The New Labour Code
The new labour code, which was supposed to go into effect in July 2020, would most likely be phased in after the States draft rules on it. These codes were framed by combining 29 central laws into four codes, taking into consideration workers’ needs, right from their joining to retirement. The labour codes are related to minimum wages, health and working conditions, occupational safety, job and social security, and industrial relations.
The implementation of the labour codes will help India to rise in the Ease of Doing Business (EoDB) ranking and help us to realise our aspirations in the ongoing fourth industrial revolution. Moreover, it will safeguard the working class, approximately 90% of whom are a part of the unorganised sector, from the complex web of labour laws that currently prevail in the country.
What are the four labour codes that were passed in Parliament?
The Code on Wages incorporates the provisions of four previous laws—the Minimum Wages Act, the Payment of Wages Act, the Payment of Bonus Act, 1965, and the Equal Remuneration Act. It is applicable to establishments in both organised and unorganised sectors.
- This code introduces the concept of a floor wage, which would be fixed by the Central Government after surveying the living standards of workers in different geographical areas.
- The state government cannot fix a minimum wage that is lower than the floor wage.
- If the same work is being done, then equal wages should be paid to male and female workers.
2. The Code on Social Security combines nine laws. It empowers the Centre to notify social security laws for the benefit of organised and unorganised workers, self-employed personnel, and gig workers.
3. The Code of Industrial Relations combines three laws. It also introduces a provision for fixed-term employment wherein such contract / temporary employees will get the same benefits as permanent employees.
- It also helps to improve the EoDB ranking by allowing firms with up to 300 workers to execute lay-offs, retrenchments, and closures of businesses without the government’s permission. Earlier, only firms with up to 100 workers were able to initiate such an action without the government’s permission.
4. The Code on Occupational Safety, Health and Working Conditions incorporates the provisions of 13 existing labour laws. It is applicable according to the manufacturing process followed by the organisation. It is applicable to a company with at least 20 workers if the manufacturing is done with the help of electricity, or 40 workers if it is done without power.
The greatest change is the departure from an archaic system to a modern legal system. With the simplification of the laws, there should be enthusiasm leading to the protection of the workers’ interests as well as making the economy conducive for business.
There is a scope for huge improvements, and as a competitive global economy, we need to implement these codes in the right spirit.
Business owners and HR professionals need to be well-versed with these new labour codes, so they can plan ahead to mitigate any unwarranted effects on their business. With an average of 10+ years of experience in labour laws and compliance-related activities, Mynd provides consistent support for different industries across India. Keep a watch on this space, as we bring you the latest information about the codes and share ideas that you can implement to adhere to the new labour codes when they are implemented.