Simpler for business, tougher for workers: Tamil Nadu debates impact of new Labour Codes
The move is seen as tilting the scales decisively in favour of industry while weakening long-standing rights that workers have fought generations to secure
When the Union government announced the long-pending rollout of the four labour codes, it reignited a fierce debate in Tamil Nadu, one of India’s largest manufacturing hubs and home to the country’s second-largest MSME ecosystem.
Tamil Nadu’s economy heavily relies on labour-intensive sectors such as automobiles, electronics, textiles, leather, and engineering goods. The state’s labour ecosystem is unique since its economic success depends on both worker stability and investor confidence. The new labour codes arrive at a time when the state is competing aggressively for global manufacturing investments while also dealing with recurring protests over wages, safety, and employment conditions.
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For industries, the simplification of compliance and pan-India Employees' State Insurance Corporation (ESIC) coverage is welcome. However, for unions and many workers, the changes could erode long-standing rights and increase job insecurity.
'Safety of the workers is overlooked'
Tamil Nadu, with its vast cluster of small and medium units, stands to benefit from simpler norms, especially for investors who have long complained about rigid labour compliances pushing them to Vietnam or Bangladesh. But labour lawyers and unions warn that the reforms come with significant dilution of worker protections, and the workers would not even have the legal right to fight against the industries.
Advocate D. Nagasaila, who has represented workers’ unions for over three decades at the Madras High Court, told The Federal that the new laws shift the focus decisively toward employer convenience.
“The main thing is that they are looking at the convenience of businesses. They are not giving much importance to the safety of the workers. Business needs flexibility, yes. But we have to look at both. They have closed many safeguards that existed earlier,’’ she said.
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Nagasaila says one of the most concerning changes relates to contractualisation. “If there is a permanent job, only a permanent employee should do it. Earlier, contract labour was not allowed in permanent roles. Now they have allowed it. This will lead to widespread job insecurity. Instead of permanent employees, firms would increase the count of contract workers, and there is no long-term security for any job,’’ she said.
Right to protest under scrutiny
The new definition of “public utility services” now widened far beyond essential sectors like transport or hospitals also raises red flags.
“Before, only certain essential services like medical, railways could not strike. Now they have notified so many industries, including bakeries. You must inform the authorities before striking. This is not new, but the scope has been expanded. Literally workers cannot go on strike to demand their rights,’’ she explained.
Parties against labour codes
DMK has strongly opposed the labour codes introduced by the Centre. Party spokesperson TKS Elangovan reiterated that, “We opposed them in Parliament itself. These laws make the lives of labourers more difficult. They are being changed to satisfy private companies. All workers should have equal rights; you cannot discriminate,’’ he told The Federal.
Slamming the BJP-led government for framing the labour codes to satisfy its “friends”, TKS Elangovan said, “The new labour codes would result in exploitation and that exploitation would be carried out with the help of the very law which earlier protected workers. Though the Union government has framed the Central rules for these codes, since “labour” was a concurrent subject, the States also have to frame and notify the rules. Only then, these Codes will be implemented. All trade unions, including DMK’s trade union, had opposed the Codes, as they were against the interests of the working class.’’
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The CPI(M) has also condemned the rollout. In a strong statement, Tamil Nadu state secretary P. Shanmugam said the codes dismantle protections won through “150 years of workers’ struggles” . He warned that implementing the codes would turn workers into “modern slaves” by restricting unionisation and strikes, and expanding insecure employment.
According to him, more than 70% of India’s workers risk losing meaningful legal protection, with permanent jobs rapidly replaced by contract, daily-wage, and fixed-term roles. “This will have huge social, political, and economic consequences,” Shanmugam said, accusing the Centre of laying out a “red carpet for corporate profit.”
Protests resolve issues
Though the DMK opposes such labour codes, it has taken steps against workers who staged protests to form unions, secure jobs, and oppose privatisation.
In the last four years, the DMK government has faced difficulties in handling strikes, but these have helped workers receive the benefits to which they are entitled. For example, In Samsung’s Sriperumbudur plant near Chennai, workers fought a bitter, months-long battle in March 2025 that ended in a breakthrough.
After a 37-day strike and sustained pressure, the Samsung India Workers’ Union (SIWU) was formally registered. Seen by many as a historic win, this is the first union (in fact, only the second after the one in South Korea) at a Samsung Electronics plant in India.
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The protest forced Samsung to negotiate seriously. Eventually, the company signed a deal guaranteeing a three-year wage hike, better leave benefits, improved welfare facilities, including a medical room, and enhanced transport and cafeteria services.
Sanitation workers protest
Meanwhile, in Chennai, sanitary workers’ prolonged protests in August 2025 against outsourcing and privatisation finally secured concrete concessions from the state government. Their agitation resulted in a set of six special welfare measures, including a free daily meal scheme at worksites, a new health coverage package especially for skin and lung conditions, and a raised insurance cover of Rs 5 lakh (total compensation raised to Rs10 lakh per family).
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The free-meal scheme, worth nearly Rs. 187 crore over three years, will serve over 29,000 sanitation workers in Chennai.
Long-pending four labour codes
The four labour codes, on Wages (2019), Industrial Relations (2020), Social Security (2020), and Occupational Safety, Health and Working Conditions (2020), have been described as the biggest overhaul in decades. The Union Government argues that the reforms will modernise outdated laws, ensure minimum wages for all workers, extend social security to gig and platform workers, allow women to work at night, and reduce the compliance burden for industries through single licences and single returns.