Decoding: The New Three Labour Code Bills, 2020

The Re-Beginnan | Vol.2 | Issue 17

What’s the Deal?

The Rajya Sabha passed 3 labour code bills on September 23rd, 2020, that proposes to replace 25 labour laws with 3 codes. The three codes namely are; The Occupational Safety, Health and Working Conditions Code 2020 (13 laws replaced), The Code on Social Security (9 laws replaced) and The Industrial Relations Code, 2020 (3 laws replaced). Along with these 3 codes, The Wage Code (4 laws replaced) was passed in August 2019.

The objective of these new codes is to simplify and modernize labour regulations along with facilitating employment growth and protecting workers’ rights.

Dissecting and Understanding the 3 codes

The Occupational Safety, Health and Working Conditions Code, 2020

Key Takeaways

- In this code, ‘Migrant Worker’ has been defined as a worker who has come on his own from one state and obtained employment in another state, earning up to INR 18,000/month. Previously, it was difficult for a migrant worker to get registered in a state and avail employment benefits. This problem has been solved with a clear definition of a ‘Migrant Worker’ in the new law, as opposed to only the presence of ‘Contractual Worker’ definition in the old law.

- This code aims to consolidate and amend laws regulating the occupational safety, health and working conditions of the employees.

- Under this code, staffing firms (contractors) will only require a single license to hire workers on contract from across different locations as opposed to multiple licenses required before. This will save time and cost of the contractor.

- Thresh hold limit for contract employees has increased from 20 to 50 under the OHS Code. This will help in increasing employment.

The Code on Social Security, 2020

Key Takeaways

- This code aspires to provide universal social security to all workers, including in the unorganized sector, gig and platform workers. These account for 90% of India’s workforce, therefore this code will act as a boon for these workers.

- This code also proposes the formulation of a National Social Security Board which shall recommend the central government to formulate suitable schemes for different sections of unorganized workers, gig workers and platform workers.

- 1–2% of their turnover will have to be contributed by the aggregators hiring gig workers for workers’ social security.

The Industrial Relations Code, 2020

- ­This code deals with trade unions, conditions of employment and investigation and settlement of disputes in industrial establishments or undertakings.

- Industrial code will be applicable to every industrial establishment wherein three hundred or more than three hundred workers, are employed, or were employed on any day of the preceding twelve months.

- The thresh hold of number of employees in an establishment needed for retrenchment and closure of establishment without government’s approval increased to 300 from 100. This will improve the ease of firing employees significantly. This will also enable the employer to hire more than 100 people without any fear of not being able to close the establishment or fire employees in case of losses. It will also enable investors to set up large scale factories and employ more workers that will facilitate low costs and efficiency. The criticism for this code is that labour rights in establishments having less than 300 workers will be compromised.

- Some states like Rajasthan had already increased their thresh hold which resulted in “an increase in employment and decrease in retrenchment”, according to the labour ministry.

- The code also proposes that no employee can go on a strike in an industrial establishment without giving a 60-days’ notice. Also, workers cannot go on a strike if some pending proceedings are on before a Tribunal or National Industrial Tribunal and till 60 days after the conclusion of such proceedings. Such provisions makes legal strikes almost impossible to be held.

The Way Forward…

These codes (bills) are yet to become acts, as they’re awaiting the president’s approval. Will the flexibility given to employers in these codes act as a boon and increase productivity & promote industries or will the labours bear the brunt of these codes wherein their rights will potentially be compromised? Only time will tell…