Prof. (Dr.) D. Mukhopadhyay
According to the classical economists, labour, in terms of importance of factors of production, comes next to capital. It is perhaps impossible to carry out any production of goods and generation of service without scientific intervention of labour in any economy. Even in highly automated production and distribution system, at least one human being is required to switch on and switch off the automotive machine. Possibly, its functional importance made Labour comes under the ambit of the Concurrent List of the Indian Constitution which implies that the Central Government and the respective State Governments are statutorily empowered to make laws for regulating labour, taking care of interest of labour and maintaining industrial peace and harmony between the employees and the owners of the industrial organizations and undertakings in the country through the Parliament and the State Legislatures respectively. According to the available statistics, there are more than 100 State and 40 Central Laws in place for regulating various perspectives and aspects of the Labour Market. The year of 2002 is a landmark year when the Second National Commission was given a mandate to study existing Labour and Industrial Laws and as a sequel to such mandate, it recommended for consolidation of the existing Central Labour Laws into broader groups such as Industrial Relations, Wages, Social Security, Safety and Welfare and Working Conditions in order to improve ease of compliance , ensure and promote consistency in the Labour Laws, promote industrial peace, easy dispute resolution and redressal of the grievances so that there uninterrupted flow in the supply of labour which in turn is expected to contribute to the cause of socio-economic development of the country.
Under the given backdrop, in 2019, to consolidate 29 central laws, the Ministry of Labour and Employment, Government of India , introduced four Bills to enact Labour Codes which included Wages, Industrial Relations, Social Security, and Occupational Safety, Health and Working Conditions in workplaces and industrial establishments.. The Code on Wages was passed by the Parliament in 2019, but the Bills on the other three areas were referred to the Standing Committee on Labour. The Standing Committee submitted its report on all three Bills and the Government replaced these Bills with new ones on September 19, 2020 by Labour Codes, 2020.
The Lok Sabha, on 22nd September 2020, passed three new Labour Bills under the Short Titles – ‘The Industrial Relations Code Bill, 2020 ‘ the Code on Social Security Bill, 2020 and the Occupational Safety, Health and Working Conditions Code Bill, 2020. These three Labour Bills are part of the Central Government’s reform formulated in order to simplify India’s Labour Legislation with an objective to improving the ease and promoting Trade, Industry and Commerce in the country. Historically speaking, the Labour Laws enacted by the British Government were not to secure any employment rights for the workers or regulate the labour market keeping in view the interest of labour.
It is an imperative to peep into the Indian Constitution, being the sole genesis of the Indian Laws, to know its provision with regard to Labour and Labour related aspects in terms of the Articles 21, 38, 39(d) and Article 43. Article 21 provides for ‘Right to Life and Liberty’. Article 38 provides to secure and protect Social Order-Economic and Political. The Payment of Wages Act, 1936 hardly secured payment of wages to the employed persons beyond a limit of wages and service sector workers were altogether not given any room in the said Legislation. Further, in the organized sector, the declared bonus under the Bonus Act, 1965 is wages which was difficult to be paid in case of illegal withholding by the employers.
The new Labour Codes have defined ‘wages and calculation of benefits’ in uniform manner. ‘Basic Wages’ for all purposes becomes the ‘operative part of wage’ and it will be the foundational parameter for ascertaining the criteria for eligibility for enjoying bonus, pay, gratuity, encashment of earned leave, , calculation of overtime payment, Employees’ Provident Fund(EPF) and Employees State Insurance (ESI) contributions, retrenchment compensation etc. Under the new labour law, remuneration comprises of ‘wage’ and ‘anything else payable to an employee including employer’s share of EPF, bonus, incentive, commission, overtime, et all’ with only one rider is in place that the wage must be 50% of the total payable. The new Labour Codes have uniformly covered both the organized and unorganized employment sectors and the concept of ‘Scheduled Employment’ has been eliminated from the ambit of the canvas of Law .The definition of the term ‘Establishment’ has been extended and it covers shops, service sector and the office of the Professionals also. Another important distinctive feature of the Labour Codes-2020 is that the contactor, owner of the premises and the principal employer are taken to the sole umbrella of ’employer’ and they are all included within the definitional meaning of the term ’employer’.
The Industrial Relations Code provides for bi-partite understanding as a grievance and disputes resolution process and the industrial disputes shall legally be resolved by consensus between the employers and the representatives of the workers. Employees are encouraged to settle the disputes though bilateral dialogues and discussions and flash strikes are devoid of statutory force in the new labour laws and minimum 14 days’ notice is to be served before going for any strike by the employees. Mass casual leave by 50% or more employees shall be considered and treated to be on strike. Moreover, contract labour can be employed in non-core activities and functions only. Non-core activities are otherwise known as auxiliary activities which include housekeeping, gardening, loading and unloading, courier services, transport maintenance, canteen services, security, watch and ward etc. In simplicity, contract labour has been prohibited in core activities of an establishment. The essence of appointment of contract labour has been substituted by ‘Fixed Term Employment’ The fixed term employment does not not entitle an employee to availing retrenchment compensation and lien on the job beyond the term(s) of the contract. The new law stipulates that the employer must provide hazard free workplace with specified standard for both the manufacturing and service sector employees. The employees are empowered to report, the variation if any between the specified requirement and the actual standard provided by the employers , to the inspector who is to take the matter to the appropriate authority for facilitating workplace to be health and safety hazard free and congenial working condition keeping in view the relevance of ergonomics is an essential working condition and environment.
Moreover, providing canteen facility and creche for 100 and 50 employees irrespective of gender respectively is the legal obligation of the employer under the newly enacted labour legislation. Further, the new Labour Code also provided for entitlement of ‘earned leave’ and leave encashment benefits for unconsumed earned leave also. In a nutshell, the Labour Codes- 2020 is expected to go a long way in bringing about reforms in labour laws.
The Rules and Regulations are in the process of finalization and after proper implementation of the law, it will be more clear as to whether it is subject to any ‘teething troubles’ as it is a common phenomenon to experience certain ifs and buts in terms of positivity and otherwise when any new law comes into force. For smooth implementation of the Labour Codes-2020 , Government of India is recommended to empower the ‘ Practicing Professionals ‘ such as Engineers, Company Secretaries, Chartered Accountants, Cost & Management Accountants, Advocates, Town Planners , Architects etc. for maintaining checks and balance as these Professionals are bound by the Professional Ethics and Code of Conducts as envisioned by the respective Professional Codes and Laws regulating those Professions besides other Laws of the Land. The efforts of the Central Government for simplifying, substituting, replacing, repealing and demystifying the draconian and out of date labour laws by enacting the Labour-Codes 2020 is certainly a welcome step. However, Government is recommended to be careful about efficient implementation of the laws for generating benefits for the employees and the employers as intended by the legislators.
Prof. (Dr.) D. Mukhopadhyay