Labour codes to become law in 2022-23, says government

The new codes on wages, social security, industrial relations and occupational safety, health and working conditions will introduce various changes to aspects of employment and work culture, such as take-home salaries, working hours and social security benefits.

According to the government, the previous set of 29 labour laws have been simplified into four easy-to-understand and transparent codes, keeping the interests of workers at the forefront. The codes will simplify labour laws that have remained largely unchanged for over 70 years, say ministers.

Commenting after Parliament passed the Labour Reforms Bill for the four codes in September 2020, prime minister Narenda Modi said the “long due and much awaited” reforms will “ensure wellbeing of our industrious workers and give a boost to economic growth. They are also shining examples of ‘Minimum Government, Maximum Governance’.”

He added: “The new Labour codes universalise minimum wages and timely payment of wages and give priority to occupational safety of the workers. The reforms will contribute to a better working environment, which will accelerate the pace of economic growth. These labour reforms will ensure ‘Ease of Doing Business’.”

Photograph: iStock/AlxeyPnferov

Ease of doing business
According to the Labour Ministry, its priorities for 2022-23 include establishing a National Social Security Fund to provide certain social security benefits to over 38 crore workers in the informal sector, and enhancing the ease of doing business in the country.

As the Union government and states have joint jurisdiction over labour legislation, both the Centre and the states must notify rules under the four codes to introduce the new laws throughout the country.

The codes empower the central and state governments – and other relevant authorities – to make rules which must be published in their official gazettes for a period of 30 or 45 days to enable public consultation on the changes.

The central government finalised its rules under the codes in February 2021 and a large number of states have also issued draft rules that will be implemented in the coming financial year.

Commenting on the progress towards implementing the codes, Union Labour Minister, Bhupendra Yadav, recently told the Upper House of Parliament that 24 states and union territories (UTs) have pre-published the draft rules for The Code on Wages, the highest number of draft notifications for the four codes. This is followed by the Industrial Relations Code (20 states) and the Code on Social Security (18). The lowest number of published draft rules is for the Occupational Safety, Health and Working Conditions Code, which has so far only been published by 13 states/UTs.

However, some of the provisions of the codes have been criticised by trade unions and labour rights campaigners, including a change that allows companies with up to 300 workers to ‘retrench’ (i.e. dismiss) employees and close their business without first gaining the government’s permission.

However, many experts argue that the reforms will improve the welfare of workers in both the organised and unorganised sectors.

Parliament passed the Code on Wages in 2019, while the codes on Industrial Relations, Social Security and Occupational Safety, Health and Working Conditions were passed a year later.

The Social Security Code provides for universal social security, beginning with gig workers who will be covered under the Employees’ State Insurance Corporation. This code will also allow the government to eventually merge all existing social security schemes.

Minimum wages
The government’s summary leaflet on the changes states: “Now all workers of the organised and unorganised sector will get the minimum wages and a large section of workers in unorganised sector would also get social security.”

It adds: “Now, Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS) and coverage of all types of medical benefit under Employees’ Insurance will be available to all workers.”

In addition, the Code on Occupational Safety, Health and Working Conditions seeks to ensure “better and safe” working environments. The planned changes include a requirement for employers to provide a free annual health check-up for workers and workers to be entitled to one day’s leave for every 20 worked, after they have been employed for 180 days, compared to a period of 240 days before.

However, the country’s national trade unions oppose the codes on several grounds. They argue that the Codes on Wages only provides a threshold floor-level wage – a minimum wage that will be calculated by the central government, taking into account factors such as a worker’s skill levels and the area of the country they are based in. The Code on Industrial Relations has been criticised for allowing firms with up to 300 employees to retrench (lay off) workers without seeking the approval of the relevant state government, and the Occupational Safety Code is being opposed because it will not apply to labour contractors engaging up to 50 workers. The Social Security Code is being opposed because it does not clarify the centre government’s financial obligations.

More on the Labour Codes at:

www.labour.gov.in/labour-codes

https://bit.ly/35Bg2vE