• India
  • Sep 23

Understanding the 4 new labour codes

The Parliament on September 23 approved three key labour reform Bills that will cover over 50 crore workers in the country.

The Rajya Sabha passed by voice vote the three labour codes on industrial relations, social security and occupational safety. The first code on wages was approved by Parliament last year. 

With passage of these three Bills, 29 central labour laws have been codified into four broad codes as contemplated by the government under labour reforms to improve ease of doing business and providing universal social security to workers as well. 

The three codes were earlier passed by Lok Sabha and these will now be sent to the President for his assent. 

Labour Codes 

As per the recommendations of the Second National Commission on Labour, the government took steps for codification of central labour laws into four codes by simplifying, amalgamating and rationalising the relevant provisions of the Central Labour laws.

1) The Labour Code on Wages

The Code on Wages, 2019 subsumes four laws. 

• The Payment of Wages Act, 1936

• The Minimum Wages Act, 1948

• The Payment of Bonus Act, 1965

• The Equal Remuneration Act, 1976.

Highlights of the code:

* The Code on Wages Bill, 2019 received Presidential assent on August 8, 2019, after the nod from both Houses of Parliament.

* It ensures the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling.

* There were 12 definitions of wages in different labour laws leading to litigation besides difficulty in its implementation. The definition has been simplified and is expected to reduce litigation. 

2) The Industrial Relations Code

It subsumes three labour laws. 

• The Trade Unions Act, 1926

• The Industrial Employment (Standing orders) Act, 1946

• The Industrial Disputes Act, 1947.

Highlights of the code:

* It allows companies with up to 300 workers to lay off people without the state government’s approval. So far only companies employing up to 100 people were allowed to do this. 

* Provision for two members in the Industrial Tribunal. Important cases will be adjudicated jointly and the rest by a single member resulting speedier disposal of cases.

* Provision for taking the matter straight to the tribunal in case the dispute is not resolved at conciliation stage. At present, the case is referred to the tribunal by the government.

* Workers will get the option of fixed term employment instead of contract labour. Under this, they would get benefits of hours of work, salary, social security and other welfare benefits like a regular employee.

* Provision has been made for giving recognition to trade unions at central and state level. Arrangement for going to the tribunal has been made for resolving disputes arising between trade unions. It will reduce time required for resolving disputes.

* Provision for re-skilling fund has been made in the law. Its aim would be to re-skill those workers who have been fired from their jobs, so that they are easily able to get employment again. For this, workers would be given 15 days salary within a period of 45 days.

3) The Occupational Safety, Health and Working Conditions Code

It subsumes 13 labour laws.

• The Factories Act, 1948

• The Plantations Labour Act, 1951

• The Mines Act, 1952

• The Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955

• The Working Journalists (Fixation of Rates of Wages) Act, 1958

• The Motor Transport Workers Act, 1961

• The Beedi and Cigar Workers (Conditions of Employment) Act, 1966

• The Contract Labour (Regulation and Abolition) Act, 1970

• The Sales Promotion Employees (Conditions of Service) Act, 1976

• The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979

• The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981

• The Dock Workers (Safety, Health and Welfare) Act, 1986

• The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.

Highlights of the code:

* The code enhances the ambit of provisions of safety, health, welfare and working conditions from major sectors to all establishments having 10 or more employees.

* Employer to provide free of cost annual health checks-up for employees above prescribed age for prescribed tests and for prescribed establishments. Coverage of employees above a certain age for health check-up would promote inclusion.

* Legal right for getting an appointment letter. The provision will result in formalisation of employment and prevent exploitation of the worker.

* The multiple committees under five labour Acts have been substituted by one National Occupational Safety and Health Advisory Board. The National Board is of tripartite nature and has representation from trade unions, employer associations, and state governments. This will result in reduction in multiplicity of bodies/committees in various Acts and simplified and coordinated policy-making.

* One registration for an establishment instead of multiple registrations. Presently six labour Acts out of 13 provide for separate registration of the establishment. This will create a centralised database and promote ease of doing business. 

* The provision of one license and one return in place of multiple licenses and returns in existing 13 labour laws subsumed in this code to save time, resources and efforts of establishments.

* Cine workers have been designated as Audio Visual Worker, so that more and more workers get covered under the OSH code. Earlier, this security was being given to artists working in films only. The definition of working journalists will include digital and electronic media journalists.

4) The Code on Social Security

It subsumes nine labour laws.

• The Employees’ Compensation Act, 1923

• The Employees’ State Insurance Act, 1948

• The Employees Provident Fund and Miscellaneous Provisions Act, 1952

• The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959

• The Maternity Benefit Act, 1961

• The Payment of Gratuity Act, 1972

• The Cine Workers Welfare Fund Act, 1981

• The Building and Other Construction Workers Welfare Cess Act, 1996

• The Unorganised Workers’ Social Security Act, 2008.

Highlights of the code:

* To provide social security to 40 crore unorganised sector workers, provision for ‘Social Security Fund’ has been made. Through this fund, social security schemes will be made for workers and gigs and platform workers working in the unorganised sector and plans will be formulated to provide all kinds of social security benefits such as death insurance, accident insurance, maternity benefit and pension, etc to these 40 crore workers.

* Effort have been made to provide right to health security under Employees’ State Insurance Corporation (ESIC) to maximum possible workers. The facility of ESIC would now be provided in all 740 districts. At present, this facility is given in 566 districts. 

* The option of ESIC will be available for plantation workers, unorganised sector workers, gigs and platform workers, and institutions with less than 10 workers.

* Establishments working in hazardous sectors would mandatorily be linked with ESIC, even if there is only one worker working in it. 

* EPFO’s coverage would be applicable on all establishments having 20 workers. At present, it was applicable only on establishments included in the Schedule. Option to join Employees’ Provident Fund Organisation (EPFO) is also being given to establishments having less than 20 workers.

* Schemes would be formulated for bringing workers coming under the category of ‘self-employed’ or falling under any other category under the aegis of EPFO.

* Provision for gratuity has been made for fixed term employees and there would not be any condition for minimum service period for this. A fixed term employee working for a determined period on contract will be given the right of social security like a regular employee.

* With the aim of making a national database for unorganised sector workers, registration of all these workers would be done on an online portal and this registration would be done on the basis of self-certification through a simple procedure. It would facilitate the extension of benefits of various social security schemes to beneficiaries in the unorganised sector. 

* The most important thing for getting employment is the information about job vacancies. With this aim, it has been made mandatory for all establishments with 20 or more workers to report the vacancy position in their establishments. This information would be given on an online portal.

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