Will The New Labour Code Consolidation Have A Positive Impact?
A look at India’s enormous workforce dwelled over multiple laws and legislations called for a streamlined labour code. Why the need you ask? To break it down, when there are multiple laws governing employees rights and many of which are vague, too complicated or uncalled for it creates difficulties for employees and employers both. The present government has introduced a consolidation of all 29 central acts simplified in 4 labour codes-
What are the key provisions and its impact?
i. Applicable to all employee- organised and unorganised
ii. A uniform definition of wages- across all the 4 codes
iii. National floor fixing for minimum wages for different states
iv. Work of similar nature is defined as work for which the skill, effort, experience, and responsibility required are the same- to curb gender discrimination
One of the major highlights of the code is the national fixing of minimum wages which was earlier decided by the states itself as it is in the concurrent list. (wherein both union & state make laws) As per the prerogative, the central government will have a national minimum wage, further, a minimum wage will also be allocated to different states. Under this, bonuses will be applicable to all employee. (which wasn’t the case earlier)
However, this brings up a question- as to what extent will the states be able to put in their inputs while framing national minimum wages. It is interesting to note that this might create competitiveness among states as the states will have the power to set minimum wage equal to or above as states by central government. Furthermore, for eg. If the national minimum wage is X and a State has fixed theirs at 3x based on the economic opportunities, cost of living etc. will they be permitted to lower their minimum wage from 3x but staying equal or above the national minimum wage?
i. Unorganised, gig workers and platform workers and their family members will receive ESI benefits and welfare schemes by central government
ii. Aadhar-based registration including self-registration by unorganised workers for availing benefits
iii. ‘Aggregators’ are referred to — ride-sharing services, delivery services, content and media services, and e-marketplaces. These aggregators will now be obliged to contribute, as per the new code.
Incorporates informal/unorganised sector into the ambit of social security, resolving the issue of these benefits being available to only formal workforce comprising 10–15% of total labour. As the code calls for an Aadhar-based registration for being a recipient of the scheme, however, this proposes a challenge as massive informal workforce might be left unregistered and oblivious to their rights and dues- a crucial attention needs to be placed on ensuring that registration takes place.
How this can be dealt is by having new forms of labour organisations that attempt to focus on compliance, rights of the employee, bargain for their demands and so on. Another noteworthy approach of the code is to have an increased retirement benefits for employees, what this translates to is that- after the implementation of the code, the gratuity will be calculated as 50% of CTC (cost-to-company) and not base salary which may be lesser take-home salaries of employees.
3. Occupational Safety, Health & Working Conditions Code, 2020
i. Electronic registration of all establishments
ii. Revised working hours- weekly capped at 48 hours. Overtime with the consent of the employee and to be paid twice for such work
iii.No appointment of employee without a prescribed appointment letter mentioning the designation, wage etc.
The code will emerge as a dynamic system that perhaps would work towards the issue of appointment letters, annual checkup for factory workers, digitally paying of wages etc. The consultative mechanism of the code puts forth the wider perspective of the government on issues like safety, health etc of the workers. The Maternity benefits have been also codified however, the percentage of women that could avail the benefits are marginalised. As the code has prescribed for a weekly cap of 48 working hours- this would imply that an employer with the consent of the employee can extend the maximum working hour to 12hrs/day for 4 days a week.
4. Industrial Relations Code, 2020
i. Definition of employee to include any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward
ii. Workers to give a 14-day prior notice for strikes, 50% or more workers being on leave on any present day shall be considered as a strike.
iii. Gratuity benefits extended to fixed-term employees on a pro-rata basis
iv. Threshold for applicability for standing orders increased to 300. Prior permission from appropriate government to lay-off/retrench the establishment (threshold now 300)
As per the prerogative of the code, an establishment with a threshold of 300 workers will now have to take prior permission from the appropriate authority to shut the business down- what if it is not permitted? In those efforts, it is easier to start an industry however, when you run out of funds- it will be the decision of the ‘appropriate authority’ to decide on its discretion as to whether such an industry can be laid-off.
The code further modifies the definition of industry, despite including hospital, school etc to be an industry which has created chaos in the past and still has not dealt with. Another noteworthy provision under the code is the 14-day notice prior to any strike and the broadened definition of strike to include mass leave as a strike. One of the prominent rights of an employee is the right to strike. The said provision will diminish the impact of such strikes and the employers will be further prepared to handle such situations. With regards to the penalising of workers the court shall interfere with the quantum of punishment w.r.t misconduct by an employee.
P.S.-As of now the codes have been deferred and are still on hold for implementations.
To sum up, many of these acts were archived act- some were framed way back in the 80s thereby a modification into the same was required. Streamlining the 29 central acts governing the employees and employers the central government has definitely simplified and has provided uniformity among all the 4 codes.
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