and psychological stress. Rather than regulating night shifts to protect all workers, the Code now legitimizes the use of this oppressive practice against women.

Institutionalizing Caste and Class Inequality through Contract Labour

As far back as 1990, the Supreme Court described^[2] the contract labour system as “an improved version of bonded labour.” Yet, despite the enactment of the Contract Labour (Regulation and Abolition) Act, 1970, contract labour has only expanded over the years, particularly as part of the neo-liberal restructuring of the workforce. Contract labour is overwhelmingly concentrated in forms of work labelled as “unskilled” or “menial,” categories that are deeply intertwined with caste. Occupations such as sanitation, housekeeping, gardening, and similar forms of labour have historically been caste-ordained and continue to be performed almost entirely by Dalits and other marginalised communities.

The contract labour system is marked by non-payment of minimum wages, delays in wage payments and the absence of social security. This precarity traps workers into poverty, and has intergenerational consequences, forcing children out of school and into the same caste-ordained occupations.

Rather than end this exploitative system, the Labour Codes legitimises the same.  The OSH Code, which replaces the 1970 Act, prohibits employment of contract labour in core activities only in name; the very definition of “core activity” reeks of casteist classist tendencies excluding precisely those forms of work where contract labour is most pervasive and exploitative. Sanitation work, watch and ward services, canteen and catering services, loading and unloading operations, housekeeping and laundry services, gardening and maintenance of lawns, transport and ambulance services, construction and maintenance work, are specifically excluded from the definition of core work. By excluding these activities from the definition of core work, the OSH Code institutionalizes this exploitative new form of bonded labour. Instead of protecting these workers who have been continually marginalized, the Code gives legitimacy to a system that has historically been designed to exploit them, embedding inequality and discrimination into the very structure of the law.

Paving the way for the Dictatorship of the Employer

In States and Minorities, Dr. Ambedkar stressed on the necessity of State intervention to prevent economic exploitation, warning that the absence of regulation would not produce freedom, but lead, instead to the “dictatorship of the private employer.” The Labour Codes, in that sense, represent the abdication by the State of any responsibility towards workers. Indeed, the very Manusmriti, that Dr. Ambedkar burnt, is invoked in  the draft Shram Shakti Niti 2025, National Labour and Employment Policy of India, which characterises labour as a “sacred and moral duty”. The Labour Codes, on the one hand enable what Dr. Ambedkar described as the “dictatorship of the private employer,” and on the other deepen poverty and reinforce caste and gender inequalities. The Labour Codes must be understood within the broader effort to dismantle Constitutional rights, one that seeks to recast exploitation as a right of the employer and resistance by workers as criminal and a failure of duty. The way forward in this class war mounted on the working class is not only to demand status quo ante, but a labour law regime that guarantees the job, wage and social security – in the true sense, to all.  

(With due acknowledgements to the first publisher, the Frontline, 24th December 2025)

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[1] Annual Survey of Industries, 2022-2023, Government of India, Ministry of Statistics and Programme Implementation
[2] Sankar Mukherjee vs. Union of India 1990(Supp) SCC 668