Labour Laws and Employment Rights in India: Work, Wage and Welfare

Abstract

This blog discusses the evolution of labour laws and employment rights in India as of 2025, in accordance with judgments of the Hon’ble Supreme Court of India. Earlier, the world of economy and the world of work were fundamentally different; most of the labour and employment laws were framed in the pre-independence and post-independence era. With updates in the economy, India continued to operate under complex, fragmented, and outdated provisions, increasing the burden for both workers and the industry. Urban employment is perceived to be advantageous because it offers higher wages, a variety of jobs, and better access to social infrastructure like healthcare and education. Conversely, rural areas often have economies heavily dependent on agriculture and fewer alternative job opportunities. Since the enactment of various rural employment acts, rural India has significantly evolved, though it has faced backlash and criticism.

With the implementation of the new Labour Codes and enhanced employment opportunities, India moves beyond the colonial-era framework and aligns with modern global trends. This shift improves predictability, accountability, and Centre-State partnership.

Introduction

The core objective of labour and employment laws is to create stability between workers and the interests of employers, thereby promoting social justice. India is a welfare state, ensuring equality and non-discrimination with considerable active government intervention to enhance national productivity. The law prescribes minimum wages, equal pay, and health and safety standards, ensuring financial stability and protection of workers from hazardous environments and exploitation. This creates a more effective system of worker welfare and economic equity.

In recent decades, most major economies have reformed and updated their labour regulations in response to changes in economic realities. Since many of India’s laws were framed in the colonial era, these restrictive frameworks struggled to keep pace with the changing economic structure. With the implementation of four labour codes and the Viksit Bharat G RAM G Bill in 2025, India is aligning with the evolving economy, empowering both workers and industries while strengthening accountability, income security, better livelihood and working conditions, and infrastructural developments.

Major labour reforms implemented by the Government of India include the four major labour codes designed to simplify and streamline labour laws, ensuring better wages, social security, and welfare for the Indian labour workforce. These labour codes rationalized 29 existing labour laws, enhancing workers’ welfare while modernizing regulations, creating a resilient and self-reliant nation, with courts balancing labour rights with economic growth.

The rural employment and wage employment programmes have also evolved as key instruments in supporting rural livelihoods and socio-economic conditions. However, with the passage of time, the objectives of rural India have also evolved, altering the nature of rural development needs and creating a necessity for reforming earlier acts and programmes.

This blog explores the challenges faced by the labour workforce and rural areas within India, alongside the major reforms and developments in 2025, which would allow the smooth functioning of labour and employment laws in India and pave the way for a better and more competitive position at the global level.

Labour Law Reforms in India

Earlier, during British rule, the economy and world of work were fundamentally different. However, during the period of transition, many colonial-era laws either became ineffective or lost their contemporary relevance, and were exceedingly complex in nature. To protect workers’ rights and ensure their welfare, the government has repealed non-useful labour laws and replaced them with a simple and accountable system that simplifies processes.

The government has consolidated 29 labour laws into four labour codes, transforming labour governance. These codes are: The Code on Wages, 2019; The Industrial Relations Code, 2020; The Code on Social Security, 2020; and The Occupational Safety, Health and Working Conditions Code, 2020, with effect from 21st November 2025.

1. The Code on Wages, 2019: This code aims to strengthen workers’ rights while promoting simplicity and uniformity in wage-related compliance for employers.

2. The Industrial Relations Code, 2020: This code simplifies laws related to trade unions, conditions of employment in industrial establishments or undertakings, and the investigation and settlement of industrial disputes.

3. The Code on Social Security, 2020: This code extends social security to all workers, including those in the unorganized sector.

4. The Occupational Safety, Health and Working Conditions Code, 2020: This code safeguards workers’ rights and ensures safe working conditions while creating a business-friendly regulatory environment.

The advantages of these codes are available to workers of both organized and unorganized sectors. This evolution ensures that workers gain access to security, health, dignity, and welfare measures, making the system more efficient.

The formulation of the four Labour Codes simplified the registration and licensing framework by introducing the concept of ‘Single Registration, Single Licensing, and Single Return’. India’s total workforce, including labour from the organized and unorganized sectors, is around 64.33 crore as per the Ministry of Labour and Employment.[1] The implementation of four new labour codes widens the social security net and enheds the probability of benefits across states and sectors.

Key Sectors Benefiting from Labour Reforms

The reforms benefit multiple sectors including: Fixed-Term Employees, Gig and Platform Workers, Contract Workers, Women Workers, Youth Workers, MSME Workers, Beedi and Cigar Workers, Plantation Workers, Mine Workers, Audio-Visual and Digital Media Workers, Hazardous Industry Workers, Textile Workers, Dock Workers, Export Sector Workers, and IT and ITES Workers.

Post-Reform Provisions Strengthening the Labour Ecosystem

1. Mandatory Appointment Letters: All workers will receive appointment letters, ensuring transparency, job security, and fixed employment.

2. Statutory Minimum Wage: Workers will receive a statutory right to minimum wage payment, ensuring financial security under the Code on Wages, 2019.

3. Timely Wage Payment: Employers must provide timely wages to all workers.

4. Universal Social Security: The Code on Social Security ensures that all workers, including gig and platform workers, receive PF, ESIC, insurance, and other social security benefits.

5. Health Checkups: All workers above the age of 40 will receive a free annual health checkup.

6. Women’s Night Work: Women are permitted to work at night in all types of work across all establishments, subject to their consent and required safety measures, ensuring women’s workforce participation and providing them with opportunities to earn higher incomes in higher-paying job roles.

7. Extended ESIC Coverage: ESIC coverage and benefits are extended pan-India, voluntary for establishments with fewer than 10 employees and mandatory for establishments with even one employee engaged in hazardous processes.

These new Labour Codes make labour laws fairer, simpler, more accountable, and aligned with the current work environment. These reforms lay the foundation for a more equitable, transparent, and growth-oriented economy.

Relevant Cases Underlining Labour Law Reforms

People’s Union for Democratic Rights v. Union of India (1982):[2] The Court established that non-payment of wages amounts to forced labour under Article 23. This case strengthened wage protection for workers and continues to guide labour reforms focused on fair remuneration and the safeguarding of vulnerable workers.

Bandhua Mukti Morcha v. Union of India (1984):[3] The Hon’ble Supreme Court imposed an obligation on the State to prevent exploitation of labour and ensure proper humane working conditions for the welfare of labour, linking directly to the right to life with dignity under Article 21.

Olga Tellis v. Bombay Municipal Corporation & Ors. (1985):[4] The Hon’ble Supreme Court recognized the right to livelihood as part of Article 21, establishing employment as essential to human dignity. It laid the constitutional foundation for labour welfare by stating that employment is important for the life and dignity of an individual.

Employment Rights and MNREGA as a Rights-Based Law

Earlier, rural employment in India was primarily focused on agriculture; for decades, agriculture was the main source of income. There were traditional occupations such as handicrafts, pottery, weaving, and cottage industries. However, over 80% of the total population was dependent on farming. Indian farmers faced numerous challenges, including dependence on the monsoon, poor irrigation, and post-harvest losses, making them vulnerable to exploitation by moneylenders and traders. This put them under high debt and led to financial instability.

To address these challenges, the government introduced initiatives such as the Employment Guarantee Scheme and the National Rural Employment Programme. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), enacted in 2005, played a key role in providing wage employment, creating basic infrastructure, and stabilizing rural income. These rural development policies focused on reducing poverty, improving agricultural productivity, and creating employment for surplus and underemployed rural labour.

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was a flagship programme that provided 100 days of guaranteed wage employment to rural households. This programme led to notable improvements, such as increased participation of women, digital governance, and financial stability, leading to livelihood security.

Over time, misappropriation increased, and only a small proportion of households were able to complete 100 days of employment. Moreover, post-pandemic, rising incomes, expanded connectivity, and evolving livelihoods have altered the nature of rural employment needs.

The Viksit Bharat G RAM G Bill, 2025

The government has proposed a new statutory framework aligned with Viksit Bharat 2047, the Viksit Bharat G RAM G Bill, 2025, replacing the long-standing MGNREGA. The employment guarantee is enhanced to 125 days per rural household, strengthening rural security and decentralized planning through Viksit Gram Panchayat plans and nationally integrated through the Viksit Bharat National Rural Infrastructure Stack.

Unlike MNREGA, which has multiple and scattered categories, this bill has four clearly defined priority areas, normative funding, and integrates institutionalized convergence and infrastructure planning. This shift moves from demand-based funding with unpredictable allocations to normative funding, ensuring predictable budgeting while protecting the employment guarantee. The states can also notify up to 60 days in a financial year when work will not be executed.

Benefits of the Viksit Bharat G RAM G Bill

For Rural Economy:
– Employment is linked with productive asset creation
– Strong focus on water security through prioritized water works
– Improved rural infrastructure supporting market access
– Livelihood infrastructure enabling income diversification
– Enhanced climate resilience through soil and water conservation
– Higher household incomes boost local consumption
– Reduced distress migration through local opportunities
– Digital systems improving efficiency and transparency

For Farmers:
– Assured labour availability during peak sowing and harvesting
– Prevention of artificial wage inflation in agriculture
– Improved irrigation and groundwater availability
– Better connectivity and storage reducing post-harvest losses
– Climate-focused works protecting crops from extreme weather

For Labourers:
– Higher earning potential with 125 guaranteed workdays
– Timely and transparent digital wage payments
– Direct benefits from improved village infrastructure
– Predictable work availability through advanced local planning
– Legal protection through mandatory unemployment allowance

This bill also promotes technology-driven governance for transparency and accountability.

Relevant Case: Swaraj Abhiyan v. Union of India (2016)[5]
The Hon’ble Supreme Court held that the right to employment under MNREGA is a statutory entitlement, not charity. It is a rights-based law obligating the State to implement rural employment guarantee schemes. The principle laid down in this case remains relevant, as the alteration or replacement of MNREGA must comply with constitutional grounds such as dignity, social justice, and livelihood.

Critical Analysis

While the labour codes promise efficiency and accountability, they prioritize economic flexibility over the welfare of labour, which could pose a risk that weakens the protection of industrial and informal workers in the long term. The flexibility granted to employers, particularly regarding fixed-term employment and ease of compliance, may inadvertently reduce job security for workers who previously enjoyed stronger protections.

In contrast, the evolution from MNREGA to VB-G RAM G reflects a shift from a legally enforceable right to work towards a programme-based employment model, raising concerns about weakened accountability. The introduction of a 60-day non-execution window and the shift to normative funding, while improving predictability for state budgets, may dilute the fundamental guarantee that MNREGA provided. The critical question is whether the new framework will maintain the same level of judicial enforceability and whether workers will have the same recourse if their employment rights are violated.

Both reforms impose new obligations on the State and redefine its role from a guarantor of labour rights to a facilitator of labour markets. This transformation must be carefully monitored to ensure that the constitutional principles of social justice, dignity, and protection from exploitation remain intact. The judiciary will play a crucial role in interpreting these new codes and ensuring they do not dilute the hard-won protections established through decades of progressive jurisprudence.

Conclusion

India’s labour law reforms in 2025 represent a significant transformation in the nation’s approach to worker welfare and employment rights. While the labour codes seek to modernize and rationalize labour regulation, the VB-G RAM G Bill aims to restructure rural employment with greater emphasis on infrastructure and productivity. The judiciary plays a key role in ensuring that workers’ rights are protected and constitutional provisions are upheld, particularly Articles 14, 19, 21, and 23, which safeguard equality, livelihood, and protection from exploitation.

As India moves toward becoming Viksit Bharat by 2047, these reforms must strike a delicate balance between economic growth and social welfare. The success of these reforms will ultimately be measured not just by their efficiency or ease of compliance, but by their ability to genuinely improve the lives of India’s workforce—both in urban industries and rural heartlands. Continuous judicial oversight, effective implementation mechanisms, and responsiveness to ground realities will be essential to ensure that these reforms fulfill their promise of creating a more equitable and prosperous India.

References

[1] Ministry of Labour and Employment, Government of India, Annual Report 2024-25. 
[2] People’s Union for Democratic Rights v. Union of India, (1982) 3 SCC 235 (India). 
[3] Bandhua Mukti Morcha v. Union of India, (1984) 3 SCC 161 (India). 
[4] Olga Tellis v. Bombay Municipal Corporation & Ors., (1985) 3 SCC 545 (India). 
[5] Swaraj Abhiyan v. Union of India, (2016) 7 SCC 498 (India).