India Clears New Labour Codes: Minimum Wage Formula Dropped, Wider Gaps Feared

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AuthorAnanya Iyer|Published at:
India Clears New Labour Codes: Minimum Wage Formula Dropped, Wider Gaps Feared
Overview

The Indian government has notified final rules for all four new labour codes, set to fully implement in November 2025. Key changes include an eight-hour workday, a 48-hour weekly cap, mandatory wage slips, and social security funds for gig and unorganized workers. However, the final wage code rules omit the previous minimum wage calculation criteria, raising concerns among experts about potential lower wages and increased disparity for workers across states.

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The finalized rules for the Code on Wages omit a specific minimum wage calculation formula that was present in earlier drafts. The January draft had proposed a formula based on factors like daily calorie intake, clothing needs, housing costs, and child education expenses, a framework rooted in a 1991 Supreme Court ruling and a 1957 labour conference. Labour economist K.R. Shyam Sundar expressed concern, stating this removal could lead to "unscientific and inconsistent criteria for calculation of minimum wages across states," potentially increasing wage differences for similar jobs.

National Floor Wage

In place of a fixed calculation formula, the government will now establish a national floor wage. This baseline will be set by the central government after consulting an advisory board and state governments. The aim is to prevent states from setting minimum wages below this national level, a move intended to provide a foundational income standard amid ongoing worker protests nationwide.

Working Hours and Social Security

The new regulations standardize the workday to eight hours for daily wage earners. Other employees will have a weekly cap of 48 hours, potentially offering more flexibility. All unorganized workers aged over 16 must register using their Aadhaar details on a central government portal. Similarly, companies that engage gig and platform workers, referred to as aggregators, must now register these workers in real-time. A National Social Security Board is also set to be formed to oversee these social security measures.

Occupational Safety and Women Workers

Under the Occupational Safety, Health and Working Conditions Code, contractor licensing has been streamlined through electronic applications, with a 45-day target for approval. A significant provision allows women to work night shifts, defined as between 7 PM and 6 AM, provided they give written consent. Employers are required to ensure adequate transportation and safe, well-lit workspaces for female employees working these late or early hours.

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