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Volume IconFour labour codes that everyone is talking about

The Parliament passed the much talked about labour codes to reform the labour laws, which have been unchanged since Independence. Check out more about the codes and what all they promise to change

labour force

The four labour codes -- the Code on Wages, Industrial Relations Code, Social Security Code and the Occupational Safety, Health and Working Conditions Code -- are set to replace 29 labour laws.

Over 90% of India’s 50 crore workers are in the unorganised sector. And through these codes the government wants to ensure that all of them enjoy the benefits of labour laws related to minimum wages and social security.

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Since labour is a concurrent subject, both the Centre and states have to frame the rules. Although the Centre notified the codes in September 2020, no state has notified the requisite rules under these codes. Just 12 states have published the draft rules so far. So once all the states are on-board, the codes will be implemented. Let us now take a look at these codes separately.   

The Code on Wages, notified in August 2019, subsumes the provisions of four laws -- Payment of Wages Act, the Minimum Wages Act, the Payment of Bonus Act, 1965 and the Equal Remuneration Act. It applies to all establishments and to all employees in both organised and unorganised sectors.

This code envisages uniform applicability of the provisions of timely payment of wages and minimum wages to all employees. It introduces the concept of a floor wage, which is to be determined by the Centre after taking into account the minimum living standards of workers which may be different for different geographical areas.

The state government can, under no circumstance, fix a minimum wage rate which is lower than the floor rate determined by the Centre. The code also prohibits discrimination between wages payable to a male and a female for the same work done. 

The Code on Social Security subsumes nine laws and empowers the Centre to notify various social security schemes like the EPF, EPS and ESI for the benefit of workers in all sectors. It also empowers the Centre to frame any other schemes for the self-employed, unorganised workers, gig workers and platform workers and the members of their families. 

Firms employing more than 20 workers have to mandatorily report vacancies online under this code. The Code has provision for the creation of a social security fund for workers in the unorganized sector.  According to some reports, employees may be able to enjoy a four-day workweek provided the total working hours in the entire week is not less than 48 hours.

The Code on Industrial Relations amalgamates three existing laws and expands the definition of worker to include persons employed in a skilled or unskilled, manual, technical, operational and clerical capacity. Besides, persons employed in a supervisory capacity and earning less than Rs. 18,000 per month have been brought under the definition.

The code introduces a new provision for fixed term employment, giving employers flexibility to engage a worker on the basis of a written contract. Fixed term employees will get the same benefits as the permanent employees.  

Besides, the new industrial relation code would also improve ease of doing business by allowing firms with up to 300 workers to go ahead for lay-offs, retrenchment and closure without government permission. At present all firms with up to 100 employees are exempted from government permission for lay-off, retrenchment and closure. 

And finally, The Occupational Safety, Health And Working Conditions (OSH) Code amalgamates 13 existing labour laws and applies to factories having at least 20 workers if the manufacturing process is being carried on with the aid of power and 40 if the manufacturing process is being done without power.  

Under this code, employers are required to ensure that the workplace is free from hazards which cause injury or occupational disease to the employees, provide free annual health examination or test, free of costs to certain classes of employees. 

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. Further, providing appointment letters to the workers has been made mandatory. 

Some provisions of these codes have also invited criticism, including the one which allows firms with up to 300 workers to go ahead with retrenchment and closure without the government permission.

However, experts believe that these reforms will pave way for the welfare of workers in both organised and unorganised sectors. They will go a long way in addressing the workers’ concerns and that of the companies too. 


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First Published: Dec 29 2021 | 8:45 AM IST

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