This article has been written by Naveen Talawar. The article deals with the concept, origin, and evolution of labour laws in India. It also highlights the principles and factors that have contributed to the development of labour laws with certain constitutional provisions. The article further discusses the four labour codes recently enacted by the Indian government in detail.

This article has been published by Shashwat Kaushik.

Introduction 

Labour laws are also known as employment laws. They are the body of laws, administrative rulings, and precedents that address the legal rights and restrictions of working people and their organizations. Labour laws attempt to regulate the relationships between an employer or group of employers and their employees. This branch of law has the broadest application, as it affects more men and women than any other branch of law. As a result of its vast implications and dynamic facets, it is also considered the most fascinating area to study. These laws generally address issues like health and safety at the workplace, collective bargaining, unfair labour practices, certification of unions, labour-management relations, general holidays, annual leave, working hours, unfair terminations, minimum wage, layoff procedures, and so on.

In India, the Central Government has promulgated around 44 labour-related statutes, 29 of which have been consolidated into four new labour codes. This article summarizes some of the labour laws in India, as well as the four labour codes.

Concept and origin of labour laws in India

In society, institutions develop to abhor the gaps that changes leave behind. The Industrial Revolution, a historical phenomenon, completely transformed society from rural and agricultural to industrial and consumerist. The changes brought by the industrial revolution had left some gaps, and it became the responsibility of society to fill those gaps. To fill those gaps, society turned to certain social devices, which are known as labour laws. Labour laws are the result of the industrial revolution, and they were formed to address the problems caused during the industrial revolution. They are different from ordinary legislation in that they are meant to address unique issues brought on by particular situations. As a result, their orientation, philosophy, and concepts are specific rather than general.

Industrial society resulted in the over-exploitation of the working classes by employers who took advantage of the individual worker’s dispensability and sought the highest profit from their investment. Due to the capitalist axiom that ‘risk and right’ go hand in hand, they had the authority to ‘hire and fire.’ At that point in time, the law also included ideas such as ‘master and servant’, etc., and the common law principle was in effect. The terms of contract were typically verbal and were mostly used in cases of breach. This resulted in the prosecution and imprisonment of the workers.

Over time, the scope and purpose of labour laws have evolved. Earlier, labour laws were enacted to protect the interests of employers. It was governed by the laissez-faire doctrine, which means a policy of minimal government intervention in the economic affairs of individuals and society. 

On the other hand, contemporary labour law safeguards employees from the exploitation of the employer. The progressiveness of social philosophy, or the doctrine that forms the foundations for a welfare state, has made laissez-faire doctrines obsolete. Theories like ‘hire and fire’ as well as those of ‘supply and demand’, which were treated under the notion of laissez-faire, are no longer valid. 

The approach to labour law and the sphere of industrial relations has changed dramatically since the Philadelphia Charter, which proclaimed “labour is not a commodity” and that “poverty anywhere is a danger for prosperity everywhere.” W. Friedmann and other scholars trying to analyse legal development in this field identify social duty on the part of an employer as one of the corresponding principles.

Evolution of labour legislation in India

The laws relating to labour in India go back 125 years with the enactment of the Apprentice Act, 1850. This Act allowed orphaned children to seek employment when they reach 18 years of age. This led to the enactment of several Acts relating to labour dealing with various aspects pertaining to industrial employment.

Labour laws not only set the standard of labour in industrial establishments but are also concerned with issues such as trade unions, payment of wages, dispute resolution mechanisms, and others. They also include within their scope the social security provisions for workers, with the Indian Constitution being considered the fundamental basis for all the labour laws. According to the Constitution, labour as a subject falls under the concurrent list and thus allows both central and state governments to enact labour laws. State legislatures may, however, not enact laws contrary to central legislation.

Further, the Factories Act of 1881 and the Bombay Trade Disputes (and Conciliation) Act of 1934 were also enacted following the Apprentice Act of 1850. These Acts were further amended during the Second World War.

The Bombay Industrial Disputes Act, 1938, was replaced by the Bombay Industrial Relations Act, 1946. In the same year, the Industrial Employment (Standing Orders) Act, 1946, was enacted by the central government. Further, the Industrial Disputes Act, 1947, was subsequently amended, superseding the Trade Disputes Act, 1947, which later became the primary tool for government intervention in labour disputes. After independence, many laws relating to labour, employment, and social security were enacted. These laws are discussed in brief in the latter part of this article.

Principles of labour laws in India

The fundamentals of labour law establish that in a civilised society, workers have rights and responsibilities. The current labour laws of the country, as a form of social security for all citizens, provide progressive benefits like health insurance, an old-age pension, maternity benefits, gratuity payments, and others. Some of the principles of labour laws are as follows:

Principle of social justice

The basis of this principle is that all social groups must be treated equally, notwithstanding their circumstances, so that they are considered on equal terms. It seeks to eliminate social inequality because it is clear that certain groups face some form of socio-economic disadvantage in terms of employment or labour. The core purpose of this principle is to facilitate equal access for everyone, regardless of social status, to available employment opportunities.

Principle of social equity

In general, the principle of social equity means the creation of fair standards for everyone through statutory obligations. The fundamental idea of this principle involves the preservation of labour-friendly laws for collective social equity, as circumstances do not remain the same and change from time to time. Thus, laws should be updated regularly. Based on this principle, the government intervenes to make changes in the laws to reflect the evolving situation.

Principle of social security

Social security includes the overall security of the person and their family, place of employment, etc. The social security system meets basic needs and unexpected life events as a way of ensuring that people continue to have an adequate standard of living. It envisages collective action against social risks, which are at the heart of labour laws.

Principle of the national economy

This principle states that while enacting labour laws, the overall economic situation of the country must be taken into account because the economic condition of the nation has a significant impact on labour laws in any country.

Factors influencing labour laws in India

There are various factors that have influenced the development of labour laws. These factors are as follows;

Early industrial society of exploitation

The labour laws in India have a long and complicated history. The roots of labour laws initially emerged as a response to the overindulgences of early industrialisation following the industrial revolution. Early industrialisation was accompanied by very long working days and the hiring of young children in very unhygienic conditions, as well as low wages being paid to the workers. Legal protection was also limited for the workers. Such abuses could not have gone on forever without public protests and the call for change.

Development of trade unionism

The trade union movement, which emerged from the industrial revolution, was another factor that contributed to the rapid development of labour laws. They helped to protect the interests of the working class, and as a result of this, laws were enacted on wages, working conditions, women’s rights, social security, and other issues. However, laws on industrial disputes, their prevention and resolution, as well as trade union privileges and rights, became inevitable due to its expansion.

Emergence of socialist and other revolutionary ideas

Through his analysis of capitalism, Karl Marx demonstrated that the economic system based on capital is innately a form of exploitation against labour. Therefore, he supported the abolition of the capitalist system. The slogan “The workers of the world unite; you have nothing to lose but your chains” sent shivers down conservative and capitalist circles by bringing forth ameliorative as well as protective labour laws that worked very safely. Soon they realised that an application of labour laws could serve as a measure to prevent the propagation of revolutionary ideals. The trend towards progressive labour laws was bolstered by the first and second internationals, as well as socialist and communist parties established in numerous countries.

Establishment of the International Labour Organisation (ILO)

The establishment of the International Labour Organisation (ILO) in 1919 drastically transformed the way in which labour laws evolved across the globe. It can be read through the acceptance of the principle ‘labour is not a commodity’, and the slogan that ‘poverty anywhere is a threat to prosperity everywhere’. Moreover, the ILO has always identified the need for better laws governing labour conditions by investigating workers’ living conditions. It has proposed new labour laws, undergone a lot of discussion, and reviewed and adopted conventions and recommendations. In an attempt to unify labour standards as far as the conditions prevailing across the globe and the uneven development of the global economy allow, the ILO has done that singular service in the field of labour legislation.

Factors that affect labour laws in India

All the above-mentioned factors played a significant role in formulating labour laws. India has unique characteristics that have formed its labour laws. They are as follows:

Impact of colonial rule

The first of the early labour laws in India were enacted under pressure from Lancashire and Birmingham manufacturers. They considered the labour, which worked in factories and mills across India, to be very cheap when compared with that of their British counterparts. These laws no doubt helped Indian labour, but they were more concerned with safeguarding the interests of British capitalists. The British Civil Servants carried the democratic and pragmatic traditions of the British. The Workmen’s Compensation Act, 1923; the Indian Trade Unions Act, 1926; the Payment of Wages Act, 1936; and other Acts followed the British model.

The adoption of the Indian Constitution and the struggle for national emancipation

Indian labour laws were shaped through the adoption of the Indian Constitution as well as the struggle for national emancipation. With the backing of freedom fighters and nationalist leaders, industrial workers worked tirelessly to ensure that protective labour laws were passed. The Indian Trade Unions Act, 1926, the Royal Commission on Labor, and other statutes were framed in pursuance of their fight for freedom. The Preamble, Fundamental Rights and Directive Principles of State Policy in the Indian Constitution are all expressions of promises given by the leaders during the national movement about how a better and more sustainable social order should be established once independence is achieved.

Constitutional provisions relating to labour laws in India

The Constitution of India is the supreme law of the land, and all laws are based on it. To this effect, the Constitution guarantees its citizens a ‘Socialistic Pattern of Society’ and carries on to assert that there would be the creation or formation of the welfare state. The Indian labour laws have been greatly shaped by the interpretation of the Preamble, Fundamental Rights, Directive Principles of State Policy, and judicial wisdom.

Seventh Schedule of the Indian Constitution

The Seventh Schedule of the Constitution outlines the distribution of legislative powers between central and state legislatures on different matters. List III (Concurrent List) covers most of the labour-related issues. These include topics such as maternity benefits, liability of employers, workmen’s compensation, invalidity, and old age pensions; social security and social insurance; employment and unemployment; labour unions; industrial and labour disputes; and provident funds. Parliament has legislated labour laws in most of these fields since the majority of issues related to labour are found on the Concurrent List.

Directive Principles of State Policy in India

The constitution emphasises the significance of socio-economic justice as a fundamental right. The framers of the Constitution thought that in a developing country like India, without economic democracy, political democracy would be meaningless, and hence they incorporated certain Articles in the Constitution to improve the socio-economic conditions of the common man. These Articles are known as the Directive Principles of State Policy (DPSP), which are provided under Part IV of the Constitution.

The main purpose of these principles is to ensure the socio-economic objectives that the government must pursue to strengthen and advance the social and economic democracy of the country. 

When it comes to the law relating to labour, Articles 38, 39, 41, 42, and 43 are very important as they serve as the ‘Magna Carta’ of industrial law. These articles impose an obligation on the central and state governments to ensure social order and living wages as per the economic and political circumstances of the nation.

It is also important to note that while DPSPs are not legally enforceable by the courts, they are still considered a fundamental part of the Constitution. They serve as the guiding principles for the government while framing policies and enacting laws that promote the welfare of the people.

Article 38 of the Indian Constitution

The concept of social justice has been provided under Article 38 of the Constitution, which states that “the state shall strive to promote the welfare of the people by securing and protecting, as effectively as it can, social order where justice, social, economic, and political, shall inform all institutions of national life.” This principle reaffirms what has been stated in the Preamble to the Constitution, i.e., that the function of the Republic is to ensure social, economic, and political justice. Further, Article 39 mandates the state to incorporate specific principles relating to social justice in its legislative process. 

Justice Gajendragadkar, in the case of State of Mysore v. Workers of Gold Mines, 1958, stated that “the idea of social and economic justice is a living idea of revolutionary import that upholds the rule of law and gives the welfare state ideal meaning and significance.”

Article 39 of the Indian Constitution

According to the Supreme Court’s interpretation of Article 39(a), the right to livelihood has been incorporated under Article 21 of the Constitution. In Olga Tellis v. Bombay Municipal Corporation (1986), the Supreme Court stated, “If the state has an obligation to secure to its citizens an adequate means of livelihood and the right to work, it would be sheer pedantry to exclude the right to livelihood from the content of the right to life.”

Articles 39(b) and (c) are important constitutional provisions as they have an impact on the entire economic system of India. Socialism seeks to distribute the community’s material resources in a way that promotes the welfare of all. According to Article 39(b), socialism requires distributive justice.

Article 39(d) provides for ‘equal pay for equal work. Under this Article, the parliament has enacted the Equal Remuneration Act, 1976. The Act prohibits discrimination based on gender and requires that both men and women be paid equally for performing the same or similar work. The Supreme Court, in many of its decisions, has drawn the general principle of equal pay for equal work from the combined reading of Articles 14, 16, and 39(d).

The Supreme Court in Randhir Singh v. Union of India (1982), has identified that even though the idea of ‘equal pay for equal work’ is not a fundamental right, it is unquestionably a constitutional objective that can be upheld through constitutional remedies under Article 32 of the Constitution.

Articles 42 and 43 of the Indian Constitution

Article 42 mandates the state to make provisions relating to just and humane conditions of work and maternity relief. Article 43, on the other hand, provides for a living wage for the workers. These Articles signify a groundbreaking concept, asserting that specific benefits are inherently owed to employees as a matter of right.

In many cases, the Supreme Court has emphasised that the Constitution expresses strong concerns with respect to the welfare of workers under Articles 42 and 43. It has given a broad interpretation to Article 21, including the right to live with human dignity, by combining it with several Directive principles, including Article 42. 

Fundamental Rights (Part III of the Indian Constitution)

Part III of the Constitution provides for fundamental rights. The freedoms and rights that are mentioned in Part III are intended to be protected against the arbitrary actions of the state.

Article 14 of the Indian Constitution

Article 14 states that “the State shall not deny to any person within the territory of India equality before the law or equal protection of the laws.” There are two aspects of equality under Article 14, i.e., equality before the law and equal protection of the law. Equality before the law is a negative concept, and it strictly prohibits discrimination. Whereas the concept of equal protection of laws is a positive one, it states that to achieve equality among all, the state has to provide special treatment to people under certain circumstances. 

Article 16 of the Indian Constitution

Article 16 provides for equality of opportunity in matters of public employment. It states that no citizen shall be discriminated against on the grounds of religion, race, caste, sex, descent, place of birth, residence or any of them. The state, under this Article, is also empowered to make special provisions for the underprivileged classes. 

Article 19 of the Indian Constitution

Article 19 provides the bundle of rights; it protects ‘the right to free speech and expression, the right to peaceful assembly without arms, the right to assemble in unions or associations, the right to practise any profession, and the right to engage in any occupation, trade, or business.’ 

Under the purview of labour laws, these constitutional guarantees, including minimum standard legislation, play a significant role. The ability of lawmakers to decide and choose which businesses or industries should adhere to the minimum standard is constrained by equal protection. The freedom to practise any trade, profession or business eliminates the burden that legislation might place on businesses for the sake of workers. These provisions protect workers’ rights to free speech, assembly, and association, as well as unionisation, which facilitates their efforts to organise themselves through picketing or by going on strike to advance personal interests.

Article 21 of the Indian Constitution

Article 21 protects the right to life and personal liberty of every person. The interpretation of the term ‘life’ by the Supreme Court has evolved significantly to include in its ambit various rights that contribute to the personal liberty of the individual. Further, the term personal liberty has been construed broadly to include a wide range of rights. These rights must adhere to a proper legal process that is fair, just, and reasonable. Thus, this broad interpretation reflects the developing notion of human rights, elaborating on significant parts of human life within the borders determined by constitutional protection.

Articles 23 and 24 of the Indian Constitution

Article 23 prohibits trafficking in human beings and forced labour. It states that trafficking in human beings, and begar and other similar forms of forced labour is prohibited, and any contravention of this provision is punishable by law. The Supreme Court has interpreted the term life under Article 21 to include livelihood, and it has held in several cases that any employment below minimum wage levels is illegal as it amounts to slavery.

Further, the employment of children below the age of 14 in any factory, mine, or other hazardous occupation is prohibited under Article 24.

Preamble of the Indian Constitution

The preamble to the constitution is another significant source of authority for the legislature to consider while enacting labour laws. It promises ‘Social, economic, and political justice; liberty of thought expression, belief, faith, and worship, equality of status and opportunity’. The elaboration of the principles provided under the preamble is found in Part IV of the Constitution, i.e., Directive Principles of State Policy. This part of the constitution states that the state is responsible for ensuring and safeguarding a social order that is characterised by justice, social equality, and political stability. These principles are intended to permeate all facets of national institutions working towards the promotion of the welfare of the people.

The promotion of the welfare of the people is addressed by some of these directives, such as minimising inequalities, directing the policy of the state towards securing the satisfaction of certain minimum needs, the right to work, an education, public assistance in some circumstances, just and humane working conditions, maternity leave, a living wage, the participation of workers in the management of industry, providing free and mandatory education for children, and enhancing public health.

Labour laws in India

Some of the labour laws in India are as follows:

Laws related to industrial relations

Trade Union’s Act, 1926

One of the earliest labour laws passed in India is the Trade Unions Act, 1926. Its early enactment as well as the constitutional guarantee of freedom of association have greatly aided in legitimising the lives and workings of trade unions. The main function of trade unions is to enable workers to act collectively. During negotiations with employers, workers find themselves in a subordinate position because strikes are the final solution for trade unions and should only be used when all other options have failed.

The Act contains rules concerning the formation and regulation of trade unions, as well as conditions under which registration can be granted, along with benefits arising from such registration. The Act covers both employer associations and labour unions.

The Industrial Employment (Standing Orders) Act, 1946

One of the most common reasons for a conflict between management and employees in industrial enterprises is not having standing orders. To solve this issue, the Industrial Employment (Standing Orders) Act was enacted in 1946 to control recruitment, termination of services, disciplinary actions, holidays and other benefits accruable to workers engaged in industrial undertakings. The Act stipulates that employers in industrial establishments should clearly define and properly describe the employees’ working conditions. Standing orders that provide for the conditions of recruitment, termination, disciplinary action, holidays, leave, etc. can reduce conflictual situations between management workers in industrial enterprises. It applies to all industries with 100 employees or more.

Industrial Disputes Act, 1947

Industrial disputes occur when there is a disagreement in labour relations. Industrial relations involve many aspects of relationships between employers and employees. Such relationships can always result in dissatisfaction for one or another party involved in a conflict of interests, which sometimes causes conflicts or industrial disputes. The conflict could manifest as demonstrations, strikes, lockouts and other actions like layoffs.

The Industrial Disputes Act, 1947,(ID Act) is a progressive social welfare Act passed by the Indian parliament to provide for better working environments in industries. The main goal of this Act is to minimise conflicts between labour and management while still providing the highest level of assurance for economic and social justice. This Act addresses the investigation and resolution of labour disputes.

The Act promotes harmonious relationships between employees and employers, providing guidelines for resolving disputes in a peaceful manner. The Act is beneficial legislation that seeks to address industrial conflicts and provides mechanisms for resolving disputes. The Act defines the powers, responsibilities, and roles of conciliation officers, work committees, courts of inquiry, labour courts, industrial tribunals, and national tribunals, as well as the procedures to be followed by them.

It further sets forth the grounds upon which a worker may be laid off, retrenched, dismissed or discharged; when an industrial establishment might close down; when strikes and lockouts may be lawfully used; and numerous other issues affecting workers’ lives with regard to their employers.

Laws related to wages in India

The Payment of Wages Act, 1936

Two common forms of employer malpractice during the early stages of industrialisation were paying wages late and making unauthorised deductions from wages. The Payment of Wages Act, 1936, was enacted to put an end to such practices after the Royal Commission on Labour had recommended it back in 1931.

The primary goal of this Act is to eliminate all types of malpractice by specifying the time and manner in which wage payments are made, as well as making sure that workers get their wages on a timely basis without any unauthorised deductions. The Act gives the government the authority to raise the ceiling in the future through a notification for greater outreach and efficiency of enforcement.

Minimum Wages Act, 1948

The Minimum Wages Act, passed in 1948, was enacted to secure the rights of workers by establishing a minimum wage for some occupations. This Act also adheres to the provisions of Article 43 of the Indian Constitution, which provide for a living wage and decent working conditions.

The Act was primarily aimed at safeguarding the interests of workers in the unorganised sector. The Act sets and reviews the minimum wage for workers in scheduled employment. The Act requires that the central and state governments set and review the minimum wage periodically, as well as enforce the payment of such scheduled employment.

Payment of Bonus Act, 1965

The Payment of Bonus Act, 1965, does not define the word ‘bonus’. According to Webster’s International Dictionary, “a bonus is something given in addition to what is ordinarily received by or strictly due to the recipient.” The bonuses are made to narrow down the difference between actual wages and the ideal of a living wage. The Payment of Bonus Act, 1965, is applicable to every factory as defined in the Factories Act, 1948, and also to any other establishment employing twenty or more people on any day during an accounting year.

If an employee serves for his or her employer for a minimum of 30 working days in any accounting year, that individual is entitled to a bonus from their employer. A bonus must not be less than 8.33% of an employee’s annual salary or wages or one hundred rupees, whichever is higher. The appropriate government appoints inspectors for the enforcement of the Act. A controversy regarding the payment of a bonus is considered an industrial dispute under the Industrial Disputes Act of 1947.

The Equal Remuneration Act, 1976

In the International Year of Women in 1975, India passed the Equal Remuneration Ordinance to fulfil Article 39 of the Constitution, which demands that men and women should be paid equally. Finally, the ordinance was replaced by the Equal Remuneration Act in 1976. The Act makes it clear that women employees could not be discriminated against in recruitment for the same or similar work, as well as in respect of any condition of service after such an employee is recruited. It also requires that there should be equal pay for men and women employees who have been engaged in similar or the same work without any exception. The Act applies to all public and private establishments as well as employment, including domestic work.

The Factories Act, 1948

Another law enacted to promote social change was the Factories Act, 1948. The Act is unambiguous in that its labour regulations serve the interests and welfare of workers, whereas it intends to guide labour discipline. The main functions of the Act are to regulate working conditions in a factory, take necessary steps towards the welfare of the worker, safety and health, control long working hours, and provide proper means for efficient execution of the Act.

The purpose of this Act is to safeguard workers working in factories against industrial occupational hazards and provide them with healthy living and working conditions. It incorporates broad guidelines on the health, safety, and welfare of employees to provide a preferable work environment as well as other benefits aimed at improving the quality of their lives.

In the case of Ravi Shankar Sharma v. The State of Rajasthan (1993), the Rajasthan High Court stated that the Factories Act is social legislation which addresses matters related to welfare, safety, and health for factory workers. In a nutshell, the Act is designed to contribute to providing a better working environment in industrial premises and protect workers from unscrupulous commercial establishments greedy for profits.

The Plantations Labour Act, 1951

The working conditions for plantation labourers are governed by the Plantation Labour Act, 1951. It concerns plantations that produce cinchona, rubber, tea and coffee. The Act provides for the registration of plantations with a registering officer and is mainly focused on the problems associated with welfare and health-related issues.

The Act provides for working hours, a weekly holiday, and paid leave. It further allows the employment of qualified inspecting, medical, or other personnel to ensure compliance with the various provisions of the Act. According to the Act, employers are supposed to provide housing, child care, health care, and welfare for their employees. To fulfil the provisions of the Act, it gives power to the state government to notify regulations as well as appoint various types of officials, such as registering officers, chief inspectors, certifying surgeons, and commissioners. In addition, the Act prohibits child labour on plantations.

The Mines Act, 1952

The Mines Act, 1952, covers various measures related to health coupled with the safety and welfare of mine workers. The term ‘mine’ encompasses an excavation where a mining operation has been or is being conducted for the purpose of finding minerals. This would include all borings, boreholes, oil wells, accessory crude conditioning plants, shafts, opencast workings, conveyors or aerial ropeways, planes, machinery works, railways, tramways, slidings, workshops, power stations, and other locations that are near or in the mining area.

The Act has various stipulations to be adhered to so as to ensure the safety and medical demands for the working conditions of miners. Moreover, these sections outline the minimum qualifications for all activities regulated by this Act.

The Act provides provisions on working hours and restrictions that range from a weekly day of rest to a compensatory day of rest, hours worked during night shifts above and below ground, overtime pay, a limit on daily hours of work, a prohibition on the presence of people under the age of 18, and the employment of women.

It examines the workers to ensure a fair and healthy environment in the mines. Under the Act, the Central Government has the power to appoint Chief Inspectors and Inspectors, who are provided with a wide range of powers and responsibilities to ensure effective implementation of the law. The Act also has rules regarding the payment of overtime and night shifts.

​​Motor Transport Workers Act, 1961

The Motor Transport Workers Act, 1961, was passed with the aim of regulating the appropriate working conditions for motor transport workers. The Act applies to any motor transport company that has five or more employees engaged in operation of such a means of transportation. Employers using motor transport must register the undertaking under this Act.

The welfare and health facilities to be provided to all workers are uniforms, canteens where 100 or more motor transport employees have been employed, restrooms where workers are required to stop at night, and medical and first-aid facilities.

Laws related to social security in India

The Workmen’s Compensation Act, 1923

Parliament has passed several laws concerning the social security of workers. This was one of the first Acts passed to benefit workers. It was passed in 1923, but it didn’t take effect until July 1st, 1924. The Workmen’s Compensation Act was subsequently renamed the Employees’ Compensation Act, 1923. The Act covered workers in the sewage, firefighting, railway, tram, factory, mine, sea dock and building industries. 

The Act grants compensation for losses resulting from accidents or occupational diseases that occur in the course of and during employment, including death benefits, permanent total disability, partial disablement and temporary disability. It sets compensation with regard to the degree of damage sustained during duty. The Act requires employers to pay compensation, both for employees and their dependents, in case of death or disability arising out of industrial accidents or occupational disease caused by employment.

Employees’ State Insurance Act, 1948

The Indian Parliament enacted the Employees’ State Insurance Act in 1948. It was the first substantial legislation for social security enacted in free India, granting such benefits to workers in the organised sector under conditions of illness, maternal condition, and industrial employment.

Apart from addressing other issues that are equally important, the purpose of this Act is to provide specific benefits for employees in cases of illness, pregnancy, and workplace injuries. The insured and their dependents are eligible for a number of benefits based on the established scale. The right to receive benefits is not transferable or assignable.

The Act grants the state government the power to set up an Employees Insurance (EI) Court. The EI Court can make decisions about an individual’s employee status under such legislation, including the number of wages or contributions he or she is making, who their principal employer is or was, and whether they are eligible for any benefits provided by the Act. 

The EI Court may also entertain actions for default or negligence in the payment of contributions, claims for recovery of any benefit admissible under the Act, and claims for contribution recovery from a principal or immediate employer.

Employees’ Provident Fund and Miscellaneous Provisions Act, 1952

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, along with the Employees State Insurance Act, is a very significant social security legislation in India. It covers any factory linked to one of the industries listed in Schedule I of the Act that employs 20 or more people, as well as an average establishment employing 20 or more people incorporated by notification from the central government.

The three major schemes that are provided by the Employees’ Provident Fund Act are the Employees’ Provident Fund Scheme, 1952; the Employees’ Deposit-Linked Insurance Scheme, 1976, and the Employee Pension Scheme, 1995.

The Act aims at furnishing social security and timely financial assistance to industrial workers who need help and their family members. Thus, three schemes are adopted in compliance with the Act. Together, the schemes provide the employee’s protection and security for life, along with survivorship advantages as well as benefits to family members after the death of an insured person in terms of long-term support concerning insurance payments. Also, arrangements include timely advances, which are available from health-related loans through the purchase or construction of dwellings during the membership period.

The Maternity Benefit Act, 1961

According to Article 42 of the Indian Constitution, the government should formulate laws to ensure fair and comfortable working conditions, along with maternity leave. This Act was enacted to promote social equity for female employees. This law on social welfare also provides various provisions for benefits to female wage earners. The Act was passed to give maternity allowances and other payments, as well as to control women’s conditions at work on certain premises during some days before and after childbirth.

Employment of women employees working in factories, mines, plantations, etc. with ten or more people is regulated by the Maternity Benefit Act, 1961. However, this Act does not cover those persons who are employed under the ESI scheme for a certain period after childbirth and before delivery. It also offers maternity and other benefits.

The Payment of Gratuity Act, 1972 

Gratuity is another major social security benefit in India. As per the Payment of Gratuity Act, 1972, a gratuity is a one-time payment. When an employee chooses to retire, it is said that the employer provides them with a gratuity as a gesture of gratitude for their many years of outstanding service. It compensates at least for part of the income that gets lost because an individual has decided to retire or resign his job or is no longer able to work as a result of death or disabling illnesses or injuries. This Act covers businesses with 10 or more employees, including factories, mines, oil fields, plantations, ports, railways, and retail establishments.

The Unorganised Workers Social Security Act, 2008

The Unorganised Workers’ Social Security Act of 2008 requires the states and the Centre to come up with various welfare programmes aimed at benefiting those already working in the unorganised sector. As stated in the Act, workers ought to be registered and must carry smart cards with personally identifiable social security numbers to provide social security benefits to those employed in the unorganised sector.

According to the Act, the Central Government should establish appropriate welfare programmes for unorganised workers in the areas of health and maternity benefits, life insurance, disability insurance, or old-age security, as well as other benefits it deems appropriate. The government has developed 10 schemes under Schedule I of the Act. According to the Act, states can establish welfare programmes involving provident funds, workers’ compensation for those who suffer an injury on the job, and housing facilities for employees and parents of children who are continuing with basic education beyond the primary school level to improve skills or in old age homes.

Employment and training laws in India

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959, imposes a statutory obligation on employers to notify employment exchanges about vacant positions and submit an employment return. Accordingly, major roles performed by employment agencies are registration services, job placement assistance, career counselling and vocational guidance, and data collection on the labour market.

The Act applies to all public and private sector establishments that are involved in non-agricultural activities with 25 or more employees. All employers in the public service in any state or region have to submit all necessary information and returns required by employment exchanges with regard to openings that have occurred or are about to appear at their establishment.

Apprentices Act, 1961

The Apprentices Act, 1961, was therefore enacted to regulate and administer the apprenticeship training programme as well as other related areas. The term apprentice means a person who is completing his or her training as related to the contract of traineeship. It is a training programme that must be undertaken in any field or establishment as specified by an apprenticeship contract with terms and conditions set for different categories of apprentices.

Employers, both in the public and private sectors, are mandated by the Act to provide training infrastructure as specified in this Act. Every employer must train apprentices in their trade as per the provisions of the Act and its rules. The Apprentices Act of 1961 was updated in 2014 to help increase the number of apprenticeship slots that were available for young people.

The Labour Codes

Recently, the Government of India initiated substantial reforms in labour laws throughout the country based on recommendations made by the 2nd National Commission on Labour. So to avoid any confusion and ambiguity regarding definitions and approaches, the Commission stressed on unifying existing labour laws while making them simpler. Moreover, consolidating labour laws would support more comprehensive labour coverage, as different and even separate sets of labour laws apply to several employee types or within multiple thresholds. To fulfil the demands provided by suggestions emanating from the National Commission of Labour recommendations, Parliament introduced four Codes on wages, labour relations, social security and occupational safety.

There are about 40 or more laws regulating wages, industrial relations, social protection, security at the workplace, and working conditions currently in place. Therefore, a major concern for Indian industries is the multiplication of rules and regulations that often result in spending more resources, documentation, administrative time, and costs. New labour Codes seek to equalise India’s different labour laws and simplify the numerous compliance obligations in the country. Each Code applies to a particular field of labour law, as shown by the title, and it aims at coding or replacing old laws in that area.

Objectives of the Labour Codes

The following are some of the objectives of the Codes:

1. The amalgamation of 29 laws relating to wages, working conditions, social security, safety, and health.
2. To ensure consistency in definitions for ease of compliance.
3. To increase business accessibility, generate employment, and give employers more flexibility in terms of employee mix and hiring.
4. To simplify and make clear the issues surrounding contract labour.
5. To standardise issues related to union recognition and negotiating agents, rationalise wages, and address unethical behaviour.
6. The rationalisation of enforcement authorities and the implementation of a web-based inspection process.

The Code on Wages, 2019

The Code on Wages, 2019 was passed by both Houses of Parliament and received the assent of the President on August 8th, 2019. The Code aims to regulate wages in all types of jobs that take part in any sector, trade business, or manufacture, including salary and bonuses. The Code consolidates the following laws pertaining to wages:

• Minimum Wage Act, 1948
• Payment of Wages Act, 1936
• Payment of Bonus Act, 1965 
• Equal Remuneration Act, 1976 

Two significant definitional changes came about as a result of the codification. The Code broadened the horizons by eliminating the difference between organised and unorganised employment, whereas the Minimum Wage Act of 1948 applied only to the ‘schedule of employment’ covered under the Wages Law. Therefore, the concepts of employee and employer have been made all-encompassing to include both the formal as well as informal sectors.

Secondly, the Code made application of both the Minimum Wage Act of 1948 and the Payment of Wages Act of 1936 to all establishments and employees, unless expressly exempted, rather than just those whose income had to be below a fixed limit.

Important provisions of the Labour Codes

Some of the important provisions of the Code are as follows:

Application of the Code

One of the main features of the Code is to universalise its application. Earlier, the payment of the minimum wage was limited to the workers specified in the scheduled employment. However, with the introduction of this Code, minimum wages are now expanded to include employees of both organised and unorganised sectors. This wider application of the Code provides security to over 50 crore workers working in these sectors.

Gender Discrimination

The Code prohibits discrimination based on gender in matters related to wages and the recruitment of employees for the same or similar work. The Code defines the term “same work or work of similar nature” in Section 2(v) as work for which the skill, effort, experience, and responsibility required are the same and are carried out under similar working conditions. The Code places an obligation on the employer to ensure equal pay for the same or similar work and prohibits reducing wages based on gender. This provision seeks to increase the involvement of women in the labour market, which can empower them socially and financially.

Minimum wage

The process of determining the minimum wage under the Code has been made more efficient and rationalised. The central and relevant state governments have to review and revise the minimum wage every five years. This places an obligation on employers to comply with the revised minimum wage standards.

Fixation of minimum wages

Section 8 provides for the fixation of minimum wages; it states that, subject to Section 9, the appropriate government is responsible for determining minimum wages based on the recommendations of the advisory board.

Further, Section 6(6) provides that the determination of the minimum wage will be categorised based on skill levels, which include unskilled, semi-skilled, and skilled. It also states that there shall be no distinction based on scheduled employment; this means that the minimum wages established will be uniformly applicable to all levels of employment, regardless of the nature of the industry.

Floor wage

Floor wage generally refers to the minimum wage that employers are legally required to pay their workers. It serves as a baseline or floor, ensuring that workers receive a certain level of compensation for their labour. Section 9 states that the central government is responsible for determining the floor wage. While determining the floor wage, the central government has to take into account the living standards of the workers, and it also empowers the central government to set different floor wages for different areas. Before finalising the floor wage, the central government may seek advice from the central advisory board, in consultation with the relevant state governments. 

Overtime wages

Section 14 provides for overtime wages; either the central or state governments have the authority to determine the standard number of hours constituting a regular working day. If the employees work beyond the set hours of the working day, they shall be entitled to receive overtime wages. Further, the provision provides that the prescribed overtime wage shall be at least twice the normal rate of wages, which ensures fair compensation for additional hours worked.

Payment of wages

Section 15 provides for various methods for payment of wages, such as coins, currency notes, cheques, credit to the bank account, or by electronic mode. Further, Section 16 states that the employers shall fix the wage period for the employees, either daily, weekly, fortnightly, or monthly. 

Deductions

Deductions that may be made from the wages are provided under Section 18. According to this section, no deductions from the wages of the employee are permitted except those which are expressly authorised under the Act.

For the purpose of this section, if an employee has made any payment to the employer or his agent, it shall be deemed to be a deduction from wages. However, any loss of wages to an employee that occurs due to the withholding of an increment or promotion, including stoppage of an increment, reduction to a lower post, or suspension, shall not be deemed to be a deduction if the employer’s actions satisfy the requirements as notified by the appropriate government.

Grounds for deductions

The employer shall make deductions from the wages of an employee in accordance with the provisions of the Code, and they shall be made only for the following purposes:

1. fines imposed on the employee;
2. deductions for employees’ absence from duty;
3. deductions for the damage to or loss of goods particularly entrusted to the employee for custody that is directly attributable to the employee’s neglect or default;
4. deductions for house accommodations supplied by the employer, by the appropriate government, or by any housing board;
5. deductions for amenities and services supplied by the employer as authorised by the appropriate government or any officer;
6. deductions for recovery of advances, loans, and interest;
7. deductions for recovery of loans granted for house-building or for any other purposes that are approved by the appropriate government;
8. deductions of income tax or any other statutory levy levied by the central government or state government which is payable by the employee;
9. deductions for subscription to and repayment of advances from any social security funds or schemes;
10. deductions for payment to co-operative society;
11. deductions made with the written authorisation of the employee for the membership of trade union fees., etc. 

Further, the section states that these deductions shall not exceed 50% of the total wage of the employee. If the total deductions authorised exceed 50% of the wages, the excess may be recovered in such manner as may be prescribed.

Payment of the bonus

Eligibility for a bonus has been provided under Section 26. Any employee who is drawing monthly wages not exceeding an amount predetermined by the appropriate government and has worked for a minimum of 30 days is eligible for the annual minimum bonus. This bonus is calculated at the rate of 8.33% of the wages earned by the employee or Rs 100, whichever is higher. Further, this provision is valid irrespective of whether the employer had any allocable surplus in the previous accounting year.

Allocable surplus refers to the available surplus after certain allocations and deductions have been made as per the provisions of the Act. This surplus is the basis for determining the amount of bonus that can be distributed among eligible employees.

If the wages of the employee exceed such an amount as determined by the appropriate government, the bonus payable to such an employee shall be calculated as if such an amount is equal to the employee’s wage as specified by the appropriate government or the minimum wage fixed by the appropriate government, whichever is higher.

Further, if the allocable surplus for the given accounting year exceeds the minimum bonus required for employees, the employer is under obligation to pay every employee a bonus for that accounting year. The bonus shall be calculated proportionally based on the wages earned by the employee during the accounting year, subject to a maximum limit of twenty percent of such wages.

Disqualifications for bonuses

Section 29 provides for disqualifications for bonuses; it states that an employee will be disqualified from receiving a bonus under this Code if they are dismissed from service for the following reasons:

• Fraud.
• Riotous or violent behaviour while on the premises of the establishment.
• Theft, misappropriation, or sabotage of any property of the establishment.
• Conviction for sexual harassment.

In these specified situations, the employee is ineligible to receive a bonus.

Advisory boards

Section 42 provides for the constitution of the central and state advisory boards. Accordingly, the central government shall establish the central advisory board, which shall consist of members appointed by the central government. The board includes an equal number of representatives from both the employers and the employees, independent persons not exceeding one-third of the total members, and five representatives who are nominated by the state governments.

Further, the section also provides that one-third of the members appointed to the board shall be women, and the chairperson appointed by the central government shall be from the category of independent persons.

It is also provided that the Central Advisory Board shall advise the Central Government on various issues, such as minimum wages, employment opportunities for women, employment for women in specific establishments, and other matters under this Code. The Central Government may issue directions to state governments based on the advice of the Board.

The section also states that the state government shall constitute a state advisory board to advise on matters relating to minimum wages, employment opportunities for women, and other matters. The board shall consist of committees and subcommittees which include an equal number of representatives from both employers and employees, independent persons not exceeding one-third of the total members.

It also states that one-third of the members appointed to the board shall be women, and the chairperson shall be appointed by the state government. Both the Central and State Advisory Boards shall regulate their procedures, including committees, and their terms of office shall be as prescribed by relevant regulations.

Offences and penalties

Section 54 provides for the penalties for offences, and employers can be held liable under the following circumstances:

• If an employer pays an employee an amount less than what is due under the Code, he shall be punished with a fine that may extend up to fifty thousand rupees. If the employer within 5 years has committed the second or subsequent offence, he shall be punishable with imprisonment for up to 3 months, a fine of up to Rs. 1,00,000, or both. 
• If any employer contravenes any other provision of this Code or any rule or order made under it, they shall be punished with a fine, which may extend to 20,000 rupees. If the employer within 5 years has committed the second or subsequent offence, he shall be punishable with imprisonment for up to one month, a fine of up to Rs. 40000, or both.

The Industrial Relations Code, 2020

The Industrial Relations Code was passed by Parliament in September 2020 and received the President’s assent on September 28, 2020. The Industrial Relations Code came into force to consolidate and amend the laws governing trade unions, working conditions in industrial establishments, undertaking investigations, resolving industrial disputes, etc. It consolidates the following labour laws:

• Industrial Disputes Act, 1947 
• Trade Unions Act, 1926 
• Industrial Employment (Standing Orders) Act, 1946

Important provisions of the Code

The Code consists of 104 sections organised into 14 chapters and is supplemented by three schedules. These schedules cover standing orders, unfair labour practices, and conditions of service for which advance notice must be provided.

Definitions

Some of the important definitions under the Code are as follows:

Employer

The term ’employer’ has been defined under Section 2(m) of the Code, which is broader in comparison to Section 2(g) of the Industrial Disputes Act, 1947 (hereinafter referred to as the ID Act). The definition in its ambit includes the occupier of the factory, the factory manager, contractors, and the legal representative of a deceased employer.

Worker and employee

The term “worker” in the context of this Code is defined as any person employed in an industry, excluding an apprentice as defined under clause (aa) of Section 2 of the Apprentices Act, 1961. A worker encompasses individuals engaged in manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward, whether the terms of employment are explicitly stated or implied. This definition also includes working journalists as defined in clause (f) of Section 2 of the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955, as well as sales promotion employees as defined in clause (d) of Section 2 of the Sales Promotion Employees (Conditions of Service) Act, 1976.

However, the definition excludes the following categories:

• Any person who is subject to the Air Force Act, 1950, the Army Act, 1950, or the Navy Act, 1957;
• Any person employed in the police service or as an officer or other employee of a prison;
• Any person employed mainly in a managerial or administrative capacity; or 
• Any person employed in a supervisory capacity drawing wages exceeding eighteen thousand rupees per month or an amount as may be notified by the Central Government from time to time.

The term ’employee’ was not incorporated under the ID Act. However, the Code has introduced the definition of ’employee’ under Section 2(l), which encompasses a broader definition than that of ‘worker’ in Section 2(zr). This broader definition includes in its ambit the persons involved in skilled, semi-skilled, or unskilled manual, operational, supervisory, managerial, administrative, technical, or clerical work for hire or reward, and excludes the members of the Armed Forces of the Union.

The simultaneous use of both the terms ’employee’ and ‘worker’ without providing clear explanations in the Code creates confusion regarding the rights of individuals falling under the scope of the definition ’employee’ but falling outside the scope of ‘worker’.

For example, Section 2(q) of the Code provides for the definition of ‘industrial dispute’ which explicitly mentions the term ‘worker’ and not ’employee.’ This suggests that the mechanisms for resolving the industrial dispute can be accessed by only those persons falling under the definition of ‘worker’ under Section 2(zr), while ’employees’ may not possess such a right. Section 91, on the other hand, excludes workers and states that an ’employee’ can file a complaint with the concerned authority if the employer adversely changes their working conditions during the pendency of an industrial dispute.

Industry

Section 2(p) of the Code defines the term ‘industry’ which is more comprehensive as compared to the definition provided in Section 2(j) of the ID Act. According to this definition, ‘industry’ means ‘any systematic activity carried on by cooperation between an employer and worker for the production, supply, or distribution of goods or services with a view to satisfying human wants or wishes, whether or not any capital has been invested for the purpose of carrying on such activity, or any activity is carried on for any gain.’ 

However, Section 2(p) excludes certain categories from its ambit. Which includes;

• institutions owned or managed by organisations engaged in charitable, social, or philanthropic services,
• activities related to the sovereign functions of the appropriate government,
• domestic service, and
• any other activity that may be notified by the Central Government. 

Fixed-term employment

The Code has introduced a new term referred to as ‘fixed-term employment’, which means engaging a worker based on a written contract for a specific period with certain conditions, which include:

• The fixed-term employee shall receive the same hours of work, wages, allowances, and other benefits as a permanent worker doing the same or similar work.
• The fixed-term employee is also entitled to all statutory benefits available to a permanent worker, adjusted proportionately based on the duration of service, even if their employment period is shorter than the qualifying period specified by law.
• If the fixed-term employee serves under the contract for one year, they shall be eligible for gratuity.

Bipartite forums

For resolving industrial disputes and addressing grievances, the Code has provided two bipartite forums, which include;

Works committee

Section 3 provides for the constitution of the works committee. The main purpose of this committee is to enhance protective measures and ensure positive relations between the employer and the workers. If an industrial establishment employs 100 or more workers in the preceding 12 months, the appropriate government, by general or special order, may need to establish a work committee. 

The work committee consists of representatives of both the employers and the workers engaged in the establishment. Further, it states that the number of representatives of workers in a committee shall not be less than the number of representatives of the employer.

Grievance Redressal Committee

The Code also provides for the establishment of Grievance Redressal Committees under Section 4 for resolving disputes arising from individual grievances. If an industrial establishment has 20 or more workers, one or more Grievance Redressal Committees must be formed, each comprising a maximum of 10 members. It shall consist of an equal number of members, representing both the employer and the workers.

Registration of a trade union

The criteria for registration of trade unions have been provided under Section 6 of the Code. Accordingly, a trade union with a minimum of seven or more subscribing members can apply for the registration of a trade union. Further, it states that at the time of applying for registration, the trade union is required to have a membership of at least ten percent of the workers, or 100 workers, whichever is less.  

After a successful registration process, the trade union is obligated to maintain its membership of at least ten percent of the workers, or 100 workers, whichever is less. It also provides that a minimum of seven members of the trade union must be engaged in or employed in an industrial establishment or industry which is associated with the union.  

Suppose the proposed name of the trade union registration is identical to that of an existing registered union. In that case, the registrar of the trade union is under an obligation to modify the name to avoid confusion or duplication.

Section 12 provides that upon formal registration of the trade union, it attains the legal status of a distinct entity. This involves being incorporated under its registered name, having a common seal, and enjoying perpetual succession. Further, the registered trade union has the power to acquire and hold both movable and immovable property and to contract. It shall also have the power to sue and be sued under the registered name.

Negotiating trade unions

Section 14 provides for the establishment of the negotiating union or negotiating council in an industrial establishment having a registered trade union for negotiating with the employer of the industrial establishment on matters specified by regulations. If an industrial establishment has only one registered trade union, then the employer, subject to the specified criteria, has to recognise it as the sole negotiating union for the workers.

If an industrial establishment has more than one trade union, the employer shall recognise the trade union that has the support of 51 percent or more of the workers on the muster roll as the sole negotiating union.

Further, it states that if an industrial establishment has more than one trade union and no single trade union has the support of 51 percent or more of the workers, then in that situation the employer shall establish a negotiating council. The council shall consist of representatives from registered trade unions having the support of at least twenty percent of the total workers on the muster roll.

Negotiations between the employer and the negotiating council will result in an agreement if it is approved by the majority of representatives of the trade union council. Further, the negotiating council constituted under and recognitions made under this section shall be valid for three years from the date of recognition and constitution.

Standing orders

Standing orders refer to the directions formulated by the employer on the matters provided under the first schedule of the Code. These matters primarily govern the relationship between the employer and worker in an industrial establishment and include the classification of workers, working hours, attendance, suspension, termination, etc.

Application of standing orders

While the Industrial Employment (Standing Orders) Act, 1946, applied to industrial establishments with 100 or more workers, this Code has raised the threshold to 300 workers.

According to Section 28, the Standing Orders apply to every industrial establishment that employs or has employed 300 or more workers on any day in the preceding 12 months. However, it excludes workers covered by Fundamental and Supplementary Rules, Civil Services (Classification, Control, and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Service (Classification, Control, and Appeal) Rules, or the Indian Railway Establishment Code and any other rules or regulations notified by the appropriate government.

Model standing orders

Section 29 provides that the central government is responsible for making the model standing orders related to conditions of service and other relevant matters.

Draft standing orders

Section 30 provides for the preparation of draft standing orders by the employer. It states that the employer, within six months after the commencement of this Code, is required to prepare the draft standing order based on the model provided by the central government.

The order prepared by the employer should not be inconsistent with any of the provisions of the Code and has to cover every matter provided in the first schedule.

During the drafting process, the employer shall consult the trade unions, recognised negotiating unions, or council and submit the draft electronically or by other means to the certifying officer for certification. Where the employer adopts the model standing order of the central government without modification, then the same shall be deemed to be certified. The employer is then required to inform the relevant certifying officer.

The certifying officer, after receiving the draft standing order, shall issue notice to

• trade union, negotiating union or council associated with the industrial establishment, and
• where there is no trade union operating, to representatives of the workers of the industrial establishment,

And shall collect comments on the matter and, upon receiving feedback, provide an opportunity for a hearing to the negotiating union, negotiating council, or, as applicable, to the trade unions or representatives of the workers. Further, the certifying authority has to decide whether any modification or addition to the draft standing order is necessary for it to be certifiable. The decision shall be made in writing.

The certifying officer shall complete the procedure of certification for the draft standing order or modifications within 60 days. If the certification procedure does not complete within the stipulated time period, then the draft standing orders or modifications to the standing orders shall be deemed to have been certified upon the expiration of the specified period.

If an industrial establishment has any existing standing orders at the commencement of this Code, they shall be deemed to be certified under the Code if they are not inconsistent with the provisions of the Code.

Change in notice

Section 40 of the legislation stipulates that no employer can make changes to the conditions of service for workers concerning matters listed in the Third Schedule without adhering to certain procedures. Specifically, the employer must provide notice of the proposed changes in the manner prescribed. The notice shall be given to the affected workers, clearly outlining the nature of the proposed changes. Further, the notice shall be given within 21 days before the intended implementation of the changes.

However, there are certain exceptions to this notice, and they are:

• Changes made in accordance with a settlement or award.
• Changes affecting workers are covered by specific rules or regulations notified by the appropriate government.
• Emergency situations requiring a change of shift or shift working, in consultation with the Grievance Redressal Committee.
• Changes made in accordance with the orders of the appropriate government or as per settlement or award.

Section 41 empowers the appropriate government to assess the impact of Section 40 on certain industrial establishments or classes of workers. If the government is of the opinion that the application of Section 40 may severely prejudice employers and have significant repercussions on the industry, it can issue a notification. This notification may either exempt certain classes of industrial establishments or workers from the application of Section 40 or subject its application to specified conditions.

The matters that are provided under the third schedule are as follows:

1. Modifications to the wages.
2. Changes made in the contributions paid or payable by the employer to any provident fund or pension fund under any law for the time being in force.
3. Compensatory and other allowances.
4. Changes made to the fixed hours of work and rest intervals for employees.
5. Changes to provisions concerning leave with wages and holidays.
6. Changes made to the commencement, modification, or cessation of shift operations which deviate from the standing orders.
7. Changes made to the classification of employees by grades.
8. Notification of the withdrawal of any customary concession, privilege, or modification in usage.
9. Introduction of new provisions for discipline or amendments to existing rules, unless already addressed in standing orders.
10. Changes related to the rationalisation, standardisation, or improvement of a plant or technique may lead to worker retrenchment.
11. Any increase or reduction in the number of persons employed or to be employed in any occupation, process, department, or shift, not resulting from circumstances beyond the employer’s control.

Mechanisms for the resolution of industrial disputes

The Code provides for the following methods for the resolution of industrial disputes:

Conciliation officers

Section 43 provides that the appropriate government, through notification, has to appoint the conciliation officers, whose main function is to mediate and promote the settlement of industrial disputes. Further, the section states that the conciliation officers may be appointed for a specified area, specific industries within a given area, or one or more specified industries. These appointments may be either permanent or for a specified duration.

Industrial tribunals 

The establishment, composition, and jurisdiction of the industrial tribunals have been provided under Section 44.

The appropriate government may, by notification, constitute one or more industrial tribunals for adjudicating industrial disputes and other functions as provided under the Code. Further, a tribunal constituted by the central government has conferred the jurisdiction, powers and authority as provided under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

Every industrial tribunal shall consist of two members who are appointed by the appropriate government. Out of which one shall be judicial and the other an administrative member. If the Tribunal consists of one judicial member and one administrative member, the judicial member shall preside over the Tribunal.

Further, the Code provides for the detailed procedure of the tribunal, including the distribution of cases among its benches. It states that if the benches comprising both the judicial member and an administrative member shall try the cases relating to the discharge or dismissal of workmen, the legality of strikes or lockouts, retrenchment, closure of establishments, and trade union disputes, they are specifically designated for benches comprising both the judicial member and an administrative member. The remaining cases are to be heard and decided by a bench consisting of either a judicial member or an administrative member.

National industrial tribunal 

Section 46 provides for the constitution of the national industrial tribunal. The central government may, by notification, constitute a national industrial tribunal which is designed to adjudicate industrial disputes of national importance or on those matters which are likely to impact establishments across multiple states.

The tribunal consists of two members appointed by the central government, with one being the judicial member and the other the administrative member.

Further, the section prescribes the eligibility criteria for the judicial member and the administrative member. It states that to be a judicial member, they must have served as a judge of a high court. On the other hand, to become an Administrative Member, they must have served as Secretary to the Government of India or have held an equivalent rank either in state or central government, with adequate experience in labour-related matters. The judicial member shall preside over the tribunal.

Strikes and lockouts

Section 62 prohibits workers in an industrial establishment from participating in strikes and lockouts. Every person employed in such establishments adheres to the following conditions:

1. Employees must provide a 60-day advance notice of strikes and lockouts to the employer.
2. Strikes may not be initiated within 14 days from the date of providing such notice.

Section 63 provides for illegal strikes and lockouts. According to this section, a strike or lockout is considered illegal if:

• It is commenced or declared in contravention of the provisions of Section 62.
• It is continued in contravention of an order issued by the appropriate government when an industrial dispute has been referred to arbitration.

Section 64 prohibits providing financial aid to illegal strikes or lockouts. It states that no person shall knowingly spend or apply any money in direct furtherance or support of any illegal strike or lock-out.

Lay-offs, retrenchment, and closure

The threshold limit for obtaining prior government permission before closure, lay-off, or retrenchment in an industrial establishment (excluding those of a seasonal nature or where work is performed intermittently) has been increased from 100 to 300 workers. Further, the Code prescribes that the appropriate government has the authority to increase this threshold through an official notification.

Worker Re-Skilling Fund

Section 83 provides for a worker re-skilling fund. The appropriate government, through notification, has to set up a fund to be known as the Worker Re-Skilling Fund. The fund shall consist of:

• Contribution from the employer of an industrial establishment, which is equivalent to 15 days of wages last drawn by the worker immediately before retrenchment.
• Contribution from other sources as prescribed by the appropriate government.

Further, the section provides that the fund is to be utilised by crediting an amount equal to 15 days’ wages last drawn by the retrenched worker to their account within 45 days of retrenchment.

Unfair labour practices

Prohibition of unfair labour practices has been provided under Section 84. According to this section, no employer, worker, or trade union, whether registered under this Code or not, shall commit any unfair labour practice specified in the Second Schedule.

The Occupational Safety, Health, and Working Conditions Code, 2020

The aim and scope of the Code are to unify and amend laws concerning occupational safety, health, and working conditions with regard to persons employed at an establishment and other connected matters. It has also specified guidelines pertaining to female labour employed in all types of work. The Code combines the following laws:

1. The Factories Act, 1948
2. The Contract Labour (Regulation and Abolition) Act, 1970
3. The Mines Act, 1952
4. The Dock Workers (Safety, Health and Welfare) Act, 1986
5. The Building & Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
6. The Plantations Labour Act, 1951
7. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
8. The Working Journalist and Other Newspaper Employees (Conditions of Service and Miscellaneous Provision) Act, 1955
9. The Working Journalists (Fixation of Rates of Wages) Act, 1958
10. The Cine Workers and Cinema Theatre Workers Act, 1981
11. The Motor Transport Workers Act, 1961
12. The Sales Promotion Employees (Conditions of Service) Act, 1976
13. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966

Important provisions of the Code

Some of the important provisions of the Code are as follows:

Application of the Code

The Code applies to all establishments. It has defined establishments as;

• a place where any industry, trade, business, manufacturing, or occupation takes place, which employs ten or more workers, or 
• a motor transport undertaking, newspaper establishment, audio-video production, building and other construction work, or plantation, which employs ten or more workers; etc.

However, the Code does not apply to the offices of the central government, state government, or any warship, except for contract labourers appointed by a contractor for any state or central government office.

Registration

Chapter 2 of the Code provides for the registration of the establishments. The Code has introduced the requirement of single registration and eliminated the need for multiple registrations, which was mandated by various legislations.

Registration of certain establishments has been provided under Section 3. It states that the employer of all the establishments within 60 days after the commencement of the Code shall register their establishments electronically. The registration shall be carried out by the registering officers, who are appointed by the appropriate government.

If the establishments have already registered under any other central labour laws, they shall be considered registered under the Code and are exempt from obtaining fresh registrations.

Further, the section states that if an employer of an establishment has obtained the registration through:

1. misrepresentation or suppression of any material fact, or 
2. fraudulent means or the registration has become useless or ineffective to run the establishment, then the same is considered as a violation of the provisions of the Code.

Misrepresentation or suppression of any material fact leads to the prosecution of the employer under Section 94. However, the prosecution does not impact the registration or operation of the establishment.

If it has been obtained through fraudulent means or the registration has become useless or ineffective to run the establishment, then in that case, the registering officer shall, after providing an opportunity for the employer to be heard, revoke the registration through an order. The process for revocation shall be completed by the registering officer within sixty days after coming to his notice of the facts.

Duties of an employer and employee

The duties of employers and employees have been prescribed broadly under Chapter 3 of the Code. Section 6 provides for the duties of the employer; accordingly, every employer is required to:

• ensure the workplace is free from hazards that cause or are likely to cause injury or occupational disease to the employees;
• adhere to the occupational safety and health standards specified under Section 18 or the regulations, rules, bye-laws, or orders provided under this Code; 
• provide annual health examinations or tests, at no cost, to employees of all age groups or specific classes of employees in establishments, as prescribed by the appropriate government;
• provide and ensure, to the extent reasonably feasible, a work environment that is secure without posing a risk to the health for employees; 
• ensure the proper disposal of hazardous and toxic waste, including e-waste disposal;
• issue a letter of appointment to each employee upon their appointment in the establishment, containing information and in a format prescribed by the appropriate government. If an employee has not been issued such an appointment letter on or before the commencement of this Code, it shall be issued within three months from the said commencement;
• prohibit the imposition of charges on any employee for activities or provisions related to maintaining safety and health in the workplace, including the conduct of medical examinations and investigations for detecting occupational diseases;
• for establishments involving factories, mines, dock work, building or other construction work, or plantations, ensure and take responsibility for the safety and health of employees, workers, and any other individuals present on the premises of the employer, whether or not the employer is aware of their presence.

The Code also prescribes explicit duties to ensure the safety of workers, including those who are engaged in designing, manufacturing, supplying plant and machinery (including importation), architects, project engineers, building designers, agencies, etc.

Section 13 prescribes the duties of employees. Every employee in the workplace shall

• exercise reasonable care for his own health and safety, as well as that of other individuals who may be affected by his actions or omissions at the workplace; 
• comply with the safety and health requirements provided in the standards;
• cooperate with the employer in fulfilling the statutory obligations imposed on the employer by this Code; 
• to report any unsafe or unhealthy situation that comes to his attention to the employer or to the health and safety representative,
• not willfully interfere with, misuse, or neglect any appliance, convenience, or other equipment provided in the workplace to ensure the health, safety, and welfare of workers; 
• avoid willfully and without reasonable cause engaging in any actions likely to endanger himself or others; and 
• perform any other duties as specified by the appropriate government.

Occupational safety and health

Provisions relating to occupational safety and health are provided under Chapter 4 of the Code. The chapter contains the following provisions:

National and State Advisory Boards

The central government, through notification, shall constitute the National Occupational Safety and Health Advisory Board to discharge the functions conferred on it and to advise the central government on the matters of occupational safety and health mentioned under the Code. Similarly, it is the responsibility of the respective state governments to constitute the State Occupational Safety and Health Advisory Board.

Declaration of health standards

Section 18 of the Code provides for occupational safety and health standards. It states that the central government has the authority to declare standards on occupational safety and health for workplaces. This includes the standards relating to factories, mines, dock work, beedi and cigar, building and other construction work, and other establishments.

Surveys and inspections

The Code provides for safety and occupational health surveys under Section 20. It states that the concerned authorities specified in the Code and members of the Advisory Boards have the right to conduct surveys of any factories, mines, or other establishments. Further, the section states that the employer must make all the necessary arrangements for these surveys.

Safety Committee and Safety Officers

Section 22 provides that the appropriate government, through general or special order, has the power to constitute safety committees in establishments. The committee consists of representatives of employers and workers engaged in such establishments. The number of representatives of workers on the committee shall not be less than the number of representatives of the employer. 

Further, the section also provides for the appointment of safety officers. It states that the employer shall appoint safety officers for every establishment, which is,

• a factory with five hundred workers or more,
• a factory engaged in a hazardous process with two hundred fifty workers or more,
• building or other construction work with two hundred fifty workers or more, and 
• a mine with one hundred workers or more.

These safety officers shall possess the prescribed qualifications and perform duties as prescribed by the appropriate government.

Health, safety, and working conditions

Section 23 imposes responsibility on the employer to maintain health, safety, and working conditions for the employees. The central government has the power to prescribe regulations for maintaining health, safety, and working conditions, which include;

• Cleanliness and hygiene
• Ventilation, temperature, and humidity
• maintaining an environment free from dust, noxious gases, fumes, and other impurities
• Establishing adequate standards for humidification, artificially increasing air humidity, ventilation, and air cooling in workrooms
• Providing potable drinking water
• Maintaining adequate standards to prevent overcrowding and ensuring sufficient space for employees or other individuals employed therein
• Ensuring adequate lighting
• Establishing sufficient arrangements for separate latrine and urinal accommodation for male, female, and transgender employees and maintaining hygiene. 
• Implementing effective arrangements for the treatment of wastes and effluents
• Any other arrangements considered appropriate by the Central Government.

Working hours

The Code has reduced the daily working hours for employees in an establishment from 9 to 8 hours. Further, it states that if the worker is willing to engage in overtime work, then the explicit consent of such worker must be given, and the employer is under the obligation to pay double the regular wages. Earlier, the Factories Act necessitated not only the consent of the worker but also required the state government to provide a special exemption through notified rules for employers to engage workers in overtime.

Inspector-Cum-Facilitator

Section 34 provides for the appointment of Inspector-cum-Facilitator. It states that the appropriate government has the authority to appoint Inspector-cum-Facilitators through notification by granting them powers across specific jurisdictions. It provides for the appointment of Chief Inspector-cum-Facilitators, Additional Chief Inspector-cum-Facilitators, Joint Chief Inspector-cum-Facilitators, and Deputy Chief Inspector-cum-Facilitators. These Inspectors-cum-Facilitators, apart from their general duties, are responsible for conducting inspections as specified under the Code.

The Inspector-cum-Facilitators shall operate within a structured inspection scheme, potentially incorporating web-based inspections and a random selection of establishments and inspectors. The integral components of the scheme include unique numbering, uploading of timely reports, provisions for special inspections, and workplace nature.

Further, Section 35 provides the powers of Inspector-cum-Facilitators. These include;

• To enter into any premises used for a workplace with the assistance of any relevant persons or experts and inspect such establishments.
• To inspect and examine establishments, premises, plants, machinery, articles or any other relevant materials.
• To inquire into accidents or dangerous occurrences, whether they result in injuries, disabilities, fatalities, or not, and to record statements on the spot from the individuals involved in such accidents or occurrences.
• To sensitise employers and workers regarding the provisions of the Code and to ensure compliance.
• To demand the production of registers, documents, or any other documents related to the workplace or work activity.
• To search, seize, or copy registers, records, or relevant documents that,  in his belief, are in contravention of the provisions of the Code.
• To take measurements, photographs, videographs, and recordings that are necessary for examinations or inquiries.
• To collect samples of articles or substances in establishments or premises, as well as the air of the atmosphere in or in the vicinity, as prescribed by the appropriate government.
• To issue directives for dismantling, testing, or any necessary process, in the case of articles or substances posing danger to the health and safety of the employee.
• To issue show cause notices related to safety, health, and welfare provisions under the Code.
• To prosecute, conduct, or defend complaints or proceedings in courts arising under the Code.
• To exercise additional powers and duties as prescribed by the appropriate government.

Special provisions relating to the employment of women

The Code prescribes special provisions relating to the employment of women. Section 43 states that women shall be entitled to be employed in all establishments for all types of work. Further, it states that women may also be employed before 6 a.m. and beyond 7 p.m. with their consent. However, this is subject to conditions relating to safety, holidays, working hours, or any other conditions specified by the appropriate government.

Further, adequate safety in dangerous operations for the employment of women has been provided under Section 44. It states that if the appropriate government considers that the employment of women poses a potential risk to their health and safety in a specific establishment or class of establishments, it may, in the prescribed manner, instruct the employer to implement adequate safeguards before employing women in such operations.

Contract labourers

Chapter 9, Part 1 of the Code deals with the provisions relating to contract labour. Some of them are discussed below:

Application of the chapter

The Code applies to establishments that employed fifty or more contract labourers in the preceding 12 months. The implementation of these provisions is governed by the designated authorities, which are appointed by the appropriate government. These authorities have such jurisdictions, powers, and duties as defined under the Code, including the issuance and revocation of licences electronically. 

Licensing of contractors

The Code also prescribes provisions relating to the licensing of contractors under Section 47. It states that every contractor to which this chapter applies shall obtain a licence to supply or engage contract labour or execute work through them. The licence shall be issued for a term of 5 years by the authority mentioned under Section 119 of the Code. The licence also prescribes specific conditions and particulars, including the number of labourers and security deposits. Further, the procedure relating to the issue or renewal of licences has been provided under Section 48.

Prohibition and obligations of contractors

The chapter also includes provisions that prohibit the contractors from charging any fees or commissions from contract labourers, whether directly or indirectly. Further, on receiving the work order to supply or engage contract labour, it is the duty of the contractor to inform the concerned authority under Section 119. Failure to provide this information shall result in the suspension or cancellation of the licence.

Appeals

The chapter also includes provisions relating to appeals. It states that appeals against the orders passed by the authorities under this chapter can be filed within thirty days.

Liabilities on contractors and principal employer 

Further, the Code provides for certain liabilities, which are as follows:

• The principal employers are liable for providing welfare facilities to contract labour and shall face consequences for engaging non-licenced contractors. 
• The contractor is under obligation for the payment of wages on time, and in case of non-payment, the principal employers are liable to make full payments.

Issuance of an experience certificate

Section 56 provides that every concerned contractor shall issue an experience certificate on demand in such form as prescribed by the appropriate government.

Prohibition of the employment of contract labour in core activities

The employment of contract labour in the core activities of any establishment is prohibited except under certain conditions as prescribed under Section 57. The appropriate government may appoint a designated authority to determine whether an activity qualifies as a core activity or otherwise.

Power to exempt in special cases

The appropriate government has the authority to exempt specific establishments or contractors from certain provisions of the Code, subject to specified conditions and restrictions for a defined period in emergencies.

Inter-state migrant workers

Earlier, the definition of the ‘inter-state migrant worker’ only included those persons who are recruited by a contractor in one state for employment in another. However, the present Code has broadened the definition to include in its ambit the persons who have independently migrated for employment from one state to another. The provisions relating to ‘inter-state migrant workers’ are provided under Part 2 of Chapter 9. Some of the important provisions are as follows:

Application and Facilities for Inter-State Migrant Workers

The Code applies to every establishment in which ten or more inter-state migrant workers are employed since the preceding 12 months. Further, the Code puts an obligation on the contractors or employers to ensure suitable working conditions, report fatal accidents or serious injuries to the specified authorities of both the states and also to the next of kin of the worker and ensure medical checkups and other statutory benefits to the inter-state migrant workers.

Journey allowance and other benefits 

Under Section 61, employers are under obligation to pay an annual lump sum fare for the journey of the inter-state migrant workers from their native place to their place of employment. The payment shall be based on factors such as minimum service for entitlement, periodicity, and class of travel. 

Further, the Code has also introduced schemes for availing the benefits of public distribution systems in either the native or destination state where the interstate migrant worker is employed.

Helpline, studies, and past Liabilities

The appropriate government shall establish a toll-free helpline and shall also conduct a study on interstate migrant workers as provided under the Code. Further, Section 65 states that no legal action can be initiated against the interstate migrant workers for the recovery of debt after the completion of their employment. Any unsettled obligations become void, and the debt is considered extinguished upon the completion of the worker’s period of employment.

Audio visual workers

The Code introduces certain conditions for regulating audio-visual workers in the production of audio-visual programmes under Section 66. The section explicitly prohibits the employment of audio-visual workers in the absence of a written agreement. And the producer of such an audio-visual programme shall register the agreement with the competent authority as notified by the appropriate authority.

The agreement must be in the prescribed format and shall include all the aspects of the audio-visual worker, such as the nature of the assignment, wages (inclusive of the provident fund), health and working conditions, safety measures, hours of work, welfare facilities, and a detailed dispute resolution process as specified by the appropriate government.

In the event of a failure of dispute resolution, either party can approach the industrial tribunal under the Industrial Disputes Act, 1947. Further, it is stated that the producer of the audiovisual programme is under obligation to provide the facilities specified in the agreement to the audiovisual worker, and the payment of such wages shall be made through electronic mode.

Mines

Part 4 of Chapter 9 provides certain provisions for the management of mines. According to the provisions, every mine, unless exempted under the Code, shall appoint a qualified manager with such qualifications as prescribed by the Central Government. 

It also states that the owner or agent of every mine shall appoint a person to be a manager if he possesses such qualifications as prescribed by the Central Government. The appointed manager shall have the responsibility for the overall management, control, supervision, and direction of the mine.

The chapter also contains certain provisions which have exceptions for mines used solely for prospecting or extracting specific materials under prescribed conditions. During emergencies or accidents, Section 69 allows the manager to permit employment, even in contravention of specific sections of the Code, to safeguard the well-being and safety of the mine. Also, the manager is under obligation to maintain the records and submit reports to the Chief Inspector-cum-Facilitator or the Inspector-cum-Facilitator.

Section 70 explicitly prohibits the employment of persons below eighteen years of age in any mine. However, apprentices and other trainees, not below sixteen years of age, may be allowed to work under proper supervision.

Beedi and cigar workers

The Code contains provisions relating to beedi and cigar workers. Section 74 provides that no employer shall use or allow to use any place as an industrial premises without having a valid licence issued by the competent authority under Section 119. Further, it states that the use of such premises must comply with the terms and conditions specified in the licence. Any person who intends to use such premises shall submit an application to the relevant authority as provided under Section 119, along with the prescribed fees.

The relevant authority, while granting a licence, has to consider certain factors, such as the suitability of the premises or place, the experience and financial status of the applicant, and the overall welfare of the labour in the locality. A licence granted shall be valid for five years and can be renewed afterwards. However, the same is subject to compliance with the provisions of the Code and rules. 

The authority shall also have the power to cancel or suspend the licence if it is obtained through misrepresentation or is in contravention of any of the provisions of the Code. Provisions relating to appeals are also provided under Section 75. It states that an appeal can be made to the appellate authority against the order of the relevant authority. Further, it has been stated under Section 77 that the provisions of this part are not applicable to self-employed persons in private dwelling houses.

Building or other construction workers

Section 78 explicitly prohibits the employment of certain buildings or other construction work. The section forbids the employer from allowing individuals with known impairments such as deafness, defective vision, or a tendency to giddiness to work in building or construction operations.

Factories

Sections 79 to 91 of the Code provide for the provisions relating to factories.

Approval and licensing of factories have been provided under Section 79. It states that the appropriate government has the power to make rules relating to factories, which shall include  the submission of plans, prior permission for the selection and construction of sites, and the process of licencing. The application for permission has to be made to the state government or Chief Inspector-cum-Facilitator in electronic mode. If the applicant does not receive the response within 30 days from the date of application, then it shall be deemed that permission was granted.

The applicant has the right to file an appeal if the state government or Chief Inspector-cum-Facilitator refuses to grant permission for the site, construction, or extension of a factory. However, the appeal shall be made within thirty days from the date of such refusal. If the decision in question originated with the state government, then the appeal shall be directed to the central government. In other cases, the appeal shall be made to the state government.

Section 80 establishes the liability of the owner of premises in specific situations. If premises or separate buildings are leased to different occupiers for use as distinct factories, the owner of the premises and the occupiers of the factories will be jointly and severally responsible for ensuring the maintenance of prescribed safety measures and facilities.

Section 82 provides authority to the appropriate government to make rules concerning dangerous operations in factories. It grants the authority to regulate any factory or a specific category of factories engaged in manufacturing processes or operations that involve a significant risk of bodily injury, poisoning, or disease to individuals. The rules provided under the section include:

• Identification and declaration of specific manufacturing processes or operations as dangerous.
• Restriction or prohibition of the employment of pregnant women in the identified hazardous manufacturing processes or operations.
• Implementation of regular medical examinations, either before or during employment, to evaluate the fitness of workers or employees for hazardous employment, with the associated costs borne by the occupier.
• Mandating the provision of welfare amenities, sanitary facilities, protective equipment and clothing, and any other necessary requirements essential for ensuring the safety of individuals engaged in dangerous operations.

The constitution of the site appraisal committee has been provided under Section 83. It states that the appropriate government has the authority to establish one or more site appraisal committees. The committee shall consist of a chairman and other members whose purpose is to evaluate and provide recommendations on applications seeking permission for the initial establishment of a factory engaged in a hazardous process or for the expansion of an existing factory. The site appraisal committee shall make its recommendations within thirty days from the receipt of the application. 

Section 86 states that the Central Government may direct the National Board to inquire into the standards of health and safety in the event of the occurrence of an extraordinary situation involving a factory engaged in a hazardous process. The purpose of this inquiry is to find out the causes of any failure or neglect in the adoption of any measures or standards prescribed by the state government.

Further, the right of workers to warn about imminent danger has been provided under Section 89. It states that the workers engaged in the  hazardous process have a reasonable apprehension that there is a likelihood of imminent danger to their lives or health due to any type of accident. They have the right to bring this concern directly to the attention of the occupier, agent, manager or any other person who is in-charge of the factory or the process. This can either be made directly or through their representatives in the Safety Committee. Simultaneously, they should also notify the inspector-cum-facilitator.

The occupier, agent, manager, or person in charge of the factory or process is under obligation to take remedial measures if they believe that there is an imminent danger. If the occupier, agent, manager, or person in charge of the factory or process is not convinced of the existence of any imminent danger, then the same shall be immediately reported to the inspector-cum-facilitator.

Plantation

Sections 92 and 93 of Chapter 9, Part 8, provide for the provisions relating to plantations.

• Facilities for workers on plantations are provided under Section 92. It states that the state government may prescribe requirements for every employer to make provisions in their plantation for:
• Housing accommodation, including drinking water, kitchen, and toilet facilities, for every worker employed on the plantation (including their family).
• Crèche facilities on the plantation when fifty or more workers (including those employed by any contractor) are employed or were employed in the preceding twelve months. However, establishments may avail themselves of common crèche facilities provided by the Central Government, State Government, municipality, private entity, non-governmental organisation, or any other organisation, or a group of establishments may agree to pool their resources for setting up a common crèche.
• Educational facilities are provided for the children of workers on the plantation when the number of children between the ages of six and twelve exceeds twenty-five.
• Health facilities for every worker employed in the plantation (including their family) or coverage under the Employees State Insurance Act, 1948.
• Recreational facilities for workers employed on the plantation.

An employer of a plantation shall be responsible for providing and maintaining welfare facilities either from his/her own resources or through the schemes of the Central Government, State Government, Municipality, or Panchayat for the locality in which the plantation is situated.

Section 93 provides for the provisions relating to safety in plantations. Some of them are as follows:

• The employer shall make arrangements to ensure the safety of workers on every plantation in connection with the use, handling, storage, and transport of insecticides, pesticides, chemicals, and toxic substances.
• The state government may prescribe special safeguards for the employment of women or adolescents in using or handling hazardous chemicals.
• The employer shall appoint qualified individuals as prescribed under the Code to supervise the use, handling, storage, and transportation of insecticides, chemicals, and toxic substances on his plantation. 
• Every worker who has been exposed to insecticides, pesticides, chemicals, and toxic substances shall undergo periodic medical examinations as prescribed by the state government.
• The employer shall maintain health records of every worker on the plantation who is exposed to these substances.
• Every employer of the plantation shall provide facilities like washing, bathing, clock rooms, and protective clothing to the workers handling such substances as prescribed by the state government.

Social Security Fund

The appropriate authority under Section 115 establishes the Social Security Fund. The fund shall be administered and expended for the welfare of the unorganised workers. Further, the section states that the appropriate government can transfer the funds from this specific fund to any other fund established under existing laws that is dedicated to the welfare of unorganised workers.

The Code on Social Security, 2020

The Social Security Code, 2020, was passed by both Houses of Parliament and got presidential assent on September 28. The Code was enacted to amend and consolidate the relevant provisions of nine central labour statutes which are as follows:

1. The Employees’ Compensation Act, 1923
2. The Employees’ State Insurance Act, 1948 
3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 
4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 
5. The Maternity Benefit Act, 1961
6. The Payment of Gratuity Act, 1972
7. The Cine Workers Welfare Fund Act, 1981, 
8. The Building and Other Construction Workers Welfare Cess Act, 1996, and 
9. The Unorganised Workers’ Social Security Act, 2008.

Important provisions of the Code

Some of the important provisions of the Code are as follows:

Registration and cancellation of an establishment

Section 3 states that every establishment to which this Code applies shall register either electronically or through other means within the specified period as prescribed by the central government. However, an establishment that has already registered under any of the prevailing central Acts need not obtain registration under this Code.

The section also provides for the cancellation of the registration. It states that establishments falling under the purview of chapters 3 and 4 and whose activities of the business are in the process of closure may make an application for cancellation. The process of making an application for the cancellation of registration, the conditions under which the registration shall be cancelled, the procedural aspects of cancellation, and all other relevant matters shall be determined and specified by the Central Government.

Social security organisations

Chapter 2 of the Code provides for the constitution and establishment of various boards and corporations which are responsible for social security schemes in India. Some of them are mentioned below:

Constitution of the Board of Trustees of the Employees’ Provident Fund

According to Section 4, the Central Government, through notification, shall establish the Central Board, also known as the Board of Trustees of the Employees’ Provident Fund. This Board is responsible for administering funds as per Chapter III and other related provisions of the Code. The Central Board consists of a Chairperson, a Vice-Chairperson appointed by the Central Government, government officials, representatives from specified states, employers, employees, and the ex officio Central Provident Fund Commissioner. The Central Board is a body corporate with perpetual succession and a common seal. An Executive Committee may be constituted, and committees can be formed to assist the Central Board. Delegation of powers to the chairperson, executive committee, officers, and state boards is allowed. The Central Board performs functions as prescribed by the Central Government.

Constitution of the Employees’ State Insurance Corporation

Section 5 provides that the Central Government, through notification, establishes the Employees’ State Insurance Corporation (Corporation) for the purpose of Chapter IV. The corporation comprises a chairperson, vice-chairperson, officials, representatives from states, union territories, employers, employees, medical professionals, and members of Parliament. It is a body corporate with perpetual succession. A standing committee administers the affairs of the corporation, and a medical benefit committee assists in medical benefit administration. The corporation can form committees, and terms and conditions for members are set by the central government. The Corporation advises the government, monitors welfare schemes, and undertakes other prescribed functions.

National Social Security Board and the State Unorganised Workers’ Board

According to Section 6, the Central Government establishes a National Social Security Board for unorganised workers. This Board includes the Union Minister for Labour and Employment as Chairperson, officials, representatives from different sectors, and the Director General of Labour Welfare. The Board recommends schemes, advises the government, and monitors social welfare programmes. It also provides for the formation of the advisory committees.

Every state establishes a State Unorganised Workers’ Social Security Board. The State Board includes the State’s Labour Minister as Chairperson, officials, representatives, and a Member-Secretary. Functions include recommending state schemes, advising the government, and monitoring welfare programmes.

Constitution of State Building Workers’ Welfare Boards

Section 7 states that every state government establishes a Building and Other Construction Workers’ Welfare Board. It includes a nominated chairperson, a member nominated by the central government, and members representing the state government, employers, and building workers, with adequate female representation. The Board is a body corporate. The state government determines terms, conditions, and allowances for members. The Board administers various welfare measures for building workers, including benefits, pensions, educational schemes, medical expenses, and more. Advisory committees may be formed.

State Boards, Regional Boards, local committees, etc.

Section 12 provides that the Central Government, through notification, shall constitute a state board for specific states, also known as a board of trustees. The State Board exercises powers as assigned by the Central Government and is constituted as specified in the regulations. The corporation can appoint regional boards and local committees as specified in the regulations and also prescribe their powers and functions.

Employees provident fund

Chapter 3 of the Code provides for the provisions related to the employee provident fund. Some of the provisions are mentioned below:

Appointment of officers of the Central Board

Section 14 provides for the appointment of officers of the central government. It states that the Central Government may appoint a Central Provident Fund Commissioner, who shall serve as the Chief Executive Officer of the Central Board and shall also be the head of the Employees’ Provident Fund Organisation. The Central Provident Fund Commissioner operates under the general control and superintendence of the Central Board. Further, to assist the Commissioner , a financial advisor and chief accounting officer are also appointed. The Central Board may appoint other officers and employees necessary for the efficient administration of the schemes provided under the Code.

Schemes

According to Section 15, the Central Government, through notification, may frame various schemes under Chapter III. The schemes under Chapter 3 include the Employees’ Provident Fund Scheme, Employees’ Pension Scheme, Employees’ Deposit-Linked Insurance Scheme, and other schemes for self-employed workers or other classes of persons. These schemes may cover matters specified in Part A, Part B, and Part C of the Fifth Schedule. 

Funds

For the Provident Fund Scheme, Pension Scheme, and Insurance Scheme, the Central Government may establish the Provident Fund, Pension Fund, and Insurance Fund, respectively, under Section 16. It also includes contributions from employers and employees. These funds shall vest in and be administered by the Central Board. The Central Government determines the rates of the employee’s contributions and may specify the rates and periods for certain establishments.

Contribution in respect of employees and contractors

Section 17 prescribes the mechanisms for the recovery of contributions. It empowers an employer to recover the total contribution amount (comprising the contributions of both the employer and employee) and charges for fund administration paid or payable in connection with an employee employed through a contractor. This recovery can be achieved by deducting the specified amounts from any payment due to the contractor under an existing contract or treating it as a debt owed by the contractor. Further, it enables a contractor to recover the contributions of the employee from his wages. However, contractors cannot deduct employer contributions or charges from employees’ wages.

Chapter not to apply to certain establishments

According to Section 20, this chapter shall not apply to:

• establishments registered under the Co-operative Societies Act.
• establishments belonging to or under the control of central or state government with existing provident fund or pension schemes
• to the employees receiving provident fund benefits before the commencement of the Code. 

Transfer of accounts

According to Section 22, when an employee relinquishes his employment from one establishment and obtains employment in another establishment, whether it falls within the scope of Chapter III or not, his accumulated provident fund or pension account is transferred or dealt with as per the Provident Fund Scheme or Pension Scheme.

Appeal to the Tribunal

Provisions relating to appeals are provided under Section 23. It states that an appeal to the Tribunal can be made by any person aggrieved by orders related to the determination and assessment of dues or the levy of damages under Chapter III. The appeal must be filed within the prescribed time, manner and fees. The employers appealed for the determination and assessment of dues; they must deposit 25% of the determined amount. Further, the section states that the Tribunal endeavours to decide the appeal within one year.

Employees State Insurance Corporation

Chapter IV provides for the provisions related to the Employees State Insurance Corporation (ESIC), specifically focusing on principal officers, appointments of staff, the Employees’ State Insurance Fund, contributions, benefits, and other related matters. Some of the provisions of the Chapter are mentioned below.

Principal Officers and Other Staff

Section 24 provides for provision relating to the appointment of principal officers and other staff for the corporation. The Central Government appoints a Director General and a Financial Commissioner, who shall be the principal officers of the Corporation. They shall hold the office for a period not exceeding five years and shall be eligible for re-appointment. Their powers, duties, salaries, allowances and other functions are defined by the central government.

Further, the provision provides that the corporation may employ other officers and employees for the efficient transaction of its business and for the discharge of any other responsibilities assigned to the corporation from time to time by the central government. Provision also states that every appointment to posts (other than medical, nursing, or para-medical posts) corresponding to Group ‘A’ and Group ‘B’ Gazetted posts under the Central Government shall be made in consultation with the Union Public Service Commission.

Employees’ State Insurance Fund

Section 25 states that all the contributions and user charges which are paid and other funds collected under this chapter are deposited into the Employees’ State Insurance Fund. It also states that the corporation may accept grants, donations, corporate social responsibility funds, and gifts from the central or any state government, local authority, any individual or  any body whether incorporated or not. Funds shall be deposited in approved banks, and their usage is regulated by the Central Government.

Contributions

Section 29 sets forth the essential provisions governing contributions within this chapter. The contribution structure for each employee involves two distinct components: the “employer’s contribution” which denotes the sum that the employer is liable to pay, and the “employee’s contribution” which represents the amount the employee is obligated to contribute. Both of these contributions are directed to be remitted to the corporation according to the provisions of the Code.

The central government regulates the specific rates at which the employer and the employee have to contribute their portions. Further, the section introduces the concept of the “wage period.” The wage period, which is explicitly defined under the regulations, serves as the fundamental unit for the calculation and payment of contributions. 

Benefits

Section 32 states that the persons insured and their dependents are entitled to sickness, maternity, disablement, dependants’, medical and funeral benefits. The corporation may extend medical benefits to the family of an insured person.

The qualifications and conditions for such benefits are prescribed by the Central Government, and the Corporation can make regulations for any matter relating to or incidental to the accrual and payment of benefits payable under this Chapter.

Schemes for Unorganised Workers, Gig Workers, and Platform Workers

Section 45 empowers the Central Government to frame schemes for the welfare of unorganised workers, gig workers, and platform workers and the members of their families for providing benefits under the provisions of this Chapter.

The operation and the terms and conditions of such schemes shall be specified by the Central Government, which are explicitly mentioned in the scheme itself. These include the determination of contributions, user charges, the scale of benefits, and the qualifying and eligibility conditions.

Employees’ Insurance Court

Section 49 provides that all matters are to be decided by the Employees’ Insurance Court. These matters include the following:

• Determination of the status of the employee and his liability to pay the employee’s contribution.
• Assessment of the rate of wages or average daily wages of an employee.
• Calculation of the contribution payable by an employer.
• Identification of the employer in relation to any employee.
• Adjudication of rights to benefits and determination of the amount and duration thereof.
• Resolution of disputes between an employer and the corporation, employer and contractor, person and the corporation, or employee and employer or contractor regarding contributions, benefits or other dues.
• Claims for recovery of contributions from employers and contractors.
• Claims for the recovery of benefits received unlawfully.

Further, Section 52 provides for the provisions relating to appeals. It states that no appeal lies from an order of an Employees’ Insurance Court. However, an exception is made for cases involving 

• substantial questions of law, where an appeal can be filed with the High Court
• The appeal must be submitted within sixty days of the order of the Employees’ Insurance Court. 
• The provisions of sections 5 and 12 of the Limitation Act, 1963, shall apply to appeals under this section.
• In cases where the corporation has initiated an appeal against an order of the Employees’ Insurance Court, the latter has the discretionary power to withhold the payment of any sum directed to be paid by the order being appealed. However, if directed by the High Court, the Employees’ Insurance Court shall withhold payment pending the decision of the appeal.

Gratuity 

Sections 53 to 58 of Chapter V contain the provisions relating to the payment of gratuities to employees.

Payment of Gratuity

According to Section 53, a gratuity becomes payable to an employee upon the termination of their employment after rendering continuous service for not less than five years. The grounds for termination include superannuation, retirement, resignation, death, disablement due to accident or disease, termination of a fixed-term employment contract, or on the happening of any such event as notified by the Central Government.

The requirement of completing five years of continuous service to be eligible for gratuity is reduced to three years for working journalists, as defined in clause (f) of Section 2 of the Working Journalists and Other Newspaper Employees (Condition of Service) and Miscellaneous Provisions Act, 1955.

The completion of continuous service for five years is not mandatory in certain situations, such as in the event of the termination of employment due to death or disability, the expiration of fixed-term employment or the happening of any event notified by the Central Government.

Payment of gratuity in case of death

In the unfortunate event of the death of the employee, the gratuity payable to the deceased employee shall be provided to their nominee. If no nomination has been made, the gratuity shall be paid to the heirs of the deceased employee.

If the nominee or heirs are minors, their respective amounts will be deposited with the competent authority as notified by the appropriate government. The competent authority will invest these amounts for the benefit of the minors in a specified bank or financial institution until they attain the age of majority.

Calculation of gratuity 

Gratuity becomes payable upon the termination of employment after the employee has completed at least five years of continuous service. The gratuity amount is calculated based on fifteen days’ wages for every completed year of service or part thereof exceeding six months. For piece-rated employees, the daily wages are computed on the average total wages of the three months preceding termination, excluding the wages paid for overtime work.

Seasonal workers receive gratuity at the rate of seven days’ wages for each season. In cases of fixed-term employment or deceased employees, gratuity is paid on a pro-rata basis. The amount of gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government.

Forfeiture of gratuity 

Section 53 also provides certain forfeiture conditions, where the employer may withhold gratuity for acts causing damage, riotous conduct, disorderly behaviour, violence, or offences involving moral turpitude.

Continuous service 

Section 54 prescribes detailed criteria for continuous service relevant to gratuity. Continuous service is defined as uninterrupted employment, which includes periods of sickness, leave, or other authorised absences. If an employee is not in continuous service, they are deemed to be so for one year or six months under certain conditions. The calculation considers the number of days worked, with variations for different types of establishments. For seasonal workers, deemed continuous service is based on working at least seventy-five percent of operational days.

Nomination 

Section 55 states that employees with one year of service shall make a nomination within the specified time using the prescribed form and method prescribed by the appropriate government. Further, an employee can distribute the gratuity amount among more than one nominee as per their preference.

If the employee has a family, the nomination should be made in favour of family members. Any nomination for a person who is not a member of his family shall be considered void. If, at the time of nomination, the employee has no family, then the employee can nominate any person. However, if the employee later acquires a family, the nomination becomes invalid, and a fresh nomination in favour of family members is required.

The section also provides for the modification of nominations. It states that employees can modify their nomination at any time by providing a written intimation to the employer, following the prescribed form and method.

Competent Authority

Section 58 provides that the appropriate government has the authority to appoint an officer with prescribed qualifications and experience through a notification. The appointed officer shall be the competent authority responsible for implementing the provisions of this chapter within a specified area.

Further, it states that if there is more than one competent authority designated for an area, the appropriate government can issue general or special orders to regulate the distribution of business among them. A competent authority, while deciding on matters referred to them under this chapter, has the discretion to engage one or more individuals possessing special knowledge relevant to the subject matter. 

Maternity Benefit

Sections 59-72 provide for the provisions relating to maternity benefits.

Section 59 ensures the well-being of women employees during pregnancy and childbirth. This section specifically prohibits the employment of women during the six weeks immediately following the day of delivery, miscarriage or medical termination of pregnancy. Further, it provides that no pregnant woman shall engage in any work which is arduous in nature, involves long hours of standing, or in any way is likely to interfere with her pregnancy. 

Section 60 further provides the right to payment of maternity benefits. It states that the employers are under obligation to pay maternity benefits at the rate of the average daily wage for the period of her actual absence, i.e., the period immediately preceding the day of her delivery and any period immediately following that day. To avail the maternity benefit a woman must have worked for at least eighty days in the twelve months preceding the expected date of delivery. 

A notice of claim for maternity benefit and payment has been provided under Section 62. It states that any woman employed in an establishment entitled to maternity benefits may provide written notice to her employer as prescribed by the Central Government. The notice shall include a nomination for the payment of maternity benefits and other entitled amounts.

Section 63 further ensures the payment of maternity benefits in case of the death of a woman. It states that if a woman who is supposed to get maternity benefits dies before receiving them, the employer must pay the benefits to the person nominated by the woman in the notice. In cases where there are no nominees, the benefits should be given to her legal representative.

Section 71 states that employers are under obligation to display an abstract of the provisions of this chapter in a conspicuous place within the establishment to promote awareness among employees. Further, Section 72 empowers the Inspector-cum-Facilitator to address complaints related to withholding of payments or wrongful discharge during maternity leave, ensuring timely resolution and fair treatment.

Social Security for Unorganised Workers, Gig Workers, and Platform Workers

Chapter IX provides for the provisions relating to Social Security for Unorganised Workers, Gig Workers, and Platform Workers.

Section 109 empowers the Central Government to frame suitable welfare schemes for unorganised workers on matters relating to life and disability cover, health and maternity benefits, old age protection, education and any other benefit as determined by the Central Government.

Further, the Section states that the state governments shall frame suitable welfare schemes for unorganised workers, which shall include provident funds, employment injury benefits, housing, educational schemes for children, skill upgradation of workers, funeral assistance and old age homes, with funding from multiple sources, including the government, beneficiaries, employers, and corporate social responsibility funds.

Section 110 states that any scheme framed by the state government under Section 109 can be funded in various ways as determined by the state government. Which includes: 

• wholly funding the scheme using state government resources. 
• partial fund from the state government and collect contributions from beneficiaries or employers as specified in the scheme. 
• funds from any other source, which includes the corporate social responsibility fund mentioned in the clause

The state government has the power to decide the funding model based on the requirements of the scheme and available resources. Further, the state government is empowered to seek financial assistance from the central government for the schemes it frames. The Central Government, in turn, has the discretion to provide financial assistance to state governments for the specified period and under such terms and conditions as deemed appropriate.

Section 112 empowers the appropriate government to establish essential support services for unorganised workers, gig workers, and platform workers. The services shall include a toll-free call centre, helpline, or facilitation centres, as deemed necessary. The primary functions of these support services are as follows:

• To disseminate information on available social security schemes for unorganised workers, gig workers, and platform workers.
• To facilitate the filing, processing, and forwarding of application forms for the registration of unorganised workers, gig workers, and platform workers.
• To assist unorganised workers, gig workers, and platform workers in obtaining registration under the relevant schemes.
• To facilitate the enrolment of registered unorganised workers, gig workers, and platform workers in the various social security schemes.

Further, Section 113 prescribes conditions and processes for the registration of unorganised workers. To be eligible for registration, individuals must have attained at least sixteen years of age or the age specified by the Central Government and have to submit a self-declaration with the prescribed information. Upon fulfilling these conditions, eligible workers can apply for registration, providing the necessary documents, including the Aadhaar number. Each applicant receives a unique identification number. The section also provides an alternative option for self-registration through the electronic system maintained by the appropriate government.

Similarly, Section 114 empowers the central government to frame suitable social security schemes for gig workers and platform workers.

Conclusion

Labour law was developed as a result of workers’ struggles for their justly deserved rights and lives throughout the world. They engaged in disputes to defend themselves and improve their living conditions. The field of labour law is dynamic and has a unique place in the legal profession. It has specific components aimed towards employees. In some ways, India’s labour laws resemble those of advanced industrial societies. Many laws govern social security, workplace health and safety, and other issues, such as minimum employment standards. However, only a small portion of India’s workforce is formally covered by the nation’s labour laws, and even among that group, the actual application of the law is very limited.

The consolidation of multiple labour laws is a significant step towards making compliance easier. Because of the rationalisation of definitions and the expansion of coverage to include the unorganised sector, the benefits of the law will be available to a larger workforce. Even though it took decades, the change should pave the way for more significant ones in the years ahead, improving India’s ease of doing business, creating jobs, and influencing the country’s future industrial relations.

References

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2. https://journals.christuniversity.in/index.php/culj/article/view/3250/2159
3. Labour laws in India pdf
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12. https://rmlnlulawreview.com/2023/01/19/article38/