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The Labour Codes: Conundrum of hope & despair!

The Central Government had constituted the second National Labour Commission headed by Mr. Ravindra Varma, which presented its report in 2002 and recommended that all the central labour laws must be combined into four or five codes. Though 12 central labour laws have already been repealed since 2014, the remaining 29 were subsumed into four codes, which were presented before the Parliament in 2019. They were then referred to the Parliament’s Committee on Labour, which suggested 100 changes in the original drafts, of which 74 were incorporated in the revised three Bills and were finally passed by the Parliament on September 24, 2020.

These codes have been introduced to balance the interests, rights and obligations of employees and the employers; bring down the multiple licensing & paperwork hassles for companies, boost new industrial investment, including foreign investments, and provide a competitive advantage to India in the global economy. The fourth code, The Code on Wages, 2019 (“Wage Code”) was passed last year subsuming The Payment of Wages Act, 1936, The Minimum Wages Act, 1948, The Payment of Bonus Act, 1965 and The Equal Remuneration Act, 1976.

The Industrial Relations Code Bill, 2020 (“IR Code”): subsumes The Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and Industrial Disputes Act, 1947. The IR Code introduces stringent conditions restricting the rights of workers to strike across industry by mandating issuance of a 60 days strike notice, increases the threshold relating to layoffs & retrenchment in industrial establishments having 300 workers, raises the threshold for requirement of a standing order, introduces fixed term employments for contract workers, and introducing re-skilling fund, amongst others.

The Code on Social Security Bill, 2020 (“SS Code”) subsumes The Employees’ Compensation Act, 1923, The Employees’ State Insurance Act, 1948, The Employees Provident Fund and Miscellaneous Provisions Act, 1952, The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959, The Maternity Benefit Act, 1961, The Payment of Gratuity Act, 1972, The Cine Workers Welfare Fund Act, 1981, The Building and Other Construction Workers Welfare Cess Act, 1996, and The Unorganised Workers’ Social Security Act, 2008. The SS Code extends the reach of ESIC & EPF, includes self-employed and workers from unorganized sector, introducing gratuity for fixed term employee, creation of national database of unorganized sector for targeted delivery of SS, and the creation of a National Social Security Board which will take on the responsibility of formulating suitable schemes for unorganised workers, gig workers and platform workers, among others.

The Occupational Safety, Health and Working Conditions Code Bill, 2020 (“OSH Code”): subsumes The Factories Act, 1948, The Plantations Labour Act, 1951, The Mines Act, 1952, The Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955, The Working Journalists (Fixation of Rates of Wages) Act, 1958, The Motor Transport Workers Act, 1961, The Beedi and Cigar Workers (Conditions of Employment) Act, 1966, The Contract Labour (Regulation and Abolition) Act, 1970, The Sales Promotion Employees (Conditions of Service) Act, 1976, The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981, The Dock Workers (Safety, Health and Welfare) Act, 1986, and The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996. The OSH Code mandates free annual health check-up for workers and issuing appointment letter to all workers

While the critics suggest that the Codes would instil job insecurity, encourage hire-fire system of employment in India and may also breed unrest amongst working class, the supporters find that the codes are beneficial as they provide for, among other aspects: (i) Compulsory facility for Helpline for redressal of problems of migrant workers; (ii) Provision for accumulation of one day leave for every 20 days worked, when work has been done for 180 days instead of 240 days; (iii) Equality for women in every sphere: Women have to be permitted to work in every sector at night, but it has to be ensured that provision for their security is made by the employer and consent of women is taken before they work at night; (iv) Provision of “Social Security Fund” for 40 Crore unorganized workers; (v) Pay parity to women workers as compared to their male counterparts; (vi) In the event of death of a worker or injury to a worker due to an accident at his workplace, at least 50 % share of the penalty would be given. This amount would be in addition to Employees Compensation; (vii) The Inspector will now be made Inspector–cum-Facilitator by the introduction of Random, Web Based Inspection System, which possibly be a step to end the Inspector Raj; and (viii) Finally, the manifold increase in penalties would act as a deterrent for non-compliance. The Codes have been introduced with the intention that they would lead to growth of industry, employment, income, balanced regional development and will bring more disposal income in the hands of workers. Hopefully, these codes would promote peaceful and harmonious industrial relations for a better working environment for both employers and workers.

Authored by
Neeraj Dubey, Partner – Corporate Law