New labour Codes

On the recommendations of the Second National Commission on Labour (2002), the Central Government proposed to replace 29 existing Labour Laws with four Codes to simplify and modernize labour regulation. The new Labour Code aim to facilitate employment growth while protecting workers’ rights.

The Labour Codes which were passed in both the Houses of the Parliament and received Presidential Assent are as follows:

Key snippets of each code are as below:

☑ The Code on Wages, 2019

The code aims to regulate wage and bonus payments in all employments (industry, business, trade and manufacture). It replaces 4 existing Laws:

☑ Minimum Wages Act, 1948

☑ Payment of Wages Act, 1936

☑ Payment of Bonus Act, 1965

☑ Equal Remuneration Act, 1976.

This Code will be applicable to all the employees. For the people employed in mines, railways, and oil fields, the Central Government will make the wage-related decisions while for all other employments, the State Governments will take the said decisions.

The term Wages has been defined exhaustively in the law with an inclusive definition subject to a few defined exclusions.

As per the Code, the floor wage will be fixed by the Central Government, considering the living standards of workers. It is to be noted that the floor wages will be different for different geographical locations.

The minimum wages notified by the Central or States Governments should be more than the floor wages. The skill of the workers’ and the difficulty level of the work will be taken into account by the Government before fixing the minimum wages. These will be revised and reviewed every five years by the government. The employers are prohibited from employing people on less than the minimum wages.

The employer can fix the wage period as: daily, weekly, fortnightly or monthly.

The employer has the right to deduct wages mainly on the following grounds: fines, absence from duty, accommodation provided by the employer or the advance payment made to the employee. It is to be noted that the deductions should not be more than 50% of the employee’s total wage.

There shall be paid to every employee, subject to conditions, an annual minimum bonus calculated at the rate of eight and one-third per cent. of the wages earned by the employee or one hundred rupees, whichever is higher whether or not the employer has any allocable surplus during the previous accounting year. As per the Code, an employee can receive a maximum bonus of 20% of his annual wages.

The Central or States Governments will fix the number of working hours. In case of overtime, the employee is entitled to overtime compensation (at least twice the normal wages).

The Code prohibits discrimination based on gender in matters associated with wages and recruitment of employees for the same work or work of similar nature. The code defines Work of Similar Nature as Work for which the skill, effort, experience, and responsibility required are the same. 

☑ The Industrial Relations Code, 2020

The Code aims to consolidate and amend the laws relating to Trade Unions, conditions of employment in industrial establishment or undertaking, investigation and settlement of industrial disputes. The following Laws stand replaced: The Industrial Relations Code, 2020 replaced 3 existing laws:

☑ the Trade Unions Act, 1926

☑ The Industrial Employment (Standing Orders) Act, 1946

☑ The Industrial Disputes Act, 1947.

However, The Government may exempt any new industrial establishment or class of establishments from the provisions of the Code in the public interest.

All industrial establishments with at least 300 workers are required to seek prior permission of the government before closure, lay-off, or retrenchment. The terms Lay-off and retrenchment have been defined in the act.

The worker may apply to Industrial Tribunal for disputes related to the discharge, dismissal, retrenchment, or termination of the services of an individual worker.

The workers in factories will have to give notice at least 14 days in advance to employers if they want to go on strike.

☑ The Code on Social Security, 2020

The Code aims to extend social security to all employees and workers either in the organised or unorganised or any other sectors. The Code replaces 9 existing laws:

☑ The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

☑ Payment of Gratuity Act, 1972

☑ Employees’ Compensation Act, 1923

☑ Maternity Benefit Act, 1961

☑ Employees’ State Insurance Act, 1948

☑ Workers Cess Act, 1996

☑ Cine Workers Welfare Fund Act, 1981

☑ Building and Other Construction and Unorganised Workers’ Social Security Act, 2008

☑ Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959.

The Central Government by notification can apply this Code to any establishment subjected to the size-threshold as may be notified.

The Social security funds for unorganised workers, gig workers and platform workers will be set up by the Central Government. The State Governments will also set up and administer separate social security funds for unorganised workers.

The Code also makes provisions for the registration of– unorganised workers, gig workers and platform workers.  

☑ The Occupational Safety, Health and Working Conditions Code, 2020

The code aims to consolidate and amend the laws regulating the occupational safety, health and working conditions of the persons employed in an establishment.

The Code replaces 13 existing Laws:

☑ The Factories Act, 1948

☑ The Mines Act, 1952

☑ The Dock Workers (Safety, Health and Welfare) Act, 1986

☑ The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996

☑ The Plantations Labour Act, 1951

☑ The Contract Labour (Regulation and Abolition) Act, 1970

☑ The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979

☑ The Working Journalist and other News Paper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955

☑ The Working Journalists (Fixation of rates of wages) Act, 1958

☑ The Motor Transport Workers Act, 1961

☑ The Sales Promotion Employees (Condition of Service) Act, 1976

☑ The Beedi and Cigar Workers (Conditions of Employment) Act, 1966

☑ The Cine-Workers and Cinema Theatre Workers Act, 1981.

Factory is defined as a premise where at least 20 employees work for a process with power and 40 employees work for a process without power. The Code will be applicable to all the establishments where any hazardous activity is carried out regardless of the number of workers.

No worker in any establishment will work for more than 8 hours a day and 6 days a week.

The Code prohibits discrimination based on gender and empowers the women workforce.

Women employed in all the establishments for all types of work will be able to work before 6 a.m. and beyond 7 p.m. subjected to their consent, safety, holidays and working hours. If women are required for undertaking dangerous operations, the employer will provide adequate safeguards to them prior to their employment.

It is mandatory for all the establishments to provide washrooms, bathing places and locker rooms for male, female and transgender employees.

The Code prohibits contract labour in core activities subject to a few exceptions

Our proposition:

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