Labour Codes: #8 Employer V. Workers Under The New Indian Labour Codes

In the existing labour laws, notably in the Industrial Disputes Act, 1947, the term "workman" has been defined in Section 2(s) to include individuals engaged in manual, unskilled, skilled, technical, operational, clerical, or supervisory work, but explicitly excluded those in managerial or administrative roles, as well as supervisors earning above a specified wage threshold. This narrow definition led to the exclusion of many white-collar employees from labour protections.

Recognizing these gaps, the new Labour Codes have introduced distinct definitions for "employee" and "worker" to ensure comprehensive coverage and protection across all employment categories. While the upcoming Labour Codes aim for simplification and uniformity in interpretation of legal terms and concepts, they also retain certain exclusive and separate terms that need such differential definition and understanding. Let us look at how the four labour codes have defined the two terms:

In the Labour Codes, the term "employees", has been broadly defined to include various job roles including managerial and technical positions, ensuring comprehensive coverage under most labour benefits. However, the inclusion of contractual workers and wage ceiling nuances (as seen in the Social Security Code) requires careful interpretation to avoid misclassification, potentially complicating payroll and compliance.

With respect to the term "workers", it has been more narrowly defined to focus on manual and operational roles, which helps target labour protections and dispute resolutions. The inclusion of a "wage worker" category under the Social Security Code extends benefits to informal and unorganized sectors. On the other hand, varying supervisory wage thresholds (Rs.15,000 vs. Rs.18,000) across codes can create ambiguity, increasing the risk of litigation if misclassified, and may impose additional administrative efforts to ensure accurate categorization.

Impact on labour Law Compliance: With this changes approach in the definition, businesses must adapt their HR and payroll systems accordingly. The legal requirement to differentiate between "employee" and "worker" – particularly with varying wage thresholds and inclusion criteria – increases administrative oversight. Failure to accurately classify staff may result in legal disputes and financial penalties. However, when properly implemented, these clear statutory distinctions reduce ambiguity in labour relations and create a predictable legal framework that benefits both employers and employees.