“New Labour Code for New India”: Continued lies by the Modi Government as it attacks the Working Class



The Ministry of Labour and Employment has brought out a propaganda booklet titled “New Labour Code for New India” which seeks to justify the anti-labour Codes by a series of false claims.


In 2019, in his Independence Day speech, Narendra Modi said that we should not suspect those who create wealth for the nation, and should respect them. He was not speaking of the actual wealth creators – the working class, but of those who fed off the workers and enriched themselves. The Labour Codes that have replaced the 44 labour laws stand testimony to the disdain that the present BJP Government has for the working class. While preaching that the Codes benefit the workers, the Government has taken all steps to further enrich the corporate sector while pushing more and more workers into vulnerable conditions. The propaganda booklet brought out by the Ministry is another effort to continue to peddle lies, and it is necessary to uncover the same. This article looks at some of the claims made and the reality of the situation.


Claims made on the Rights of Women Workers

Claim: Maternity Benefit Amendment Act, 2017, which came into effect on 01.04.2017, increased the paid maternity leave from 12 weeks to 26 weeks.

Reality: The calculation of Maternity Benefit is heavily impacted by the definition of wages in the new Social Security Code. Thus, while on maternity leave, a woman would still be entitled to maternity benefits, but the “wages”  exclude several heads including any conveyance allowance, special expenses, house rent allowance and any overtime allowance effectively reducing the wages significantly compared to the existing acts.

Claim: It will be necessary for the employers to provide secure working condition at workplace for women workers.

Reality: A number of sectoral statutes currently mandate provision of crèche. Section 67 of the new Social Security Code maintains the provision of creche, but the sector-wise mandate of crèche has been done away with. Further, those factories with 30 women workers but less than 50 workers would now be excluded from coverage.

Statutorily, the manner of maintenance of such crèches are laid down, including that they must provide adequate accommodation, be adequately lighted and ventilated, be maintained in a clean and sanitary condition and be under the charge of a woman trained in the care of children and infants. The base criteria for such crèches, including ventilation and sanitation, are no longer statutorily mandated.


Claim: Equal remuneration to male and female workers.

Reality: The 1976 statute envisaged that all remuneration be equal between men and women, for same or similar work. However, the new Wage Code mandates payment of ‘equal wages’, which is specifically defined  in section 2(y) with various exclusions, thus, opening up space for gender discrimination. The second proviso to section 2(y) of the Code states that “Provided further that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for computation of wage. This would means that clauses (a), (b), (c), (e), (i), (j), (k) would not be included in the new mandate for equal wage for equal work. Thus, discrimination on ground of gender is statutorily permissible in respect of bonus, the value of any house-accommodation, any contribution paid by the employer to any pension or provident fund, special expenses, any commission payable to the employee, any gratuity payable on the termination of employment or any retrenchment compensation or other retirement benefit. 


Claim: Right to women workers to work in all types of establishments. Women have been given the right to work at night with their consent and it has also been ensured that the employer would make adequate arrangements to provide safety and facilities to women workers at night.

Reality: The deletion of prohibition against employment in night shifts is nothing more than an extension of exploitative practices against women workers. In the name of freedom, women are compelled to work in the night. Consent taken from women workers to be employed at night would be nothing more than an unfree choice, thus a travesty of justice.


Claims made on social security of workers


Claim: After 73 years of independence, work is being done to provide wage security, social security and health security to 50 crore workers, covering organized and unorganized sectors.

Reality: The Code employs a myriad of devices to ensure that the mass of workers are excluded from the ambit of protection, which they previously had under the existing laws.


Firstly, the increase in thresholds of applicability themselves exclude lakhs of workers – whereas provisions in respect of Factories Act applied to factories with more than 10 workers / 20 workers [in factories without power and with power respectively], this has now been revised to 20 workers/ 40 workers respectively. Similarly, the mandate for contractor licensing has been revised from a threshold of 20 workers to 50 workers.


Secondly, through definitional exclusions. For example, the term industry excludes “institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic services [which the Supreme Court had held as early as 1978 to be industry if the triple test were satisfied]. Similarly, while contract labour cannot be employed in ‘core activities, the definition of core activities excludes sanitation, watch and ward amongst many others.


Thirdly, the Code allows the Government to make various exemptions. In the definition of ‘industry’ discussed above, the government is permitted to add activities that would not be considered industry. Similarly, the Occupational Safety, Health and Working Conditions Code, 2020 under Section 127, allows the appropriate government to notify that any or all provisions of the Code will not apply to any establishment or class of establishments.


Claim: Now, Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS) and coverage of all types of medical benefit under Employees’ Insurance will be available to all workers.

Reality: The current labour laws, by having minimum thresholds for applicability, leave out 80-90% of the unorganized sector workforce. 

The foundational issue of universal coverage is not addressed by the Code, which maintains high coverage thresholds, resulting in exclusion. For example, EPF is applicable for establishments with 20 or more employees, ESI for 10 or more persons, gratuity for shops with 10 or more employees.  Resultantly, there is exclusion of those mass of workers working in micro-establishments, who remain unorganized and deprived of statutory protections.


Claim: Opportunity to join ESIC for platform and gig workers engaged in new technology

Reality: The Code on Social Security has included ‘gig workers’ and ‘platform workers.’ However, absolutely no social security rights accrue to them by virtue of the Code on Social Security, apart from mandatory registration. In fact, the Code says that the government ‘may’ frame schemes for the benefit of these categories of workers (as opposed to ‘shall’ in the 2008 Act). This approach is in stark contrast to the rights-oriented approach of older enactments. Further, the Code fails to recognize that these workers are in fact workers and have an employer-employee relationship with the concerned establishment, and thus deprives them of al protections that they are in fact entitled to. 



Claim: Benefit of pension scheme (EPFO) to all workers of organized, unorganized and self-employed sectors.

Reality: The Code allows the government to permit the employer to opt out of EPF compliance if the Central Provident Fund Commissioner is satisfied that there is an agreement between the employer and majority of the employees to this effect. This is highly dangerous when unequal power relations are taken into account.



Claims made on minimum wages for workers


Claim: Review of minimum wages in every 5 years.

Reality: This provision is one that already exists in the Minimum Wages Act, 1948. In fact the provision on revision has been diluted by the Wage Code, 2019 and the proposed Rules. Rule 5 of the Draft Rules state that an endeavour will be made to revise the dearness allowance linked to the minimum wage and places no mandatory obligation to ensure such revision. The increase in dearness allowance forms part of the minimum wages and failure to place a mandatory obligation on the Government to ensure an increase in dearness allowance allows for wages to be fixed at lower than the rate of minimum wages.



Claim: To remove regional disparity in minimum wages the provision of floor wage has been introduced-

Reality: The entire notion of floor wages envisages a wage which is less than minimum wages and has no place in the law, when the law clearly lays down that workers forced to work for less than minimum wages amounts to forced labour prohibited under Article 23 of the Constitution. 


Claim: The determination of minimum wages has been made easy. It will be based on criteria such as skill level and geographical area.

Reality: The manner of determination of minimum wages prescribed by the Draft Code on Wages (Central) Rules, 2020 is completely unscientific and would result in the fixation of wages way below the minimum wages. The Draft Rules provides for a net intake of 2700 calories per day per consumption unit, an outdated recommendation made as far back as 1948. The Draft Rule proposes that 66 meters cloth per year be taken per standard working class family, another outdated recommendation. In regard to housing and shelter, the Draft Rule proposes that rent expenditure is not to be calculated by how much it actually costs, but as a percentage (10%) of food and clothing expenditure. This is completely unscientific and without any rationale, and would in fact result in the reduction of minimum wages far below the present standard.


Claims on Inter-state migrant workers


Claim: Various provisions in the OSH Code will ease the lives of the Inter-State Migrant Workers

Reality: The Occupation Safety Health and Working Conditions Code that replaces the Inter-State Migrant Workers Act excludes large umber of workers by increasing the applicability from establishments with 5 or more interstate migrant workers to establishments with 10 or more interstate migrant workers. This seemingly small change has massive consequences. As per the 6th Economic Census conducted in 2013-2014, around 55.86 million establishments (95.50%) had 1-5 workers, around 1.83 million establishments (3.13%) had 6-9 workers, while 0.8 million establishments (1.37%) employed 10+ workers. 


Claim: Anomalies of the Inter-State Migrant Workers Act, 1979 have been comprehensively addressed in the OSH Code. By this provision, the worker would get a legal identity which would enable them to get benefits of all social security schemes.

Reality: In the Occupational Safety, Health and Working Conditions Code, 2020 various existing rights of inter-state migrant workers have ben withdrawn. This includes the mandate to equal treatment to migrant and local workers. Section 13 of the 1979 Act, which mandates equality in wage rates, holidays, hours of work and other conditions of service is sought to be replaced by section 60(iii) of Code, which requires the employer or contractor to extend all benefits to such workers which are available to a worker of that establishment including statutory benefits such as ESI and PF. Wage rates, holidays, hours of work, are conditions of service and are not benefits, and might not fit into Section 60(iii).


Claim: A provision has been made for employers to provide travelling allowance annually to an Inter-State Migrant Worker for undertaking a to-and-fro journey to his native place.

Reality: The provision relating to journey allowance is a pre-existing provision. In fact, a number of entitlements under the 1979 Act have been deleted including the right to displacement allowance of 50% of monthly wages, the right to journey allowance and wages for the time of journey, the right to suitable residential accommodation and the right to protective clothing.

Claim: National database to be created for the Inter-State Migrant Workers.-


Reality: The creation of a database is not per se helpful to migrant workers, and may, and in these times almost certainly will, be used to their detriment. While the database will include the category of self-employed migrant workers, their recognition is limited to this aspect, and no further mention of them is made.


Claim: Mandatory helpline facility in every State for resolution of Inter-State Migrant Workers’ grievances. National database to be created for the Inter State Migrant Workers.

Reality: The Toll Free Helpline is not made mandatory, but is left to the discretion of the appropriate government. Effectively, these provisions are absolutely lacking in force and totally unnecessary except for a display of sham benevolence.


Claims on Termination of Workers and enforcement of law

Claim: In this Code, all possible steps have been taken for industrial units and workers so that disputes do not arise in future Industrial Relations (IR) Code, 2020

Reality: This is a gross misrepresentation. The Code is a direct attack on the most basic rights of workers and pushes a large number of workers into insecure working conditions. By making workers insecure and vulnerable, it reduces their ability to seek redressal. The Code also introduces a strict limitation period for raising disputes, effectively barring legitimate grievances of workers purely on grounds of delay.


Claim: In case of job loss, a worker will get benefit under the Atal Bimit Vyakti Kalyan Yojna.

Reality: The New Code makes it easier for establishments to retrench workers, and takes away existing safeguards. The Atal Bimit Vyakti Kalyan Yojna is a scheme introduced by the Employees' State Insurance Corporation (ESIC) which was in force only till 30th June, 2021 as per the official Government of India website. It is only available to workers who are already insured under ESI, which required previous service in organized sector. Hence, this is limited to job loss from organized sector. While making it easier for establishments to retrench workers, the Code in fact further reduces the compensation payable to workers on retrenchment by changing the definition of wages to exclude several components that were previously included. Thus, the manner of calculation of retrenchment compensation itself has changed, and the amount payable will be calculated after several exclusions.


Claim: Requirement of minimum service has been removed for payment of gratuity in case of fixed term employees. Employees engaged on fixed term to get same social security benefit as permanent employees

Reality: The introduction of “fixed term employment” is itself made with the intent to place workers under extremely vulnerable working conditions and to deprice them of their legitimate rights. The termination of a worker under fixed term employment lies outside the meaning of retrenchment (Section 2(zh)(iv)), and thus outside any protection. The provision of gratuity cannot be used to compensate for placing a worker in an illegal insecure working condition.  


Claim: The system of “inspector raj” was removed by making the role of inspectors to that of advisor and facilitator for workers

Reality: The change of the role of inspectors to “inspector-cum-facilitators”, results in making redundant the effective role of the inspector, who is absolutely essential for the enforcement of various laws. The Code on Social Security mandates that the Inspector-cum-Facilitator must give the employer an opportunity to comply before initiating prosecution against him. So even if an employer has wilfully committed an offence, the law legitimises his escape, free of cost, at the expense of the worker. By reducing the role of the inspector, the Code does not make him a facilitator for the workers, but instead a facilitator for the Management, and makes it extremely difficult to ensure the enforcement of various laws.