This article has been written by Roma Khare pursuing Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution course from LawSikho.

 This article has been edited and published by Shashwat Kaushik.

Introduction

Employment law is the portion of laws that govern the nexus between an employer and their employees, in addition to the rights and responsibilities of both parties. It guarantees and ensures that a workplace is safe and appropriate to work in, governs the hours that an employee can work and determines the wages that an employee can receive. Many regulations are included in employment law at all levels of government. Due to how extensive employment law is, it’s often divided into different areas, such as:

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  • Workplace safety;
  • Wages;
  • Benefits;
  • Family and medical leave; and
  • Unemployment and workplace conduct.

Employment law has been fashioned to treat all parties unbiasedly, fairly and ethically so that business can run smoothly. Knowing their rights and obligations, both employer and employee can be more efficient and worthy in various situations, such as salary negotiations and misconceptions. Employment law can also help prevent and cure work disruptions and turbulence between employees and management by setting standards to govern the workplace environment. Employment law can help mitigate the issues that may arise in the workplace in the first place.

For example, Title VII of the Civil Rights Act of 1964 prohibits discrimination.

Definition of employment law

Employment law is a body of law that relates to the relationship between employers and employees. It includes laws that govern the hiring, firing, compensation, benefits, and working conditions of employees. Employment law also protects employees from discrimination and harassment.

Employment law is a complex area, and it is important for employers to be aware of their legal obligations. Employers who violate employment laws can be subject to fines, penalties, and lawsuits.

According to the Collins Law Dictionary, employment law means:

  • “An area of law that deals with the legal rights and duties of employers and employees -a specialist in employment law.” 
  • “A piece of legislation that is relevant to this area of the law.”

Issues relating to employment laws

  • Discrimination;
  • Harassment;
  • The Family and Medical Leave Act;
  • Minimum wage disputes;
  • Overtime disputes;
  • Salary misclassification; and
  • Wrongful termination.

Discrimination- Discrimination has been prevalent in Indian workplaces. It has been shown by various standards that it is unavoidable, but there are sure chances many of us have seen it or, for worse, experienced it ourselves. Discrimination is unjust or prejudicial treatment or practice against people who have certain different characteristics

Workplace discrimination usually relates to:

  • Age;
  • Disability;
  • Genetic information;
  • Pregnancy;
  • Race or colour;
  • Religion;
  • National origin; or
  • Sex.

Though discrimination is always against the law, the one exception is when it is based on intelligible differences and is just and fair discrimination.

New employment laws in India

To maintain work-life balance, the government has taken various new measures that will surely change the face of employment laws and benefit employees in various new ways. One of the new laws will command companies to compensate employees who have not claimed more than 30 days of leave to reward them for their dedication.

The Occupational Safety, Health and Working Conditions Code of 2020 defines an “employee” as a person who is employed to do any work, skilled or unskilled, manual or clerical, in or in connection with the business of an establishment, whether the terms of employment are express or implied.

The new four labour laws:

  1. Occupational Safety, Health and Working Conditions Code of 2020;
  2. Code on Wages of 2019;
  3. Industrial Relations Code of 2020;
  4. Social Security Code of 2020;

The codes, or laws, are one of the most major economic changes implemented by the Modi government.

The annual leaves for workers cannot be lapsed under the labour codes and will have to be availed, carried forward, or encashed for the benefit of the workers. As of now, not many organisations are supporting these reforms, but they will have to do so once the laws are enforced. The encashment of leaves will be limited to labour and won’t apply to personnel holding administrative, managerial, or supervisory positions. Leave encashment is a reward by the employer to the employee, as it is not necessary to use all the leaves accrued by the workers.

Labour law reforms

As India has spread its wings in the field of welfare and development, new labour reforms are not impossible to frame and run. Reforms have been introduced to make the country more efficient in terms of per capita income.

Being the subject matter of a concurrent list, both the state and Central Government can make laws relating to labour matters. The Central Government has already proposed to replace 29 existing laws with four major codes just to simplify them and make them more relatable and understandable to laymen.

These codes will regulate:

  • Wages;
  • Industrial relations;
  • Social security;
  • Occupational safety, health, and working conditions.

The proposed labour reforms are aimed at achieving the following objectives:

Simplification of labour laws

It is observed that the complexities of labour laws have defied justice for many; thus, to make them more approachable, they are required to be simple. As suggested by the Second National Commission on Labour, the consolidation of central labour laws will be helpful in keeping them compact and easy. The Commission also observed that there are a number of laws that are being dealt with by the Centre and the state. Similarly, some laws have become archaic and obsolete as they contain provisions that are no longer needed as they have lost importance today. The Commission proposed to consolidate these laws so that the system is transparent and the terms and definitions are interpreted uniformly.

Economic growth

This proposed reform will help workers get protection in terms of minimum wages, social security, and health and safety standards. These protections will help workers improve their lives and contribute more to the economy. A higher minimum wage would give workers more money to spend on goods and services, which would boost economic growth. Social security benefits would help workers weather financial difficulties and continue contributing to the workforce. And stronger health and safety standards would protect workers from injury and illness, which would make them more productive. The proposed reform is a necessary step to protect workers and promote economic growth. 

Improvement of coverage of establishments as per the Sixth Economic Census

Almost 79% of the labour is done in establishments with less than ten unregulated workers. Current laws apply to establishments with 10 or more people working as labourers. To promote the growth of smaller establishments, some states have already amended their laws to increase the threshold. For example, Rajasthan has increased the limit from 10 to 20 workers for the applicability of the Factories Act of 1948. This is in line with the recommendations of the National Commission for Enterprises in the Unorganised Sector (NCEUS), which called for a reduction in the threshold for the applicability of labour laws in order to reduce the compliance burden on small businesses.

The NCEUS argued that the current threshold of 10 workers is too low and that it discourages the growth of small businesses. The Commission recommended that the threshold be increased to 20 workers, or even higher in some cases.

The Rajasthan government’s decision to increase the threshold is a positive step, and it is hoped that other states will follow suit. This will help to create a more conducive environment for small businesses, and it will encourage the growth of the informal sector.

In addition to increasing the threshold, there are a number of other ways to promote the growth of smaller establishments. These include providing access to finance, training and skill development, and reducing the regulatory burden. By taking these steps, the government can help create a more level playing field for small businesses and encourage the growth of the informal sector.

Limitation of threshold for lay-off, closures, and retrenchment

The Industrial Disputes Act of 1947 is a central legislation that governs industrial relations in India. The Act was enacted to protect the interests of workers and to promote industrial peace and harmony.

One of the key provisions of the Act is that it requires employers to obtain prior permission from the government before retrenching, closing down, or laying off workers. This provision was intended to prevent employers from arbitrarily dismissing workers and to ensure that workers are given adequate notice and compensation in the event of a lay-off or closure.

However, the prior permission requirement has been criticised for creating a barrier to employment creation. Employers argue that the requirement is too onerous and that it makes it difficult for them to adjust to changing market conditions. They also argue that the requirement can lead to job losses, as employers may be reluctant to hire new workers if they know that they will have to obtain prior permission to lay them off in the future.

Labour enforcement

Due to multiple labour laws with no uniformity, the establishments have to go through various compliance changes, which ultimately increase the compliance burden on them and a unified code will really help in reducing the burden of compliance on the establishments. This can require a significant amount of time and resources, which can take away from an establishment’s ability to focus on its core business.

A unified labour code would help to reduce the compliance burden on establishments by consolidating all of the relevant regulations into one law. This would make it easier for establishments to understand and comply with the law, and it would also reduce the amount of time and resources that they need to spend on compliance.

In addition, a unified labour code could help to improve labour standards by ensuring that all workers are treated fairly and equitably. By consolidating all of the relevant regulations into one law, it would be easier to identify and address any gaps or inconsistencies in the law. This would help to ensure that all workers are protected by the law, regardless of their industry or location.

Contract labour

Because of complex and tedious labour compliances, it was observed that the establishments prefer to hire contract labour in order to avoid them. The contract labourer is denied the basics, such as assured wages. The reformed Code does not address this concern, but the Committee has proposed to introduce a new form of short-term labour for fixed-term employment. This new form of labour would be subject to the same regulations as permanent employees and would therefore provide contract workers with the same basic rights.

The Committee’s proposal is based on the belief that the current system of contract labour is unfair and exploitative. Contract workers are often paid less than permanent employees, and they do not have the same benefits or protections. The Committee believes that the new form of short-term labour would provide contract workers with a more secure and fair form of employment.

The committee’s proposal has been met with mixed reactions. Some stakeholders support the proposal, arguing that it would provide contract workers with the basic rights that they deserve. Others oppose the proposal, arguing that it would increase the cost of doing business for employers. The government has not yet decided whether to adopt the committee’s proposal.

Trade unions

Trade unions have been present for a long time now but there is no provision for recognising them or talking about them. The Industrial Relations Code creates provisions for the recognition of unions with 51% membership. This is a significant step forward, as it will allow unions to have a voice in the workplace and to negotiate on behalf of their members.

The lack of recognition for trade unions has been a major problem in India. Unions have been unable to bargain for better wages and working conditions, and they have been unable to protect their members from exploitation. The Industrial Relations Code will help to address these problems by giving unions a legal basis for their existence.

The 51% membership requirement is a necessary step to ensure that unions are representative of the workforce. Unions should not be able to gain recognition without the support of a majority of workers. The 51% requirement will help to ensure that unions are legitimate and that they can effectively represent the interests of their members.

The Industrial Relations Code is a positive step forward for trade unions in India. It will help to give unions a voice in the workplace and to protect the rights of workers. The 51% membership requirement is a necessary step to ensure that unions are representative and legitimate.

Delegated legislations

The new codes have mentioned and delegated many key aspects, like the applicability of social security schemes and health and safety standards, to rule-making by the government, making the law-making process faster and easier.

For example, the new labor code specifies that all employees must be covered by a social security scheme. However, the details of the scheme, such as the contributions that employers and employees must make, are left to be decided by the government through rule-making. This allows the government to quickly adapt the scheme to changing circumstances, such as the economic climate or the needs of specific industries.

Similarly, the new labour code sets out general health and safety standards that employers must comply with. However, the specific requirements of these standards are left to be decided by the government through rule-making. This allows the government to take into account the specific risks faced by different industries and workplaces when setting standards.

The delegation of key aspects of the new labour code to rule-making by the government has made the law-making process faster and easier. It has also allowed the government to tailor the law to the specific needs of different industries and workplaces. This is likely to make the law more effective in protecting workers and promoting a safe and healthy workplace.

Conclusion

India, being the nation known for its labour, has been struggling for a long time for labour reforms. The major challenge faced by the government is facilitating employment growth while protecting workers’ rights. Labour laws were there but were not practical and resourceful, so the face of labour needed a complete amendment, overhaul, reformation and simplification. At present, not all four codes are effective, and the rules are yet to be notified. Hence, only time will tell about the success of this reform. But we can only hope for the best for the labourers. Most of the provisions of the Codes address past demands and discrepancies, acting as restorative justice for past harms. They are no longer required; we need these laws to be more futuristic and practical. The more protection and welfare are what the new-age labourers want and demand. Labours need to resolve disputes related to automation and robotics, an artificial intelligence-powered workforce, and bio-engineering, which could hinder the rights of the workers in the coming decades. We have faced the pandemic most recently, where so many labourers lost their livelihoods and their homes and were forced to move back to their villages during COVID 19 since they had no other option. The labourers need these force majeure situations to be addressed and if they leave their native place for the work, the security of their lives and families should be taken care of.

References

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