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Centre’s new labour codes "EMPOWER IAS"

Centre’s new labour codes "EMPOWER IAS"

Centre’s new labour codes

 

In news:

  • The Centre under its new labour codes would soon provide an option for organisations to allow their employees to work for four days in a week.

 

What is the news?

  • The proposed new labour codes could provide companies with the flexibility of four working days in a week.

 

Key Proposals in the Three Labour Codes

Industrial Relations Code Bill 2020

  • The code, among its important provisions, makes it easier for companies to hire and fire workers.
  • Companies employing upto 300 workers will not be required to frame rules of conduct for workmen employed in industrial establishments. Presently, it is compulsory for firms employing upto 100 workers.
  • It proposes that workers in factories will have to give a notice at least 14 days in advance to employers if they want to go on strike.
  • Presently, only workers in public utility services are required to give notices to hold strikes.
  • Besides, every industrial establishment employing 20 or more workers will have one or more Grievance Redressal Committees for resolution of disputes arising out of employees’ grievances.
  • The code also proposes setting up of a reskilling fund to help skill retrenched workers.

 

Occupational Safety, Health and Working Conditions Code Bill, 2020

  • It spells out duties of employers and employees, and envisages safety standards for different sectors, focusing on the health and working condition of workers, hours of work, leaves, etc.
  • The code also recognises the right of contractual workers.
  • The code provides employers the flexibility to employ workers on a fixed-term basis, on the basis of requirement and without restriction in any sector.
     
  • More importantly, it also provides for statutory benefits like social security and wages to fixed-term employees at par with their permanent counterparts.
  • It also mandates that no worker will be allowed to work in any establishment for more than 8 hours a day or more than 6 days in a week.
  • In case of an overtime, an employee should be paid twice the rate of his/her wage. It will be applicable to even small establishments, which have upto 10 workers.
  • The code also brings in gender equality and empowers the women workforce. Women will be entitled to be employed in all establishments for all types of work and, with consent can work before 6 am and beyond 7 pm subject to such conditions relating to safety, holidays and working hours.
  • For the first time, the labour code also recognises the rights of transgenders. It makes it mandatory for industrial establishments to provide washrooms, bathing places and locker rooms for male, female and transgender employees.

 

Code on Social Security Bill, 2020

  • This will replace nine social security laws, including Maternity Benefit Act, Employees’ Provident Fund Act, Employees’ Pension Scheme, Employees’ Compensation Act, among others.
  • The code universalizes social security coverage to those working in the unorganised sector, such as migrant workers, gig workers and platform workers.
  • For the first time, provisions of social security will also be extended to agricultural workers also.
  • The code also reduces the time limit for receiving gratuity payment from the continuous service of five years to one year for all kinds of employees, including fixed-term employees, contract labour, daily and monthly wage workers.

 

What does this mean?

  • The working hour’s limit of 48 hours for a week will remain unchanged.
  • This implies that there will be long working hours if the working days are reduced.
  • Having a reduced number of working days does not mean a cut in paid holidays.
  • Therefore, when the new rules will provide the flexibility of four working days, it would imply three paid holidays.

 

Roll out of the proposal

  • The Ministry of Labour and Employment is likely to complete the process to finalise the rules for four labour codes soon.
  • The provision of flexibility to have reduced working days of four days in the labour code rules will mean that companies will not require prior government nod to enact it.

 

Why such a move?

  • The well-being of employees improves with less workload. Working parents can spare more time for the childcare.
  • It helps the economy and the environment since power and fuel consumption is reduced.

 

Benefits of Labour Codes

  • Consolidation and simplification of the Complex laws: The three Codes simplify labour laws by subsuming 25 central labour laws that have been on the table for at least 17 years.
  • It will provide a big boost to industry & employment and will reduce multiplicity of definition and multiplicity of authority for businesses.
  • Single Licensing Mechanism: The codes provide for a single licensing mechanism. It will give fillip to industries by ushering in substantive reform in the licensing mechanism. Currently, industries have to apply for their licence under different laws.
  • Easier Dispute resolution: The codes also simplify archaic laws dealing with industrial disputes and revamp the adjudication process, which will pave the way for early resolution of disputes.
  • Ease of Doing Business: According to the industry and some economists such reform shall boost investment and improve ease of doing business. It drastically reduces complexity and internal contradictions, increases flexibility & modernizes regulations on safety/working conditions
  • Other benefits for Labour: The three codes will promote fixed term employment, reduce influence of trade unions and expand the social security net for informal sector workers.

 

Concerns with the Labour codes

  • Against the Interests of Employees: The codes provide the liberty to industrial establishments to hire and fire their employees at will.
  • This move might enable companies to introduce arbitrary service conditions for workers.
  • Free Hand to States: The central government has also attracted criticism that states have been given a free hand to exempt laws in violation of labour rights. However, the Union Labour Minister has said the labour issue is in the Concurrent list of the Constitution and therefore states have been given the flexibility to make changes as they wish.
  • Affect Industrial Peace: Industrial Relation Code proposes that workers in factories will have to give a notice at least 14 days in advance to employers if they want to go on strike.
  • However, earlier the Standing Committee on Labour had recommended against the expansion of the required notice period for strike beyond the public utility services like water, electricity, natural gas, telephone and other essential services.
  • Further, Bharatiya Mazdoor Sangh has also opposed the Code, describing it as a clear attempt to diminish the role of trade unions.

 

Existing Labour Codes Subsumed

  • The social security code replaces nine laws on social security, including the Employees’ Provident Fund Act, 1952, and the Maternity Benefit Act, 1961.
  • Industrial Relations Code subsumes the Industrial Disputes Act, 1974, the Trade Unions Act, 1926; and Industrial Employment (Standing Orders) Act, 1946.
  • The Occupational Safety, Health and Working Conditions Code replaces 13 labour laws.

 

Key Proposals in the Three Labour Codes

Industrial Relations Code Bill 2020

  • The code, among its important provisions, makes it easier for companies to hire and fire workers.
  • Companies employing upto 300 workers will not be required to frame rules of conduct for workmen employed in industrial establishments. Presently, it is compulsory for firms employing upto 100 workers.
  • It proposes that workers in factories will have to give a notice at least 14 days in advance to employers if they want to go on strike.
  • Presently, only workers in public utility services are required to give notices to hold strikes.
  • Besides, every industrial establishment employing 20 or more workers will have one or more Grievance Redressal Committees for resolution of disputes arising out of employees’ grievances.
  • The code also proposes setting up of a reskilling fund to help skill retrenched workers.
  • Occupational Safety, Health and Working Conditions Code Bill, 2020
  • It spells out duties of employers and employees, and envisages safety standards for different sectors, focusing on the health and working condition of workers, hours of work, leaves, etc.
  • The code also recognises the right of contractual workers.
  • The code provides employers the flexibility to employ workers on a fixed-term basis, on the basis of requirement and without restriction in any sector.
  • More importantly, it also provides for statutory benefits like social security and wages to fixed-term employees at par with their permanent counterparts.
  • It also mandates that no worker will be allowed to work in any establishment for more than 8 hours a day or more than 6 days in a week.
  • In case of an overtime, an employee should be paid twice the rate of his/her wage. It will be applicable to even small establishments, which have upto 10 workers.
  • The code also brings in gender equality and empowers the women workforce. Women will be entitled to be employed in all establishments for all types of work and, with consent can work before 6 am and beyond 7 pm subject to such conditions relating to safety, holidays and working hours.
  • For the first time, the labour code also recognises the rights of transgenders. It makes it mandatory for industrial establishments to provide washrooms, bathing places and locker rooms for male, female and transgender employees.

 

Code on Social Security Bill, 2020

  • This will replace nine social security laws, including Maternity Benefit Act, Employees’ Provident Fund Act, Employees’ Pension Scheme, Employees’ Compensation Act, among others.
  • The code universalizes social security coverage to those working in the unorganised sector, such as migrant workers, gig workers and platform workers.
  • For the first time, provisions of social security will also be extended to agricultural workers also.
  • The code also reduces the time limit for receiving gratuity payment from the continuous service of five years to one year for all kinds of employees, including fixed-term employees, contract labour, daily and monthly wage workers.

 

Benefits of Labour Codes

  • Consolidation and simplification of the Complex laws: The three Codes simplify labour laws by subsuming 25 central labour laws that have been on the table for at least 17 years.
  • It will provide a big boost to industry & employment and will reduce multiplicity of definition and multiplicity of authority for businesses.
  • Single Licensing Mechanism: The codes provide for a single licensing mechanism. It will give fillip to industries by ushering in substantive reform in the licensing mechanism. Currently, industries have to apply for their licence under different laws.
  • Easier Dispute resolution: The codes also simplify archaic laws dealing with industrial disputes and revamp the adjudication process, which will pave the way for early resolution of disputes.
  • Ease of Doing Business: According to the industry and some economists such reform shall boost investment and improve ease of doing business. It drastically reduces complexity and internal contradictions, increases flexibility & modernizes regulations on safety/working conditions
  • Other benefits for Labour: The three codes will promote fixed term employment, reduce influence of trade unions and expand the social security net for informal sector workers.

 

Concerns with the Labour codes

  • Against the Interests of Employees: The codes provide the liberty to industrial establishments to hire and fire their employees at will.
  • This move might enable companies to introduce arbitrary service conditions for workers.
  • Free Hand to States: The central government has also attracted criticism that states have been given a free hand to exempt laws in violation of labour rights. However, the Union Labour Minister has said the labour issue is in the Concurrent list of the Constitution and therefore states have been given the flexibility to make changes as they wish.
  • Affect Industrial Peace: Industrial Relation Code proposes that workers in factories will have to give a notice at least 14 days in advance to employers if they want to go on strike.
  • However, earlier the Standing Committee on Labour had recommended against the expansion of the required notice period for strike beyond the public utility services like water, electricity, natural gas, telephone and other essential services.
  • Further, Bharatiya Mazdoor Sangh has also opposed the Code, describing it as a clear attempt to diminish the role of trade unions.

 

Ahead of Labour reforms

  • The ministry is in the final phase of amalgamating 44 central labour laws into four broad codes.
  • The four Codes include- Code on Wages, Industrial Relations, Occupational Safety, Health and Working Conditions (OSH) and Social Security Codes.

 

 

What is Social Security?

  • Social security is “any government system that provides monetary assistance to people with an inadequate or no income”.
  • It refers to the action programs of an organization intended:
  • to promote the welfare of the population through assistance measures guaranteeing access to sufficient resources for food and shelter and
  • to promote health and well-being for the population at large and potentially vulnerable segments such as children, the elderly, the sick and the unemployed

 

Why need Social Security?

  • India has a very basic social security system catering to a fairly small percentage of the country’s workforce.
  • Traditionally, Indians relied on their extended families for support in the event of illness or other misfortunes.
  • However, due to migration, urbanization, and higher social mobility, family bonds are less tight and family units much smaller than they used to be.

 

Social Security System in India

  • India’s social security system is composed of a number of schemes and programs spread throughout a variety of laws and regulations.
  • Keeping in mind, however, that the government-controlled social security system in India applies to only a small portion of the population.
  • Furthermore, the social security system in India includes not just an insurance payment of premiums into government funds (like in China), but also lump sum employer obligations.
  • Generally, India’s social security schemes cover the following types of social insurances:
  1. Pension
  2. Health Insurance and Medical Benefit
  3. Disability Benefit
  4. Maternity Benefit
  5. Gratuity