In the current parliament session, three bills – Code on Occupational Safety, Health and Working Conditions, Industrial Relations Code and Social Security Code were passed to reform Labour laws.

The central government had said 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. The Second National Commission on Labour (2002) found existing legislation to be complex, with outdated provisions and inconsistent definition, hence, to improve ease of compliance, the Commission recommended the consolidation of central labour laws into broader groups.

In 2019, the Ministry of Labour and Employment introduced four Bills to consolidate 29 central laws. While the Code on Wages, 2019 was passed by Parliament, Bills on other areas were referred to the Standing Committee on Labour. The Standing Committee submitted its report on the three Bills, and then, the Modi government replaced these Bills with new ones on September 19, 2020. To that end, the three bills – Code on Occupational Safety, Health and Working Conditions, Industrial Relations Code and Social Security Code were passed.

There have been several questions raised in connection with the three bills passed by the parliament and in this article, we aim to answer 5 such questions that have been raised.

The Industrial Relations Code 2020

The Industrial Relations Code seeks to replace three specific labour laws:

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

Question 1: Unites up to 300 can hire and fire without seeking government permission, and thus, it might lead to increased hiring and firing

The threshold that has been increased from 100 to 300 was recommended by The Parliamentary Standing Committee. The Parliamentary Standing Committee has recommended that the threshold of one hundred workers may be increased to three hundred workers for seeking prior permission for lay-off, retrenchment and closure. In the previous provisions, the rule of prior government permission for hire and fire only pertained to factories, mines and plantations.

The criticism in this case is that this change in the law would compromise the workers’ rights and promote firing practises. However, the only change in this aspect is that units with up to 300 workers will not have to take prior permission of the appropriate Government before hiring and firing. The workers’ rights workers such as notice before retrenchment, compensation at the rate of 15 days wages per completed year of service and pay in lieu of notice period has not been compromised. 

It is to be kept in mind that there is no evidence that a change of this rule to extend it to units with up to 300 workers would promote hire and fire practises. What is also being pushed under the rug is that the Industrial Relations Code envisages an additional monetary benefit equivalent to 15 days of wages under newly created Reskilling Fund.

The Economic Survey, 2019 had analysed that due to the threshold of 100 workers, there were several businesses that were incentivised to remain a small unit. The State of Rajasthan in 2014 had increased the threshold from 100 to 300 workers and done away with the requirement of prior permission before retrenchment etc., in case of firms having less than 300 workers. The impact of increase in threshold in the state of Rajasthan, showed that average number of factories in Rajasthan having more than 100 increased significantly as compared to the rest of India.  The total output in those factories also increased.  

Following the footsteps of Rajasthan, 15 more States have enhanced threshold to 300 workers even before the Industrial Relations Code 2020 was passed. These States include, AP, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, HP, Jharkhand, Karnataka, MP,  Meghalaya, Odisha, Punjab, Rajasthan and UP.

Question 2: Won’t Fixed Term Employment introduce hire and fire

By several people, the introduction of ‘Fixed Term Employment’ is being touted as a new rule that has been introduced by the government. However, Fixed Term Employment has already been notified by Central Government and 14 other States. These States include Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jharkhand (apparel and made up) Karnataka, MP, Odisha, Punjab, Rajasthan, UP (textile and EOU), and Uttarakhand.

Earlier, an employer could only hire either permanent employees or contractual employees. There were several issues with this limitation. The employer often had to hire unskilled labourers with no commitment and long term relationship with the company, in case of contractual employees. There have also been allegations that the contractors charges full amount in terms of minimum wage and other entitled benefits like EPF, ESIC but do not pass the same to the contract labour.   

However, now with the introduction of Fixed Term Employment, the employer can directly get into a fixed term contract with the employee without the middleman. A fixed term employee has been made statutorily entitled for all benefits and service conditions equivalent to that of a regular employee. In fact the code on Industrial Relations also extends benefit of gratuity even for a Fixed Term Employee contract of one year which is five years in case of regular employee.

Hence, the introduction of the Fixed Term Employee option is actually a pro-labour reform that the Industrial Relations Code, 2020 has introduced.

The Occupational Safety, Health and Working Condition Code, 2020

The Occupational Safety, Health and Working Condition Code, 2020 consolidates 13 acts regulating health, safety and working conditions. These include Factories Act 1948, The Mines Act 1952, and the Contract Labour (Regulation and Abolition) Act, 1970.

Question 1: The definition of Inter-State Migrant worker is different in Inter-State Migrant Workmen Act, 1979 Act and new Code – will it create confusion?

The Inter-state Migrant Worker Act, 1979 has been subsumed in OSH Code.  The various provisions of the erstwhile Act have been further strengthened in the OSH Code. The definition of Inter-State Migrant worker is same in the Social Security Code and the OSH Code. 

The definition of the inter-state migrant worker was very restrictive in the Inter-state Migrant Worker Act, 1979. It provided that a person who is recruited through a contractor in one state for employment in another state, to be an ‘Inter-state Migrant Worker’. The OSH Code expands the definition of the migrant worker to include those workers who would be directly employed by the employer besides by contractor.  Further, it has also been made possible that a migrant, who comes on his own, in the destination State, can declare himself a migrant worker by registering on an electronic portal on the basis of self-declaration seeded with Aaadhar. The registration on the portal has been made simple and there is no requirement of any other document except Aaadhar.  

The Ministry in this regard has also taken steps to develop a national database to enrol unorganised workers including migrants, which will inter-alia help migrant workers get jobs, map their skills and provide other social security benefits.  It will also help in better policy formulation for unorganised sector workers, in general. 

A statutory provision for helpline for migrant workers has also been made.

The migrant workers will also be able to enjoy the benefits of portability in respect of ration and avail benefits from building and other construction cess. They will also get all other benefits of ESIC, EPFO and annual medical check-up etc.

Question 2: Won’t night shifts for women compromise their safety?

Gender equality in the workplace and in hiring practices has been a long-time demand. The Occupational Safety, Health and Working Condition code ensures that gender equality is maintained in workplaces and women, should they want, be entitled to get the same working opportunity, including the night shift.

However, safety of women is always a paramount concern and to that end, sufficient safeguards for employing women at night have been provided. The consent of women for employing them at night has been made mandatory. Further, it is said that the appropriate government shall prescribe conditions for safety, holidays and working hours or other conditions before permitting women to work at night.

Question 3: Have Welfare provisions been diluted in the new Codes?

It is being alleged that in the new code, several welfare benefits have been diluted and that would affect the rights and well-being of the workers. However, that allegation is far from the truth since several new provisions for the welfare of the workers have been introduced through these bills.

Following are some of the welfare provisions:

1. There is generally a threshold of workers employees, beyond which, the government notifies certain health and safety measures. Through these codes, for establishment carrying on hazardous and life-threatening occupations, the Government can notify coverage even on establishment having workers less than the threshold.
2. ESIC has been extended to plantation workers.
3. Appointment letter has been made mandatory. Earlier, hiring workers without an appointment letter could be a means to exploit workers by employers. If there was no appointment letter and no record of the hire, the establishment could arbitrarily fire workers and even deny them there basic rights like ESIC, Provident Fund etc.
4. Free annual health checkup has been introduced.
5. The bipartite safety committee has been introduced for establishments in factory, mines and plantation in place of hazardous factories. The involvement of two separate parties in the committee ensures that the steps taken are fair to the workers.
6. Activities of the plantation worker dealing with elements like insecticides, pesticides have been included as hazardous processes. Earlier, though the health effects of these jobs were severe, they were not considered a hazardous process and thus, these workers were not given certain benefits extended to workers in the hazardous process category.
7. There are certain other facilities that factories and establishments have to provide, for which, the number of workers threshold has been reduced. For example, the number of workers beyond which an establishment will have to provide canteen services has been reduced to 100. Earlier, in certain acts, the threshold was higher – for example, in Factories Act and Mines Act it was 250. An establishment has to provide Crèche facilities if it employees more than 50 women, and a Welfare Officer has to be employed beyond 250 workers for factory, mine, plantation. Earlier, a Welfare Officer only had to be employed beyond 500 workers for Factories and Mines and 300 workers in Plantations.