Employment: Labour Codes, gig work and skills

The four codes made effective on 21 November 2025 are the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020. There is no 'Code on Employment Guarantee'; the rural employment guarantee is provided by a separate law, the VB- G RAM G Act, 2025, administered by the Ministry of Rural Development.

The Code on Wages, 2019 consolidated four laws: the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. It was the first of the four codes to be passed by Parliament (August 2019), and all four codes came into effect on 21 November 2025.

All three statements are correct. The Code on Social Security, 2020, in force since 21 November 2025, is the first Indian labour law to define gig workers, platform work and aggregators. Under section 114(4), aggregators in the Seventh Schedule categories (ride- sharing, food and grocery delivery, logistics, e-marketplaces and others) contribute at a notified rate of 1-2 per cent of annual turnover, capped at 5 per cent of the amount paid to gig and platform workers, to a social security fund.

All three are correct. The codes allow women to work at night and in all kinds of work, including underground mining and heavy machinery, with their consent and mandatory safety measures. Employers must provide a free annual health check-up to all workers above 40. Overtime beyond prescribed hours is consent-based and paid at double the normal wage rate. Together these provisions aim at higher female participation and better working conditions.

Statements 1 and 2 are correct. The Union Budget 2025-26 (1 February 2025) announced identity cards, registration on the e-Shram portal and health-care coverage under AB-PMJAY for online platform workers. Statement 3 is wrong: no guaranteed minimum income was announced; the social security of gig and platform workers is to be funded through schemes under the Code on Social Security, including aggregator contributions.

Statements 1 and 2 are correct. The codes recognise fixed-term employment as a form of direct hiring and give such employees parity with permanent staff in wages, hours, allowances and benefits. Under the Code on Social Security, a fixed-term employee becomes eligible for gratuity after one year of continuous service, against five years for others. Statement 3 is wrong: parity extends to wages, so a fixed-term employee doing the same work cannot be paid less.

Section 114(4) sets the contribution at a notified rate of 1-2 per cent of annual turnover, but adds a cap of 5 per cent of the amount paid or payable to gig and platform workers. Here even 1 per cent of turnover is ₹20 crore, while 5 per cent of ₹40 crore is ₹2 crore. Since the contribution may not exceed the cap, the aggregator pays at most ₹2 crore. Turnover for this purpose excludes Central taxes, levies and cess.

Statements 1, 2 and 3 are correct. According to the Government's release of 21 November 2025, the Code on Social Security extends ESIC coverage pan-India, makes it voluntary for establishments with fewer than ten employees and mandatory for any establishment with even one employee in a hazardous process. Statement 4 is wrong: the ESIC (health and cash benefits) and the EPFO (provident fund, pension and deposit-linked insurance) remain separate bodies under the Code.

The Service Area Approach came under the Lead Bank Scheme (b). The Lead Bank Scheme, started by the RBI in 1969 on the Gadgil Study Group's advice, gave one bank the lead role in credit planning for each district. The Service Area Approach (SAA), introduced in 1989, went further. Each rural and semi-urban bank branch was given a set of villages and made responsible for planning and meeting their credit needs. It was relaxed in 2004, except for government-sponsored schemes. The IRDP (a), MGNREGS (c) and Skill Mission (d) are unrelated.

Notice the related bodies: District Consultative Committees and State Level Bankers' Committees. Today, financial inclusion relies more on Jan Dhan accounts and bank correspondents.

Answer as per the official UPSC answer key.

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Statements 2 and 3 are correct (c). Statement 1 is wrong because PMKVY, launched in 2015, is the flagship scheme of the Ministry of Skill Development and Entrepreneurship (MSDE), not the Labour Ministry. It is run through the National Skill Development Corporation (NSDC). Statement 2 is right because, besides trade skills, it trains people in soft skills, entrepreneurship, and financial and digital literacy. Statement 3 is right because its Recognition of Prior Learning (RPL) part tests and certifies informal workers against the National Skills Qualifications Framework (NSQF).

The scheme is now in PMKVY 4.0, with a focus on new-age skills such as AI, drones and coding. Notice the related Skill India Digital Hub and the PM Vishwakarma scheme (2023) for traditional artisans.

Answer as per the official UPSC answer key.

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MUDRA brings small entrepreneurs into the formal financial system (a). Pradhan Mantri MUDRA Yojana (2015) gives collateral-free loans to non-farm micro and small enterprises through banks, NBFCs and MFIs. It has slabs called Shishu (up to ₹50,000), Kishore (up to ₹5 lakh) and Tarun (up to ₹10 lakh). Since 2024, Tarun Plus goes up to ₹20 lakh. It is not a crop loan scheme (b), which is the Kisan Credit Card's job. It is not a pension scheme (c), which is NSAP's, and it does not fund NGOs (d).

MUDRA stands for Micro Units Development and Refinance Agency, a SIDBI arm that refinances lenders. Notice how the target is the "missing middle": the unfunded, informal small business.

Answer as per the official UPSC answer key.

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Statements 3 and 4 are correct (b). The answer draws on the NITI Aayog paper on India's changing rural economy (2017). Statement 1 is wrong because worker productivity rose in both rural and urban areas after 1991, though faster in towns. Statement 2 is wrong because the rural share of the workforce fell, as people moved to cities and towns. Statement 3 is right because within villages the non-farm economy (construction, trade, transport, services) grew fast and now makes up most of rural output. Statement 4 is right because rural employment growth slowed.

Notice the term "jobless growth", used for India's high GDP growth with weak job creation. The PLFS (Periodic Labour Force Survey) is now the main source on jobs.

Answer as per the official UPSC answer key.

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Both statements are correct (c). The 2018 amendment to the Industrial Employment (Standing Orders) Central Rules allowed fixed-term employment in all sectors, not just apparel. Statement 1 is right because a fixed-term contract simply ends on its date. The employer need not follow retrenchment procedures or give compensation, which makes it easier to let workers go. Fixed-term workers still get the same wages and benefits as permanent workers. Statement 2 is right because the rules say no notice of termination is needed for a temporary workman, whether employed for a fixed term or not.

Notice the change since then: these ideas were included in the Industrial Relations Code, 2020. The four Labour Codes were brought into force in November 2025, and fixed-term workers became eligible for gratuity after one year.

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Neither statement is correct (d). The National Career Service (NCS), launched in July 2015, is run by the Ministry of Labour and Employment, through the Directorate General of Employment, not by DoPT, so statement 1 is wrong. Statement 2 is wrong because it is not limited to uneducated youth. It is an online portal and a network of Model Career Centres that link all job seekers with employers. It also offers career counselling, skill information and job fairs, and it modernised the old employment exchanges.

Notice the related platforms: e-Shram for unorganised workers, Skill India Digital Hub, and the Employment Linked Incentive scheme from the 2024 Budget, which encourages formal hiring.

Answer as per the official UPSC answer key.

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