Labour Reforms in India, Explanation and Notes for UPSC EPFO Exam

Labour Reforms in India: If you’re getting ready for the UPSC EPFO Enforcement Officer/Accounts Officer & APFC exams, you need to know about India’s new labour laws. The government has made a huge change by replacing 29 old laws with just four new ones. This is a big deal because it changes how businesses and workers operate.

This guide is made just for you. We’ll explain everything about these new laws in a simple, clear way, so you can easily understand and remember them for your exam.

Why Did India Need Labour Reforms?

Think of the old system as a big, messy closet with too many clothes thrown in. It was confusing and difficult to use. Here’s why the government decided to clean it up:

• Too Many Laws: There were over 40 central laws and many more state laws. This made things very complicated for everyone.
• Old Rules: Many laws were from a long time ago and didn’t fit today’s modern world and businesses.
• Different Rules: Different laws had different definitions for the same words, like “wages” or “employee.” This created a lot of confusion.
• Most Workers Left Out: The old laws mainly helped people in big, formal companies. This left out over 90% of India’s workers, who are in the informal sector.

Why Are These New Laws Important for Your EPFO Exam?

As an EPFO officer, you will be in charge of making sure companies follow these laws. This is why knowing them is so important for your exam.

• Directly in Your Syllabus: Your exam syllabus clearly includes “Industrial Relations & Labour Laws” and “Social Security in India.” These new codes are the most current and important part of these topics.
• Your Future Job: Your work will involve enforcing the rules about provident funds, pensions, and other social security benefits, which are now all under the new Code on Social Security.
• Interview Questions: In your interview, you will likely be asked what you think about these new laws; what’s good about them and what challenges they face. Knowing the details will help you stand out.

The Four New Labour Codes Explained

The new model is built upon four comprehensive codes, each targeting a specific pillar of labour law. Let’s look at each of the four codes one by one.

1. The Code on Wages, 2019

This code is all about making sure every worker gets a fair and equal salary. It brings together four old laws into one.

What’s New and Important?

• A National Floor Wage: The biggest change is a “national floor wage” that the government will set. No state can set a minimum wage that is lower than this amount. This ensures a basic standard of living for all workers.
• Equal Pay for All: This law makes it a rule that men and women must be paid the same salary for the same or similar work. This helps stop gender-based discrimination.
• Overtime Pay: If a worker works extra hours, they must be paid at least double their normal wage for that time.
• Simple Wage Definition: The code uses one simple definition for “wages,” which makes it easier to calculate everything from your salary to your bonus and PF contributions.

2. The Industrial Relations Code, 2020

This code focuses on the rules between a company and its workers. It’s about making things easier for businesses to grow while still protecting workers’ rights.

What’s New and Important?

• Easier to Hire and Fire: The law has changed the rule for companies that need to get government permission to lay off workers. Now, this rule only applies to companies with 300 or more workers (the old rule was for 100 workers). This change is meant to encourage businesses to hire more people.
• New Rules for Strikes: Workers now have to give a 60-day notice before they go on strike. This rule applies to all companies, not just those that provide essential services. Many people feel this makes it very difficult for workers to protest.
• Help for Laid-off Workers: If a company lays off workers, it must contribute to a new “reskilling fund.” This fund will give the worker a one-time payment to help them get new skills for a new job.

3. The Code on Social Security, 2020

This is the most important code for your exam as an EPFO aspirant. It’s all about providing social security (like provident funds and health benefits) to many more people.

What’s New and Important?

• Including Gig Workers: For the first time, this code officially defines and includes gig workers and platform workers (like food delivery riders or ride-share drivers) in the social security system. This is a huge step.
• A Big Safety Net: The government now has the power to create special social security schemes for all unorganized workers, gig workers, and platform workers.
• Aadhaar is Key: To get these benefits, unorganized workers must register online using their Aadhaar number. This helps create a proper record of all workers.
• Help for Journalists: The minimum time a working journalist needs to work to get gratuity has been reduced from five years to just three years.

4. The Code on Occupational Safety, Health and Working Conditions (OSH), 2020

This code is all about making workplaces safer and healthier for everyone.

What’s New and Important?

• A Safe Working Limit: The law sets a clear rule that a worker can only work a maximum of 8 hours per day.
• Women Can Work Anywhere: The code allows women to work in any kind of establishment and even at night, as long as they agree to it and the company ensures their safety.
• Help for Migrant Workers: The law provides new help for workers who move between states for work. They will get a “journey allowance” to cover their travel fare, and they can easily access their ration and other benefits in their new state.
• Appointment Letters are a Must: All employers must now give a formal appointment letter to every worker they hire. This helps create proper records and formalizes employment.

Below is a table for quick revision of the New Labour Laws implemented.

Code Name	Main Purpose	Key New Feature	Impact
Code on Wages, 2019	To provide fair and equal pay for all.	National Floor Wage	Sets a universal minimum wage for the whole country.
Industrial Relations Code, 2020	To manage the relationship between companies and workers.	Increased Lay-off Threshold	Makes it easier for small companies to manage their workforce.
Code on Social Security, 2020	To give social benefits to more workers.	Inclusion of Gig Workers	Extends social security to workers in the informal and gig economy.
Occupational Safety Code, 2020	To make workplaces safer.	8-hour Workday Limit	Provides a clear rule for daily working hours.

Pros and Cons of the New Labour Reforms in India

Every big change has good points and bad points. For your exam, it’s important to understand both sides.

Pros:

• Simpler Laws: The new codes are much easier to understand and follow.
• More People Get Benefits: Millions of unorganized and gig workers will now get social security.
• Easier for Businesses: The new rules make it easier for businesses to operate, which can lead to more jobs.

Cons:

• Less Job Security?: Some people worry that the new rules on lay-offs could make jobs less secure for workers in smaller companies.
• Difficult to Strike: The longer notice period for strikes might make it harder for workers to have their voices heard.
• Implementation Challenges: It will be very difficult to get all the unorganized workers to register and for companies to follow the new rules perfectly.

Practice Questions on Labour Reforms for Upcoming Exam

Question 1: What is the primary purpose of the “national floor wage” introduced in the Code on Wages, 2019?

• a) To allow states to set their own minimum wages, regardless of a national standard.
• b) To ensure that no state government fixes a minimum wage below a certain national level.
• c) To give the central government the power to fix all wages across the country.
• d) To eliminate the need for minimum wages in the unorganized sector.

Question 2: Under the Industrial Relations Code, 2020, what is the new threshold for establishments to get government permission for lay-offs and closures?

a) 50 workers b) 100 workers c) 200 workers d) 300 workers

Question 3: Which of the following is a new category of worker formally included under the Social Security Code, 2020, for the first time?

a) Permanent employees b) Gig workers c) Contract workers d) Apprentices

Question 4: The Occupational Safety, Health and Working Conditions Code, 2020, sets a maximum limit for a worker’s daily working hours. What is this limit?

a) 7 hours b) 8 hours c) 9 hours d) 10 hours

Question 5: According to the Code on Wages, 2019, if a worker does overtime, how much must they be paid at least per hour?

a) The same as their normal wage. b) 1.5 times their normal wage. c) Twice their normal wage. d) 2.5 times their normal wage.

Question 6: What is a key feature of the Industrial Relations Code, 2020, that has been criticized by some as a restriction on workers’ rights?

• a) The provision of a reskilling fund for laid-off workers.
• b) The formalization of fixed-term employment.
• c) The mandatory 60-day notice period for strikes.
• d) The establishment of a new grievance redressal committee.

Question 7: The Social Security Code, 2020, has reduced the minimum service period for which group to claim gratuity from five years to three years?

a) Gig workers b) Platform workers c) Working journalists d) Domestic workers

Question 8: Under the new labour codes, what is the purpose of the “Journey Allowance” for inter-state migrant workers?

• a) To provide them with daily travel fare.
• b) To cover a lump-sum travel fare from their native state to their place of work.
• c) To pay for their accommodation.
• d) To compensate them for working away from home.

Question 9: The Code on Social Security, 2020, requires unorganized workers to register on an online portal using their:

a) Voter ID b) PAN card c) Aadhaar number d) Ration card

Question 10: The Code on Wages, 2019, legally prohibits discrimination based on gender in which of the following areas?

a) Wages only b) Recruitment only c) Both wages and recruitment d) Work hours

Answer Key

1. b) To ensure that no state government fixes a minimum wage below a certain national level.
2. d) 300 workers
3. b) Gig workers
4. b) 8 hours
5. c) Twice their normal wage.
6. c) The mandatory 60-day notice period for strikes.
7. c) Working journalists
8. b) To cover a lump-sum travel fare from their native state to their place of work.
9. c) Aadhaar number
10. c) Both wages and recruitment

FAQs

---

• Aadhaar Enabled Payment System (AEPS): Features & Services
• Forex Market Guide for LIC AAO Aspirants: Concepts, Risks & Trends
• Government Securities & Debt Market: Types, Features & Exam Notes
• Working Capital Loan: Features, Types, Benefits & Bank Exam Notes
• White Label ATMs in India: Features, Benefits & Exam Guide
• Treasury Bills (T-Bills) Meaning, Features & Types Explained

---