Discussing Experience Letter in New Labour Codes

Introduction

Contract Labour is included in the Occupational Safety, Health and Working Conditions Code, 2020, by the new labour codes, which were updated, amended and presented in a consolidated form on November 21, 2025. The new labour codes introducing newer protections for labourers at the same time were also inclined towards promoting the ease of doing business. There is an increasing trend in the objectives of the codes, to provide a safety net to the workers, but at the same time, give maximum freedom to the employers, or in this case, the contractors, to formulate the terms of the contracts.

The government is shifting the focus of codes like Occupational Safety, whose sole purpose was to protect workers in the workplace, from the adverse effects of exploitative contracts, to also include another objective to promote the ease of doing business. The increase in the threshold of application of the code hints at the existence of such intentions in the government’s policies.

Earlier, the Contract Labour (Regulation & Abolition) Act, 1970^[1], applied to places where there were more than 20 workers, and hence the protections were available at a lesser threshold, but now the protections available to contract labour will be available to more than fifty workers in an establishment, according to the OSH Code.

New Developments

Section 56^[2] of the OSH Code, 2020 makes it mandatory for a contractor to issue an Experience Certificate, on demand, to the contract labour, in such form as specified by the appropriate government. What is meant by appropriate government may be a part of a separate discussion altogether, but what this development means pertains to this piece.

The government, as proposed above, is moving towards a more balanced approach that provides protection to workers while also giving businesses enough space to grow. The government is not mandating the contractor to keep the worker on the payroll or, whenever out of work, to let the worker go and provide compensation. Instead, the contractor is required to give the contract labour an experience letter of their previous work, so that they can look for a better job. It was held earlier in the case of Steel Authority of India Ltd. and Ors. Vs. National Union Water Front Workers and Ors.^[3] that if there is a closure of Industry by a notification of the state government barring contract labour in a particular business under the Contract Labour (Regulation & Abolition) Act, 1970, then the contractor is liable to employ them under different industries, and the state is not liable for their unemployment; and in case the contractor says that there is no further work, and bails them, the contract labour can claim benefit from the contractor and not the state government. The contract labour can only claim benefits from the state government if the contractor is not a real contractor but a sham contractor. According to CLA, 1970, contract labour can be hired only through a licensed contractor. The licensed contractor can be a real contractor that supplies labour to multiple industries of the government or private, but can also equally be a sham contractor just to comply with the law. In case the industry just makes compliance with the law, hires a sham contractor, then only the government will be liable.   

The contention is that this liability of payment of compensation after being discharged from the contract appears to be replaced by an experience letter. It looks as if the government wishes the worker to have better jobs in future using this Experience Letter, but do not expect anything else from the current employer.

The ground of this proposition is the movement of government towards making labour a free market exchange, but as already disputed by many theorists like Hugh Collins^[4], labour is anything but a commodity for free exchange in the market. This new development seems to increase flexicurity^[5] (easy hiring and firing) and decrease labour protections. Though less can be said about its future effects.

As put forth, the coming of Section 56 can be seen as decreasing protection, and supporting a free trade of labour; this part will critique the same. This new development will make the contract labour more precarious, submissive, and will further decrease their bargaining power.

As explained above, the normativity of enacting this provision is to make it easier for the workers to get a better job, at least this is what it seems prima facie. The E-Shram portal has a specific section in the profile, where you must upload your previous work experience. So, it is clear that it cannot be hidden, destroyed, manipulated, etc.

The employer must sanction this Experience Letter, and hence he/she has full control over the contents of this letter. This makes the employer have another prospect to control the contract labour, to exploit it, by threatening and saying that they will ruin your experience letter. Since it cannot be hidden, it would reduce further employment prospects, leading to an opposite effect than what the government would have thought.

Noting that this has happened in England in the Master and Servant Acts^[6], which criminalised disobedience in the workplace. This is not the same, but a similar thing that may be used by employers to threaten workers and exploit them for work they are unwilling to do.

Deduction

The point that is raised is that the very provision that is put forth to protect the workers can be very effectively used as a tool of exploitation. There is no doubt about the intention of legislators who introduced this as a protective measure to support the growth of workers, but due to its wide potential for misuse, there is a pressing need to draft rules in this regard.

Given that the rules of the newer labour codes are still not drafted, the need of the hour is to clear the clouds and present a clearer framework, with less ambiguity. 

Author: Apoorva Kumar, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

^[1] Contract Labour (Regulation & Abolition) Act, § 1(4)(a) (1970).

^[2] Occupational Safety, Health and Working Conditions Code, § 56 (2020).

^[3] Steel Authority of India Ltd. and Ors. Vs. National Union Water Front Workers and Ors, AIR 2001 SC 3527.

^[4] Hugh Collins, Employment Law, 2 (2010).

^[5] Jason Heyes, Flexicurity, Employment Protection and the Jobs crisis, 25 British Sociological Association, 4 Sage Journals (2011). 

^[6] Bogg, Alan, KD Ewing, and Andrew Moretta, The Persistence of Criminal Law and Police in Collective Labour Relations, Oxford Academic, 362–388 (2020).