Examining the Long Wait for the Labour Code

**Srijan Tripathi 

INTRODUCTION

On 25th July this year, approximately 25 crore workers from both the public and private sectors participated in a nationwide strike (Bharat Bandh), backed by widespread support from trade unions across the country. Among their many demands, the workers alleged that the new Labour Codes (“Codes”) seek to dilute their rights under the guise of reform and called for their repeal. The irony, however, lies in the fact that the Codes have not yet been implemented and, since their publication, have remained in a state of limbo while being a subject of widespread politics and discussion.

During the COVID-19 pandemic in 2019, India embarked upon a welcome quest for labour reforms driven by the need for  complete overhaul of the labour laws. The labour regulations in India, as per the World Bank, are the most restrictive and complex in the world. This constitutes a significant impediment to growth of the formal manufacturing sector where these laws find their widest application. Currently, the labour regime of India continues to be a paper tiger, where despite having one of the strictest laws, enforcement of even minimum standards remains dismal primarily due to politics, corruption and lack of awareness. It is therefore evident that rejuvenating the labour law framework would not only enhance regulatory clarity but also attract greater labour-intensive investment and generate much-needed employment opportunities for India’s growing workforce.

Upon recently being questioned in the Rajya Sabha regarding the delayed implementation of the Codes, the Minister of State for Labour and Employment in her reply stated that since “labour” is a subject on the concurrent list of the Constitution of India and under the Codes themselves too, the power to make applicable rules has been entrusted to both the Central as well as the State Governments. The Codes cannot come into effect until the respective State Governments notify their own Rules. It was clarified that the Central Government has already notified the Draft Rules. 

This complex governance structure for labour regulations in India can be identified as the prime reason behind the non-implementation of the Codes. Since, the wide topic of labour regulations lie on the Concurrent list of the Indian Constitution, the code cannot come into force till all the States notify and finalize their own respective rules. Currently, as many as eight States and Union Territories are yet to publish their Draft Rules due to various reasons which can be only understood as the unfortunate pitfalls of federalism and politics. 

The new Labour Codes indeed have the potential to bring about substantial improvements in the rights and conditions of workers. However, their persistent non-implementation has led to widespread uncertainty among both workers and employers, as evidenced by recurring strikes and demonstrations. This article seeks to examine the legal and constitutional implications of this continued deferral and to propose a way forward that may facilitate the timely and effective implementation of the Codes.

WHY THE DELAY? WHY ARE THE STATE RULES A PREREQUISITE? 

The Seventh Schedule of the Constitution has been divided into three lists which demarcate the law-making authority of the Central and the State Legislature on the basis of loosely worded Subject enumerations. The existence of two parallel legislations under the scheme of federalism allows for accommodation of the rich diversity within the nation into consideration while enacting laws, as well as establish a power sharing mechanism.

The Concurrent List of the Seventh Schedule enumerates subjects upon which both the Union as well as State government can make laws. This list includes divergent topics like Criminal Justice Administration, Marriage and Divorce etc. where the implementation of Central laws with customizations by States to account for geographical, political and cultural factors is desirable as long as uniformity is maintained. Uniformity however, is not an absolute requirement under  List-III and in cases of conflict between the Central and State laws, the Union law prevails as per the doctrine of Repugnancy. 

The subject of Labour regulations in India historically, has been a concurrent subject as per the Constitutional scheme, with the bulk of laws being enacted by the Parliament and the States coming up with rules to supplement them. While it can be argued that the Labour code was prematurely passed by the Parliament with inadequate consideration, now the ball lies with the State legislature to make rules and regulations for the executive after due consultation and consideration. This allows for timely alteration of the Rules if the need arises, due to localised circumstances without requiring central interference. Once these State Rules are drafted, they are required to be laid before Parliament. However, this parliamentary oversight often functions as a mere formality, given the overwhelming volume of subordinate legislation placed before it- a problematic yet undeniable reality..

Hence, the implementation of the Codes now lies at the behest of all 28 states and 8 Union Territories coming up with their own draft rules after due consideration and getting them approved by the Parliament. Calling this whole process ponderous would be an understatement when considering the consequence of the non-implementation, but does there exist a solution for this delay which would also ensue no such situations arise with respect to labour legislations in future? 

THE ARGUMENT FOR MOVING LABOUR TO UNION LIST

Despite being enacted by the Union between 2019-2020, the Codes have not become operational in 2025 solely for the reason that under the scheme of the Concurrent list, they cannot be enforced until all the States and Union Territories have notified their own respective rules. An arguable solution to this federal paralysis could be the use of the powers of Parliament under Article 368 to relocate the labour entries to the Union List. If India wants to continue to stick with its ideal of a welfare state while attempting to compete with nations like China which regard labour rights subservient to the national interest of manufacturing and production, a centrally coordinated administration of uniform labour regulations throughout the country becomes imperative.

This would not be without precedent. A similar step was taken in 1976 during the 42nd Constitutional Amendment, when five subjects, including education and administration of justice, were moved from the State List to the Concurrent List. This restructuring enabled greater legal uniformity and facilitated more efficient implementation of policies across the nation.. The concerns about the excessive centralization maybe balanced out by the reality of economic viability and the limited capacity for states to even notify Rules based upon the Model already released due to political considerations. 

We must face the bitter reality that the political climate of the nation has always been such that the states have a tendency to impede reformation attempts of the Union government in cases where they are governed by rival political parties and vice versa. An example of this can be observed with Tamil Nadu, which despite contributing 11.9% to India’s manufacturing GDP and having the most factories nationally, continues to be in confrontation with the Centre on the issue of anti-federalism and fiscal constraints. 

It would be in the interest of the nation that the Union is given the responsibility to implement a uniform labour regime throughout India which would greatly improve the ease of doing business and attract foreign investments creating much needed employment in the nation. The states unfortunately, cannot be trusted for creating their own labour regulations respectively as it risks making the issue of labour rights a political circus like the issue of reservation. Let us take the example of Maharashtra where migrant labourers from Uttar Pradesh and Bihar in particular face continuous hostility, we can only imagine if their rights would be considered if when the State government sits down to draft the labour Codes.

While the implementation of the Codes lies in a limbo, several states have been forced to take it upon themselves to implement labour reforms to boost investment and ease of doing business. This further points towards the utility of a mechanism for uniform Labour regulation across India. For instance, 19 states have raised the retrenchment threshold from 100 to 300 employees and 31 states and Union Territories have allowed women to work night shifts. This gives way to a another less outrageous solution, where enforcement, inspection and dispute resolution can remain state subjects while the power to legislate and notify labour laws is secured with the Union.

The Constituent Assembly placed labour in the Concurrent List to enable progressive central intervention while respecting local contexts. But the present delay in enforcing nationally enacted laws shows that the current conditions result in paralysis and area big blot upon cooperative federalism.

CONCLUSION

The Joint Committee on Indian Constitutional Reforms justified the creation of the concurrent list by citing the need for uniformity while ensuring state participation and encouraging provincial efforts. Dr. B.R. Ambedkar justified the need for creating a concurrent list as to overcome the inherent weaknesses of federalism which are rigidity and legalism and to provide elasticity in law making for certain aspects. However, at present, the issue of labour has become a threat to the very cause of uniformity and participation for which it was placed in the concurrent list. The states are forced to pass their own legislation thus defeating the cause of uniformity because of inaction on the part of a fraction of the states which in turn results in a deadlock. It is time that India should reconsider the issue of legislating upon labour regulations and centralization is considered seriously. 

**Srijan Tripathi is a student at MNLU Nagpur 

**Disclaimer: The views expressed in this blog do not necessarily align with the views of the Vidhi Centre for Legal Policy.