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28th April 2022 (8 Topics)

Labour codes to be rolled out soon

Context

The four labour codes, which were passed by Parliament in 2019 and 2020, would be implemented soon.

About

1. Labour Codes on wages Bill, 2019

  • Need
  • It arises in the absence of statutory National Minimum Wage for different regions, which impedes the economic prospect.
  • It seeks to consolidate laws relating to wages by replacing- Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976.
  • Key Features
  • The Code will apply to any industry, trade, business, manufacturing or occupation including government establishments.
  • Wages include salary, allowance, or any other component expressed in monetary terms. This will not include bonus payable to employees or any travelling allowance, among others.
  • It differentiates the central and State Jurisdiction in determining the wage related decision for establishment such as Railways Mines and oil fields.
  • A concept of statutory National Minimum Wage for different geographical areas has been introduced. It will ensure that no State Government fixes the minimum wage below the National Minimum Wages for that particular area as notified by the Central Government.

2. Labour Code on Industrial relations, 2019

  • Need
  • It aims to create greater labour market flexibility and discipline in labour – to improve upon ease of doing business and also to encourage entrepreneurs to engage in labour-intensive sectors.
  • It would replace three laws i.e. Trade Unions Act, 1926; Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947.
  • Key Features
  • It seeks to allow companies to hire workers on fixed-term contract of any duration.
  • The code has retained the threshold on the worker count at 100 for prior government approval before retrenchment, but it has a provision for changing ‘such number of employees’ through notification. This provision has been criticized sharply by the labour groups and trade unions as any notification may change it later.
  • It also provides setting up of a two-member tribunal (in place of one member) wherein important cases will be adjudicated jointly and the rest by a single member, resulting speedier disposal of cases.
  • It has vested powers with the government officers for adjudication of disputes involving penalty as fines.
  • Introduces a feature of ‘recognition of negotiating union’ under which a trade union will be recognized as sole ‘negotiating union’ if it has the support of 75% or more of the workers on the rolls of an establishment.
  • As several trade unions are active in companies, it will be tough for any one group to manage 75% support, hence taking away their negotiating rights. In such a case, a negotiating council will be constituted for negotiation.
  • Underlines that fixed-term employees will get all statutory benefits on a par with the regular employees who are doing work of the same or similar nature.
  • Under the code, termination of service of a worker on completion of tenure in a fixed-term employment will not be considered as retrenchment.
  • Proposes setting up of a “re-skilling fund” for training of retrenched employees. The retrenched employee would be paid 15 days’ wages from the fund within 45 days of retrenchment. 
  • While this means workers can be hired seasonally for six months or a year it also means that all workers will be treated at par with regular workers for benefits.

3. Labour Code on Social Security & Welfare, 2017

  • Need
  • Almost 90% of the current workers are not covered under any social security.
  • The current thresholds for wage and number of workers employed for a labour law to be applicable creates tenacious incentives for the employers to avoid joining the system which results in exclusions and distortions in the labour market.
  • Key Features
  • Definition of employee and categorization of workers covers all kinds of employment including part-time workers, casual workers, fixed term workers, piece rate/ commission rated workers, informal workers, home-based workers, domestic workers and seasonal workers.
  • A proper percentage-based structure for contribution, vis-à-vis socio economic category and minimum notified wage, has been put in place under the Code.
  • It introduces new approaches to ensure a transparent and fair financial set up, such as,
  • Time bound preparation of Accounts within six months of the end of the financial year;
  • Provision for social audit of social security schemes by State Boards after every five years;
  • Accounts of Intermediate Agencies to be subject to CAG Audit on the same lines as that of Social Security Organizations.
  • Wage Ceiling and Income Threshold: The term 'wage ceiling' is for the purpose of determining a maximum limit on contribution payable; whereas the term 'income threshold' is for the purpose of enabling the government to provide for two different kind of schemes (for same purpose) for two different class of workers.
  • Contribution Augmentation Funds would be established through which governments could contribute to the social security in respect of workers who are unable to pay contribution.
  • National Stabilization Fund will be used for harmonizing the Scheme Funds across the country and will be managed by the Central Boards.

4. Labour Code on Occupational Safety, Health & Working Conditions, 2018

  • Need
  • The proposed code is the first single legislation prescribing standards for working conditions, health and safety of workers and it will apply on factories with at least 10 workers.
  • It will amalgamate 13 labour laws including the Factories Act, 1948; the Mines Act, 1952; the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; the Contract Labour (Regulation and Abolition) Act, 1970 etc.
  • Key Features
  • Centre has been empowered to prescribe standards on occupational safety and health
  • Annual health check to be made mandatory in factories and its charge will be borne by the employers
  • Appointment letters for all workers (including those employed before this code), underlying their rights to statutory benefits
  • At least 50% of penalty levied on employers could go towards providing some relief to families of workers who die or are seriously injured while working
  • National Occupational Safety and Health Advisory Board at national level and similar bodies at state level, have been proposed to recommend standards on related matters.
  • Appointment of facilitators with prescribed jurisdiction for inspection, survey, measurement, examination or inquiry has been proposed
  • Mandatory license for every contractor who provides or intends to provide contract labour. Also, license is needed for industrial premises as well

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