This article is written by Rashi Singh from Campus Law Centre, Faculty of Law, University of Delhi. The below article covers the three Labour Code Bills 2020, proposed provisions, amendments and a critical analysis of the same.
The Central Government on September 19, 2020, introduced three major bills in the labour laws of India. The Lok Sabha passed the bills on September 22, 2020. The government claimed that the bills aim towards the simplification of the labour laws to make trade and commerce easier in the nation.
As labour is a subject mentioned in the concurrent list of the Indian Constitution both centre and the state governments have the power to legislate on the matter. According to the data, provided by the central government, currently, there are around 40 central statutes and 100 state statutes governing the various facets of the labour laws in India. The reforms were previously proposed in 2019, when the government introduced four bills, out of these four bills only Wages Code Bill was passed and the others were referred to the Standing Committee on Labour. The Standing Committee submitted its report in April 2020, after which the government replaced the bills with new ones. As per the government, these bills will help in consolidating the different scattered labour laws in India. Now, let us understand these three bills and how they will affect you if you are a worker, employee or employer.
Industrial relations code bill 2020
The Industrial Relations Code Bill 2020, is formed after amalgamating, repealing or simplifying three central labour laws:
The bill is aimed at protecting the interests of the workers to form trade unions and in case of any conflict with the employer, easy settlement for the same can be reached.
Changes in the definitions
Industrial relations code redefines some of the definitions and also introduces new definitions such as:
The bill has included “working journalists” and “sales promotions employee” under the ambit of the definition of worker. Further, the bill also includes persons who are employed under “supervisory capacity” and less than eighteen thousand rupees per month (or any other amount as specified by the central government). So the definition of “worker” under the bill has been broadened.
Employee means any person other than the apprentice under the Apprentice Act, 1961 hired by an industrial establishment to do any skilled, unskilled or semi-skilled or unskilled, manual, operational, supervisory, managerial, technical, administrative or clerical for hire or reward even if the terms of the employment are express or implied, and it also includes a person announced to be an employee by the appropriate Government but does not include the member of the Armed Forces of the Union.
The bill expands the definition of Employer. It includes:
- Concerning an establishment which is a factory, the person who occupies the factory,
- Where a person has been announced as the manager of the factory,
- Concerning any other establishment, the person who, or the authority having ultimate control over the affairs of the establishment and where the said affairs are trusted with a manager or managing director, such manager or managing director; legal representative and contractor of a deceased employer.
IR code mainly excludes these from the definition of Industry:
- Institutions which are owned or managed wholly or substantially engaged in any kind of charitable, social or philanthropic service; or
- Any activity of the appropriate Government which is relatable to the sovereign functions of the appropriate Government also includes all the activities carried on by the departments of the Central Government exclusively dealing with defence research, atomic energy and space; or
- any domestic service provider; or
- Any other activity which may be notified by the Central Government from time to time.
Also, under the Industrial Disputes Act, several other establishments such as hospitals, educational institutions, scientific institutions etc. which were earlier excluded from the definition, have now been removed from the list of exceptions under the definition.
- Industrial Dispute
The industrial dispute now also includes any dispute and differences arising between an individual worker and his/her employer due to the discharge, dismissal, retrenchment, termination of such worker within its ambit.
- Fixed Term Employment
This new provision of “fixed-term employment” has been introduced in the bill. It means and refers to the engagement of a worker based on a written contract of employment for a fixed period provided that:
- his/her hours of work, allowances, wages and other benefits shall not be less than that of a permanent worker doing the same work or work of similar nature;
- he/she shall be eligible for all the statutory benefits available to a permanent worker proportionately according to the period of service rendered by him/her even in the case where his/her period of employment does not extend to the qualifying period of employment required in the statute; and
- he/she shall be eligible for gratuity if he/she has rendered services under the contract for one year.
The definition of “strike” has been expanded extensively as now it also includes the concerted casual leave on a particular day by fifty percent or more workers employed in an industry.
Trade Union Registration
- Any seven or more members of a trade union by subscribing to their names can apply for registration to the Authority according to Rules of the Trade Union.
- Not less than ten percent of the workers or 100 workers, whichever is less, must be members of the Trade Union on the date of making an application for registration.
- Registered Trade Union shall continue to have not less than ten percent of the workers or one hundred workers, whichever is less.
- If the name of the proposed Trade Union to be registered is identical with an existing registered Trade Union, alteration of the name needs to be done as asked by the Registrar of Trade Union.
- Registered Trade Union shall be a body incorporated by the registered name, which has a common seal and perpetual succession with the power to hold property.
“Negotiating Trade Union/Council” is a new provision which has been added in the new code which means that every industrial establishment having registered trade unions shall have a single negotiating union/council (this status will be given to the trade union which has 51% of the employees as a member). In case there is only one registered trade union, then the employer shall recognise that trade union as a sole negotiating council. Also, if there is no trade union registered in an industrial establishment then the employer itself constitutes a negotiating council. This council is responsible for negotiating on said matters with the employer.
Industrial establishments with more than 300 or more workers (earlier threshold was 100 workers) on any day during 12 months are required to prepare a standing order on the following matters:
- Workers as classified;
- Manner of intimating to workers for pay-days, hours of work holiday and wage rates Shift Working;
- Conditions and the procedure involved for leave and holidays;
- Attendance; and
- The requirement to enter premises through certain gates, and the liability to search.
Provisions related to Lay Off, Retrenchment and Closure
The bill has waived off the requirement of prior permission from the appropriate government for retrenchment, lay off or closure for establishments such as mines, factories and plantations not less than 300 workers. However, it is not necessary to obtain prior permission in cases wherein such lay-off is due to the reasons such as natural calamity, shortage of power, and in the case of a mine, such lay-off is due to the causes like flood, fire, excess of inflammable gas or explosion. The code makes any lay-off illegal if it is done without permission or it is done even after the refusal of permission. Closure of an establishment requires a 60 days notice to be served to the government, also during retrenchment if a worker has been working for more than 1 year, a 60 days notice or payment in lieu of notice period is prescribed.
How does the IR code affect the right to strike
The new code prohibits all strikes and lock-outs in an Industrial Establishment without notice. The provision says:
Every employee is prohibited from going on strike:
- without giving advance notice of 60 days for strike and lockout to the employer;
- Within a fourteen-day period after giving such notice; or
- before the date given in the notice for strike and lockout expires; or
- When a conciliation proceeding is pending before a conciliation officer and seven days right after the conclusion of such proceedings; or
- When an arbitration proceeding is pending before an arbitrator and 60 days right after the conclusion of such proceedings.
Grievance Redressal Committee
The IR code mandates a constitution of one or more grievance redressal committees for industrial establishments having twenty or more workers. This committee shall be constituted with an equal number of representation from the workers and employer. The maximum number of representatives is ten also, the code asks for equal representation of women workers in the committee. Such a committee shall aim to resolve disputes arising out of individual grievances between the workers and the employer.
Prohibition of arbitrary strikes and lock-outs is a step towards the continuous functioning of industries. Also, the introduction of a sole negotiating council and grievance redressal committee will ensure speedy and amicable dispute resolution between workers and the employer. Though the curb on workers’ right to strike has received several criticisms from the labour unions around the country hence, it remains one of the major concerns regarding the IR code. The increased limit (from 100 workers to 300 or more workers) for prior government approval by establishments for lay off and retrenchment may make workers prone to arbitral dismissal from the employment.
Code on Social Security Bill 2020
The new code is aimed at providing security to employees of organized, unorganized sectors. It extends the benefit to the workers of all sectors.
This code has subsumed nine central laws, namely:
As the bill also recognises workers of unorganised sectors, it introduces several new definitions too. Some major definitions include:
This includes a marketplace or a digital intermediary for the buyer or user of a service or we can say the service provider.
- Gig Worker
This code defines a “gig worker” as someone who performs work or takes part in a work arrangement and makes living through such activities without falling under the purview of the traditional employee-employer relationship.
- Unorganised Worker
An “unorganised” worker includes self-employed, a home-based worker, or a wage worker in an unorganised sector.
- Platform Work
Platform work is defined as a work arrangement without the traditional employee-employer relationship. In this arrangement, the organisations or individuals use an online medium to provide or hire for specific problems or activities or any other activity as prescribed by the central government. A worker engaged in platform work is defined as a “platform worker”.
- Unorganised Sector
Unorganised sector means an enterprise owned by self-employed workers and individuals and such enterprises engaged in production or sales of goods or providing any services and the number of workers in such enterprises is less than 10.
- Social Security
Now, what is termed social security? Under SS code, social security means the measures of protection afforded to unorganised workers, employees, gig workers and platform workers so that to ensure access to health care and to provide them income security, particularly in cases of old age, sickness, invalidity, work injury, unemployment, maternity or loss of a breadwinner of the family utilizing rights conferred on them and schemes framed, under the SS Code.
What does the SS code say on Gratuity
A gratuity is given by the employer to his/her employee for the services rendered to the employer during the period of employment (to be eligible for gratuity an employee should have been in service for five or more years). A gratuity shall be payable to all the eligible employees by every shop or establishment in which ten or more employees are employed, or were employed, on any day of the preceding twelve months. Some events give rise to gratuities such as superannuation, resignation, retirement, death or disablement due to accident or disease. For working journalists, the term for gratuity payment has been reduced to 3 years from 5 years under the SS code. Fixed-term employees are not required to fulfill the requirement of 5-year service. Failure by any person to pay the amount of gratuity to the employee who is entitled to it makes it punishable with imprisonment which can extend up to 1 year or with a fine of up to 50 thousand or both.
Employees’ Provident Fund
The code increases the applicability threshold of the EPF scheme to every establishment with 20 or more employees. The employee and the employer both will contribute ten per cent of the wages towards the EPF. The central government may by notification increase the contribution to 12% of the wages for employers and employees of certain establishments.
If an employer fails to contribute under the Social Security code, the offence is made punishable.
The SS code provides that the maternity benefits shall apply to every shop or establishment having 10 or more employees, on any day of the preceding 12 months; and such establishments as the government may notify. The maximum period for which any woman shall avail maternity benefits shall be twenty-six weeks out of which not more than eight weeks shall precede the expected date of her delivery, but in cases where a woman already has two or more surviving children, she is entitled to maternity benefits for 12 weeks only. No employer (even a woman employer) knowingly can employ a woman in an establishment for six weeks immediately after the delivery, miscarriage or medical termination of pregnancy.
Social Security Organisations (SSOs)
The SS code also provides for the establishment of various bodies called social security organisations so that the social security schemes are effectively administered. Some of the organisations include:
- Employees’ State Insurance Corporation
This corporation has two committees, first one is a standing committee to administer the affairs and functions of the committee and to exercise the powers conferred on the committee. The second committee is the medical benefit committee to administer the schemes related to the medical benefits to the employees.
- National Security Board for Unorganised Workers
Unorganised workers like gig workers, platform workers etc, are included in the code. The board aims to recommend suitable schemes and monitor social welfare schemes for such workers. The board is constituted for three years.
- Central Board of Trustees of Employees’ Provident Fund
This board is constituted for the effective administration of the funds. The board can also form one or more committees of the same composition for assistance in the functioning of the board.
The next step is that the employers should be well aware and prepared in advance for this new development. The changes in the definitions and introduction of new definitions such as gig workers, platform workers etc. invites attention. Gratuity is introduced for fixed-term employees making this a worry for the employers. Aggregators now have to contribute towards the social security fund. Employers should ensure a smooth transition to the new code as it invites various compliance requirements to be fulfilled.
Occupational safety, health and working conditions Code Bill 2020
This code subsumes around 633 provisions of 13 different central labour laws into one code with 143 provisions. The code is aimed at providing health and safety to the workers employed in different sectors such as industry, trade, business, building and other construction work, newspaper establishments, plantation, mine, dock-work and service sectors. The code also creates several provisions for the workers engaged in hazardous works and their safety concerns. Certain classes of establishments such as mines, factories, dock workers, construction workers are subject to different provisions for a license, safety regulations and duties of employers.
- Contract labour
A worker is defined as contract labour if he is hired for work in an establishment with or without the knowledge of the principal employer. This definition does not include any worker who is regularly employed by the contractor for any activity in the establishment.
The OSH Code defines an employer as a person who employs, whether directly or indirectly through any other person, or on his behalf, or on behalf of any person, one or more employees in his establishment or shop.
An establishment is:
(i) any place where ten or more workers work, where any industry, trade, business, or engaged in manufacturing or any occupation is carried on; or
(ii) a motor transport undertaking, newspaper establishments, audio-video production house, building and other construction work or plantation employing ten or more workers; or
(iii) a factory in which ten or more workers are hired; or
(iv) a mine or port or vicinity of the port where an activity such as dock work is carried out.
- Hazardous process
The occupational safety and health conditions code defines hazardous works as any process or activity concerning specific industries, where unless special care is undertaken, raw/intermediate/finished/by-products, etc. would cause:
- Cause any kind of material impairment to the health of the persons engaged in or connected with such work; or
- It results in pollution of the general environment.
Wages, as given in the OSH Code, comprises of all remunerations such as salaries, allowances or otherwise, expressed in monetary terms or capable of being so expressed which would be payable to a person in respect of the employment he is engaged in, whether express or implied, or of all work done in such employment and also includes basic pay, dearness allowances and retaining allowances, if any. The OSH Code also makes it clear that wages do not include:
(b) value of accommodation or light, water, medical attendance if any;
(c) contribution made by an employer towards any pension or provident fund;
(d) conveyance allowance;
(e) sum paid to the employed person to defray any kind of special expenses;
(f) house rent allowance;
(g) allowance for overtime; and
(h) gratuity, etc.
Rights as an employee
The employees have the following rights under the OSH code:
- To ask for information regarding the health and safety at the work from the employer. The employee can inform the employer about the required safety provisions at the workplace and if not satisfied with the employer’s action on the same, he can reach out to the inspector-cum-facilitator;
- If the employee has a reasonable apprehension that there is a possibility of imminent personal injury to death or health, he may inform the employer and the inspector-cum-facilitator simultaneously;
- If the employer is satisfied with the existence of such imminent danger, he is required to take immediate remedial action and send a report to the inspector-cum-facilitator;
- If the employer is not satisfied that such imminent danger exists, he can refer the matter to the inspector-cum-facilitator and the decision of the inspector-cum-facilitator is final.
Duties as an employer
As an employer, one has to ensure the following:
- That the workplace is free from any kind of hazards and danger which can cause injury to the employees in any manner, an employer should comply with the directions laid down in the code;
- Issue letter of appointments to the employees;
- Provide health tests and check-ups annually for free to a certain class of employees;
- Making sure a safe and healthy work environment is available for the employees;
- No charge should be levied on the employee to maintain health and safety conditions at the workplace.
For factories, mines, dock work, building or construction work:
- arrangements in the workplace for ensuring safety of workers and ensuring the absence of risk to the health in connection with the use, storage and transport of articles and substances;
- provision of such instruction, information, training and the required supervision which is necessary to ensure the health and safety of all employees at work, etc.;
- it shall be the duty of the architect, project engineer or designer involved in any building or construction work or the design made for any project relating to such building, to ensure that, at the planning stage, due consideration is maintained to the safety and health aspects of the building workers and the employees who are employed in the work related to the erection, operation and execution of such projects.
Health, safety and working conditions
Under the OSH code the employer is required to provide and maintain welfare activities such as the following:
- adequate and suitable facilities of washrooms to male and female employees separately;
- bathing places and locker rooms for male, female and transgender employees separately;
- sitting arrangements for all employees who have to work in a standing position as the work demands so;
- adequate first-aid boxes or cupboards with contents readily and easily accessible during all working hours; and
- any other welfare measures and precautions which the Central Government considers, under the set of certain circumstances, as required for a decent standard of life of the employees.
The central government may provide for the provisions on the following:
- To maintain cleanliness and hygiene;
- ventilation, temperature and humidity related issues;
- adequate standard for the purpose of humidification;
- potable and safe drinking water;
- adequate lighting standards;
- adequate standards to prevent overcrowding, etc.
Inter-state migrant workers and contract labours as employees
For the OSH code to apply the minimum number of contract labours should be 50 (earlier 20). The principal employer is bound to provide welfare facilities to the contract labourer under this code.
The OSH Code also extends to safeguarding the rights of the Inter-State Migrant Workers by making sure that the contractor extends all benefits as are available to a normal worker under the various labour laws to inter-state migrant workers as well. Further, the employer of every applicable establishment is required to pay to every inter-state migrant worker, a lump sum travel fare for to and fro journey to his native place from the place of his employment.
As a well-taken step, the OSH code also provides for a common license in respect of a factory, industrial premises engaged in beedi and cigar work and also for engaging contract labour.
OSH code provides that, the Central Government shall constitute a National Occupational Safety and Health Advisory Board to discharge the functions which are conferred on it by or under this Code and to advise to the Central Government on the matters relating to standards, and various rules and regulation to be framed under this Code.
Also, it says that the State Government shall constitute a Board to be called the State Occupational Safety and Health Advisory Board to advise the State Government on matters relating to the administration of this Code as the State government refers to the board.
The three labour codes are being criticized widely on various grounds such as it has very heavy delegated legislation, it fails to address some crucial class of workers under the codes. Also, the increase in the threshold of the standing order to 300 employees which was earlier 100 is receiving criticism as analysts are saying that it will just give more flexibility to the employers in terms of hiring and firing. It demolishes the foundation of employment security. The IR Code says that no person employed in an establishment can go on a strike without giving a notice of 60 days. This hampers the worker’s right to strike facing backlash from the trade unions.
The three labour codes the Industrial Relations Code, the Social Security code and the Occupational, Safety and Health Working Conditions code aim to overhaul the bulky legislations in place. Labour reforms were a much-needed demand in India and these demands were fulfilled by these codes as said by the government. However, the effect of these codes can be analyzed only after some time of their implementation.
- Industrial Relations Code, 2020 – eGazette
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