Parliament passes three Labour Codes to pave way for enactment of “game changer” Labour Laws
Parliament House

Parliament passes three Labour Codes to pave way for enactment of “game changer” Labour Laws

New Delhi, September 23, 2020

The Rajya Sabha today passed three labour codes to clear the decks for the enactment of “game changer” Labour Laws. The codes were passed by the Lok Sabha on Tuesday.

Minister for Labour & Employment Santosh Kumar Gangwar said the Labour Codes harmonize needs of workers and industry and will prove an important milestone for the welfare of the workers. The codes propose to cover more than 50 crore workers from organized, unorganized and self-employed sections to ensure minimum wages and social security.

The codes passed by the Upper House are the Industrial Relations Code, 2020, Code on Occupational Safety, Health & Working Conditions Code, 2020 and Social Security Code, 2020.

Under the new codes, a “Social Security Fund” is proposed for 40 crore unorganized workers along with gig and platform workers to help widen the Universal Social Security coverage. Women workers will get pay parity as compared to their male counterparts. Working journalists’ definition will be expanded to include Digital and Electronic Media. A helpline will be set up to redress the grievances of migrant workers.

The Labour Codes will establish transparent, answerable and simple mechanism reducing the paperwork to one registration, one license and one return for all the codes.

Speaking during the discussions on the Bills, Gangwar described them as a historic game changer which will harmonize the needs of workers, industries and other related parties. These Labour Codes will prove to be an important milestone for the welfare of the workers in the country, he said.

“From 2014 onwards, the Government has taken several steps for the welfare of the workers and through these Labour Codes, the dream of overall labour reform is being realized. The Occupational Safety Code envisages a safe working environment for workers, especially women,” he said.

An effective dispute resolution mechanism was being ensured through the Industrial Relations Code providing for time-bound dispute resolution system in every institution. The Social Security Code provides a framework to include organized and unorganized sector workers under the ambit of comprehensive social security. It contains provisions relating to EPFO, ESIC, building construction workers, maternity benefits, gratuity and social security fund for unorganized sector workers.

“Through this Code, we are moving towards fulfilling the Prime Minister’s vision of Universal Social Security,” he added.

Gangwar said the Ministry has been working tirelessly to provide social security and other welfare measures to both organized and unorganized workers including during the COVID-19 pandemic. Among the steps taken were increasing the maternity leave from 12 weeks to 26 weeks. Women were also allowed to work in mines under Pradhan Mantri Rozgar Protsahan Yojana. Formal employment was increased with portability in EPFO and welfare schemes and expansion of ESIC facilities.

Dwelling upon amalgamation of 29 labour laws into four Labour Codes, the Minister said extensive consultation was undertaken by the Government before finalizing the Labour Codes. These include discussions carried out in nine tripartite meetings, four sub-committees, 10 inter-ministerial consultations, Trade Unions, Employers’ Associations, State Governments, Experts and International Bodies. Suggestions/comments were invited from the people by placing the recommendations in the public domain for 2-3 months.

The objective of labour reforms is to have the labour laws in line with the changing world of the workplace and to provide an effective and transparent system, balancing the needs of workers and industries.

“In this journey of 73 years of independence, the atmosphere, technological phase, mode of working and the nature of work has changed drastically in today's new India. If we do not make the required changes in its labour laws, then we will be left behind in both the welfare of the workers and the development of industries,” he said.

He emphasized that the structure of welfare and rights of ‘Atmanirbhar Shramik’ were based on four pillars. Regarding the first pillar, salary protection, the Minister said that even after 73 years of independence and despite having 44 labour laws, only about 30% of India's 50 crore workers had the legal right to minimum wages. All the workers were not paid on time.

“For the first time, our government has worked to correct this discrepancy and has given the legal right to all the 50 crore organized and unorganized sector workers to get minimum wages and timely wages,” he added.

The second important pillar of labour safety would give them a safe working environment to protect their health and help lead a happy life. For this, he said, for the first time in the OSH Code, annual health check-up has been provided for workers above a certain age. Additionally, to keep the standards related to safety effective and dynamic, these could be replaced with changing technology by the National Occupational Safety & Health Board.

To provide a safe environment, workers and employers should decide together for which a safety committee has been provided in all institutions.

The OSH Code also reduced the minimum qualification from 240 days to 180 days for availing of leave facility. It provides for the payment of at least 50% of the penalty imposed on an employer for injury or death at the workplace, to the aggrieved worker, in addition to other benefits.

Stating that women should have the freedom to do the same work as men, he said that for the first time, a provision has been made that women can work in any type of institution at night as per their choice. “However, the employer will have to make all necessary security arrangements, as determined by the appropriate government,” he added.

The third important pillar for workers was Comprehensive Social Security. In line with this resolution, he said the scope of ESIC and EPFO was being extended in the Social Security Code.

To increase the scope of ESIC, a provision has been made that its coverage will extend to all the 740 districts of the country. The ESIC option will be extended for plantation workers, unorganized sector workers, gigs and platform workers and institutions with less than 10 workers.

If the work is risky, that workplace will inevitably be brought under the purview of ESIC even if it is a sole labourer. Similarly, to increase the scope of EPFO, the schedule of the institutions has been removed in the current law. Now all those institutions which have 20 or more workers will come under the ambit of the EPF. Apart from this, the option of EPFO for institutions with less than 20 workers and self-employed workers is also being given in the Social Security Code.

To provide social security to 40 crore unorganized sector workers, he informed, provision for “Social Security Fund” has been made. Through this fund, social security schemes will be made for workers and gigs and platform workers working in the unorganized sector and plans will be formulated to provide all kinds of social security benefits such as death insurance, accident insurance, maternity benefit and pension etc. to these 40 crore workers.

“Through these efforts, we have taken an important step towards fulfilling our pledge of Universal Social Security coverage”, he said.

Talking about the fourth pillar, Gangwar said, “We have simplified and made the IR Code more effective so that peace and harmony prevail in the industrial units. We have also ensured that Fixed Term Employees' service conditions, salary, leave and social security will also be the same as a Regular Employee. Also, Fixed Term Employee has been given the right to pro-rata Gratuity.”

The Minister emphasized that the provisions of a strike in IR Code do not take back the right of any workers to go on strike. “Before going on the strike, the 14-day notice period obligation has been imposed on every institution to attempt to end the dispute through amicable negotiations. Neither the workers nor the industry would benefit from the workers going on strike,” he added.

As far as raising the threshold in retrenchment, closure or lay-off in the IR Code from 100 workers to 300 workers, he pointed out that labour was the subject of the concurrent list, and the concerned state governments have the right to change the laws. As many as 16 states have already increased this limit, using this right.

“Parliamentary Standing Committee also recommended that this limit be increased to 300. Moreover, most of the institutes do not want to keep more than 100 workers in their institution, which promotes informal employment,” he added.

The Minister said according to the Economic Survey 2019, after increasing this threshold from 100 to 300 in the state of Rajasthan, along with the number of large factories, there has also been an increase in employment generation of workers and an unprecedented reduction in layoffs.

“This makes it clear that changing this one provision will motivate investors to set up large factories in the country, and by setting up more factories, more employment opportunities, more workers in our country will be generated for”, he opined.

Trade Unions play an important role in getting workers their rights in institutions. Recognizing the contribution, for the first time in law, Trade Unions were being recognized at the institution level, state level and central level. For the first time in the IR Code, a provision of the Re-skilling Fund has been made to increase the chances of employment again. The workers will be given 15 days salary for this purpose, the Minister said.

Mentioning special provisions made to strengthen the rights of migrant workers in the scenario of COVID-19, he said, the definition of migrant workers has been broadened. Now all the workers who come from one state to another state, with salary less than Rs 18,000, will come under the definition of migrant labour and get the benefit of welfare schemes of the government.

There was a provision to create a database for migrant workers, portability of their welfare schemes, a separate helpline arrangement and travel allowance to be given by the employer once a year for them to go to their place of origin.

Under the various labour laws, there will be no need to have multiple registrations or multiple licenses to set up industries. “As far as possible, now we are going to arrange to provide registration, license etc. in a time-bound manner and under online process,” he added.

“Through these four Labour Codes, we are ensuring the welfare of workers, on the one hand, on the other hand, it is an effort to develop new industries through a simple compliance system, which will create employment for our workforce. New opportunities should be created,” he added.


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