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    • Modernizing the outdated laws in lines with the needs of the present time.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