New Delhi – The sweeping overhaul of India’s labour laws — through the newly implemented “four labour codes” — has stirred fresh controversy as labour unions raised alarm over what they describe as a revived “hire-and-fire” regime. According to Amarjeet Kaur, General Secretary of AITUC, approximately 60–70 per cent of industrial units across India will now be able to sack employees without prior government approval.
📋 What Changed Under New Codes?
- Under the previous law, any factory employing 100 or more workers needed government permission before layoffs, retrenchments, or closures. The new threshold has been increased to 300 workers under the Industrial Relations Code, 2020 (IRC) — part of the four labour codes now in effect.
- This means smaller and medium-sized establishments — which reportedly make up 60–70% of industrial units — can now retrench or close shop with just mandatory notice and severance pay, but without government nod.
- Additionally, the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) raised the threshold for basic safety compliance: many units that were considered factories earlier will now fall outside strict safety norms.
🚨 Why Trade Unions Are Alarmed
Amarjeet Kaur argues this shift undermines the narrative that the reforms are “employee-friendly”. She warns:
- Mass layoffs possible without oversight: Factories with fewer than 300 workers have the flexibility to lay off or retrench staff without prior approval — raising fears of widespread job losses.
- Weaker labour safety safeguards: Many small units will now be exempt from compliance with basic safety, sanitation and worker-welfare norms.
- Decline of union power: The new labour codes raise the bar for union formation and recognition. Under IRC, a union must have either 10% of the workforce or 100 workers (whichever is less) to be recognised — a change many see as limiting workers’ collective bargaining power.
Kaur summed up:
“How can we call the labour-codes employee-friendly when 60-70% units are now free to sack workers at will?”
⚖️ Government & Supporters’ View: More Flexibility, Less Red Tape
Proponents of the codes — including the Government and some economists — argue the reforms bring long-overdue simplification. According to the official announcement, the four labour codes aim to modernise and rationalise 29 outdated labour laws dating back to colonial times. Benefits highlighted include a national minimum wage, social security cover (even for gig workers), standardised wage definitions, and simpler compliance for businesses.
Supporters say the higher threshold for layoffs is meant to help small & medium enterprises (SMEs) adapt quickly to market demands and economic uncertainty — potentially boosting investment and creating jobs in the long run.
They also point out the positive new provisions — such as social security for gig and unorganised-sector workers — which previously lacked any safety net under older laws.
📢 Unions Strike Back: Protests Across States
In the wake of the codes’ implementation (effective 21 November 2025), workers and unions organised protests across multiple states — including Kerala, Tamil Nadu, West Bengal, Odisha and Delhi — calling the reforms “anti-worker” and demanding their rollback.
Union leaders warn that this could mark the beginning of a larger labour unrest, especially if small factories start laying off workers en masse without any safeguard. AITUC and other unions say they will continue to fight the codes through strikes, legal challenges, and public mobilization.
⚠️ What This Means for Workers & Industries
For Workers:
- Job security has weakened for many employed in small and medium-sized industrial units.
- Risk of sudden layoffs has increased.
- Safety and welfare standards in small factories may be diluted.
- Union representation and collective bargaining rights could be under pressure.
For Employers / Industry:
- Easier workforce restructuring and flexibility to adapt to market changes.
- Reduced bureaucratic hurdles for layoffs or closure.
- Lower compliance burden, especially for small factories.
- But potential social backlash, workforce unrest, reputational risk, and difficulty attracting long-term skilled labour.
