Evaluation of Labour Legislation and need of Labour Code

Labour Laws aim to correct the power disbalance between the employees and employers. It provides the employees with security so that they can’t be unjustly dismissed. Therefore, they give the employees the power to negotiate and ensure a good working conditions. The most important factors that the Labour Laws aim to work on are:

•Productive Work & Adequate Earning

•Proper Working Hours

•Security to the Employees

•Employee Compensation

•Work-Life Balance

•Secure Working Environment

•Sickness and Accident benefits to the employees Social Security

•Labour Welfare

•Fair Treatment in the Workplace

•Prevention of Child & Adolescent at Work

•Forced Labour.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 3(b) (Syllabus 2022).

The need for new Labour Codes arose from the limitations of India’s earlier labour law framework, which was fragmented, outdated, and difficult to administer. Labour laws must evolve with “emerging economic and industrial scenarios” to remain effective. The earlier system consisted of numerous laws with overlapping provisions, inconsistent definitions, and varying thresholds, creating confusion for employers and workers alike.

One major objective of the new Labour Codes is simplification. By consolidating 29 central laws into four comprehensive codes, the government aimed to create a unified, coherent, and easily understandable legal structure. This simplification reduces compliance burden, eliminates duplication, and promotes transparency.

Another objective is standardisation. The Codes seek to harmonise definitions, procedures, and regulatory requirements across different labour laws. This ensures uniformity in the application of concepts such as wages, contractor, employee, and employer.

A key objective is expanding social security. The Social Security Code aims to extend benefits such as provident fund, insurance, gratuity, and maternity benefits to all workers, including those in the unorganised, gig, and platform sectors. This reflects the government’s commitment to inclusive welfare.

The Codes also aim to promote ease of doing business by introducing single registration, single licensing, and single returns. This reduces administrative hurdles and encourages formalisation of employment.

Another objective is strengthening worker protection. The Codes ensure minimum wages for all workers, prohibit gender discrimination, and enhance safety and health standards across industries.

Finally, the Codes aim to improve industrial relations by providing mechanisms for recognition of trade unions, regulating strikes, and balancing employer flexibility with worker rights.

Overall, the Labour Codes aim to create a modern, efficient, and equitable labour regulatory system that supports economic growth while safeguarding worker welfare.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 6A(i) (Syllabus 2022).