In the current scenario, organized sector comprises of only 10% of employment sector. Organized sector is a sector where employment terms are fixed and regular and employees get assured work whereas unorganized sector is a sector where employment terms are irregular and not registered with the government. In organized sector, the one who seeks employment gets much of the powers whereas the one who gave employment gets lesser powers. In unorganized sectors, lesser power is given to the employees and employees usually get exploited due to uncertain income and working hours. Organized sector is the most regulated sector whereas unorganized sector is the least regulated. To maintain the balance of regulation among the two, the government of India introduced new labor laws. The purpose is to achieve harmony and industrial peace in resolving industrial disputes.
The 3 labor bills seemed to amalgamate the existing 44 labor laws to simplify the process. Several features of the codes were problematic and there was hardly any transparency. So, all central trade unions opposed the amalgamation and submitted their objections. It was mooted in 2002 initially under the NDA government itself. But it couldn’t be passed as terms of the UPA government were different from that of trade unions. The labor bills achieved success in 2020 under the BJP government. Now, the enactment of bills came at a time when the plight of labors was brought into focus and rights of workers were debated immensely. Also, the codes were enacted for the welfare of unorganized sector including gig economy workers is a half truth; they were enacted for facilitating ease of business.
There are around 50 central labor laws and 200 state labor laws. So, the objective of introducing labor laws was to regulate and modernize the all. After the advent of new laws, the existing laws will be substituted with just 4 labor codes. The major challenge for the government was that the government wanted to facilitate employment while protecting workers’ rights as demands of both are different. High employment rate demands flexibility in labor laws whereas it will violate the person’s rights.
- Wage code
- Occupational safety and welfare
- Industrial relations
- Social security
The wage code was passed in 2019 only but not implemented yet. Other 3 labor code laws were passed in 2020. Wage code law includes 4 existing labor laws, industrial safety and welfare law subsumes 13 existing laws, industrial relations include 3 existing labor laws and social security includes existing 9 labor laws. These labor codes made the lengthy labor laws simplified.
HOW THESE BILLS BECAME ACTS
These 3 bills were also introduced last year but were sent to standing committee for suggestions. The standing committee gave around 100 suggestions out of which 70 were followed in the new bill introduced this year. The bill then presented on 19th September in Lok Sabha. The bills were passed on 22nd September in Lok Sabha and on 23rd September from Rajya Sabha. The president
THE OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS CODE, 2020
- This law consolidates previous existing laws and compressed into one including Contract Labor (Regulation and Abolition) Act, 1970, the Factories Act, 1948.
- This code has made changes regarding migration of workers for employment. It has defined inter-state migrant as the one who seeks employment in another state willingly and earning at most 18000 per month.
- The proposed definition made a distinction from the present day definition of contractual employment. It has been decided as the labor when worker is employed through a contractor without knowing the actual owner or principal owner who supervises all the work. Such contract employment is governed by mutually accepted standards of conditions and employees get periodical increment.
- The code clarifies that wages of employee include all remuneration such as salary, allowance but not bonus or value of accommodation or light, water, conveyance allowance, pension, overtime allowance, house rent allowance and gratuity.
- Earlier, for hiring workers on contractual basis, it was mandatory to take license for everyone but after the implementation of this code, it allowed the staffing firm to have a single license for all the labors from different locations instead of earlier multiple entries.
- The code prohibits employment of people less than 18 years in mines. It allows a person above 16 years to work as apprentice. The penalties for the offences under the code range from fines to imprisonment up to 3 months.
- It has increased the threshold limit of contractual employees from 20 to 50.
- OSH code also provides women right to work in all activities including mining before 6 am and beyond 7 pm with their consent. However, working with consent is not from choice and consent but from economic pressure in most cases.
The most important code among all is industrial relations as it seeks to amend laws related to trade unions, terms of employment and how employees can be fired or hired by employer. Earlier, when there are less than 100 workers, employer can easily remove or fire the employees and can easily stop the factory without government’s license. There were only 100 employees needed to stop the factory from working. Now, the government has raised the threshold of workers needed from 100 to 300 for closure of any establishment.
This move further eased the firing or removal of employees from the factory. Around 16 states in India have already adopted it as every factory was willing to have less than 100 employees so that firing remains flexible. For every factory to flourish, it needs to be efficient and labor extensive to maximize production. Even the last year’s survey also shows that states that made transformation in labor laws making it flexible were 25% more productive than other states.
- The code also introduced a new term ‘fixed term employment’ which means engagement of a worker for a fixed period based on written contract and he will be entitled to same benefits available to others for similar work and for gratuity for minimum of 1 year.
- Termination or firing of any employee through the expiry of fixed term would not qualify as retrenchment under this code.
- Under the code, no employee can go on strike without giving prior notice within 60 days before the strike/ lock or within 14 days of such notice or before expiry of date of strike.
CODE ON SOCIAL SECURITY
- This code intends to provide for universal social security to all workers, including the unorganized and the gig and platform workers.
- This together account for over 90% of India’s total workforce estimated at 50 crore.
- Social security like health and other insurances were limited to organized sector only which constitute only 10% of India’s population.
- For example, a newspaper cartoonist who can work for any newspaper is a gig worker didn’t get social security earlier but now with the passage of this code, they are entitled to.
- It proposes a national social security board which 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. Examples of gig workers include workers from Zomato or Swiggy.
- The government shall formulate from time to time suitable welfare schemes like provident fund, educational schemes for children and skill up gradation of workers.
- The government can also tap corporate social responsibility funds within the meaning of the Companies act, 2013.
The new reforms have both its pros and cons. It’s advantageous for workers on side and disadvantageous on the other. For instance, increase in limit of workers required for easily hiring and firing of workers without government’ s approval provides employment to people but doesn’t provide stable job to employees. It will water down the rights of workers in factories having less than 300 workers. After this code, factories started to have more employees to have maximum efficiency. Investors have been encouraged to employ more. Labor codes introduced restrictions on workers’ right to strikes. 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. Elongating the legally permissible time frame before the workers can go on a legal strike, making a strike impossible. On the other hand, it provides basic security to unorganized sector which constitutes around 90% of employment sector.