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LABOUR CODE

On September 23, 2020, the Parliament of India passed 3 (three) long awaited labour codes, namely (a) the Industrial Relations Code Bill, 2020; the Code on Social Security Bill, 2020; and the Occupational Safety, Health and Working Conditions Code Bill, 2020. The labour codes subsequently received the Presidential assent on September 29, 2020, marking a major milestone in ushering reforms in the labour sector.

Industrial relations Code, Social security Code and, Occupational safety, health and working conditions Code are effective from 28th September 2020.

The three codes on – industrial relations, social security and, occupational safety, health and working conditions will subsume 25 labour laws.

The fourth one, code on wages, which combined four labour laws became a law in August 2019. However, the government is yet to make the law effective as it plans to introduce all the four laws together.

The codes are part of four codes that consolidates 29 central labour laws

1) Code on Wages: Subsumes 4 acts into 1.

The Code on Wages will replace the Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976.

Salient Features:

• Statutory right for minimum & timely wages for ALL workers – organized and unorganized
• 542 different classifications of minimum wages standardized to just 12 Skill to be a determinant in fixing wage.

2) Industrial Relations Code: Subsumes 3 acts into 1

The Industrial Disputes Act, 1947, The Trade Unions Act, 1926 ,The Industrial Employment (Standing Orders) Act, 1946.

Salient Features:

• No prior permission needed for upto 300 workers for retrenchment (earlier limit 100)
• Fixed term employment. Workers can now be directly hired with all benefits without middlemen contractors.
• Payment of 15 days wages per completed year of service if retrenched
• Re-skilling fund for all retrenched workers
• 14 days mandatory notice period before strike (thus avoiding flash strikes)

3) Occupational Safety & Health Code: Subsumes 13 acts into 1

Some of these laws include the Factories Act, 1948, Dock workers Act, 1986, Contract Labor Act, 1970, and Inter-state Migrant Workers Act, 1979 among others.

Silent Features:

• 1 registration instead of 6
• 1 license instead of 4
• 1 return instead of 21
• Single, all India 5 years valid license for hiring contract workers (now license needed per work order)
• Applicability threshold of law increased from 10 (power) and 20 (non-power) to 20 and 40
• New establishments may be exempt from the law by specific local orders

4) Social Security Code: Subsumes 9 acts into 1

Some of these laws include the Employees’ Provident Fund Act, 1952, the Maternity Benefit Act, 1961, and the Unorganised Workers' Social Security Act, 2008

Silent Features: 

• Applicability of ESIC extended to all districts of India
• Social security extended to gig, platform and all such other workers
• Social security and welfare fund for unorganized sector workers

Benefits to employers

• One registration, one inspection and one return.
• Perverse incentive for MSMEs to not expand beyond 100 workers capacity ended
• Reduced compliance costs, reduced litigation, time
• Faceless inspections, End of ‘inspector raj’

Benefits to employees

• Nigh shifts for women allowed (with safety measures)
• Fixed term employment, weeding out contractor route
• Migrant workers definition made comprehensive; portability of benefits
• Dignity of labour; assured wages and benefits

Note: The content of this article is intended to provide a general guide to the subject matter. Expert advice should be sought about your specific circumstances.