The Union government passes three bills that complete the government’s codification of 29 labour laws into four codes. Both the houses pass the bills amidst opposition continue to boycott over Farm Bills. Interestingly, The three Bills that merge 25 laws were passed by the Lok Sabha. The first of the four codes proposed by the government, the Code on Wages, was passed by Parliament in 2019. According to the ruling party, this will help in empowering employers in hiring and firing at the same time maintaining the social security of the workers. Earlier the Codes on Wages ’19 was passed last year, which provided the passage for the labour reform through the introduction of three Labour Bills ’20.
The three bills comprise of: i)Industrial Relations Code, 2020 ii) Code on Occupational Safety, Health and Working Conditions, 2020 iii) Social Security Code, 2020
“The purpose of labour reforms is to provide a transparent system to suit the changing business environment. States have been given the flexibility to tweak labour laws as per their need.” said labour Minister Santosh Gangwar. The minister informed the house that as many as 16 states have already increased the threshold for closure, layoff and retrenchment in firms up to 300 workers without government permission. The minister added that the passage of the Bills would balance the needs of workers, industry and other stakeholders.
The minister said the bill will safeguard the interest of the employer as well as the employee. It will serve as a bridge to facilitate better working conditions for the workers. He added it’s not suitable for the employment generation to keep threshold lower to 100 employees, it discourages employer to hire more people to avoid compliance.
However, this has brought dissent among several political parties and intellectuals. They questioned the intentions of the regime in improving the social security of the workers. By providing enormous power to an organization on hire and fire decision will further deteriorate the working condition of the workers.
“The increase in the threshold for standing orders from the existing 100 to 300 is uncalled for and shows the government is very keen to give tremendous amounts of flexibility to the employers in terms of hiring and firing…dismissal for alleged misconduct and retrenchment for economic reasons will be completely possible for all the industrial establishments employing less than 300 workers. This is complete demolition of employment security,” XLRI professor and labour economist KR Shyam Sundar said.
Key Highlights of Labour Bills ’20:
The Occupational Safety, Health and Working Conditions Code, 2020, will amend the law on regulating the occupational safety, health and working environment of the person involved in the establishment. The much controversial code of empowering employers absolute ownership over their employees having less than 300 workers have been established. There is no requirement of the standing order in such cases.
The Code on Social Security, 2020, shall amend the consolidating law related to social security to boost the social security of the employees irrespective of whether the employee is working in organized or unorganized sectors. The Social Security Code proposes a National Social Security Board which will recommend central government for formulating suitable schemes for different sections of unorganised workers, gig workers and platform workers. Also, aggregators employing gig workers will have to contribute 1-2 per cent of their annual turnover for social security, with the total contribution not exceeding 5 percent of the amount payable by the aggregator to gig and platform workers. Under the former rules, an employee has to work for an organisation for five continuous years to be eligible for gratuity payment. However, with the introduction of social security code, contract workers will also get gratuity benefits.
The Industrial Relations Code, 2020, seeks to amend the law relating to the trade union, condition of employees in establishments or undertaking, investigation and settlement of industrial disputes. The Industrial Relations Code also introduces new conditions for carrying out a legal strike. The code proposes that no person employed in any industrial establishment shall go on strike without a 60-day notice and during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and sixty days after the conclusion of such proceedings. The Code Bill has also proposed a worker re-skilling fund, though the contributions for the fund are only detailed from the employer of an industrial establishment amounting to fifteen days wages last drawn by the worker immediately before the retrenchment along with the contribution from such other sources.
The reforms in Labour Bill has brought several positive changes and aim to attract big capital. However, the bill failed to pleased certain section of society. There is no full-proof strategy plan to improve the living standard of contractual workers. It would be interesting to see if the situation becomes better in the coming future.