“Labour is prior to, and independent of, capital. Capital is only the fruit of labour, and could never have existed if labour had not first existed. Labour is the superior of capital and deserves much the higher consideration”
- Abraham Lincoln
On 23rd September 2020 the Rajya Sabha passed three Labour Codes with nearly no opposition in an expeditious manner. The Occupational Safety, Health and Working Conditions Code, 2020; the Industrial Relations Code, 2020 and the Code on Social Security, 2020 subsume 29 out of 44 central acts enacted in the past. These codes not only reduce the multiplicity of labour laws but also include several reforms which are purported to be beneficial to either side. Moreover, it aims to expedite the employment growth while safeguarding workers’ rights.
The Second National Commission on Labour (2002) (NCL) found subsisting legislations to be complex, with obsolete provisions and repugnant definitions. To facilitate ease of compliance and to assure uniformity and transparency in labour laws, the NCL recommended the unification of central labour laws into broader groups like industrial relations, social security, wages, safety and welfare and working conditions. Now let’s understand the codes in a lucid manner infra.
1. Code on Industrial Relations, 2020
The Code provides that all industrial establishments with at least 300 workers will have to mandatorily furnish standing orders. Besides, the code removes the condition that if once an establishment is covered under the standing order provisions it will have to abide by those provisions even if its employee strength reduces.
For establishments with at least 300 workers, prior permission of the government would be required for closure, lay-off or retrenchment. An increase in the threshold would be allowed only through notification by the central government.
The code further reduces the threshold limit to 51% of workers from that of 75% in the code of 2019 for recognition of a trade union as sole negotiating union. Moreover, disputes relating to dismissal, discharge, retrenchment or termination of services of an individual worker would be classified as an industrial dispute.
Moreover, trade unions are also required to give a prior notice of 60 days before a strike or lockout. However, strikes and lockouts would be prohibited during the conciliation proceedings.
2. Code on Social Security, 2020
The code ensures extension of social security to all or any employees and workers within both organized and unorganized sectors. In case of unorganized workers it also covers gig workers and platform workers. It also sets up a National Social Security Board for the welfare and security of gig and platform workers. It also reduces the period of gratuity for working journalists from five years to three years.
Additionally, the code expands the definitions of ‘employees’, ‘inter state migrant workers’, ‘platform workers’, etc thus including workers employed through contractors, self employed workers from another state. Whereas, the bill excludes construction works from the purview of ‘building or other construction work’ provided that the total construction cost transcends Rupees 50 lakhs.
However, the bill mandates an employee or a worker to provide his Aadhar number to receive social security benefits. This may adversely violate the Supreme Court’s Justice K. S. Puttaswamy (Retd.) and Anr vs Union of India and Ors judgement.
3. Code on Occupational Safety, Health and Working Conditions, 2020
It is applicable to factories with 20 or more workers where the manufacturing process is being carried on with the aid of power or on factories with 40 or more workers where manufacturing is being carried on without the aid of power.
The code includes all establishments engaged in hazardous activity where such an activity is being carried out irrespective of the number of workers. Under the code the appropriate government can discharge contractors in case of emergency if such a condition has been notified. Besides it also limits the maximum working to 8 hours per day.
Perhaps, the best part of the code is that women can now undertake employment in any establishment for all kinds of work. The bill also expands the definition of ‘inter state migrant worker’ thus including any worker who moves on his own to another state for employment. Besides which they are also conferred upon with various additional benefits.
The code restrains the civil courts from hearing any disputes under it. However, a case can be filed in the civil courts against the orders of the Inspector and subsequently an appeal may be filed before the High Court and Supreme Court respectively.
The Flip Side
Strangely, the codes state that the central government will continue to act as the appropriate government for central Public Sector Undertaking (PSU) albeit the holdings of the PSU become less than 50%. Rationally, if the central government does not have controlling stake it shall not be given the status of appropriate government.
The Factories Act, 1948 exempted certain establishments from its provisions in cases of public emergency, however, such exemption was limited to a period of three months only. On the other hand, the Code on Industrial Relations and Occupational Safety grants the central and state government the power to exempt new industrial establishments from its provisions if it is in public interest.
While defining, expanding and restricting the definitions of certain terms, the bills fell short in defining terms like ‘manager’, ‘supervisor’, ‘contractor’ and ‘establishment’. Besides, both Code on Industrial Relations and Social Security have varied principles on gratuity for fixed term workers. Under the former, a worker is eligible for gratuity if and only if he completes a one year contract. Whereas, the latter states that a worker will be eligible for gratuity only if he has served for a continuous period of five years.
The government's move to finally unify the law on social security and enhancing the previous version of the labour bills appears well deliberated. However, it would have been consummate if the government would have released the draft for bill for public comments keeping up with the traditional practice. An admonitory approach would have enabled the government to address issues concerning industries and other stakeholders especially in the present challenging times of COVID-19..