Status of Labour Code Implementation: Five States Yet to Publish Draft Rules

Status of Labour Code Implementation: Five States Yet to Publish Draft Rules

Sub: Polity

Sec: Legislation in news

Why in News

• The issue of implementing India’s new Labour Codes has gained attention, as the Union Labour Ministry recently revealed that several states and union territories have not yet published the required draft rules. These codes, passed between 2019 and 2020, aim to streamline India’s complex labour laws.

New Labour Codes: India’s labour laws were consolidated into four major codes:

• Code on Wages, 2019
• Industrial Relations Code, 2020
• Code on Social Security, 2020
• Occupational Safety, Health and Working Conditions Code, 2020

Code of Wages 2019:

• It regulates the wages and bonus payments in all employment areas where any industry, trade, business, or manufacturing is being carried out.
• It subsumes the following four labour laws:
• • The Payment of Wages Act, 1936
  • The Minimum Wages Act, 1948
  • The Payment of Bonus Act, 1965
  • The Equal Remuneration Act, 1976
• It universalizes the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling and seeks to ensure “Right to Sustenance” for every worker and intends to increase the legislative protection of minimum wage.
• It has been ensured that employees getting monthly salary shall get the salary by 7th of next month, those working on a weekly basis shall get the salary on the last day of the week and daily wagers should get it on the same day.
• The Central Government is empowered to fix the floor wages by taking into account the living standards of workers. It may set different floor wages for different geographical areas.
• The minimum wages decided by the central or state governments must be higher than the floor wage.

Industrial Relations Code 2020:

• Industrial Employment (Standing Orders) Act, 1946 makes it obligatory for employers of an industrial establishment where 100 or more workers are employed to clearly define the conditions of employment and rules of conduct for workmen, by way of standing orders/services rules and to make them known to the workmen employed.
• The new provision for standing order will be applicable for every industrial establishment wherein 300 or more than 300 workers are employed or were employed on any day of the preceding twelve months.
• It proposes that workers in factories will have to give a notice at least 14 days in advance to employers if they want to go on strike.
• No person employed in any industrial establishment shall go on strike without a 60-day notice and during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and sixty days after the conclusion of such proceedings.
• It also introduces new conditions for carrying out a legal strike. The time period for arbitration proceedings has been included in the conditions for workers before going on a legal strike as against only the time for conciliation at present.
• Besides, every industrial establishment employing 20 or more workers will have one or more Grievance Redressal Committees for resolution of disputes arising out of employees’ grievances.
• The code also proposes setting up of a reskilling fund to help skill retrenched workers.

Occupational Safety, Health and Working Conditions Code 2020:

• It spells out duties of employers and employees, and envisages safety standards for different sectors, focusing on the health and working condition of workers, hours of work, leaves, etc.
• The code also recognises the right of contractual workers.
• The code provides employers the flexibility to employ workers on a fixed-term basis, on the basis of requirement and without restriction in any sector.
• More importantly, it also provides for statutory benefits like social security and wages to fixed-term employees at par with their permanent counterparts.
• It also mandates that no worker will be allowed to work in any establishment for more than 8 hours a day or more than 6 days in a week.
• In case of overtime, an employee should be paid twice the rate of his/her wage. It will be applicable to even small establishments, which have upto 10 workers.
• The code also brings in gender equality and empowers the women workforce.Women will be entitled to be employed in all establishments for all types of work and, with consent, can work before 6 am and beyond 7 pm subject to such conditions relating to safety, holidays and working hours.
• For the first time, the labour code also recognises the rights of transgenders. It makes it mandatory for industrial establishments to provide washrooms, bathing places and locker rooms for male, female and transgender employees.

Code on Social Security 2020:

• Replaced nine social security laws, including Maternity Benefit Act, Employees’ Provident Fund Act, Employees’ Pension Scheme, Employees’ Compensation Act, among others.
• The code universalizes social security coverageto those working in the unorganised sector, such as migrant workers, gig workers and platform workers.
• For the first time, provisions of social security will also beextended to agricultural workers also.
• The code also reduces the time limit for receiving gratuity payment from the continuous service of five years to one year for all kinds of employees, including fixed-term employees, contract labour, daily and monthly wage workers.
• It proposes a National Social Security Boardwhich shall recommend to the central government for formulating suitable schemes for different sections of unorganized workers, gig workers and platform workers.
• Also, aggregators employing gig workers will have to contribute 1-2% of their annual turnover for social security, with the total contribution not exceeding 5% of the amount payable by the aggregator to gig and platform workers.

Labour as a Concurrent Subject:

• Labour falls under the Concurrent List of the Indian Constitution, meaning both the Centre and State governments share responsibility. This makes the cooperation between the two crucial for the effective implementation of labour reforms.
• Article 39 (Directive Principles of State Policy): Focuses on the welfare of workers, ensuring equal pay for equal work, humane working conditions, and protection against exploitation.
• Article 43: Encourages the State to secure a living wage, fair working conditions, and social security for workers, contributing to their well-being.
• Article 43A: Added by the 42nd Amendment in 1976, mandates participation of workers in management, promoting industrial democracy.

India Employment Report 2024:

• The India Employment Report 2024, published by the Institute for Human Development and the International Labour Organisation (ILO)
• Global Unemployment Trends: According to the ILO’s “Global Report Trends for Youth 2022”, the worldwide youth unemployment rate stood at 15.6% in 2021. This highlights the challenges faced by young job seekers internationally.
• The unemployment rate in India stands at around 5% in 2024, with youth unemployment higher at approximately 13%, reflecting challenges in absorbing the growing working-age population.
• The unemployment rate for women is higher than that of men, indicating a gender disparity in the job market.
• The Labour Force Participation Rate has remained stable at 2% in 2024, reflecting limited changes in the overall number of people actively participating in the labour market.
• Female Labour Force Participation continues to be a concern, remaining below 25%, indicating the need for more inclusive employment policies.
• The services sector remains the largest employer, accounting for about 50% of the total employment.
• The agriculture sector has seen a decline in employment share, now employing around 40% of the workforce, while contributing to a smaller share of GDP.
• Manufacturing and industry sectors employ approximately 10%, showing slower growth compared to services.
• Informal employment continues to dominate the Indian job market, with about 80% of the workforce employed in informal jobs lacking social security and benefits.