New Delhi: The Parliament Wednesday passed three labour codes — on industrial relations; occupational safety, health and working conditions; and social security — proposing to simplify the country’s archaic labour laws and give impetus to economic activity without compromising with the workers’ benefits.
The codes, including the one on wages that was passed last August, have been in the making since 2003 and have seen a lot of back and forth.
It was in 2002 that the Second National Commission on Labour had recommended consolidating the over 100 state and 40 central laws into four-five codes to bring in uniformity. The commission it its report had categorically stated that it found the existing legislations to be “complex, with archaic provisions and inconsistent definitions”.
Industry and businesses have been crying hoarse for years to streamline the complex web of labour laws to help them leverage the full potential of the market. Labour sector experts, meanwhile, had been batting for a better social security framework for workers.
It was in 2014 that the Modi government gave a fresh push to convert the existing 44 central labour laws into four codes.
The labour reforms were facing opposition from the Congress and Left parties. But because the Congress-led opposition boycotted the Lok Sabha and Rajya Sabha proceedings, the bills got passed without a hurdle.
ThePrint explains the three codes and how they will ensure a better deal for employers and employees.
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Industrial Relations Code
The code, among its important provisions, makes it easier for companies to hire and fire workers.
Companies employing upto 300 workers will not be required to frame standing orders for its workforce anymore. Standing orders are the rules of conduct for workmen employed in industrial establishments. Presently, it is compulsory for firms employing upto 100 workers.
While this gives leverage to firms to hire and fire workers without requiring the respective state government’s permission, it has met with a lot of opposition from labour unions. They have argued that this provision will give liberty to industrial establishments to hire and fire their employees at will.
Another provision that has created misgivings among labour unions as well as workers is that the code makes it difficult for labour unions to go on a strike without giving prior notice. It proposes that workers in factories will have to give a notice at least 14 days in advance to employers if they want to go on strike.
Presently, only workers in public utility services are required to give notices to hold strikes.
On Wednesday, soon after the codes were passed, the RSS-backed Bharatiya Mazdoor Sangh opposed the Industrial Relations Code, describing it as a clear attempt to diminish the role of trade unions.
The code will give fillip to industries by ushering in substantive reform in the licensing mechanism. Currently, industries have to apply for their licence under different laws. The code provides for a single licensing mechanism.
It also simplifies archaic laws dealing with industrial disputes and revamp the adjudication process, which will pave the way for early resolution of disputes.
Besides, every industrial establishment employing 20 or more workers will have one or more Grievance Redressal Committees for resolution of disputes arising out of employees’ grievances.
The code also proposes setting up of a reskilling fund to help skill retrenched workers.
Occupational safety, health, working conditions code
It spells out duties of employers and employees, and envisages safety standards for different sectors, focusing on the health and working condition of workers, hours of work, leaves, etc.
Among the most significant aspects of the code is that it recognises the right of contractual workers.
The code provides employers the flexibility to employ workers on a fixed-term basis, on the basis of requirement and without restriction in any sector. More importantly, it also provides for statutory benefits like social security and wages to fixed-term employees at par with their permanent counterparts.
It also mandates that no worker will be allowed to work in any establishment for more than 8 hours a day or more than 6 days in a week. In case of an overtime, an employee should be paid twice the rate of his/her wage. It will be applicable to even small establishments, which have upto 10 workers.
Following the migrant crisis that unfolded in the wake of the Covid lockdown, the government expanded the definition of ‘inter-state migrant worker’ to ensure that no one gets left out of the social security net in the future.
For the first time, income criteria will be included to define a migrant worker.
The new labour codes will now include all workers whose monthly family income is less than Rs 18,000, and who migrate to another state and get directly employed or self-employed.
The existing Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, defined a migrant worker as one who is recruited by or through a licensed contractor in one state for employment in an establishment in another state.
The code also brings in gender equality and empowers the women workforce. Women will be entitled to be employed in all establishments for all types of work and, with consent can work before 6 am and beyond 7 pm subject to such conditions relating to safety, holidays and working hours.
For the first time, the labour code also recognises the rights of transgenders. It makes it mandatory for industrial establishments to provide washrooms, bathing places and locker rooms for male, female and transgender employees.
The code also mandates that no employer should knowingly employ a woman in any establishment during the 6 weeks immediately following the day of her delivery, miscarriage or medical termination of pregnancy.
Also read: How Modi govt’s labour law changes hope to raise India’s ‘Ease of Doing Business’ ranking
Social security code
This will replace nine social security laws, including Maternity Benefit Act, Employees’ Provident Fund Act, Employees’ Pension Scheme, Employees’ Compensation Act, among others.
The code universalises social security coverage to those working in the unorganised sector, such as migrant workers, gig workers and platform workers.
For the first time, the code will bring freelancers, also known as ‘gig workers’, and platform workers who access other organisations using online platforms, such as delivery personnel working with food aggregators like Zomato and Swiggy, and cab drivers working with aggregators such as Ola and Uber, under the social security net.
It also provides for setting up a Gig and Platform Workers’ Social Security Fund for meeting the social security and welfare needs of gig and platform workers.
Gig companies will have to put aside 1-2 per cent of their annual turnover for social security funds of their workers.
The fund will be administered by the Centre and contributions to it will mainly come from the aggregators.
For the first time, provisions of social security will also be extended to agricultural workers also.
The code also reduces the time limit for receiving gratuity payment from the continuous service of five years to one year for all kinds of employees, including fixed-term employees, contract labour, daily and monthly wage workers.
For working journalists, the government has reduced the time limit for receiving gratuity payments from five years to three years.
Also read: Modi govt says suspension of labour laws not reform, raises concern over states changing laws