LABOUR CODE

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PURPOSE OF LABOUR LEGISLATION
l Labour legislation that is adapted to the economic and social challenges of the
modern world of work fulfils three crucial roles: it establishes a legal system that
facilitates productive individual and collective employment relationships, and
therefore a productive economy;
l l by providing a framework within which employers, workers and their
representatives can interact with regard to work-related issues, it serves as an
important vehicle for achieving harmonious industrial relations based on workplace
democracy;
it provides a clear and constant reminder and guarantee of fundamental principles
and rights at work which have received broad social acceptance and establishes the
processes through which these principles and rights can be implemented and
enforced.

FEATURES OF NEW LABOUR CODES

1. Most labour rules are applicable to businesses larger than a particular size (typically
10 or above). Thresholds based on company size could ease the burden of compliance
for businesses. One would counter that all businesses should be subject to
fundamental protections including pay, social security, and working conditions. Such
size-based limits are still present in some codes.
2. Simple and accountable system will simplify the processes. One Registration one
License, single return for all the Codes.
3. Government approval is required for establishments that employ 100 or more
employees to close, lay off, or retrench. It has been suggested that this has made it
harder for businesses to leave and has interfered with their capacity to change their
staff to meet production demands. This number is increased to 300 by the Industrial
Relations Code, and the government is permitted to raise it further by notification.
4. The complexity of labour laws has led to many compliances, which has increased
the burden of compliance on businesses. On the other side, the labour enforcement
apparatus has been unsuccessful due to weak enforcement, insufficient sanctions, and
inspectors’ rent-seeking behaviour. Some of these issues are covered by the Codes.
5. Contract labour is now used more frequently as a result of economic factors and
labour compliance requirements. However, fundamental rights like guaranteed
salaries have been denied to contract workers. These issues are not entirely addressed
by the Codes. Fixed-term employment, however, is a new type of short-term labour
that is introduced by the Industrial Relations Code.
6. There are many registered trade unions, but there are no standards by which to
“recognise” unions that can formally bargain with employers. Provisions for
recognition are created by the Industrial Relations Code.
7. The Codes greatly simplify labour rules, yet there are several areas where they fall
short. Additionally, the Code on Social Security has enabling measures to notify
programmes for “gig” and “platform” workers; nonetheless, these classifications lack
precision.
8. The Codes delegate rule-making authority over a number of significant issues,
including the applicability of social security programmes and health and safety
regulations. The debate is on whether the legislature or the executive branch should
decide these issues.
9. The law forbids discrimination based on gender when it comes to hiring new
employees for similar or identical jobs and determining pay. Work of a similar kind is
defined as work requiring the same level of expertise, effort, responsibility, and
experience.
10. The advisory boards will be made up of the federal and state governments.
Employers, employees (equal in number to employers), independent individuals, and
five state government representatives make up the Central Advisory Board. State
Advisory Boards will be made up of independent individuals, employers, and workers.
Women will make up one-third of both the central and state boards’ overall
membership. The Boards will give their respective governments advice on matters
such as (i) setting minimum wages and (ii) expanding possibilities for women in the
workforce.
11. The Code outlines punishments for offences committed by an employer, such as (i)
underpaying required wages or (ii) violating any Code requirement. The maximum
punishment is three months in prison and a fine of up to one lakh rupees. Penalties
varies based on the type of offence.

ACTS SUBSUMED BY THE FOUR LABOUR CODES

Code on Wages, 2019
Acts subsumed –
Payment of Wages Act, 1936; l Minimum Wages Act, 1948; l Payment of Bonus Act,
1965; and l Equal Remuneration Act, 1976

Occupational Safety, Health and Working Conditions Code, 2019

Acts subsumed-
l Factories Act, 1948; l Mines Act, 1952; l Dock Workers (Safety, Health and Welfare)
Act, 1986; l Building and Other Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996; l Plantations Labour Act, 1951; l Contract Labour
(Regulation and Abolition) Act, 1970; l Inter-State Migrant Workmen (Regulation of
Employment and Conditions of Service) Act, 1979; l Working Journalist and other
Newspaper Employees (Conditions of Service and Miscellaneous Provision) Act,
1955; l Working Journalist (Fixation of Rates of Wages) Act, 1958; l Motor Transport
Workers Act, 1961; l Sales Promotion Employees (Condition of Service) Act, 1976; l
Beedi and Cigar Workers (Conditions of Employment) Act, 1966; l Cine-Workers and
Cinema Theatre Workers (Regulation of Employment) Act, 1981

Industrial Relations Code, 2019

Acts subsumed –
l Trade Unions Act, 1926; l Industrial Employment (Standing Orders) Act, 1946, and l
Industrial Disputes Act, 1947.
Code on Social Security, 2019
l Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; l Employees’
State Insurance Act, 1948; l Employees’ Compensation Act, 1923; l Employment
Exchanges (Compulsory Notification of Vacancies) Act, 1959; l Maternity Benefit Act,
1961; l l Payment of Gratuity Act, 1972; LESSON 15 Acts being subsumed Cine-workers
Welfare Fund Act, 1981; l l Building and Other Construction Workers’ Welfare Cess
Act, 1996; and Unorganised Workers Social Security Act, 2008.

REFORMS PROPOSED BY NEW LABOUR CODES

Code on Wages, 2019

A Code to amend and consolidate the laws relating to wages and bonus and matters
connected therewith or incidental thereto. Four Labour Laws have been amalgamated
into the Minimum Wages Code. Due to this, for the first time, all the workers have got
the Right to Minimum Wages
The salient features of the Code on Wages, 2019, inter alia, are as follows:— l To
provide for all essential elements relating to wages, equal remuneration, its payment
and bonus. l To provide wage security, social security and health security to workers,
covering organized and unorganized sectors. l The guarantee of minimum wages is
available to workers of organized and unorganized sectors. l Review of minimum wages
in every 5 years. l Guarantee of timely payment of wages to all workers. l Equal
remuneration to male and female workers. l For the first time workers of unorganized
sector in the country have got this right. l To remove regional disparity in minimum
wages the provision of floor wage has been introduced. l The determination of
minimum wages has been made easy. It will be based on criteria such as skill level and
geographical area. l The appropriate Government may extend the coverage of wage
ceiling to the Government establishments also. l The minimum wage decided by the
government should be higher than the floor wage. l It provides that the wages to
employees may also be paid by cheque or through digital or electronic mode or by
crediting it in the bank account of the employee. However, the appropriate
Government may specify the industrial or other establishment, where the wages are
to be paid only by cheque or through digital or electronic mode or by crediting the
wages in the bank account of the employee. l In order to remove the arbitrariness and
malpractices in inspection, it empowers the appropriate Government to appoint
Inspectors-cum-Facilitators in the place of Inspectors, who would supply information
and advice the employers and workers. l It enables the appropriate Government to
establish an appellate authority to hear appeals for speedy, cheaper and efficient
redressal of grievances and settlement of claims. l It provides for graded penalty for
different types of contraventions of the provisions of the legislation l It provides that
the Inspector-cum-Facilitator shall give an opportunity to the employer before
initiation of prosecution proceedings in cases of contravention, so as to comply with
the provisions of the legislation. However, in case of repetition of the contravention
within a period of five years such opportunity shall not be provided. l It provides for
compounding of those offences which are not punishable with imprisonment. l The
period of limitation for filing of claims by a worker has been enhanced to three years,
as against the existing time period varying from six months to two years, to provide a
worker more time to settle his claims. l It provides that where a claim has been filed
for non-payment of remuneration or bonus or less payment of wages or bonus or on
account of making deduction not authorised by the legislation, the burden shall be on
the employer to prove that the said dues have been paid to the employee. l It enables
the appropriate Government to constitute Advisory Boards at Central and State level
to advice the Central Government and the State Governments, respectively, on
matters relating to wages, women employment, etc

Industrial Relations Code, 2020

A code to consolidate and amend the laws relating to Trade Unions, conditions of
employment in industrial establishment or undertaking, investigation and settlement
of industrial disputes and for matters connected therewith or incidental thereto. By
amalgamating 3 Labour Laws into the Industrial Relations Code the Central
Government has taken steps for safeguarding the interests of Trade Unions as well as
the workers. In this Code, all possible steps have been taken for industrial units and
workers so that disputes do not arise in future.

The salient features of the Industrial Relations Code, 2020, inter alia, are as follows:

l To define “workers” which includes the persons in supervisory capacity getting wages
up to eighteen thousand rupees per month or an amount as may be notified by the
Central Government from time to time. l To provide for fixed term employment with
the objective that the employee gets all the benefits like that of a permanent worker
(including gratuity), except for notice period after conclusion of a fixed period, and
retrenchment compensation. The employer has been provided with the flexibility to
employ workers on fixed term basis on the basis of requirement and without
restriction on any sector. l To revise the definition of “industry” that any systematic
activity carried on by co-operation between the employer and workers for the
production, supply or distribution of goods or services with a view to satisfy human
wants or wishes (not being wants or wishes which are merely spiritual or religious in
nature) with certain exceptions. l To bring concerted casual leave within the ambit of
the definition of strike. l To provide the maximum number of members in the
Grievance Redressal Committee up to ten in an industrial establishment employing
twenty or more workers. There shall be adequate representation of the women
workers therein in the proportion of the women workers to the total workers
employed in the industrial establishment. l Under the Atal Bimit Vyakti Kalyan Yojna, a
worker of organized sector who loses his job gets financial aid from the Government.
This is a type of unemployment allowance, the benefit of which is admissible to the
workers covered under the ESI Scheme. l In case of job loss, a worker will get benefit
under the Atal Bimit Vyakti Kalyan Yojna. l At the time of retrenchment a worker would
be provided 15 days’ wages for re-skilling. The wages would be credited directly into
the bank account of the worker so as to enable him to learn new skills. l To provide for
appeal against non-registration or cancellation of registration of Trade Union before
the Industrial Tribunal. l To empower the Central Government and the State
Governments to recognise a Trade Union or a federation of Trade Unions as the Central
Trade Union or State Trade Unions, respectively. l To provide for applicability of
threshold of three hundred or more workers for an industrial establishment to obtain
certification of standing orders, if the standing order differ from the model standing
order made by the Central Government. l Faster justice to the workers through the
Tribunal. l Workers disputes to be resolved within a year in the Tribunal. l To set up
Industrial Tribunal consisting of a Judicial Member and an Administrative Member, in
place of only Judicial Member who presently presides the Tribunal. For certain
specified cases, the matters will be decided by the two-member Tribunal and the
remaining shall be decided by single-member Tribunal as may be provided for in the
rules. l To set up Industrial Tribunals in the place of existing multiple adjudicating
bodies like the Court of Inquiry, Board of Conciliation and Labour Courts. l To remove
the reference system for adjudication of Industrial Disputes, except the reference to
the National Industrial Tribunal for adjudication. l To prohibit strikes and lock-outs in
all industrial establishments without giving notice of fourteen days. l To provide for a
new feature of recognition of negotiating union and negotiating council in an industrial
establishment by an employer for the purpose of negotiations. The criterion for
recognition of negotiating union has been fixed at fifty-one per cent. or more workers
on a muster roll of that industrial establishment. As regards negotiating council, a
Trade Union having support of every twenty per cent. of workers will get one seat in
the negotiating council and the fraction above twenty per cent. shall be disregarded. l
Trade unions have been conferred with a new right, enabling them to get statutory
recognition. l To provide for penalties for different types of violations to rationalise
with such offences and commensurate with the gravity of the violations. l To empower
the appropriate Government to exempt any industrial establishment from any of the
provisions of the Code in the public interest for the specified period. l To provide for
the obligation on the part of industrial establishments pertaining to mine, factories
and plantation having three hundred or more workers to take prior permission of the
appropriate Government before lay-off, retrenchment and closure with flexibility to
the appropriate Government to increase the threshold to higher numbers, by
notification. l To provide for compounding of offences by a Gazetted Officer, as the
appropriate Government may, by notification, specify, for a sum of fifty per cent of the
maximum fine provided for such offence punishable with fine only and for a sum of
seventy-five per cent. provided for such offence punishable with imprisonment for a
term which is not more than one year, or with fine.

Code on Social Security, 2020

A Code to amend and consolidate the laws relating to social security with the goal
to extend social security to all employees and workers either in the organised or
unorganised or any other sectors or for matters connected therewith or incidental
thereto. To ensure security for all workers, the Central Government has
amalgamated 9 Labour Laws into the Social Security Code in order to secure the right
of workers for insurance, pension, gratuity, maternity benefit etc. The Government
can fund the contribution of workers from disadvantaged section.

The salient features of the Code on Social Security, 2020, inter alia, are
l Benefit of pension scheme (EPFO) to all workers of organized, unorganized and self-
employed sectors. l Creation of social security fund for providing comprehensive
social security to the unorganized sector. l Through a small contribution, benefit of
free treatment is available under hospitals and dispensaries of ESIC. l The doors of
ESIC will now be opened for the workers of all sectors along with the workers of the
unorganized sector. l Expansion of ESIC hospitals, dispensaries and branches upto
district level. l To define various expressions used in the Code such as, “career
centre”,”aggregator”, “gig worker”, “platform worker”, “wage ceiling” , etc. Further,
the definition of “employee” has been comprehensively elaborated to cover
maximum number of employees and workers. l Even if a single worker is engaged in
hazardous work, he would be given ESIC benefit. l Opportunity to join ESIC for
platform and gig workers engaged in new technology. l Plantation workers to get
benefit of ESIC. l Institutions working in hazardous area to be compulsorily registered
with ESIC. l Constitution of various social security organisations for the
administration of the Code, namely, (a) the Central Board of Trustees of the
Employees’ Provident Fund (Central Board), (b) the Employees’ State Insurance
Corporation (Corporation), (c) the National Social Security Board for Unorganised
Workers (National Social Security Board), (d) the State Unorganised Workers’ Social
Security Board and (e) the State Building Workers Welfare Boards. l Provisions for
maternity benefits such as prohibition from work during certain periods, provision
of nursing breaks, crèche facility, claim for maternity benefits, etc. l To provide for
appeal against an order passed by any authority in regard to determination and
assessment of dues and levy of damages relating to Employees’ Provident Fund by
an employer only after depositing with Social Security Organisation concerned,
twenty-five per cent. of the amount due from him as determined by the authority
against whose order the appeal has been preferred. l Requirement of minimum
service has been removed for payment of gratuity in case of fixed term employees. l
Employees engaged on fixed term to get same social security benefit as permanent
employees. l Creating a national database of workers of unorganized sector through
registration on Portal. l Employers employing more than 20 workers to mandatorily
report vacancies online. l A Universal Account Number (UAN) for ESIC, EPFO and
Unorganised Sector Workers. Along with Aadhaar based Universal Account Number
(UAN) to ensure seamless portability. l To empower the Central Government by
order, to defer or reduce employer’s contribution, or employee’s contribution, or
both. l To provide for establishment and maintenance of separate accounts under
social security fund, for the welfare of unorganised workers, gig workers and
platform workers; and a separate account for the amount received from the
composition of offences under the Code or under any other central labour laws.

Occupational Safety, Health and Working Conditions Code, 2020

The salient features of the Occupational Safety, Health and Working Conditions
Code, 2020 inter alia, are as under:—

l To impart flexibility in adapting technological changes and dynamic factors, in the

matters relating to health, safety, welfare and working conditions of workers. l To
apply the provisions of the Code for all establishments having ten or more workers,
other than the establishments relating to mines and docks; more employees. l
Various provisions in the OSHWC Code will ease the lives of the Inter-State Migrant
Workers. l Anomalies of the Inter-State Migrant Workers Act, 1979 have been
comprehensively addressed in the OSHWC Code. Earlier only workers appointed by
a contractor were recognized as Inter-State Migrant Workers. By this provision, the
worker would get a legal identity which would enable them to get benefits of all
social security schemes. l A provision has been made for employers to provide
travelling allowance annually to an Inter-State Migrant Worker for undertaking a to-
and-fro journey to his native place. l Providing of appointment letters to the workers
has been made mandatory. l Mandatory, free annual health check-up of the workers
to be provided by the employers. l For a worker engaged in building and other
construction work in one State and moving to another State, benefit from the
Building and other Construction Workers’ Cess fund will be provided. l Under the
“One Nation - One Ration Card”, an Inter-State Migrant Worker would get ration
facility in the State he is working in and the remaining members of his family would
be able to avail of the ration facility in the State where they reside. l Mandatory
helpline facility in every State for resolution of Inter-State Migrant Workers
‘grievances. l National database to be created for the Inter State Migrant Workers. l
Instead of 240 days, now if a worker has worked 180 days, he shall be entitled for
one-day leave for every 20 days of work done. l Emphasis on women empowerment
through the Labour Codes. l Right to women workers to work in all types of
establishments. l Women have been given the right to work at night with their
consent and it has also been ensured that the employer would make adequate
arrangements to provide safety and facilities to women workers at night. l Maternity
Benefit Act paid Maternity leave for women workers to 26 weeks and ensure
mandatory crèche facility in all establishments having 50 or more workers. l To
provide for issuing of appointment letter mandatorily by the employer of an
establishment to promote formalisation in employment. l To constitute the National
Occupational Safety and Health Advisory Board to give recommendations to the
Central Government on policy matters, relating to occupational safety, health and
working conditions of workers. l To constitute the State Occupational Safety and
Health Advisory Board at the State level to advice the State Government on such
matters arising out of the administration of the Code. l To make a provision for the
constitution of Safety Committee by the appropriate Government in any
establishment or class of establishments. l To make provision of “common license”
for factory, contract labour and beedi and cigar establishments and to introduce the
concept of a single all India license for a period of five years to engage the contract
labour. l To enable the courts to give a portion of monetary penalties up to fifty per
cent. to the worker who is a victim of accident or to the legal heirs of such victim in
the case of his death. l To provide overriding powers to the Central Government to
regulate general safety and health of persons residing in whole or part of India in the
event of declaration of epidemic or pandemic or disaster