Why in the news?
- The Government of India notified the four new Labour Codes.
Labour Codes of India
- What is it?: The Labour Codes of India consolidate 29 existing labour laws into four comprehensive and modernized codes aimed at simplifying regulations, improving workers’ rights, and enhancing ease of doing business.
- Rationale:
- Simplifying Compliance: Multiplicity of laws leading to compliance difficulty and confusions.
- Multiple authorities in different labour laws led to complexity and difficulty in enforcements
- Modernizing the outdated laws in lines with the needs of the present time.
Code on Wages, 2019
- Aim: Strengthen workers’ rights while promoting simplicity and uniformity in wage related compliance for employers.
- Key Provisions:
- Universal Minimum wages: A statutory right to minimum wages for all employees across both organized and unorganized sectors.
- Introduction of Floor wage: A statutory floor wage shall be set by the GoI based on minimum std of living, and states shall only fix minimum wages above this floor wage.
- Gender equality in employment: Employers shall not discriminate based on gender including transgender in recruitment, wages and employment conditions for similar work.
- Overtime Compensation: Overtime wages should be at least twice the normal rate for any work done beyond regular working hours
- Compounding of Offences: First-time, non-imprisonable offences can be compounded by paying a penalty. However repeated offences shall not be compounded.
Industrial Relations Code, 2020
- Aim: To simplify laws related to Trade Unions, conditions of employment in industries and investigation and settlement of industrial disputes.
- Key Provisions:
- Fixed Term Employment: Allows time-bound contracts with full parity in wages and benefits.
- Re-skilling Fund: To train retrenched employees, this fund has been set up from the contribution from the industrial establishment.
- Trade Union Recognition: Unions with 51% membership get recognition as the negotiating Union.. Otherwise, a negotiating council is formed from unions, not less than 20% membership of the trade union.
- Expanded Worker Definition: It covers Sales promotion staff, Journalists and Supervisors earning upto 18000 per month as workers.
- Women’s Representation: Ensures proportional representation of women employees in grievance committees for gender-sensitive redressal.
- Work from Home Provisions: Permitted in service sectors with mutual consent, improving flexibility.
- Industrial tribunals: 2 member tribunals for quick dispute resolution and parties may approach tribunals directly after failed conciliation.
Code on Social Security, 2020
- Aim: Extending social security to all workers.
- Key Provisions:
- Expanded Employees State Insurance Coverage: ESIC now applies to pan India, and establishments with lesser than 10 employees may opt in with mutual consent of employers and employees.
- Inclusion of Gig and Platform workers: they are also covered under the social security code. Aggregators contribute 1-2% of annual turnover.
- Social Security Fund: A dedicated fund to finance schemes for unorganized, gig and platform workers has been proposed. Funded through amount collected from compounding offences
- Expanded definition of dependents: Coverage extended to maternal grandparents and in case of females it also includes dependents in laws.
- Commuting accidents are covered: They are deemed as employment related and hence made qualified for compensation.
Occupational Safety, Health and Working Conditions Code, 2020
- Aim: Safeguarding worker rights and safe working conditions and creating a business-friendly regulatory environment.
- Key Provisions:
- Unified Registration: One registration for an establishment is needed instead of 6 regns- creating a centralized database
- Govt can extend the code provisions to any establishment- even with one employee engaged in hazardous occupations.
- Free annual health checkups for employees
- Wider definition of Migrant workers and they are benefitted with a lump-sum annual travel allowance to native place once in 12 months.
- Women’s employment: Women can work in all kinds of establishments and during night hours, with consent and safety measures fostering equality and inclusion.
- Victim Compensation: Courts can direct at least 50% of the fins imposed on offenders to be paid as compensation to victims or their legal heirs in cases of injury or death.
- Safety Committees: Establishments with 500 or more workers will form safety committees with employer-employee representation enhancing the safety.
Benefits of the Codes:
- For Workers:
- Wider social security coverage.
- Timely wage payments.
- Improved safety and health standards.
- Legal recognition of gig & platform workers.
- Maternity benefits & fixed-term worker protections.
- For Employers:
- Simplified compliance via one registration & one license.
- Flexibility in hiring (fixed-term employment).
- Higher retrenchment threshold and lower regulatory burden.
- Improved industrial relations due to uniform definitions.
Challenges and Criticisms:
- Increase in retrenchment threshold may make job security weaker.
- Strike restrictions seen as limiting trade union rights.
- Gig workers still lack assured universal benefits (depends on funding).
- Implementation dependent on states causing risk of uneven rollout.
- Potential dilution of safety norms in hazardous industries.
Source: The Hindu