In the Dharam Singh v. State of UP Case, the Supreme Court of India recently noted that the government is an employer under the Constitution rather than merely a market player, where an employer alone represents competition and profit motives. The conditions of that kind of work are determined by contracts, labour supply and demand, and corporate requirements rather than by constitutional duties. This observation was made in the context of criticising the long-term use of temporary or daily-wage workers for permanent tasks, since the state should be held to a higher standard of justice and dignity than a private enterprise.

The Uttar Pradesh government was ordered by the court in the Dharam Singh case to regularise the employment of daily-wage workers who had been employed for decades by the Higher Education Services Commission. The court emphasised the importance of clear tasks, established deadlines, and verifiable compliance in implementing judicial orders to translate legal rights into tangible outcomes for employees. Thus, the court reminded that under the framework of the Constitution and laws, recruitment, promotions, reservations, salaries, retirement benefits, and protections for employees are all governed by constitutional provisions (like Articles 14, 16, and 309–311 in India).

However, a significant portion of Indian workers have been encountering the government acting as a market employer rather than fulfilling its constitutional role. Numerous indications of this are clearly evident in the present labour sectors.

Labour Codes and Implementation Gaps
Rather than being protected by the Constitution, employee rights are primarily safeguarded by labour legislation, contracts, and collective bargaining. This provides a methodical overview of the primary problems and challenges raised by India's new labour codes, which consolidated 29 central labour laws into four codes after being adopted in 2019 and 2020. However, it ignores the challenges associated with its implementation.

Because the government has not yet established standard legislation or notifications, employers and employees are unsure. States may interpret the rules differently since labour is on the Concurrent List because of the federal system. Although the goal of the labour codes is to modernise and streamline labour laws, the main concerns are implementation delays, coverage of the informal sector, and worker protection against the flexibility of companies.

Rising Contractualisation of Work
Contract labour is on the increase. According to the data, in FY23, a total of 14.61 million (1 crore and 46 lakh) workers were employed by 253,000 factories throughout India. Among them, 5.95 million (59 lakh and 50 thousand) workers (40.7 per cent) were on contract — the highest figure recorded — compared to only 40.2 per cent in the previous financial year. This trend of outsourcing also extends to nearly every service sector, which contributes 49.58 per cent to GDP, and even within the army under the initiative known as 'Agniveer.' This trend leads to the persistence of informality and precarious employment within India's workforce as a whole. In the informal sector, there is a lack of contracts, social security, or job protection.

Gig and Platform Workers: Legal Exclusion
Additionally, despite their fast growth, gig and platform workers are still not covered by the majority of labour laws. However, no legislation has been passed as of yet, despite the backdrop of the 113th ILO Convention 2025, which recognised gig workers as workers rather than aggregators. In June 2022, NITI Aayog released "India's Booming Gig and Platform Economy," which included several policy measures for platform workers, including recommendations for social security, skill development, and a more comprehensive enumeration of the gig workforce. These measures complement the Code on Social Security, 2020, and support initiatives like the e-Shram portal.

Unemployment and Underemployment Challenges
Unemployment and underemployment rates exceed 70 per cent, despite India's position as the world's fourth-largest economy. In India, open unemployment, particularly among educated young people, remains a significant issue. A considerable number of workers are underemployed, meaning they are either working fewer hours or in low-productivity jobs than they desire.

Wage Inequality and Minimum Wage Violations
Furthermore, many workers make less than the minimum wage or a livable wage. Rural-urban wage disparities and gender pay gaps continue to exist. In India, more than 60 per cent of casual workers and over 70 per cent of unskilled workers in specific industries, such as construction and agriculture, do not receive their minimum wage; the issue is exacerbated by low compliance and pervasive informality. Systemic exploitation by contractors is a significant factor in depriving these workers of their rightful minimum wages, according to the India Employment Report 2024.

Lack of social security provision 
India has inadequate social security coverage. Only a small percentage of workers are covered by provident funds, health insurance, and pension plans (mainly in the formal sector). There are no strong safety nets for the unorganised sector, which includes migratory workers. It's essential to note that India has made significant strides in expanding the scope of social protection. In mid-2025, the International Labour Organisation (ILO) stated that over 940 million people in India were covered by social protection, up from 19 per cent in 2015 to 64.3 per cent in 2025. Even though this expansion is a positive step, it should be weighed against the gaps and implementation challenges that still exist, particularly for the large informal workforce whose security scheme is still based on a digitalised card, despite having been documented through e-Shram card registration.

Unsafe Workplaces and Weak Union Rights
There are unsafe workplaces, long hours, poor working conditions, and a lack of union rights in numerous industries in India. According to 2024 data provided by IndustriALL, there were at least 240 workplace accidents in the mining, industrial and energy sectors, which resulted in over 400 fatalities and over 850 serious injuries.

Women Workers and Gender Disparities
Women workers frequently experience maternity protection, childcare insecurity, and harassment. The female labour force participation rate, or LFPR, is only 41.3 per cent, while the male LFPR is a strong 78.3 per cent. This glaring gender gap in the workforce necessitates more thorough research and focused policy changes, especially in a nation striving for inclusive progress. The extremely low incidence of female labour force participation is especially concerning. Women are deterred from entering the labour market by cultural norms, safety concerns, and a lack of enabling infrastructure.

Migrant Workers' Exploitation
Migrant workers face exploitation, poor housing, and exclusion from state welfare schemes. The issues confronted by migrant workers in India are complex and deeply rooted in the country's socio-economic structure. Despite their invaluable contribution to the nation's economy, these workers face challenges ranging from insufficient legal protections to poor living conditions.

The Persistence of Child Labour
According to ILO-aligned data, India has over 10.1 million child labourers as of mid-2025, according to the Child Labour Scale. Between 2018 and 2022, there was a 44 per cent increase in FIRs under the Child Labour Act and a 66 per cent increase in connected case files. Therefore, in 2025, child labour is still a major and widespread problem in India. The fundamental problems of poverty, underfunded programs, and lax enforcement nevertheless permit exploitation to continue, despite tremendous efforts—increasing rescues, more legal proceedings, and aggressive NGO interventions.

The Government Acting as a Market Employer
The factors mentioned above alone demonstrate that the Indian government has embraced the role of a market employer, similar to the private sector, which is motivated by competitiveness and profit objectives, rather than fulfilling its constitutional duties to its workers. In this instance, contracts, labour supply and demand, and company or service requirements—rather than constitutional duties—determine employment conditions. As a result, similar to market businesses, the government frequently offers flexibility, performance-based pay, and quicker career advancement; however, it also typically provides less job security than employment held under decent work.