Context: Recently, the Parliament passed three labour codes- on industrial relations; occupational safety, health and working conditions; and social security. The three Bills are part of the government’s labour law reforms agenda, of which the first, the Code on Wages, which proposes universalisation of minimum wages, was passed by Parliament last year.
Prelims: Indian Polity and Governance – Constitution, Political System, Panchayati Raj, Public Policy, Rights Issues, etc.
- GS II- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
- GS III- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
- Labour falls under the Concurrent List of the Constitution. Therefore, both Parliament and state legislatures can make laws regulating labour.
- The central government has stated that there are over 100 state and 40 central laws regulating various aspects of labour such as the resolution of industrial disputes, working conditions, social security and wages.
- In 1999, Atal Bihar Vajpayee’s government set up the second national labour commission. NCL found existing legislation to be complex, with archaic provisions and inconsistent definitions.
- To improve ease of compliance and ensure uniformity in labour laws, the NCL recommended the consolidation of central labour laws into broader groups such as (i) industrial relations, (ii) wages, (iii) social security, (iv) safety, and (v) welfare and working conditions.
- In 2019, the Ministry of Labour and Employment introduced four Bills to consolidate 29 central laws.
- These Codes regulate
- Industrial Relations,
- Social Security, and
- Occupational Safety, Health and Working Conditions.
- While the Code on Wages, 2019 has been passed by Parliament, Bills on the other three areas were referred to the Standing Committee on Labour. The government replaced these Bills with new ones on September 19, 2020.
|A brief history of labour laws in India|
- Indian labour law is closely connected to the Indian independence movement and the campaigns of passive resistance leading up to independence.
- While India was under colonial rule by the British Raj, labour rights, trade unions, and freedom of association were all regulated by the:
- Indian Slavery Act, 1843
- Societies Registration Act, 1860
- Co-operative Societies Act, 1912
- Indian Trade Unions Act, 1926
- The Trades Disputes Act, 1929
- Workers who sought better conditions and trade unions who campaigned through strike action were frequently and violently suppressed.
- The labour laws of India originated and express the socio-political views of leaders such as Nehru from pre-1947 independence movement struggle.
- These laws were expanded in part after debates in Constituent Assemblies and in part from international conventions and recommendations such as of International Labour Organization.
- The current mosaic of Indian laws on employment is thus a combination of India's history during its colonial heritage, India's experiments with socialism, important human rights and the conventions and standards that have emerged from the United Nations.
- The laws cover the right to work of one's choice, right against discrimination, the prohibition of child labour, fair and humane conditions of work, social security, protection of wages, redress of grievances, right to organise and form trade unions, collective bargaining and participation in management.
- India has numerous labour laws such as those prohibiting discrimination and Child labour, those that aim to guarantee fair and humane conditions of work, those that provide social security, minimum wage, right to organise, form trade unions and enforce collective bargaining.
- India also has numerous rigid regulations such as the maximum number of employees per company in certain sectors of the economy, and limitations on employers on retrenchment and layoffs, the requirement of paperwork, bureaucratic process and government approval for change in labour in companies even if these are because of economic conditions.
- Indian labour laws are considered to be very highly regulated and rigid as compared to those of other countries in the world.
- The intensity of these laws has been criticised as the cause of low employment growth, large unorganised sectors, underground economy and low per capita income.
- Many of these laws survive from British colonial times, while some have been enacted after India's independence from Britain.
- These have led many to demand reforms for Labour market flexibility in India.
|Constitutional Provisions Concerning Labour Rights|
- Labour is a subject in the concurrent list of the Indian Constitution and therefore labour matters are in the jurisdiction of both central and state governments. Both central and state governments have enacted laws on labour relations and employment issues.
- After independence was won in 1947, the Constitution of India of 1950 embedded a series of fundamental labour rights in the constitution, particularly the right to join and take action in a trade union, the principle of equality at work, and the aspiration of creating a living wage with decent working conditions.
- Articles 14-16, 19(1)(c), 23-24, 38, and 41-43A of the constitution directly concern labour rights. Article 14 states everyone should be equal before the law, article 15 specifically says the state should not discriminate against citizens, and article 16 extends a right of “equality of opportunity” for employment or appointment under the state.
- Article 19(1)(c) gives everyone a specific right “to form associations or unions”. Article 23 prohibits all trafficking and forced labour, while article 24 prohibits child labour under 14 years old in a factory, mine or “any other hazardous employment”.
- Articles 38-39, and 41-43A, however, like all rights listed in Part IV of the Constitution are not enforceable by courts, rather than creating an aspirational “duty of the State to apply these principles in making laws”.
- The original justification for leaving such principles unenforceable by the courts was that democratically accountable institutions ought to be left with discretion, given the demands they could create on the state for funding from general taxation, although such views have since become controversial.
- Article 38(1) says that in general, the state should “strive to promote the welfare of the people” with a “social order in which justice, social, economic and political, shall inform all the institutions of national life.
- In article 38(2) it goes on to say the state should “minimise the inequalities in income” and based on all other statuses.
- Article 41 creates a “right to work”, which the National Rural Employment Guarantee Act 2005 attempts to put into practice.
- Article 42 requires the state to “make provision for securing just and human conditions of work and for maternity relief”.
- Article 43 says workers should have the right to a living wage and “conditions of work ensuring a decent standard of life”.
- Article 43A, inserted by the Forty-second Amendment of the Constitution of India in 1976, creates a constitutional right to codetermination by requiring the state to legislate to “secure the participation of workers in the management of undertakings”.
|Labour Structure in India|
- India possesses a large labour pool as almost half its population of 1.3 billion is of working age. Naturally, the structure of India’s labour market is diverse.
- A majority of the working population (92%) is engaged in the unorganized, or informal sector, working for small businesses or manufacturing units that employ less than ten individuals.
- The expansion of higher education has created a larger skilled talent pool, but it still only amounts to about 10% of the country’s overall labour market.
- In local terms, the organised sector or formal sector in India refers to licensed organisations, that is, those who are registered and pay GST.
- These include the publicly traded companies, incorporated or formally registered entities, corporations, factories, shopping malls, hotels, and large businesses.
- The unorganised sector, also known as own-account enterprises, refers to all unlicensed, self-employed or unregistered economic activity such as owner manned general stores, handicrafts and handloom workers, rural traders, farmers, etc.
- The unorganised sector has low productivity and offers lower wages. Some of the lowest income jobs are in the rural unorganised sectors. Poverty rates are reported to be significantly higher in families where all working-age members have only worked in the unorganised sector throughout their lives.
- The government’s labour laws usually classify employees on the basis of skill and area of operation.
- In terms of skill, employees are categorized as unskilled, semi-skilled, skilled, and highly skilled.
- In terms of area of operation, employees are categorized as managerial personnel and workmen. This defines their job roles, wages, disbursal of benefits, and their rights and obligations.
What are the objectives behind labour reforms?
- Consolidation and simplification of numerous States’ and Centre labour laws.
- Streamlining of Minimum Wages in the country and ensuring they reach the beneficiaries.
- Introduction of fixed-term employment, to curb the tendency for employing (socially insecure) contract labour.
Table- Details of Acts which are being subsumed by the four labour codes:
|Labour Code||Acts subsumed|
|Code on Wages, 2019||
|Occupational Safety, Health and Working Conditions Code, 2020||
|Industrial Relations Code, 2020||
|Code on Social Security, 2020||
|Code on Industrial Relations, 2020|
Applicability of standing orders:
- All industrial establishment with 300 workers or more must prepare standing orders on the matters listed in a Schedule to the Code.
- These matters relate to classification of workers, (ii) manner of informing workers about work hours, holidays, paydays, and wage rates, (iii) termination of employment, and (iv) grievance redressal mechanisms for workers.
Powers to the central government to revise the threshold:
- The 2019 Bill provided that the central government may make the provisions related to standing orders applicable to establishments with less than 100 workers through a notification. The 2020 Act removes this provision.
- Change in employee strength: The 2019 Bill provided that once an establishment is covered under the provisions related to standing orders, these provisions will continue to apply even if its employee strength reduces below the threshold (100 workers) at any time thereafter. The 2020 Bill removes this requirement.
Closure, lay-off and retrenchment:
- Prior permission of the government: Under the Act, an establishment having at least 300 workers is required to seek prior permission of the government before closure, lay-off, or retrenchment.
- Lay-off refers to an employer’s inability to continue giving employment to a worker in the face of adverse business conditions.
- Retrenchment refers to the termination of service of a worker for any reason other than disciplinary action.
Powers to the central government to revise the threshold:
- Earlier the government was empowered to increase or decrease the threshold for the establishments to seek prior permission before closure, lay-off or retrenchment.
- The 2020 Bill only allows an increase in the threshold through notification.
Negotiating Union and Council
- Sole Negotiating Union: Under the Code, if there are more than one registered trade union of workers functioning in an establishment, the trade union having more than 51% of the workers as members would be recognised as the sole negotiating union.
- Negotiation Council: In case no trade union is eligible as sole negotiating union, the Code provides that a negotiating council will be formed consisting of representatives of unions that have at least 20% of the workers as members.
New conditions for carrying out a legal strike:
- The 2020 Bill requires all persons to give prior notice of 14 days before a strike or lock-out. This notice is valid for a maximum of 60 days.
- The Bill also prohibits strikes and lock-outs: (i) during and up to seven days after a conciliation proceeding, and (ii) during and up to sixty days after proceedings before a tribunal.
- At present, a person employed in a public utility service cannot go on strike unless they give notice for a strike within six weeks before going on strike or within fourteen days of giving such notice, which the IR Code now proposes to apply for all the industrial establishments.
Re-skilling fund: It has also proposed to set up a re-skilling fund for the training of retrenched workers with contribution from the employer, of an amount equal to 15 days last drawn by the worker.
Disputes relating to termination of individual worker:
- The 2020 Code classifies any dispute in relation to discharge, dismissal, retrenchment, or otherwise termination of the services of an individual worker to be an industrial dispute.
- The worker may apply to the Industrial Tribunal for adjudication of the dispute.
- The worker may apply to the Tribunal 45 days after the application for the conciliation of the dispute was made.
|Code on Social Security, 2020|
Social security entitlements
The 2020 Bill states that the central government may, by notification, apply the Code to any establishment (subject to size-threshold as may be notified).
Gig workers refer to workers outside the traditional employer-employee relationship. Platform workers are those who access organisations or individuals through an online platform and provide services or solve specific problems.
The 2020 Bill makes the following changes for such workers:
Social security funds for unorganised workers, gig workers and platform workers:
- The 2020 Bill states that the central government will set up social security funds for unorganised workers, gig workers and platform workers.
- Further, state governments will also set up and administer separate social security funds for unorganised workers.
- The 2020 Bill also makes provisions for registration of all three categories of workers – unorganised workers, gig workers and platform workers.
National Social Security for gig workers and platform workers:
- The 2019 Bill provided for the establishment of a national and various state-level boards for administering schemes for unorganised sector workers.
- The 2020 Bill states that in addition to unorganised workers, the National Social Security Board may also act as the Board for the purposes of the welfare of gig workers and platform workers and can recommend and monitor schemes for gig workers and platform workers.
- In such cases, the Board will comprise of a different set of members including
- five representatives of aggregators, nominated by the central government,
- five representatives of gig workers and platform workers, nominated by the central government,
- Director-General of the ESIC, and
- five representatives of state governments.
Role of aggregators:
- The 2020 Bill clarifies that schemes for gig workers and platform workers may be funded through a combination of contributions from the central government, state governments, and aggregators. For this purpose, the Bill specifies a list of aggregators in Schedule 7.
- These mention nine categories including ride-sharing services, food and grocery delivery services, content and media services, and e-marketplaces.
- Any contribution from such an aggregator may be at a rate notified by the government falling between 1-2% of the annual turnover of the aggregators.
- However, such contribution cannot exceed 5% of the amount paid or payable by an aggregator to gig workers and platform workers.
Changes in definitions:
- The 2020 Bill changes the definitions of certain terms in the Code. These include:
- expanding the definition of ‘employees’ to include workers employed through contractors,
- expanding the definition of “inter-state migrant workers” to include self-employed workers from another state,
- expanding the definition of “platform worker” to additional categories of services or activities as may be notified by the government,
- expanding the definition of audio-visual productions to include films, web-based serials, talk shows, reality shows and sports shows, and
- exempting construction works from the ambit of “building or other construction work” if the total cost of construction work exceeds Rs 50 lakhs (and if they employ more than a certain notified number of workers).
Term of eligibility for gratuity:
- Under the 2019 Bill, gratuity was payable on the termination of employment, if the employee has been in the organisation for at least five years.
- The 2020 Bill reduces the gratuity period from five years to three years for working journalists.
Offences and penalties:
- The 2020 Bill changes the penalties for certain offences. For example, the maximum imprisonment for obstructing an inspector from performing his duty has been reduced from one year to six months.
- Similarly, the penalty for unlawfully deducting the employer’s contribution from the employee’s wages has been changed from imprisonment of one year or fine of Rs 50,000 to only fine of Rs 50,000.
Composition of boards for unorganised workers: The Bill expands the representation of central government officials in the National Social Security Board for unorganised workers from five members to 10 members (taking the total count of members from 37 in the 2019 Bill to 42 in the 2020 Bill). Similarly, the number of state government officials in the state Boards for unorganised workers has been increased from seven to 10 members (taking the total members from 31 in the 2019 Bill to 34 in the 2020 Bill).
Additional powers during an epidemic: The 2020 Bill adds new clauses which may become applicable in the cases of an epidemic. For example, the central government may defer or reduce the employer’s or employee’s contributions (under PF and ESI) for a period of up to three months in the case of a pandemic, endemic, or national disaster.
|Code on Occupational Safety, Health and Working Conditions, 2020|
The 2020 Bill empowers the state government to exempt any new factory from the provisions of the Code in order to create more economic activity and employment.
The threshold for coverage of establishments
- The 2019 Bill defined a factory as any premises where the manufacturing process is carried out and it employs more than:
- 10 workers, if the process is carried out using power, or
- 20 workers if it is carried out without using power. This was same as the Factories Act, 1948, which is being subsumed by the Bill.
- The 2020 Code increases the threshold to:
- 20 workers for premises where the manufacturing process is carried out using power, and
- 40 workers for premises where it is carried out without using power.
Establishments engaged in hazardous activity: The 2020 Bill includes all establishments where any hazardous activity is carried out regardless of the number of workers.
- The 2020 Bill specifies that the Code will apply to establishments or contractors employing 50 or more workers (on any day in the last year).
- The 2019 Bill empowered the government to prohibit employment of contract labour in some cases including where:
- the work is of perennial nature, or
- the work performed by contract workers is necessary for the business carried out by the establishment, or
- the same work is carried out by regular workmen in the establishment.
- The 2020 Bill instead prohibits contract labour in core activities, except where:
- the normal functioning of the establishment is such that the activity is ordinarily done through a contractor,
- the activities are such that they do not require full-time workers for the major portion of the day, or
- there is a sudden increase in the volume work in the core activity which needs to be completed in a specified time.
- The appropriate government will decide whether an activity of the establishment is a core activity or not.
- However, the Bill defines a list of non-core activities where the prohibition would not apply. This includes a list of 11 works including (i) sanitation workers, (ii) security services, and (iii) any activity of intermittent nature even if that constitutes a core activity of an establishment.
- The Bill allows the appropriate government to exempt contractors from the provisions of the Bill in case of an emergency, subject to such conditions as may be notified.
- The 2020 Bill clarifies that the Code will apply to contract labour engaged through a contractor in the offices of the central and state governments (where the respective government is the principal employer).
Work hours and employment conditions
Daily work hour limit: The 2020 Bill fixes the maximum daily work hours limit at eight hours per day.
Employment of women: The 2020 Bill provides that women will be entitled to be employed in all establishments for all types of work under the Bill. It also provides that in case they are required to work in hazardous or dangerous operations, the government may require the employer to provide adequate safeguards prior to their employment.
Inter-state migrant workers and unorganized workers
- The 2019 Bill defined inter-state migrant worker as a person who: (i) has been recruited by an employer or contractor for working in another state, and (ii) draws wages within the maximum amount notified by the central government.
- The 2020 Bill adds that any person who moves on his own to another state and obtains employment there will also be considered an inter-state migrant worker.
- The 2020 Bill also specifies that only those persons will be considered as inter-state migrants who are earning a maximum of Rs 18,000 per month, or such higher amount which the central government may notify.
Benefits for inter-state migrant workers:
- The 2020 Bill provides for certain benefits for inter-state migrant workers. These include:
- option to avail the benefits of the public distribution system either in the native state or the state of employment,
- availability of benefits available under the building and other construction cess fund in the state of employment, and
- insurance and provident fund benefits available to other workers in the same establishment.
Database for inter-state migrant workers: The 2020 Bill requires the central and state governments to maintain or record the details of inter-state migrant workers in a portal. An inter-state migrant worker can register himself on the portal on the basis of self-declaration and Aadhaar.
Social Security Fund: The 2020 Bill provides for the establishment of a Social Security Fund for the welfare of unorganised workers. The amount collected from certain penalties under the Code (including the amount collected through compounding) will be credited to the Fund. The government may prescribe other sources as well for transferring money to the Fund.
The government plans to bring into effect new labour laws across the country from April 1. The new codes give powers to state governments to make rules as they will have jurisdiction over most of the establishments. For instance, while the central government will frame around 57 rules for the Industrial Relations Code, 2020, states will have to come up with around 40 rules.
On its part, the central government, which has jurisdiction over sectors, such as coal, mining, banking, and civil aviation, is set to make public the draft rules under the three labour codes by November this year. The rules will be open for public comments for a period of 45 days.
|Benefits of Labour Codes|
Benefits for workers
- Universalisation of right of minimum wages and timely payment of wages to all workers including unorganised workers. presently minimum wages applicable to only 30% of workers.
- Concept of National Floor Wage introduced- will reduce regional disparity in minimum wages.
- Fixation of minimum wages simplified, leading to less number of rates of minimum wages and better compliance.
- Appointment letter for all workers- this will promote formalization.
- Annual health checkup for employees.
- Occupational Safety and Health Code is also applicable to establishments engaged in work of hazardous natures even with the threshold of fewer than 10 workers.
- Definition of inter-state migrant workers modified to include migrant workers employed directly by the employer, workers directly coming to destination state of their own besides the migrant worker employed through a contractor.
- Portability of welfare benefits for migrant workers.
- Extension of ESIC coverage pan India to all districts and all establishments employing 10 or more employees as against those in the notified district/area only.
- Extension of ESIC coverage to employees working in establishments with less than 10 employees on a voluntary basis.
- Mandatory ESIC coverage through notification by the central government for employees in hazardous Industries with less than 10 employees.
- Social security scheme for gig workers and platform workers.
- Reskilling fund for retrenched employees.
- All occupations opened for women and permitted to work at night with safeguards.
- Provision for Social Security Fund for unorganised workers.
- Gratuity for Fixed Tem Employment- Provision of gratuity on completion of one year service as against 5 years.
- Consolidation and simplification of the Complex laws: The three Codes simplify labour laws by subsuming 25 central labour laws that have been on the table for at least 17 years.
- It will provide a big boost to industry & employment and will reduce multiplicity of definition and multiplicity of authority for businesses.
- Single Licensing Mechanism: The codes provide for a single licensing mechanism. It will give a fillip to industries by ushering in substantive reform in the licensing mechanism. Currently, industries have to apply for their licence under different laws.
- Easier Dispute resolution: The codes also simplify archaic laws dealing with industrial disputes and revamp the adjudication process, which will pave the way for early resolution of disputes.
- Ease of Doing Business: According to the industry and some economists such reform shall boost investment and improve ease of doing business. It drastically reduces complexity and internal contradictions, increases flexibility & modernizes regulations on safety/working conditions
- Other benefits for Labour: The three codes will promote fixed-term employment, reduce the influence of trade unions and expand the social security net for informal sector workers.
The Periodic Labour Force Survey observes that 71% of regular wage/salaried workers in the non-agriculture sector did not have a written contract, and 50% were without social security cover. The new laws, by simplifying compliance, should create an incentive for workforce formalisation.
The new labour codes will help in increasing the pace of generating good quality jobs to cater to the growing workforce, their rising aspirations and to absorb out-migration of labour from agriculture. This way India can fully be able to capitalize on its inherent labour and skill cost and help a fast economic recovery especially post Covid-19.
|Issues with the Codes|
Key issues in the Industrial Relations Code Bill, 2020
- It will water down the labour rights for workers in small establishments having less than 300 workers and would enable companies to introduce arbitrary service conditions for workers.
- It will 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 which is complete demolition of employment security.
- The new conditions for carrying out a legal strike elongate the legally permissible time frame before the workers can go on a legal strike, making a legal strike near impossible.
- It has expanded to cover all industrial establishments for the required notice period and other conditions for a legal strike even though the Standing Committee on Labour had recommended against it beyond the public utility services like water, electricity, natural gas, telephone and other essential services, as is the case at present.
- The mention of ‘other sources’ for funding the re-skilling fund is vague. The reskilling fund is arbitrarily framed as the Code has no idea from where the funds for the same will come apart from employers’ contributions.
- These ambiguities are left to the rule-making processes and the bureaucrats and, further, there are unclarities over who will reskill the workers and how adequate the funding will be.
Key issues in the Code on Social Security, 2020
Excludes some workers:
- First, the Code continues to retain thresholds based on the size of establishment for making certain benefits mandatory.
- Benefits, such as pension and medical insurance, continue to be mandatory only for establishments with a minimum number of employees (such as 10 or 20 employees).
- All other categories of workers (i.e., unorganised workers), such as those working in establishments with less than 10 employees and self-employed workers may be covered by discretionary schemes notified by the government.
- A large number of workers may continue to be excluded.
- The Code continues to treat employees within the same establishment differently based on the number of wages earned.
- For instance, provident fund, pension and medical insurance benefits are only mandatory to employees earning above a certain threshold (as may be notified by the government) in eligible establishments.
Provisions on gig workers and platforms workers are unclear:
- Consider the example of a driver working for an app-based taxi aggregator. Here, there is no employee-employer relationship.
- For example, appointment letters are not issued, social security benefits are absent, work hours are not regulated by the employer, and the driver may choose to work for a competitor taxi aggregator.
- Therefore, the nature of the work involved may lie outside the purview of a ‘traditional employer-employee relationship’, making him a ‘gig worker’. However, the driver is able to pursue this job only through an online platform.
- This would meet the definition of a ‘platform worker’ as well. Such a driver may also be an ‘unorganised worker’ as he may be self-employed.
- With such overlap across definitions, it is unclear how schemes specific to these categories of workers will apply.
Mandatory linking with Aadhaar may violate Supreme Court judgement:
- The 2020 Bill mandates an employee or a worker (including an unorganised worker) to provide his Aadhaar number to receive social security benefits or to even avail services from a career centre. This may violate the Supreme Court’s Puttaswamy-II judgement.
- In its judgement, the Court had ruled that the Aadhaar card/number may only be made mandatory for expenditure on a subsidy, benefit or service incurred from the Consolidated Fund of India.
- Applying this principle, the Court has struck down the mandatory linking of bank accounts with Aadhaar.
- Since certain entitlements such as gratuity and provident fund (PF) are funded by employers and employees and not by the Consolidated Fund of India, making Aadhaar mandatory for availing such entitlements may violate the judgement.
Key Issues in the Code on Occupational Safety, Health and Working Conditions, 2020
The rationale for some special provisions unclear:
- The Code contains general provisions which apply to all establishments. These include provisions on registration, filing of returns, and duties of employers.
- However, it also includes additional provisions that apply to the specific type of workers such as those in factories and mines, or as audio-visual workers, journalists, sales promotion employees, contract labour and construction workers.
- It may be argued that special provisions on health and safety are required for certain categories of hazard-prone establishments such as factories and mines. It may be necessary to allow only licensed establishments to operate factories and mines.
- Similarly, special provisions may be required for specific categories of vulnerable workers such as contract labour and migrant workers. However, the rationale for mandating special provisions for other workers is not clear.
Civil Court barred from hearing matters under the Code:
- The 2020 Bill bars civil courts from hearing any matters under the Bill.
- In some matters where persons are aggrieved by the orders of authorities such as, by the order of the Inspector-cum-facilitator in the case of factories, or by the revocation of a license for contractors, the Bill provides for an administrative appellate authority to be notified. However, it does not provide a judicial mechanism for hearing disputes under the Bill.
- Under the existing 13 health and safety laws, claims which affect the rights of workers such as wages, work hours, and leave, are heard by labour courts and industrial tribunals. However, the Bill bars the jurisdiction of civil courts and does not specify that such disputes arising under it may be heard by these labour courts and tribunals.
Key Issues with the Code on Wages 2019
Issues with the consolidation
- While the previous four pieces of legislation had a total of 119 sections, the new Code has 69 sections.
- Any consolidation will impact the length of the sections.
- Further, all requirements for enforcing the Act, have been relegated to the Rules.
- As a result, the delegated pieces of legislation (Rules) will be bigger than the Code; this is no way to condense prior pieces of legislation.
- All four repealed pieces of legislation were enacted historically at different points in time and to deal with different situations.
- The combining of asymmetrical laws into a single code is not an easy task and will only create its own set of new problems.
- The central government will have the power to fix a “floor wage”.
- Once it is fixed, State governments cannot fix any minimum wage less than the “floor wage”.
- The concept should be for a binding minimum wage and not have dual wage rates- a binding floor wage and a non-binding minimum wage.
- Neither the Code nor the Rules (presently, draft Rules) prescribe the qualifications and experience required for the appointment of the competent authority.
- Anew provision (Section 52) has been introduced where an officer will be notified with power to impose a penalty in the place of a judicial magistrate.
- An essential judicial function is now sought to be vested with the executive in contravention of Article 50 of the Constitution.
Issue of MGNREGA wages
- There were cases as to whether the Minimum Wages Act would have an overriding effect over the provisions of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005.
- Several High Courts have placed the Minimum Wages Act to override MGNREGA.
- That has been set to rest by excluding MGNREGA from the purview of the Code on Wages.
- That has been set to rest by excluding MGNREGA from the purview of the Code on Wages.
Despite the progress, drafting of the labour codes is also a case of missed opportunities. Compensation payable to workmen at the time of his exit from the service has not been increased.
Tribunals should have been given the power to grant the injunction in appropriate cases without driving the litigants to court for such interim relief.
A division bench of tribunals should have been formed as an appellate court against the award of the industrial tribunal as it is well-known that quasi-judicial powers vested with authorities have not worked satisfactorily.
While industries are entitled to make a reasonable profit on investment, workers are equally entitled to reasonable wage and good and safe working conditions. It is an uphill task to enact and codify rules that satisfy both parties and the mid path, taking care of the interest of both should be the goal of any labour legislation. To that end, the four labour codes have been rightly grouped together.
While the labour codes could be called “historic” because they come after nearly a century, the exuberance of the Union govt terming them as “landmark” and “game-changer” is an exaggeration. The laws have adapted to the prevailing industrial
and economic activity, but there is a long way to go to achieve a fine balance in the interest of workers and the industry.