Labour Reform-An Era of Substantial Change

Labour Reform- An Era of Substantial Change

Ministry of Labour and Employment, Government of India has conveyed its firm intent that forty four central legislations pertaining to labour, industrial and environment related will be merged and subsumed into four codes.

The first code (i.e. Code on wages, 2019) has already become a law on August 08, 2019 after receiving assent of President of India though the Government, only the applicability has to be notified.

There is a likelihood that all these four codes became live effective April, 2020, hence there is a need for organization to evaluate it’s potential impact on operations, so as to welcome the said change.

The below is a brief write up summarizing the basic introduction about the changes introduced –

The Code on Wages,
 2019

Major Changes & Impact on Employers:

• Definition of wages and  Worker changed
• Fixing of minimum wage rates (Floor wage)

Penal Provisions:

• Both Civil and Criminal Penalty being introduced
• With the maximum penalty being imprisonment for three months and/or with a fine of up to INR  100,000.
• The Employer will be liable to pay compensation up to 10 times the amount.

Applicability Status of Legislative Process:
The Code on wages, 2019 has already become the law on 8th Aug 2019 after receiving assent of President of India though Government has yet to notify its applicability.

The Code on
Occupational Safety
Health and working Environment, 2019

• Proposed bill seeks to consolidate the thirteen {13} labour laws which deal with occupational safety, health and working conditions of employees. Few major acts which intend to be consolidated are- The Factories Act, 1948, Contract Labour (Regulation and Abolition) Act, 1970, Interstate Migrant Workmen, Motor Transport Act and so on…

Major Changes & Impact on Employers:

• Single Registration instead of invoking and keeping multiple registrations.
• One license and one return will be required.
• Welfare facilities, working conditions, leaves, and working hours for different types of establishments and workers will be aligned by single code

Penal Provisions:

• The Code specifies various offences like-an offence that leads to the death of an employee will be punishable with imprisonment of up to two years, or fine up to five lakh rupees, or both.  
• For any other violation where the penalty is not specified, the employer will be punished with a fine between two and three lakh rupees.

Applicability Status of Legislative Process:
Code on Occupational Safety Health and working Environment, 2019 introduced in Lok Sabha on 23 Jul 2019, and same was referred to standing committee on 7th Oct 2019 for examination and their report.

The Code on Social Security,
 2019

Major Changes & Impact on Employers:

• Single Registration instead of multiple registrations.
• PF, ESIC and pension has to be managed by establishments in accordance with a single umbrella code.

Penal Provisions:

• The Non-compliance pertaining to various offences may lead to- Civil and Criminal liability both
• Maximum imprisonment for 3 years or with fine upto INR 1,00,000 or with both

Applicability Status of Legislative Process:
Preliminary draft of the code has been introduced in Lok Sabha on 11 Dec 2019, and same was referred to standing committee on 23rd Dec 2019 for examination and their report within three months.

4. The Code on Industrial Relations

Major Changes & Impact on Employers:

• Allow companies to hire workers on fixed-term contract of any duration
• 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.

Penal Provisions:
An employer who contravenes the provisions of section 86 or section 87 or section 88 shall be punishable with a fine which shall not be less than rupees five lakhs but which may extend to rupees ten lakhs

Applicability Status of Legislative Process:
Bill has been introduced in Lok Sabha on 28 Nov 2019.