Labour laws fall under the Concurrent List of the Constitution, meaning both the Centre and States have the authority to create rules. However, in cases of conflict between State and Central laws, Central Legislation generally prevails unless the State’s law has obtained Presidential approval. State governments are tasked with drafting rules to address areas not fully covered by the labour Codes. This includes rules on working hours, overtime provisions, and trade union verification processes. With almost all States of India having finalized the draft rules under the New Labour Code Law, the implementation of the four Labour Codes passed by Parliament in 2019-2020 appears to be finally approaching. The four codes include the Code on Wages 2019, The Code on Social Security 2020, The Occupational Safety, Health and Working Conditions Code 2020 and The Industrial Relations Code 2020.
For the first time, there is a statutory requirement for employers to issue appointment letters to all employees formalizing contracts and improving job security. Workers will now be able to claim statutory benefits such as Minimum Wages and Social Security. Other provisions include the creation of a Re-skilling Fund to support skill development and Social Security Schemes for gig and platform workers. Workers on Fixed Term Employment will now receive the same benefits as permanent employees and be eligible for gratuity after one year of service. Furthermore, workers will be entitled to annual leave with wages after 180 days of work, rather than the previous 240-days requirement, and will have the option to encash leave at the end of the calendar year. The applicability of the Employees’ Provident Fund has also been expanded to cover all industries, not just those previously listed.
The Codes will apply to all employees. The Central Government will decide on wages for employment in mines, railways, oil fields, etc. For all other sectors, the State governments are empowered. ‘Wages’ include Salary, allowance or any other monetary component: It does not include bonuses and travelling allowances. As per the Code, the Central Government will fix the floor level wages considering the workers’ living standards. The minimum wages decided by the Central or State governments should be above the floor wages. In case the existing minimum wages are higher than the floor wages, the Central or State governments cannot reduce them. While fixing the minimum wages, the government should take into account the workers skill-level and the difficult nature of work. The minimum wages fixed will be reviewed by the government at least once every five years. Employers cannot employ people on less than the minimum wage. The number of working hours will be fixed by the Central or State governments. In the case of overtime work, the worker is entitled to overtime compensation which should be at least twice the normal wages. The employer can fix the ‘wage period’ as daily, weekly, fortnightly, or monthly.
There have been serious concerns expressed about the New Wages Codes. There is no clarity on the formula to be adopted for fixing the minimum wage and also on the designated authority to settle the disputes that arise on the minimum wages such as the fixing of minimum wages on the basis on geography, skill and difficulty levels of the work, etc. This would bring in a lot of discretionary power to the administrators. The clause on deduction of wages seems arbitrary and it might prevent workers from unionizing for fear of a deduction in wages. The Code omits the ‘Principal Employer’ liability to pay wages if the labour contractor fails to do so. The ‘Principal Employer’ is defined broadly in the Code making it difficult to pinpoint the responsibility for payment of wages. This is a major issue, in India, since a majority of the workers are contract labourers. The Code also takes away the jurisdiction of courts in providing justice to workers who have faced violations with respect to their wages. This means that workers can no longer have access to courts to contest the wages paid to them by their employers, but can only approach the quasi-judicial body and the appellate authority set up under the provisions of the Wage Code.
Trade unions allege that the Codes will give employers sweeping powers against their workers, and that working conditions are bound to deteriorate. The Codes lack clear principles to determine the relationship between employees and independent contractors. The Code on Industrial Relations lays down new conditions on the rights of workers to go on strike. Unions will now have to give 60 days’ strike notice. If proceedings are pending before a labour tribunal or the National Industrial Tribunal, workers cannot go on strike for 60 days until after they are concluded. These conditions apply to all industries. Earlier, workers could go on strike by giving between two-six weeks of notice to the employers. Flash strikes for whatever reason will be banned. Under existing legislation, establishments employing 100 or more workmen need government approval before carrying out any closures, layoffs or retrenchments. However, section 77 (1) of the New IR code will increase this cap to 300 workmen. Obviously the objective of the new enhanced cap is to provide flexibility and freedom to establishments and business owners looking to cut down their workforce.
While the New Labour codes are yet to be implemented, a contentious debate has arisen over a number of issues concerning their applicability and potential consequences. Not all industry stakeholders have welcomed the proposed changes. In this new era, new concepts have come around such as the gig economy workers, freelancers, etc. In such cases, there is no contract with the employer and the traditional employer-employee relationship is bypassed making it impossible for the workers to get any remedy against the employer in case of a dispute. However, there are concerns about the implementation of these benefits, since these workers do not have the status of permanent employment and may not be registered with the agency.
There is no real wealth but the labour of man. Workers are that part of our society that helps in implementing the great ideas born out of the minds of geniuses. The workers who work behind the scenes are often forgotten. The rights, dignity, the standard of living, and even a better work environment, which are fundamental for a human being to survive, are often ignored. The genesis of labour law is to provide effective solutions to the clash between the rights of labourers and the existing socio-economic conditions which often violate their rights. Social security is a human right that responds to the universal need for protection against certain life risks and social needs. Effective social security systems guarantee income security and health protection, thereby contributing to the prevention and reduction of poverty and inequality, and the promotion of social inclusion and human dignity.
The Code on Social Security should have been futuristic in approach while giving protection to the workers and addressing the disputes related to Automation and Robotics, Artificial Intelligence powered workforce, and Bio-engineering which are likely to endanger the rights of the not to distant future.
Recently, tens of thousands of Indian workers marched through several towns and cities in the country to protest and demand the repeal of the Four Labour Codes which they say favour Multinational Corporations. Protesters waved banners and placards, chanting slogans against the present government. “The labour laws were introduced by the ruling BJP in 2019, despite Union and opposition objections.” “This is a violation of human rights and global practices,” said Amarjeet Kaur, General Secretary of the AITUC, the country’s third biggest Union. A joint platform of 10 Central Trade Unions will once again give a call for a Nation-Wide strike on 26th November with over 25 crore workers protesting against various policies of the Central government and in particular the haste in which the unfriendly New Labour Codes are being thrust on the toiling masses.
(The writer is a social scientist and a Sr. practicing criminal lawyer)