Labour code reforms

Subject: Economy

Context:

• Government has introduced three Labour Codes in the Lok Sabha heralding the path of game changing labour welfare reforms in the country.
• These bills are (i) Industrial Relations Code, 2020, (ii) Code on Occupational Safety, Health & Working Conditions Bill, 2020 (iii) Social Security Code, 2020.
• It was mentioned that the Code on Wages has already been approved by Parliament in the month of August, 2019 and has already become the law of the land.

Concept:

i) Social Security Code, 2020

• Labour falls under the Concurrent List of the Constitution.  Therefore, both Parliament and state legislatures can make laws regulating labour.
• Currently, there are over 100 state and 40 central laws regulating various aspects of labour such as resolution of industrial disputes, working conditions, social security and wages.
• Social security refers to protection measures provided to workers to ensure healthcare and income security in case of certain contingencies such as old age, maternity, or accidents.
• In India, social security schemes under different laws are designed on the basis of size of establishment, nature of employment, income of worker, or income status of the worker’s household.
• These schemes are administered through a combination of contribution-based schemes (funded by the government, employer, or employee), state-funded social assistance programmes, or, employer-liability schemes

Features:

• The Bill replaces nine laws related to social security.  These include the Employees’ Provident Fund Act, 1952, the Maternity Benefit Act, 1961, and the Unorganised Workers’ Social Security Act, 2008.
• Establishments above a certain specified size have to provide benefits (such as provident fund and insurance).  These are mandatory for employees above a wage level which will be notified.  For other workers, the government may frame social security schemes.
• The Bill provides for the establishment of several bodies to administer the social security schemes.  These include: (i) a Central Board of Trustees, headed by the Central Provident Fund Commissioner, to administer the EPF, EPS and EDLI Schemes, (ii) an Employees State Insurance Corporation, headed by a Chairperson appointed by the central government, to administer the ESI Scheme, (iii) national and state-level Social Security Boards, headed by the central and state Ministers for Labour and Employment, respectively, to administer schemes for unorganised workers, and (iv) state-level Building Workers’ Welfare Boards, headed by a Chairperson nominated by the state government, to administer schemes for building workers.
• All eligible establishments are required to register under the Bill.  All employees and unorganised workers have to provide their Aadhaar number to receive social security benefits.  Employers may be required to report vacancies to career centres.
• The Bill specifies penalties for various offences, such as failure to pay contributions and falsification of reports.  Offences which are not punishable with imprisonment can be compounded (i.e., settled) by payment of up to 50% of the maximum fine applicable.

ii) Industrial Relations Code, 2020

Features

• The Code provides for the recognition of trade unions, notice periods for strikes and lock-outs, standing orders, and resolution of industrial disputes.   It subsumes and replaces three labour laws: the Industrial Disputes Act, 1947; the Trade Unions Act, 1926; and the Industrial Employment (Standing Orders) Act, 1946.
• Trade unions that have a membership of at least 10% of the workers or 100 workers will be registered.  The union with 75% of workers in an establishment will be the sole negotiating union.  Otherwise, a negotiating council of unions will be formed.
• An employee cannot go on strike unless he gives notice for a strike within six weeks before striking, and within 14 days of giving such notice.  Similar provisions exist for lock-out of workers.
• Industrial establishments with 100 workers must prepare standing orders on matters listed in a Schedule and have them certified
• Factories, mines or plantations in which 100 or more workers are employed are required to take prior permission of the central or state government before laying off or retrenching their workers
• The Code provides for the constitution of Industrial Tribunals for the settlement of industrial disputes.  Each Industrial Tribunal will consist of a Judicial member and an Administrative member.

iii) Code on Occupational Safety, Health & Working Conditions Bill, 2020

The Code consolidates 13 labour laws relating to safety, health and working conditions.  These include the Factories Act, 1948, the Mines Act, 1952, and the Contract Labour (Regulation and Abolition) Act, 1970.

Features

• The Code seeks to regulate health and safety conditions of workers in establishments with 10 or more workers, and in all mines and docks.
• Establishments covered by the Code are required to register with registering officers, appointed by the central or state governments.
• Welfare facilities, working conditions and work hours for different types of establishments and workers will be prescribed by the central or state governments through rules.
• The Code sets up occupational safety boards at the national and state level to advise the central and state governments on the standards, rules, and regulations to be framed under the Code.
• The Code creates special provisions for certain classes of establishments such as factories, mines, dock workers, and constructions workers. These include separate provisions on licenses, safety regulations, and duties of employers.