Labour Day 2026: Do Laws Protect Workers or Just Exist on Paper?
India has nearly a century of labour legislation, but few are covered. The global labour movement - led by the International Labour Organization (ILO) - institutionalised the 8-hour day as early as 1919. Early labour laws in India, such as the Workmen's Compensation Act 1923 and Trade Unions Act 1926, followed by a host of post-Independence acts, including the Factories Act 1948 and Minimum Wages Act 1948, did the same. However, these largely applied to formal sector enterprises, leaving out most workers. Even post-Independence, only a small proportion of employment relationships - largely from the formal sector - were regulated under labour laws. Since then, there have been a series of reforms, including the four Labour Codes (2019-2021) that codified 29 laws, to cover the workforce, including the gig economy. But loop holes are glaring. India continues to have an informal sector (80-90%) without contracts or benefits. Despite laws on minimum wages, working conditions, unionism and universal coverage, "workers are off the books" and there is only occasional enforcement. This is due to the weak enforcement of these laws, few inspections and exemptions from regulation, which raises the paradox - there are laws but few protections.
Historical Evolution of Labour Laws
The international labour rights movement began with the Treaty of Versailles in 1919, leading to the founding of the ILO and Hours of Work Convention. In India, the labour laws started in the colonial period with the Workmen's Compensation Act (1923) and Trade Unions Act (1926). This was followed by the Payment of Wages Act 1936 and after 1947, a host of laws, including the Industrial Disputes Act 1947 and the Contract Labour (Regulation and Abolition) Act 1970.
Labour rights are also enshrined in the Indian Constitution in Articles 23-24 and in the Directive Principles (Articles 39-43), which emphasise such rights as the abolition of forced labour, provision of living wages and welfare of workers. However, labour laws historically relied on the assumption of formal employment relationships, mainly in factories and industries. This overlooked small, rural and informal sector work. This is changing with the recent Labour Codes. For example, the Code on Wages introduces a national minimum wage and the Code on Social Security recognises gig and platform workers.
Despite these changes, there is some concern that deregulation - with higher threshold of applicability and less inspections - has provided greater flexibility to employers at the cost of workers' rights.
Legal Protections vs Reality
The biggest problem is the disconnect between the law and enforcement. The majority of Indians are engaged in informal work, where 82-90% of workers have no contracts, paid leave or social security. Data consistent with ILO estimates show that the level of informal employment has consistently hovered around 85-90% for the last decade.
Merely 10% are in formal jobs, leaving most workers outside the law. Almost 82% lack written contracts and approximately 47% are without social security. Even when legislation is in place, its enforcement is lax, and enforcement is selective and prone to corruption.
The number of labour inspections is low compared to the workforce. Many facilities are eligible for self-certification. Breaches are seldom penalised, and enforcement bodies lack the staff and resources they need. Labour rights are thus often "only on paper”.
Unionisation and Collective Bargaining
Although unions are legally protected in India, they have low membership. India's 9.2 million union members represent a mere 5-8% of the workforce, known as union density. These unions mainly represent public sector or large-scale employers, neglecting the informal sector.
This is a much lower fraction than the global average of 15-20% in OECD nations. This undermines collective bargaining as workers lack a voice in negotiating wages, conditions and grievances. As a result, formal rights are not enforced.
The Greatest Gap in the Informal Sector
Marginalised groups include those in the informal sector such as construction workers, domestic workers, street vendors and rural labourers. These workers often lack contracts, social security and labour regulation.
Despite social security and cess-based funds, there is low participation, and the benefits are denied due to lack of documentation and inefficient administration. Even when funds are collected, they are often under spent. The COVID-19 pandemic highlighted these short comings, with informal workers not having access to social security or relief.
In other words, for informal workers, labour laws remain merely theoretical.
Gig Economy and Emerging Challenges
The gig economy has given birth to a new group of workers such as platform workers, delivery workers and freelancers who do not fall under the conventional frame work of employment. In 2025, India had about 8-9 million gig workers, which is expected to reach 23 million in 2030.
Gig and platform workers received a huge boost in the Code on Social Security (2020). But this has yet to be fully implemented. A 2026 report by a Parliamentary Standing Committee revealed most gig workers are not registered with labour exchanges or social security schemes, and it recommended compulsory registration with e-Shram and contributions by platform companies.
Until these changes come into effect, gig workers continue to earn low wages, lack job security, paid leave and health insurance, revealing the gap between formal and effective rights.
Recent Developments(2022–2026)
India's new four Labour Codes on Wages, Industrial Relations, Social Security, and Occupational Safety are a significant reform to its labour laws that seeks to consolidate laws and enhance worker protections. The Codes include universal worker registration, a national minimum wage, expansion of social security for gig and platform workers, and enhancements in maternity leave, health and safety. But the roll-out has been patchy. There has been a lag in the implementation of the Codes in some states, and provisions are still not fully implemented. Some have also noted that the reforms have given employers greater flexibility - for instance, firms with up to 300 employees can now down size without obtaining government clearance - impacting on employment security.
The courts, however, have made it clear that enforcement is crucial. The Supreme Court of India has called for the welfare of unorganised workers and the effective use of welfare funds. Yet, media reports continue to expose high levels of non-compliance, reflecting the disconnect between policy and practice. Compared to the UK, Brazil and South Africa, India's labour protection laws appear to be robust but are ineffective due to high informality and institutional shortcomings.
This highlights a broader point: it is not enough for labour protection to exist on paper - it must also be enforced and applied. This discrepancy between legislation and practice can betraced to various factors, including high levels of informality that hinder regulation; weak enforcement and reliance on self-declaration; low union density, which weakens collective bargaining; unclear and complex regulations, allowing loopholes; and the delay in implementation of Labour Codes. These collectively contribute to a situation of "rights on paper but not in practice".
Policy Implications and Recommendations
A multi-faceted approach is needed to resolve these issues. In the short run, enforcement of existing policies, inspections, and registration of workers, such as e-Shram, should be prioritised. In the medium term, policies should encourage formalisation, extend universal social security, and enhance collective bargaining.
In the long run, India needs to tackle structural problems by focusing on education, training and employment, while establishing a universal social security system that includes all workers, whether they are in formal or informal employment. It is also important to improve labour data and adhere to international norms.
India has a long tradition of concern for labour welfare and social justice, reflected in its labour laws,but these have a limited impact due to poor enforcement and the prevalence of informality. On Labour Day 2026, the problem is not the lack of laws, but their poor implementation.
For vast numbers, particularly in the informal and gig economy, labour laws remain a case of "theory and practice". This calls for institutional and enforcement reformand participatory policy making. Until reform occurs, India's labour laws were main strong on paper, but weak in reality.
