With the recent declaration of election results, the Government of India is poised to rejuvenate its efforts to enforce the four new labour codes (“Labour Codes”). These codes aim to replace 29 existing labour laws with a streamlined framework, thereby simplifying and modernizing labour regulations in the country.
The proposed labour codes are as follows:
The Code on Wages, 2019
Overview: Enacted by the Lok Sabha on July 30, 2019, and by the Rajya Sabha on August 2, 2019, the Code on Wages, 2019 (“Wage Code”) amalgamates four previous statutes: (i) the Payment of Wages Act, 1936; (ii) the Minimum Wages Act, 1948; (iii) the Payment of Bonus Act, 1965; and (iv) the Equal Remuneration Act, 1976.
Key Changes: The Wage Code introduces a uniform definition of “wages” across all incorporated statutes, addressing a frequent source of litigation under the previous laws. It also broadens the definition of “employer” to include contractors and legal representatives of deceased employers.
The Industrial Relations Code, 2020
Overview: The Industrial Relations Code, 2020 (“IR Code”) was approved by the Lok Sabha on September 22, 2020, and by the Rajya Sabha on September 23, 2020. It consolidates three laws: (i) the Industrial Disputes Act, 1947; (ii) the Trade Unions Act, 1926; and (iii) the Industrial Employment (Standing Orders) Act, 1946.
Key Changes: The IR Code raises the threshold for mandatory government approval for retrenchment and closure from 100 to 300 workers. Additionally, it exempts employers with fewer than 50 workers from the requirement to provide one month’s notice and retrenchment compensation. A notable inclusion is the stipulation that if 50% or more workers take casual leave on the same day, it will be considered a “strike.”
The Occupational Safety, Health, and Working Conditions Code, 2020
Overview: Passed by the Lok Sabha and the Rajya Sabha on September 22 and 23, 2020, respectively, the Occupational Safety, Health, and Working Conditions Code, 2020 (“OSH Code”) received presidential assent on September 28, 2020. It integrates 13 statutes, including: (i) the Factories Act, 1948; (ii) the Contract Labour (Regulation and Abolition) Act, 1970; (iii) the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; and (iv) the Mines Act, 1952.
Key Changes: The OSH Code mandates safer and healthier work environments and improved working conditions. It extends protections to gig and platform workers and requires all employers to issue a letter of appointment to every employee, thus increasing compliance obligations.
The Code on Social Security, 2020
Overview: The Social Security Code, 2020 (“SS Code”) was ratified by the Lok Sabha on September 22, 2020, and by the Rajya Sabha on September 23, 2020, receiving presidential assent on September 28, 2020. This code consolidates nine laws, including: (i) the Employees’ Compensation Act, 1923; (ii) the Employees’ State Insurance Act, 1948; (iii) the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; and (iv) the Maternity Benefit Act, 1961.
Key Changes: The SS Code simplifies the registration process for employers, consolidating it into a single registration on the Shram Suvidha portal. It also reduces the provident fund contributions by both employers and employees from 12% to 10%, with the Central Government retaining the authority to adjust this percentage.
Future Prospects
Although the Labour Codes have been legislated and have received presidential assent, their enactment has been delayed due to resistance from trade unions and political opposition. With India now poised to have a coalition government, it remains to be seen whether the Labour Codes will be implemented as drafted or undergo further modifications.
The Labour Codes represent a significant overhaul of India’s labour law landscape, promising to streamline and modernize the regulatory environment. However, their successful implementation will require navigating the complexities of coalition politics and addressing the concerns of diverse stakeholders.
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