Parliament passes historic Labour Codes to reform labour laws: Know in Detail

The Parliament on September 23, 2020 passed three labour codes that aim to pave the way for the enactment of historic “game changer” Labour Laws. The codes were passed after the Rajya Sabha gave its approval through voice vote amid a boycott by the opposition leaders over the suspension of eight MPs from the house. The Lok Sabha had passed the bills on September 22nd.

The three labour codes include: 

1. Industrial Relations Code, 2020: The bill seeks to provide for a time-bound dispute resolution system in every institution. 
2. Occupational Safety, Health & Working Conditions Code, 2020 (OSH Code): The bill envisages safe working environment for workers especially women. 
3. Social Security Code, 2020: The bill aims to provide a framework to include organized and unorganized sector workers under the ambit of comprehensive social security. 

While replying to the debate on the three labour reform bills, Union Labour Minister Santosh Gangwar said that the purpose of the labour reforms is to provide a transparent system to suit the changing business environment. He described the Bills as a historic game-changer that will harmonize the needs of workers, industries and other related parties. 

The Minister stated that these Labour Codes will prove to be an important milestone for the welfare of the workers in the country. He informed that since 2014 the centre has taken many steps for welfare of the workers and through these Labour Codes, the aim of achieving an overall labour reform is being realized. 

According to the Labour Minister, the Social Security Code provides a framework to include organized and unorganized sector workers under the ambit of comprehensive social security. It contains provisions related to EPFO, ESIC, building construction workers, maternity benefits, gratuity and social security fund for unorganized sector workers. The Social Security Code, 2020 aims to fulfil the Prime Minister’s vision of Universal Social Security.

The Minister further emphasized that the structure of welfare and rights of Atmanirbhar Shramik is based on four pillars:

a) Salary Protection

Despite having 44 labour laws, the Labour Minister informed that only about 30 percent of India's 50 crore workers had the legal right to minimum wages and all the workers were not paid on time. Under the new labour codes, all 50 crore organized and unorganized sector workers will get the legal right to minimum wages and timely wages.

b) Labour Safety

• This pillar aims to ensure a safe working environment to protect the labourer’s health and keep standards related to safety effective and dynamic. 

• The OSH Code provides an annual health check-up for workers above a certain age. The code also reduces the minimum qualification from 240 days to 180 days for leave. 

• Under the bill’s provisions, the employer will have to pay at least 50 percent of the penalty imposed for injury or death at the workplace, to the aggrieved worker, in addition to other benefits. All these provisions aim to give workers a safe working environment.

• Under the code’s provisions, women can work in any type of institution at night as per their choice but their employer will have to make all necessary security arrangements, as determined by the appropriate government. This provision aims to provide women with the freedom to do the same work as men.

c) Comprehensive Social Security

• To ensure this, the government has decided to extend the scope of ESIC and EPFO under the Social Security Code. To increase the scope of ESIC, its coverage has been increased to cover all 740 districts of the country. The option of ESIC will also be given to plantation workers, unorganized sector workers, gigs and platform workers and institutions with less than 10 workers. 

• Further, If there is a risky work in an institute then that institute will inevitably be brought under the purview of ESIC even if it has just one labourer. Further, to increase the scope of EPFO, the schedule of the institutions has been removed in the current law and now all institutions with 20 or more workers will come under EPF’s ambit.

• Besides this, institutions with less than 20 workers and self-employed workers will also be given the option of EPFO under the Social Security Code.

d) Peace & Harmony in Industrial Units

• The government has brought in Fixed Term Employment through Industrial Relations Code, 2020 (IR Code) to simplify the code and make it effective and enable peace and harmony to prevail in the industrial units.

• Through this the government has ensured that Fixed Term Employees' service conditions, salary, leave and social security will be extended to regular employees as well, including those engaged for a short period of time and who did not get service conditions like leave, social security and gratuity. Besides this, the Fixed Term Employee will also be given the right to pro-rata Gratuity.

• The IR Code also has provisions for a strike, though they do not take back the right of any workers to go on strike. 
However, under the provisions, a 14-day notice period obligation has been imposed on every institution to attempt to end the dispute through amicable negotiation during this period.

• The IR Code also raises the threshold in Retrenchment, Closure or Lay-off from 100 workers to 300 workers. However, the concerned state government will have the right to change the laws as labour is a subject of concurrent list. 

• Labour Minister informed that around 16 states, using this right, have already increased this limit. A Parliamentary Standing Committee had also recommended earlier that this limit be increased to 300. He further stated that the Economic Survey 2019 had shown that after increasing this Threshold from 100 to 300 in the state of Rajasthan, there was also a rise in employment generation and an unprecedented reduction in layoffs. 

• Further, Trade Unions will be given recognition at the institution level, state level and center level under the IR Code for the first-ever time, as they play an important role in getting workers their rights in institutions. 

Rights of Migrant Workers

The IR also has a special provision to strengthen the rights of migrant workers in the scenario of COVID-19. First and foremost, the definition of migrant workers has been broadened.

Now all the workers who come from one state to another state with a salary less than Rs 18000 will come under the definition of migrant labour and will get the benefit of welfare schemes of the government. 

The code also includes a provision to create a database for migrant workers to enable the portability of their welfare schemes and a separate helpline arrangement. Besides this, under the new labour code the employers will have to provide travel allowance to the migrant workers once a year for them to go to their place of origin.

Background

The new labour codes have been formed after dwelling upon the amalgamation of 29 labour laws and after extensive consultations. The government had undertaken several discussions before finalising the labour codes including holding inter-ministerial consultations and consultations with Trade Unions, experts and international bodies and taking into consideration public suggestions by placing the labour codes in the public domain for 2-3 months.