IMPACT OF NEW LABOUR CODES ON THE FORMALIZATION OF UNORGANISED SECTOR IN INDIA

AUTHOR – MADHUMITHA.K, STUDENT AT SCHOOL OF EXCELLENCE IN LAW, TAMILNADU DR. AMBEDKAR LAW UNIVERSITY

BEST CITATION – MADHUMITHA.K, IMPACT OF NEW LABOUR CODES ON THE FORMALIZATION OF UNORGANISED SECTOR IN INDIA, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (5) OF 2026, PG. 627-633, APIS – 3920 – 0001 & ISSN – 2583-2344.

ABSTRACT:

Nearly 70–80% of employment opportunities in India are held by a large unorganized workforce, which is a key component of the country’s labor market. Historically, this group has not been adequately covered by labor laws, which has led to unsafe work environments, insufficient access to social security, unstable employment, and susceptibility to wage exploitation. The adoption of the four labor codes—the Occupational Safety, Health, and Working Conditions Code, 2020; the Industrial Relations Code, 2020; the Code on Wages, 2019; and the Code on Social Security, 2020 represents a major structural change intended to alter India’s labor law system. With a focus on extending coverage to unorganized, gig, and platform workers, these regulations combine 29 current labor statutes into a streamlined and consistent approach.

By examining important clauses including uniform minimum wages, obligatory worker registration, the extension of social security benefits, and the recognition of new workforce classification, this study critically investigates the effects of these labor regulations on the formalization of the unorganized sector. It delves deeper into the ways in which these regulations support more accountability, transparency, and inclusiveness in the labor market. However, the report also cites significant implementation problems, such as employee ignorance, digital illiteracy, administrative limitations, and employer reluctance, especially in the unorganized sector.

In order to ensure inclusive and long-lasting labor reforms in India, this article indicates that although the new labor codes offer a solid institutional and legal basis for formalization, their effectiveness relies on efficient implementation, strong enforcement mechanisms, and concerted efforts between the government, employers, and workers.

Key words: unorganised workforce, new labour codes, inclusiveness, social security, enforcement, efficiency.