Abstract
Four labor codes, including 29 central labor regulations, aim to streamline, consolidate and simplify these complex labor laws. Streamlining is underway to improve working conditions for workers, helping companies comply with the rules through increasing the use of technology, in addition to improving the ease of doing business in India.
The rules also aim to expand the scope of social security (such as pensions) to include the unorganized sector, self-employed, migrant workers, and more within the legislative framework.
Recent reforms are expected to result in four labor laws covering wages, social security, occupational safety, health and working conditions, and industrial relations. These new labor rules were drawn up based on International Labor Organization (ILO) standards and a consultation process with various stakeholders.
This article is written by our intern Lavanya Gupta, a law student from Sushant University and Harshika Gaur, a law student from HILSR, School of Law, Jamia Hamdard.
Introduction
The new labor reforms have been passed by the Parliament. The reform of these laws will have an impact on working conditions, wages, pensions, and more, including employment scenarios in India. These rules are considered revolutionary steps to help better manage work and find a better work-life balance in organized and unorganized sectors.
29 laws were reformed and consolidated into 4 codes, the Central Government has introduced 4 laws in the Wage code, 2019, 9 laws in the Social Security Code, 2020, 13 laws in the Occupational Safety, Health and Working Conditions Code, 2020, and 3 laws in the Industrial Relations Code. These 4 new pieces of legislation are expected to come into effect on July 1, 2022. The new labor codes will secure worker empowerment through minimum wages, employment security, and social and health security.
Wage code, 2019
4 labor laws have been merged into the minimum wage code, covering wages and bonuses while enabling prompt payment of wages for Indian workers.
The four laws are-
This guarantees minimum wages to 50 crore workers as well as timely payment to all, no discrimination will be there based on sex. Provisions for floor wages have been introduced so that regional disparities can be removed.
Features
The new labor code gives a uniform definition of wages - the definition of wages given in different acts led to a lot of confusion so now the new labor code provides a proper definition of wages. The uniform definition of 'wage' includes all monetary payments and any benefits provided in kind except for the specified exclusions.
It ensures uniform applicability of timely payment. The payment should be paid on time irrespective of the wage ceiling. It gives a proper distinction between worker and employee.
No discrimination on the bases of sex, everyone who has the same type of skills should be treated equally.
Social security code, 2020
The Central Government has incorporated nine labor laws into the Social Security Code to protect workers' rights to insurance, pension, gratuity, and maternity benefits, among other things.
The 9 laws in this code are-
It gives social security to all workers and employees of both organized and unorganized sectors and ensures health and care as well as income security for them.
Features
This code defines gig workers, platform workers as well as unorganized workers, not only this but previously there were no benefits given to these workers, for example, unorganized workers were not entitled to work overtime they didn't have the right to minimum wages, leave, etc, but now these codes have given such opportunities to them, this code also talks about compulsory registration for every worker, organized, gig, platform everyone. It also gives maternity benefits to women.
The benefit of free treatment is given under ESIC hospitals and clinics for a nominal donation. ESIC will be available to workers in all industries, including those in the unorganized sector. ESIC hospitals, dispensaries, and branches are being expanded to the district level. This service will be expanded from 566 districts to all 740 districts throughout the country.
The Occupational Safety, Health, and Working Conditions Code, 2020
The occupational safety, health, and working condition code, 2020 incorporates and replaces 13 current labor regulations concerning safety, health, and working conditions. The 13 laws are-
OSH( the Occupational Safety, Health, and Working Conditions Code) will be helpful for the inter-state migrant workers, earlier only those workers were considered inter-state migrant workers who were appointed by the contractors but now the workers can register themselves as inter-state migrant workers on the national portal, by this workers will get legal identity and will be benefited by the social security scheme
Features
Previously, the law required you to work at least 240 working days a year to apply for leave. It has now been reduced to 180 working days per year, resulting in a change where employees can claim and take a day off with a minimum work history of 180 days per year. However, the rule remains 1 day off in 20 working days.
Interstate migrant workers have been covered and have been given a legal identity, a national portal has been made for them so that they can register themselves on it. An appointment letter as well as free medical checkups annually have been made mandatory and is to be provided by the employer.
It also empowers women as they have been given a right to work late at night with “their consent” and the employer has to make every possible arrangement for her safety and facilities for women workers at night.
Industrial Relations Code, 2020
The industrial relation code includes 3 laws which are-
In case a worker from an organized sector loses their job they will get financial aid under the Atal Bimit Vyakti Kalyan Yojna. The disputes of a worker will be solved within a year.
Features
In industrial establishments, a Trade Union with 51% of the vote is acknowledged as the sole negotiating union that can make agreements with employers, the trade union has 51% of the vote, and a negotiating council of trade unions is formed to make agreements with employers. The definition of worker has been properly defined
Impact on employers
1. The Ministry of Labor and Employment has updated its website with a document on the benefits of the new labor codes, titled “New Labor Code for New India”
2. The government has worked to encourage more states to publish draft rules under the code. As previously reported, in April 2022, 29 Countries/Union Territories (UTs) released draft rules under the Wage Code, 24 Countries/UTs under the Industrial Relations Code, 24 countries / UT under the Social Security Code, and 21 countries / UT under the Safety, Health and Working Conditions Code. States such as West Bengal, Andhra Pradesh, Nagaland, and Meghalaya as well as the union territories of Lakshadweep, Ladakh as well as Dadra and Nagar Haveli & Daman, and Diu have yet to issue draft rules under one of the codes.
The Code also requires reorganizing payroll, compensation, and other policy processes, establishing different security and compliance processes and specific committees, and more. Organizations need a reasonable lead time to implement these changes, and therefore expect a transition period of at least 3 months after the effective date is announced to implement the provisions.
Organizations can also assess the impact of labor code changes on their existing HR policies and costs, so they're prepared for whatever transition period is available later when the new code takes effect. Employers may need to redesign their salary structure and human resource policies to comply with the code's requirements. Given the far-reaching impact of the rules, the industry must have enough time to implement the new rules.
Impact on employees
With the expansion of the "wage" scope under the new laws, workers' pension benefits are expected to increase with the implementation of these laws. The Labor Code was read together with the draft internal regulations that included many provisions beneficial to the health of workers such as - expanding the coverage of social insurance for workers in the unorganized sector, mandatory issue of appointment letters to each employee, free annual health insurance balance sheet for employees, regulation on overtime pay double the employee's salary, create social security fund for workers in the unorganized sector, early payment of full and final contributions in the event of severance, and removal of the minimum service requirement for bonuses in the case of tenured employees, among others. The delay in the implementation of labor laws has certainly delayed these benefits for workers.
New Norms To Be Highlighted
It can be seen that the interface of the codes may appear as an act of consolidation rather than reform. However, the rules introduce several changes that employers in almost every industry, location, and size will need to understand and strictly implement the new rules.
An employer-centered approach within the framework of the labor code
One-time registration and license
The legitimacy of hiring contract workers in the core business in some cases
Raise the threshold of applicability of certain laws for factories and contract labor
Raise worker thresholds for the ability to enforce standing orders and government approval for layoffs (fires) of workers
Permission to save records in electronic form
Set a time limit for contingency fund non-compliance.
Transform labor laws into labor codes.
It is expected to have a lasting positive impact on the industry and will contribute to easier doing business. Employee-centered approach within the framework of the labor code
The revised wage definition increased the minimum wage, statutory bonuses, contingency funds, severance pay, and bonuses.
Reduce daily work hours limits in certain circumstances.
General permission is granted to hire women with employee consent between 7:00 pm and 6:00 am.
Consent to work overtime is required.
Provision for collection of annual leave. Mandatory provision of benefits and bonuses in the same proportions to term employees.
Pay wages before the end of the next day in case the employee quits.
The government seems to have made a conscious effort to balance workers` rights with employers' rights. Several new and interesting concepts have been introduced into the labor code, including provisions for fixed-term workers, employee requisition funds, and social security for contract and public employees. foundation employees, union recognition, strike notice period, increase in certain violations, and more.
Conclusion
Transformative changes to the labor code are expected to create a major impetus for labor reform and impact many organizations across all sectors. The government's goal is for the new laws to reduce complexity, make compliance easier, provide greater transparency and accountability, and benefit employers and employees. Both the organized and unorganized sectors will be benefited from the new labor code, even the interstate migrant workers have been included in this. Complex definitions have been simplified so that no dispute can arise on them. These new reforms are said to be pro-workers and will help the laborers to ensure a better lifestyle.
References
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