General Impact of Labour Codes - Legislative update - Private Member's Bill for scrapping Labour Codes
General
Impact of the New Labour Codes
The Codes:
The new labour
codes, viz., Code on Wages 2019, Code on Social Security 2020, Industrial
Relations Code 2020, and the
Occupational Safety, Health and Working Conditions Code 2020 consolidate
29 Central Labour Laws, into 4 sets of codes.
The key objectives of the consolidation is to simplify,
amalgamate and rationalize the relevant provisions of the existing Central
Labour Laws.
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Industrial Relations Code |
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Code
on Social Security, 2020- |
1. The
Employees’ Compensation Act 1923
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Occupational
Safety, Health and Working Conditions Code, 2020 |
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Highlights
1. Common Features of all Codes:
Wages:
To ensure consistency, codes have
a common definition, which includes all remuneration including HRA, conveyance
and other allowances capable of being expressed in monetary terms. The exempted
components are capped at 50 per cent of the gross wages/salary.
Inspector-cum
Facilitator
This role of the Inspector is enlarged to encompass
inspection and advise the employers and workers on various compliances. The
scheme (Central Government), includes web based schedule.
Compounding First
Offence:
The 1st offence can be compounded by 50% fine
payment. For recurrence within 5 years, no option providing for compounding and
prosecution shall be initiated.
2. Code on Wages:
The Code on Wages is a well-rounded legislation that seeks to balance the
interests of the employer and the employee. It aims to remove the ambiguity in
the existing labour laws by having a common definition of ‘wage’. This is
likely to have a significant impact on the net payable salary of the employees.
The Code will further aid in ease of doing business by replacing obsolete
provisions and streamlining the laws.
·
Covers all employees in organized/unorganized
sector
·
Floor Wages for determination of the Minimum
Wages Act by Central, basis States/Regions
·
All employees are protected without wage limit –
includes supervisors & managers
·
Uniform accounting year – April to March
mandated
·
Prohibits gender discrimination in
wages/recruitment, transfers/promotions
·
Territorial jurisdiction for
Inspector/Facilitator not provided for
·
Only two registers & one return vs 10
registers and 4 returns.
Concept of Floor
Wages
The term ‘floor wage’ has been
introduced under Section 9 which mandates that the Central Government shall fix
floor wage considering minimum living standards of a worker in a prescribed
manner. The minimum floor wage shall not be less than the floor wage fixed by
the Central Government.
Settlement of Wages
Section 17 stipulates that in the
event of removal, dismissal of an employee from service, retrenchment, or resignation
from service by the employee, the wages shall be paid to the employee within
two working days of his removal, dismissal, retrenchment or
resignation, as the case may be.
Disqualification for Bonus
Section 29 lays down that an
employee shall be disqualified from receiving bonus under the Code is he is
dismissed from service for fraud; or riotous or violent behaviour while on the
premises of the establishment; or theft, misappropriation or sabotage of any
property of the establishment or conviction
for sexual harassment
3.
Industrial
Relations Code
The Industrial Relations Code is
enacted to amalgamate, simplify and rationalise the relevant provisions of the
existing laws relating to Industrial Disputes Act, 1947, Trade Unions Act, 1926
And Industrial Employment (Standing Orders) Act, 1946
Object: to achieve Industrial
peace & harmony, progress of industry and cordial relationship between
the employer and the employees
Salient Provisions:
- Bipartite
Forums:
- Constitution
of Works Committee & Grievance Redressal Committee
- Registrar
of Trade Unions, criteria, constitution and procedure
- Standing
Orders:
- Applicability,
Model Standing Orders, and procedure
- Notice
of Change – Power to exempt..
- Voluntary
reference of disputes to arbitration
- Mechanism
for Resolution of Industrial disputes
- Strikes
& Lock-outs, Lay-off, Retrenchment & Closure
- Worker
Reskilling fund
- Prohibition
of unfair labour practice
·
Fixed Term Employment – all statutory benefits
including gratuity as a result
of completion of tenure
·
Defines Employee (earlier workman) wide category
including managerial
administrative, technical,
·
Defines Employee including working journalists
and sales promotion employees
·
New set of provisions for Trade Unions
(Negotiating Union/Council)
·
Flash Strike completely prohibited
·
Prior permission for lay off, retrenchment and
closure of Industrial Establishment
·
Composition of offences
·
The threshold for applicability of the Standing
Orders has been raised to 300 from the earlier set limit of 100.
·
The Code has also decreased its threshold for a
trade union to have the status of a sole negotiating union from 75% set in the
2019 Bill to the one that has 51% of the employees as its members.
·
Further, to constitute a negotiating council,
where no single union meets the 51% threshold, the council can be constituted
with representatives from various unions provided they have at least 20% of
employees as its members.
·
The Code prohibits strikes and lockouts in all
establishments without i) giving a 14 days’ notice, ii) during pendency of the
proceedings before a conciliation officer iii) during pendency of proceedings
before the tribunal or, iv) during pendency of arbitration or settlement or
while an award is in operation.
·
The Code ensures that industries continue to work
smoothly, avoiding repeated disruptions in work by imposing curbs on strikes
during pendency of litigation. Introduction of the sole negotiating union will
help reduce the time taken in reaching amicable settlements with employer.
4.
Social
Security Code:
·
No separate registration required
·
Constitution of National Social Security Board
& State Unorganised Workers’ Board
·
Presumption as to accident arising in course of
employment
·
ESI’s rights to protect employee, if employer
fails to register
·
Schemes for unorganized/GIG & Plantation
workers
·
Helpline/Facilitation Centre for above workers
- Section 3 of the Code
stipulates that all covered establishments are required to be registered
under the Code unless they are already registered under other labour laws.
- It has introduced the
term ‘Career Centre’ meaning any office (including employment exchange,
place or portal) established as prescribed by the Central Govt. for
providing career services.
- The Code allows for an
establishment to voluntarily opt in or out of coverage of Employees’
Provident Fund (Chapter III) and Employees’ State Insurance Scheme
(Chapter IV), even if the number of employees is less than the specified
threshold. This provision has been inserted as an afterthought in the
context of the pandemic.
- Section 53(2) of the
Code provides that in case of fixed term employees, gratuity shall be paid
on pro- rata basis and not on continuous service of five years.
- The Code empowers the
Central Government to frame social security schemes for unorganized
workers, gig workers, and platform workers as well as members of their
families with respect to providing benefits under the Employees’ State
Insurance Corporation (ESIC).
- The Code also lays down
penalties and offences. Highlights are- Section 134 which talks about
penalties for repeated offenders and Section 137 which allows the employer
an opportunity to correct a non- compliance for any offence under the Act
prior to initiation of prosecution or proceedings.
- A provision has been
made under Section 144 wherein employers’ or employees’ contribution may
be deferred or reduced for a period of three months in the event of
pandemic, endemic or national disaster.
The goal of this Code is to extend social security to all
employees and workers either in the organized, unorganized sector or any other
sectors. It also includes gig workers (persons who perform work or participate
in a work arrangement and earn from such activities outside of traditional
employer-employee relationship) and platform workers (a work arrangement where
workers or individuals/ organizations use online platform to solve specific
problems or to provide specific services or any other such activity in exchange
of payment). Hence, the SS Code has not only extended the social security
coverage to more employees but has also enhanced the coverage.
5.
Occupational Safety, Health and Working
Conditions Code (OSHWCC)
·
Mandatory registration by electronic means
·
Appointment letter compulsory for all employees
·
Employees’ right to obtain from employer
information on his health and
safety and report to safety committee also
·
National OS & H advisory Board
·
Welfare Officer for every 250 workers
(factory/mine/plantation)
·
Safety Committee & Officer, Welfare
facility, etc.,
Highlights
Contract Labour
License for engagement can be
obtained for working in more than one State or for
whole of India (through Central Government) valid for 3 years. Contract Labour
in core activity permitted with certain condition. Contractors are also covered
by the term ‘employers’ under the Code.
The Code has included fixed term employees, platform
workers, gig workers, inter-state workers etc., in its ambit.
- This
Code applies to all establishments employing 10 workers or more, except
mines and docks where the Code would be applicable even with 1 worker.
- It
stipulates that there shall be registration for all establishments having
10 or more workers.
- It
has enhanced safety compliance by mandating safety requirement for all establishments.
- Section
57 of the Code prohibits employment of contract labour for core
activities.
- The
Code clarifies that a contractor who deploys his own employees and
provides statutory benefits is not contractor and the employees, not
contract labourers.
- Section
55 of the Code stipulates that the contractor shall pay salary via bank
transfer only. Where the contractor fails to pay wages, the principal
employer shall be liable to pay.
- Section
48 lays down that only one license for pan India deployment for a
contractor needs to be obtained which shall be valid for 5 years.
- Section
32 talks about leave encashment and stipulates that where the total
quantum of leave exceeds 30 days, a worker shall be entitled to encash
such excess leave. Workers are entitled to encash the remainder of leaves
that is not carried forward.
- Through
the draft rules, the Code sets the overtime threshold at 125 hours per
quarter.
- Section
2(1)(zf) lays down that the definition of ‘interstate migrant worker’ in
the Code includes individual traveling to another state for work, provided
the wages are below Rs.18,000/- per month.
- Section
61 further lays down that the interstate migrant worker is entitled to
yearly journey allowance.
The OSHWC Code has come at a critical juncture where the rights
of the workers have been in debate and their conditions have been brought to
the fore owing to the pandemic. The Code clearly addresses issues like that of
the migrant workers that needed much attention. Further, it simplifies
compliance for employers in the industry by introducing the provision of a
single license pan India.
Implementation of
Labour Codes:
Implementation: Implementation of the Labour Codes has been
deferred due to constraints and delay in enactment of corresponding rules by
the State Governments. Most of the States have now published the draft rules
and are in the process of final notification. It is expected that the Codes are
implemented in phased manner during the FY 2022-23.
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