In an attempt to boost India to the top 10 countries in the World Bank’s Ease of Doing Business rankings, the government is bringing about changes in the labor reforms of the country. To this effect, the government has enacted the following four labor codes:
- Code of Wages;
- Code on Social Security;
- The Occupational Safety, Health and Working Conditions Code; and
- The Industrial Relations Code.
The Codes were set to be implemented on April 1, 2021 but the Government has deferred the implementation for the time being as most states were unable to notify rules under the Codes in their jurisdiction. Since labor falls under the concurrent list of subjects as per the Constitution of India, both the Central and State Governments must notify rules under the Codes for it to become law.
The Code of Wages subsumes the existing statutes that deal with wages - The Minimum Wages Act, 1948; The Payment of Wages Act, 1936; The Payment of Bonus Act, 1965; and The Equal Remuneration Act, 1976. The Code seeks to amend and consolidate the laws concerning wages, bonus and its associated matters. A key highlight of the Wage Code is that it will provide a uniform definition of ‘wages’ which will now include (i) basic pay, (ii) dearness allowance and (iii) retaining allowance. Under the provisions of the existing Minimum Wages Act and the Payment of Wages Act, “employees” were restricted to workers drawing wages below a ceiling and in certain specified categories of scheduled employment. The Wage Code, however, will extend to all types of establishments . It also modifies the definition of “employees,” which will benefit a large number of workers in the unorganised sector who do not work under written contracts.
The Code on Social Security subsumes the following 9 labor laws namely Employees' Compensation Act, 1923; Employees State Insurance Act, 1948, Employees Provident Funds and Miscellaneous Provisions Act, 1952; Building and Other Construction Workers Cess Act, 1996; Unorganized Workers Social Security Act, 2008; Maternity Benefit Act, 1961; Payment of Gratuity Act, 1972; Cine Workers Welfare Fund Act, 1981; and Employment Exchanges (Compulsory Notification of Vacancies) Act 1959. The Code on Social Security seeks to implement new rules for contribution to social security and payment of employee benefits including retirement benefits. The Code also seeks to widen the coverage to include the unorganized sector, fixed-term workers, gig workers and platform workers and inter-state migrant workers.
The Occupational Safety, Health and Working Conditions Code subsumes and replaces 13 labor laws relating to safety, health and working conditions including Factories Act, 1948; Mines Act, 1952; Dock Workers Act, 1986; Contract Labour Act, 1970; and Inter-State Migrant Workers Act, 1979. The Code aims to ease doing business for the employers by replacing the need for various registrations under several statutes to one registration.
The Industrial Relations Code subsumes and replaces The Industrial Disputes Act, 1947; The Trade Unions Act, 1926; and The Industrial Employment (Standing Orders) Act, 1946. This Code is set to provide for the recognition of trade unions, notice periods for strikes and lockouts, standing orders, and resolution of industrial disputes. The Industrial Relations Code is being implemented with the aim of providing a better structure to protect the workers’ rights of forming unions and to provide regulations for the settlements of industrial disputes.
Once the labor codes are implemented, companies would need to adhere and conform with the new rules to ensure compliance with the labor laws of the country. In addition to overhauling the labor reforms of the country, the government with the implementation of these four codes intends to use technology to ensure enforcement and compliance.
