Author, Aayushi Kiran, is a 2nd year, BBA LLB student at the ICFAI University, Dehradun. She is currently interning with LatestLaws.com.

The Lok Sabha, on 22nd September 2020, passed three new labour bills – The Industrial Relations Code Bill, 2020; Code on Social Security Bill, 2020 and the Occupational Safety, Health and Working Conditions Code Bill, 2020. These three labour bill, are part of the government’s reform formulated in order to simplify India's labour legislation and improve the ease of trade and commerce in the nation.

Labour falls under the Concurrent List of the Indian Constitution, which means Parliament as well as the State Legislatures can make laws regulating labour. According to the central government, there are over 100 state and 40 central laws regulating various aspects of labour. In 2002, the Second National Commission on Labour on finding that the existing legislation to be complex, it recommended the consolidation of central labour laws into broader groups such as industrial relations, wages, social security, safety and welfare and working conditions, to improve ease of compliance and ensure consistency in labour laws.

In 2019, to consolidate 29 central laws, the Ministry of Labour and Employment introduced four Bills. These Codes included Wages, Industrial Relations, Social Security, and Occupational Safety, Health and Working Conditions. The Code on Wages was passed by the Parliament in 2019, but the Bills on the other three areas were referred to the Standing Committee on Labour.  The Standing Committee submitted its report on all three Bills and the government replaced these Bills with new ones on September 19, 2020.

CHANGES IN 2020 LABOUR BILLS

  1. According to the 2019 labour bill, the central government was authorized to act as the appropriate government for any central public sector undertaking (PSUs). The 2020 Bills lay down that the central government will continue to be the appropriate government for a central PSU even if the holding of the central government in the PSU becomes less than 50% after the commencement of the Bills.
  2. It was specifically mentioned in the 2019 Bills that the central government would be the appropriate government for industries such as railways, mines, telecom and banking, whereas, the 2020 Bills lay down that the central government will also be the suitable government for any “Controlled Industry”.
  3. The 2019 Bills permitted settling of offenses which were not punishable with imprisonment, or with imprisonment and fine, subject to certain conditions.  Compounding or settling of offenses was allowed for a sum of 50% of the maximum fine. According to the 2020 Bills compounding is allowed for a sum of 50% of the maximum fine for offenses with fine and offenses with imprisonment compounding is allowed for a sum of 75%, whereas in the Bill on Occupational Safety, 50% can be compounded where a ‘penalty’ is imposed for non-maintenance of registers and 75% for ‘offenses’ for falsification of records.

CODE ON INDUSTRIAL RELATIONS, 2020

The Industrial Relation Code Bill is formulated with the main motive to energize the industry and economic activity and free employees from the constraints of earlier labour laws.

The Industrial Relations Code amalgamates the features of three laws namely: the Trade Unions Act, 1926, the  Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947.

According to the Code on Industrial Relations the term ‘workers’ consists of all persons beside employed in a skilled or unskilled, manual, technical, operational and clerical capacity, supervisory staff drawing up to ₹18,000 a month as salary. It presents 'fixed-term employment', which aims to give employers the flexibility to hire workers based on requirements 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 new Code states, any establishment that employs 300 or more workers must prepare standing orders relating to categories of workers, manner of allotting them time slots and hours of work, holidays, paydays, etc., shifts, attendance, conditions for leave, termination of employment, or suspension, besides the means available for the redress of grievances. Earlier, the 2019 Bill applied this to units with 100 employees or more, which now has been raised to 300 in the 2020 Code.

What does the Code on Industrial Relations say on trade unions?

Where there exists 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. The 2020 Bill provides that a negotiating council will be formed consisting of representatives of unions that have at least 20% of the workers as members, in case no trade union is eligible as sole negotiating union.

What are the provisions on lay-off and closure?

The provisions are such that it requires 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 even permits the government to raise this threshold by notification. A lay-off would be declared illegal if it is affected without permission or is done despite the refusal of permission, but it will not be so if the employee had been offered other employment that does not require any special skill or cause unwarranted hardship. The Code prescribes notice period, or payment instead 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 also required for closure of a unit, with the application to be filed 90 days prior to the intended closure.

How does the new Code affect the right to strike?

The Code prohibits strikes and lock-outs in all industrial establishments without notice. Therefore, no unit shall go on strike in breach of contract without giving notice 60 days before the strike, or within 14 days of giving such a notice, or before the expiry of any date given in the notice for the strike. Further, there should be no strike during any conciliation proceedings or within seven days of the conclusion of such proceedings; or during proceedings before an industrial tribunal or 60 days after their conclusion or during arbitration proceedings. Parallel restrictions have been given on the employer from announcing a lock-out. The Industrial Disputes Act, 1947, had placed such restrictions on announcing strikes only in respect of public utility services. But the present Code extends to all establishments. Even the Standing Committee on Labour had preferred and supported limiting these provisions to public utilities.

CODE ON SOCIAL SECURITY, 2020

What are the Social security entitlements, under Code on Social Security, 2020?

The Code on Social Security states that the central government may, by notification, apply to any Social security entitlements such as the size of the establishment and income ceilings.

Under the 2020 Bill, the government makes the few changes for unorganized sector workers (such as home-based and self-employed workers), gig workers, and platform workers. The changes are as follows:

The 2020 Bill lays that the central government will set up funds for unorganized workers, gig workers and platform workers. The State governments will also set up and administer separate social security funds for unorganized workers. The Bill even makes provisions for registration of all three categories of workers namely: unorganized workers, gig workers and platform workers.

According to the 2020 Bill, the National Social Security Board will act as the Board for the purposes of the welfare of gig workers and platform workers and can recommend as well as monitor schemes for gig workers and platform workers. In such cases, the Board will comprise of a different set of members including (i) five representatives of aggregators, nominated by the central government, (ii) five representatives of gig workers and platform workers, nominated by the central government, (iii) Director-General of the ESIC, and (iv) five representatives of state governments.

 The 2020 Bill clarifies that schemes for gig workers and platform workers may be funded through a combination of contributions from the central government, state governments, and aggregators. For this purpose, a list of aggregators is specified in Schedule 7.  These nine categories include ride-sharing services, food and grocery delivery services, content and media services, and e-marketplaces. Any contribution from such an aggregator may be at a rate notified by the government falling between 1-2% of the annual turnover of the aggregators.  But, this contribution cannot exceed 5% of the amount paid or payable by an aggregator to gig workers and platform workers. 

Changes in the definition of certain terms - The 2020 Bill changes the definitions of certain terms in the Code.   These include: (i) expanding the definition of ‘employees’ to include workers employed through contractors, (ii) expanding the definition of “inter-state migrant workers” to include self-employed workers from another state, (iii) expanding the definition of “platform worker” to additional categories of services or activities as may be notified by the government, (iv) expanding the definition of audio-visual productions to include films, web-based serials, talk shows, reality shows and sports shows, and (v), exempting construction works from the ambit of “building or other construction work” if the total cost of construction work exceeds Rs 50 lakhs (and if they employ more than a certain notified number of workers). The 2020 Bill reduces the gratuity period from five years to three years for working journalists.

What are the Provisions on appeals, assessment and offenses and penalties under the new Bill?

The 2020 Bill removes the provisions to conduct inquiries and decide disputes regarding the applicability of the provisions of provident fund (PF) and employee state insurance (ESI) to certain establishments, and determine amounts due from employers under these heads.

The 2020 Bill removes this provision to the determination of escaped amounts.

In the 2020 Bill, the penalties for certain offenses are changed. For instance, the maximum imprisonment for obstructing an inspector from performing his duty has been reduced from one year to six months.   Similarly, the penalty for unlawfully deducting the employer’s contribution from the employee’s wages has been changed from imprisonment of one year or fine of ₹50,000 to only a fine of ₹50,000.

Other relevant Changes- The Bill expands the representation of central government officials in the National Social Security Board for unorganized workers from five members to 10 members (taking the total count of members from 37 in the 2019 Bill to 42 in the 2020 Bill).  Similarly, the number of state government officials in the state Boards for unorganized workers has been increased from seven to 10 members (taking the total members from 31 in the 2019 Bill to 34 in the 2020 Bill).

The 2020 Bill adds new clauses which may become applicable in the cases of an epidemic.  For instance, the central government may comply or reduce the employer’s or employee’s contributions (under PF and ESI) for a period of up to three months in the case of a pandemic, endemic, or national disaster.

CODE ON OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS, 2020

The 2020 Bill, on occupational safety, health and working conditions empowers the state government to exempt any new factory from the provisions of the Code in order to create more economic activity and employment.

What are the thresholds for coverage of establishments under the Code on Occupational safety, health and working conditions, 2020?

According to the new bill a factory is defined as any premises where the manufacturing process is carried out and it hires 20 workers for premises where the manufacturing process is carried out using power, and 40 workers for premises where the manufacturing is carried without using power.

An establishment of a place is where any business, trade, or occupation is carried out with 10 or more than 10 workers. Simultaneously the bill includes all establishments where any hazardous activity is carried out regardless of the number of workers.

The 2020 Bill replaces the 2019 provision by specifying that the Code will apply to establishments or contractors employing 50 or more workers (on any day in the last one year) instead of 20 or more contract workers (on any day in the last one year).

The Bill forbids contract labour in core activities, except in the places where:

  1. the normal functioning of the establishment is ordinarily done by contractor,
  2. the activities do not require full-time workers for the major part of the day, or
  3. there is an unexpected increase in the volume work in the core activity which needs to be completed in a specified time period.

 It is in the hands of the appropriate government to decide whether an activity of the establishment is a core activity or not. This includes a list of 11 nom-core activities where the prohibition in contract labour would not apply are: sanitation workers, security services, and any activity of intermittent nature even if that is a core activity of an establishment. 

The appropriate government also has to exempt contractors from the provisions of the Bill in case of an emergency, subject to such conditions as may be notified as per the new bill.

The 2020 Bill explains that the new Code formulated will apply to contract labour engaged through a contractor in the offices of the central and state governments.

What are the working hours and employment conditions under the Bill?

The new Bill of 2020 fixes the maximum limit at eight hours per day.

The 2020 Bill provides that women will be entitled to be employed in all establishments for all types of work under the Bill and it also lays that in case if the women are required to work in hazardous or dangerous operations, the government will provide adequate safeguards prior to their employment.

How is Inter-state migrant workers and unorganized workers defined under the bill?

The 2020 Bill states that any person who moves on his own to another state and obtains employment they will be considered an inter-state migrant worker apart from this if anyone has been recruited by an employer or contractor for working in another state or draws wages within the maximum amount notified by the central government will also fall in the category of an inter-state migrant worker. As per the provisions of the new Bills only those persons will be considered as inter-state migrants who are earning a maximum of Rs 18,000 per month, or higher amount which the central government may say.

The benefits provided to the inter-state migrant workers are:

  1. preference to avail the benefits of the public distribution system either in the native state or the state of employment,
  2. availability of benefits available under the building and other construction cess fund in the state of employment, and
  3. insurance and provident fund aids are available to other workers in the establishment.

The 2020 Bill requires mandated the central and state governments to record and maintain the details of inter-state migrant workers in a portal. Using the portal an inter-state migrant worker can register himself based on self-declaration and Aadhaar.

The Code on Occupational Safety, Health and Working Condition, 2020 provides for the Social Security Fund for the welfare of unorganized workers. The amount collected from certain penalties under the will be credited to the Fund on the other hand the government may recommend any other source for transferring money to the Fund.

CONCERNS RAISED OVER THE NEW LABOUR CODES (ANALYSIS)

In the wise of Analysts, the increase in the threshold for standing orders will curb down the labour rights for workers in small establishments having less than 300 workers. “The increase in the threshold for standing orders from the existing 100 to 300 is uncalled for and shows the government is very keen to give tremendous amounts of flexibility to the employers in terms of hiring and firing…dismissal for alleged misconduct and retrenchment for economic reasons will be completely possible for all the industrial establishments employing less than 300 workers. This is complete demolition of employment security,” XLRI professor and labour economist KR Shyam Sundar said.

The new conditions are introduced by The Industrial Relations Code for carrying out a legal strike. The time slot for arbitration proceedings has been included in the conditions for workers before going on a legal strike against only the time for conciliation at present.

Just for an instance, the IR Code proposes that no person employed in any industrial establishment shall go on strike without a 60-day notice and during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and sixty days after the conclusion of such proceedings. Therefore, elongating the legally permissible time frame before the workers can go on a legal strike, making a legal strike well-nigh impossible.

The Industrial Relations Code has extended to cover all industrial establishments for the required notice period and other conditions for a legal strike. The Standing Committee on Labour had recommended against the expansion of the required notice period for strike beyond the public utility services like water, electricity, natural gas, telephone and other essential services.

Currently, a person employed in a public utility service cannot go on strike without giving notice for a strike within six weeks before going on strike or within fourteen days of giving such notice, which the IR Code now proposes to apply for all the industrial establishments.

CONCLUSION

In the country like India, where social justice is becoming a distant dream, a total dilution of rights of workers is nothing more than an authoritarian rule which is completely opposed to the democratic principles that the Constitution espouses. Labour reforms were indeed needed in India. Therefore, the government fulfilled its duty by introducing the three Labour Bills, 2020, which ensure greater operational flexibility to the employers. The central government has come up with three codes which reform various action plans and give steps to increase the efficiency. It has also made checklist for the state governments to ensure that they follow the norms diligently. India required an overhaul of reform from the ground level therefore these labour codes on Operational safety, Health and Working conditions, the Industrial code and the Social Security Code will bring a new revolution for the labours in India.

Picture Source :

 
Aayushi Kiran