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  • D. C. Baxi

Opportunities arising from the New Labour Codes

Updated: May 27, 2021

The Second National Commission on Labour constituted in the year 1999 and was asked to submit its report on (a) rationalization of existing labour laws, and (b) suggest an umbrella legislation for unorganized labour. Its report, Wage Laws, Laws related to Occupational Safety, Health and Working Conditions of the Workers, Laws related to Industrial Relations and Social Security was submitted in June, 2002.

The subject of Labour is in the Concurrent List of the Constitution and over 100 State and 40 Central Labour Laws were in force and there was an urgent need to streamline and rationalise these laws. These statutes had multiple definitions for workers, employers, establishment, etc. There was also a need to amalgamate similar provisions on wages, social security, industrial relations and health, welfare and safety of workers, legalize web based inspections, encourage use of information technology for compliances, compounding of offenses and properly cover unorganized labour, migrant labour, workers in gig economy, etc.

Government of India has now legislated following Four Codes- (a) The Code on Wages, 2019 where four laws were merged, (b) The Occupational Safety, Health and Working Conditions Code, 2020 by merging 13 existing Labour Law, (c) The Industrial Relation Code, 2020 which amalgamates three Law, and (d) The Social Security Code, 2020 , which includes none existing laws.

The reduction in plethora of Labour Laws will be useful to all stake holders and will certainly help in ease of doing business, better compliance and help in creation of better employment opportunities. The online Licensing and Registration will reduce the involvement of human interface. Further, the term “Inspector” is redefined as “Inspector cum Facilitator”, where they have been more accountable to their functions and duties. The software facilitated inspections will also bring transparency and prevent autocratic approach in the current system of inspection. These measures will bring transparency and accountability which would lead to more effective enforcement.

The National Floor Level Wages will expand the ambit of the minimum wages, so as to cover unorganized workers under the provisions of the Minimum Wages Act, 1948. The specific focus on occupational safety, health and occupational diseases under the OSH Code is quite timely as about 28 million workers die annually due to occupational injuries and occupational diseases[i]. The invisible contribution of migrant workers has been visualized as byproduct of Pandemic and dedicated portal is suggested in the Code that will help in tracking of migrant workers.

The approach of in-house redressal of industrial disputes in Grievance Redressal Committee will reduce the burden on Judiciary and provision of Negotiation Council and Negotiating Agent will prevent the multiplicity of bargaining agents in cases of collective bargaining. Provision of statutory backing to fixed term employment will help in elasticity in employment creation and raising of the threshold of workers strength from 100 to 300 under the Industrial Relations Code for applicability of the Standing Orders will give much needed flexibility to small units. The focus on social security in informal sector, gig workers, plateform workers and home based workers will improve their conditions of employment.

In light of the four new Labour Codes, the existing industries, including building and construction industry, will have to restructure their HR policy, re-work their man power planning, comply with occupational health and safety related provision for their workers and it will have some initial cost. The industries providing services like ride sharing, food and grocery delivery, logistic, e-Market place for wholesale or retail sale of goods and/or services (B2B/B2C), professional services providers, healthcare, travel and hospitality, content and media services, etc. shall have to frame suitable social security schemes for their employees.

Further, industries will have to upgrade its information technology based infrastructure for online registration, licenses and compliance of new Labour Codes. The NGOs, membership based organizations, social sector organizations, trade unions, etc. dealing with informal economy shall have to focus on providing better social security benefits to unorganized workers[ii].

[i] This thematic note is written by Dr. D. C. Baxi, who imparts customised training on the new labour codes and also provide follow up support to the industrial undertakings.

[ii] ILO, 2018.

[iii] One Small Strategy provides legal guidance, advice and practical training on Labour Codes and also helps companies in financial planning, compliance with occupational health and safety standards and other aspects of the Codes.

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