NEW LABOUR DEAL : PROFIT OR PERIL ?

Introducing the bills, Labour Minister Santosh Gangwar stressed that the objective of labour reforms is to have labour laws in line with the changing world of workplace and provide an effective and transparent system, balancing the needs of workers and industries.

The Parliament today passed three labour codes -- Industrial Relations, Occupational Safety, Health & Working Conditions and Social Security Code, 2020, subsuming the earlier 29 labour laws. The three codes will now go to the President for his assent. Wage code bill was passed in 2019 but is yet to be implemented.

What are the main features of the Industrial Relations  Code?

The Industrial Relations Code combines the features of three erstwhile laws — the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947. It defines ‘workers’ to include, besides all persons employed in a skilled or unskilled, manual, technical, operational and clerical capacity, supervisory staff drawing up to ₹18,000 a month as salary. It introduces ‘fixed term employment’, giving employers the flexibility to hire workers based on requirement through a written contract. Fixed term employees should be treated on a par with permanent workers in terms of hours of work, wages, allowances and other benefits, including statutory benefits such as gratuity.

The Industrial Relations Code combines the features of three erstwhile laws — the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947. It defines ‘workers’ to include, besides all persons employed in a skilled or unskilled, manual, technical, operational and clerical capacity, supervisory staff drawing up to ₹18,000 a month as salary. It introduces ‘fixed term employment’, giving employers the flexibility to hire workers based on requirement through a written contract. Fixed term employees should be treated on a par with permanent workers in terms of hours of work, wages, allowances and other benefits, including statutory benefits such as gratuity.

What does it say on trade unions?

Where there is more than one trade union in an establishment, the sole negotiating union status will be given to the one that has 51% of the employees as its members. It has been brought down from the 75% requirement in the 2019 version. Where no union qualifies under this criterion, the employer must constitute a ‘negotiating council’ consisting of representatives drawn from the various unions, with only those with at least 20% of employees as its members.

What are the provisions on lay-off and closure?

The provisions that require the prior permission of the government for lay-off, retrenchment and closure are made applicable to only establishments that had employed 300 or more workers on an average per working day in the preceding 12 months. The Code also allows the government to raise this threshold by notification. A lay-off would be deemed illegal if it is effected without permission or is done despite refusal of permission, but it will not be so if the employee had been offered alternative employment that does not require any special skill or cause undue hardship. The Code prescribes notice period, or payment in lieu of notice period, and prior government permission before retrenchment of anyone who has been in continuous service for a year or more. Such a prior permission requirement is in place also for closure of a unit, with the application to be filed 90 days prior to the intended closure.

The Social Security Code provides a framework to include organised and unorganised sector workers under the ambit of comprehensive social security.  It contains provisions relating to EPFO, ESIC, building construction workers, maternity benefits, gratuity and social security fund for unorganised sector workers. One of the provisions under the new code says that now its coverage will be in all 740 districts of the country. In addition, the option of ESIC will also be for plantation workers, unorganised sector workers, gigs and platform workers, and institutions with less than 10 workers. Also, now all institutions with 20 or more workers will come under the ambit of the EPF.

The OSH Code that seeks to ensure a safe working environment has included annual health check-up for workers above a certain age. Also, workers employed for 180 days are eligible for leave; earlier this threshold was 240 days.  

The definition of migrant workers has been broadened. Now all the workers who come from one state to another and have less than Rs 18,000 salary will come under the definition of migrant labour and will get the benefit of welfare schemes of the government. Besides, the government is working to create a database for migrant workers, portability of their welfare schemes, a separate helpline arrangement and travel allowance to be given by the employer once a year for them to go to their place of origin.