New Labor Laws

By Hilal Manzoor Wagay

WORK is not only part of everybody’s daily life but is crucial to one’s dignity, well-being and development as a human being. Economic development does not include only creation of jobs but also comprises working conditions in which one can work in freedom, safety and dignity. In order to develop economy, the government (both central and state) had time and again passed, a number of legislations to create new jobs and concomitantly provide favorable working conditions for overall development of the labors. As Labor is a Concurrent Subject and both Central Legislature and State Legislature can make laws, more than forty labor legislations existed in India. Overlapping and confusion was unavoidable in such circumstances.

Therefore, in order to lessen complexity, to provide ease of compliance and for accountability and transparency beneficial for both employers and workers, new reforms were long-awaited. Recently, Parliament passed the three labor code bills – the Occupational Safety, Health and Working Conditions Code, 2020; the Industrial Relations Code, 2020; and the Code on Social Security, 2020 – merging 24 central labor laws in a major boost to Labor sector.

The Industrial Relation Code, 2020

This code mostly combines three codes i.e. Trade Union Act, 1926, Industrial Employment (Standing Orders) Act, 1946 and Industrial Disputes Act, 1947.

The new laws have allowed companies with up to 300 workers to fire workers or shut plants without the prior approval of the government. Hitherto, prior approval had been required. However, Firms with more than 300 workers need to still apply for approval.

The rules and regulations (also called Standing Orders) with respect to holidays, workers classification, paydays, wage rates etc. was made mandatory for the establishment with up to 300 workers, the number earlier was 100 workers.

New rules for hiring and firing of labor in mid-sized and large industries were introduced, this new legislation makes retrenchment easier. The prior permission of government for retrenchment, layoff and closure applied to establishment with up to 300 workers.

It also declared that Fourteen days’ notice before strike should be given by the employee. However, this notice will remain valid for 60 days. Flash strikes are now outlawed.

This code also prohibits any sort of strike and lockdown during the pendency of matter before any tribunal and also prohibits strike after 60 days of order passed by tribunal.

If there are more than one trade union in any establishment, the Sole Negotiation Union status will be given only to such trade union which comprises the 51% of the employees as members, the number earlier was 75%.

Code on Social Security, 2020

This code combines nine earlier codes which mostly relates to retirement, social Security and employee Benefits i.e. The Employees Compensation Act 1923, the Employees State Insurance Act 1948, The Employees Provident Fund and Miscellaneous Provisions Act 1952, The Employees Exchange (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 Cess Act 1996 and the last but not least The Unorganized Workers Social Security Act 2008.

This code for the first time introduced comprehensive social security to workers of Unorganized Sector.

It lays emphasis that the Government from time to time formulate and notify suitable welfare schemes relating to Provident Fund, Employment Injury Benefit, Housing, Educational Scheme for Children etc.

The definition of employees has been expanded to include more workers like, Inter State Migrant Workers, Gig Workers, Platform Workers, Film Industry Workers etc.

New gratuity period for working journalists are now 3 years instead of earlier 5 years.

It also declares that Central government can reduce employer’s or employee’s contribution (under Provident Fund and Employees State Insurance) for a period of three months in case of a pandemic, endemic and national disaster.

Code on Occupational Safety, Health and Working Conditions, 2020

This code replaces 13 labor laws related to Safety, Health and working conditions of labors and alike. Some of the codes replaced were Factories Act 1948, Dock Workers Act 1986, Contract Labor Act 1970, Inter-state Migrant Workers Act 1979 etc. The main aim of this code is not only to regulate employment but also to regulate health, safety and favorable working conditions of employees.

Under this, definition of factory was expanded, now any premises with more than 20 workers (where electricity is used) and 40 workers (where electricity is not used) can be called factory.

Applicable to contractors who employee more than 50 workers, it also removed earlier manpower limit on hazardous conditions. However, Maximum daily work limit was fixed to 8 hours per day. It also states that women can work in any establishment and it’s the employer’s responsibility to provide adequate safeguard.

Additionally, state and central government have to maintain the record of inter-state migrant workers. Workers earning more than eighteen thousand per month can be treated as Inter State migrant workers and can benefit under public distribution system, building cess, insurance and provident fund.

No doubt, the revolutionary majors had been introduced via these legislations, by allowing industries flexibility in hiring and retrenchment. On the one hand, these legislations were introduced to bring ease of compliance to the industry and investment push for India and more importantly to create more jobs when unemployment is on its peak. But on the other hand, these legislations will definitely make industrial strikes more difficult, enhancing a company’s powers of retrenchment may push unemployment rates higher, especially at a time when millions of workers have been out of work since the Covid-19 outbreak.

  • The author is an Advocate, Delhi High Court

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