Codifying capitalism: The corporatisation of Indian labour law

On November 21, 2025, India brought into force the four Labour Codes: 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. Together, they consolidate 29 Central enactments into a unified regulatory framework touted as simplification and a necessary step toward promoting investment and ease of doing business.

But on closer examination, the statutes reveal a completely different legislative project. The Codes mark a deliberate transfer of regulatory power away from the State and towards private capital, weakening three pillars of labour protection that have defined post-Independence industrial jurisprudence: (i) State enforcement, (ii) security of tenure and (iii) collective bargaining power.

The result is a legal regime that privileges corporate flexibility over workers’ constitutional guarantees of dignity, livelihood and social security under Articles 21, 39, 41, 42 and 43 of the Constitution.

Under the Factories Act, 1948, the labour inspector was the backbone of workplace enforcement. Inspectors could enter premises without notice, examine registers, interview workers and initiate prosecutions for violations. Critically, Section 92 of the Factories Act prescribed imprisonment of up to two years for maintaining false records or providing false information, an important deterrent given India’s history of wage theft and unsafe working conditions.

The OSH Code, 2020 replaces this enforcement model with a “trust-based” system. Section 51 redesignates the inspector as an inspector-cum-facilitator, mandating that their primary function is to advise and supply information. Inspections must follow a web-based, randomised schedule, eliminating the element of surprise necessary for detecting covert violations like overwork, under-reporting of accidents or child labour.

Most consequentially, for a broad range of first-time offences, the facilitator must provide the employer an opportunity to comply before prosecution. This converts violations such as non-payment of wages or breaches of safety standards from criminal wrongs into administrative defects.

This retreat is at odds with ILO Convention No. 81 (Labour Inspection Convention, 1947) - ratified by India in 1949 - which requires that inspectors be empowered to conduct “unannounced and free” inspections.

The Codes further accelerate decriminalisation. Under the Code on Wages, Section 54 introduces compounding, allowing first-time offenders to settle violations by paying up to 75% of the maximum fine. Offences that previously involved imprisonment such as non-payment of minimum wages under Section 22 of the Minimum Wages Act, 1948, will now result in monetary penalties only.

For large corporations, this transforms statutory obligations into cost-benefit calculations. Looking from a corporate perspective, exploitation becomes an operational expense, while deterrence collapses.

Post-Independence industrial policy recognised that Indian workers faced severe bargaining power asymmetry. Chapter V-B of the Industrial Disputes Act, 1947 required establishments employing 100 or more workers to seek prior government permission for layoffs, retrenchment or closure. This was a crucial protection not merely on procedure, but substantively ensuring that economic decisions with social consequences were subject to public scrutiny.

The Industrial Relations Code, 2020 raises this threshold to 300 workers under Section 77. This single numerical amendment has sweeping consequences:

1. Exclusion of the “missing middle”: Most formal-sector establishments employ between 100 and 299 workers. They are now exempt from prior-permission requirements.

2. Unilateral employer power: Retrenchment becomes a managerial prerogative, requiring only statutory compensation.

3. Administrative deregulation by notification: Section 77(2) allows the appropriate government to increase the threshold further by simple notification and without parliamentary oversight.

This creates the possibility of a “race to the bottom,” where states competing for investment dilute job security protections through executive notifications.

The cumulative effect is the creation of a “just-in-time” workforce, a term borrowed from lean manufacturing. Human labour becomes a flexible input, expandable or dispensable based on market signals, with minimal legal friction.

The constitutional right to collective bargaining, while not explicitly enumerated, has been read into Article 19(1)(c) (freedom of association). The Supreme Court has emphasised the importance of unions in BR Singh v. Union of India (1989), calling collective bargaining “the backbone of industrial democracy.” The IR Code, however, reconfigures this landscape.

Strike restrictions

Under the Industrial Disputes Act, only workers in public utility services required 14-day strike notice. Now, Section 62 of the IR Code extends the mandatory 14–60 day notice requirement to all industrial establishments. The moment notice is given, conciliation proceedings commence automatically, rendering any strike during the pendency of conciliation illegal.

This eliminates the tactical element of industrial workforce action - surprise.

Fragmentation through recognition requirements

Section 14 of the IR Code requires a union to have 51% support to be recognised as the sole negotiating agent. Failing this, multiple unions with at least 20% support each form a negotiating council. In workplaces with multiple small unions (a common feature in India), this creates structural fragmentation. Employers can quietly encourage union proliferation, weakening the formation of a majority.

Penalties increase dramatically

Penalties for “illegal strikes” have been significantly enhanced, creating a chilling effect. Strikes have not been banned outright, but such dense procedural requirements have been imposed that exercising the right becomes nearly impossible. This is governance through process, where rights exist only on paper.

The Code on Social Security, 2020 under Sections 2(35) and 2(77) is perceived as a progressive step that brings gig workers and platform workers into the ambit of social protection. Yet, the substantive protections offered are minimal.

Section 113 empowers the government to frame schemes, but the language is permissive (“may frame”), not mandatory. There is no statutory obligation to create or fund these schemes within a timeline. Section 114 authorises the government to require aggregators to contribute up to 2% of annual turnover, subject to a 5% cap on payments to workers. But both the rate and mechanism are left to future notification. Critically, gig workers are not classified as employees, excluding them from:

• the IR Code’s protection against retrenchment,

• trade union rights,

• access to industrial tribunals, and

• standing orders or minimum wage protections for waiting time.

This creates a welfarist containment zone, some symbolic recognition, limited discretionary benefits, but no enforceable rights.

The OSH Code consolidates 13 laws but expands thresholds in ways that deregulate the workforce:

• 12-hour workday: The Code allows 12-hour daily shifts (while retaining the 48-hour weekly cap), effectively legalising extended workdays without ensuring consent.

• Contract labour: The applicability threshold is raised from 20 to 50 workers (Section 45), excluding many small establishments from welfare obligations.

• Inter-state migrant workers: The threshold of 10 workers excludes domestic workers and micro-units. The repeal of the Inter-State Migrant Workmen Act, 1979 eliminates specific entitlements such as displacement allowance and journey allowance.

These threshold shifts create vast grey zones where legal protections do not apply and the social security of migrant labourers becomes even more precarious.

Taken together, the Labour Codes reflect an internally consistent legislative philosophy: maximising corporate flexibility while minimising worker protections.

• Enforcement is weakened through facilitation and self-certification.

• Job security is diluted by raising thresholds and enabling executive deregulation.

• Collective power is fragmented through procedural barriers and inflated penalties.

• Gig workers receive symbolic recognition without statutory rights.

This is not an accidental by-product of simplification. It is a deliberate redesign of India’s labour law architecture, one that subordinates human dignity to market efficiency. As India chases a $5-trillion economy, we must ask a constitutional question: at what cost to the workers whose labour makes this growth possible?

Syed M Nasif is a 3rd-year B.A. LL.B. student at Aligarh Muslim University.