Rajya Sabha passes three labour Codes, industry welcomes reforms

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September 24, 2020 5:30 AM

Chandrajit Banerjee, director general, CII said, “We believe that these new legislations would facilitate expansion of establishments to create employment opportunities and help India become a preferred investment destination.”

Some 29 central acts, one of which dates back to 1923, have been subsumed into four Codes, with the aim of simplifying the laws and ensuring higher productivity and generation of decent employment.Some 29 central acts, one of which dates back to 1923, have been subsumed into four Codes, with the aim of simplifying the laws and ensuring higher productivity and generation of decent employment.

Significant labour market reforms are close to be a reality. With the Rajya Sabha passing three labour Codes on Wednesday , only the President’s assent is now required for these to become a law. Another code that provided statutory backing for minimum wages came into force in August last year.

Some 29 central acts, one of which dates back to 1923, have been subsumed into four Codes, with the aim of simplifying the laws and ensuring higher productivity and generation of decent employment.

The industry gave the Modi government a thumbs-up for carrying out reforms of such magnitude and bringing in provisions which will reduce their compliance burden to a great extent and ensure the ease of doing business.

Unorganised workers, gig workers, platform workers and even those self-employed should also be happy as the government proposes to provide all of them some sort of social security cover, though in phases, in its stride towards “universalisation of social security”.

Provision for creation of a Social Security Fund has been made to fund social security schemes for extending benefits like death and accident insurance, maternity benefit and pension to cover all of the 80% of the county’s over 50-crore workforce who do not now come under any sort of social security cover. The financial implications and the source of funding are yet to be determined. Through the Code on wages, passed in August last year, the government has made universal minimum wages a statutory right for all workers.

Fixed-term employment will get benefit as that of a permanent worker and will be entitled to proportionate gratuity even if the contract is for one year. All employees will get appointment letter, a move that might promote formalisation of workforce. Contractors have to pay wages electronically. They will be issued pan-India licence for five years as against work order-based licensing at present.

In order to promote gender equality, employment of women has been allowed in all establishments for all types of works and in the night shift, subject to their consent. However, provisions of safety, holidays, working hours or any other condition should be in place. The Codes also ensure their pay parity with their male counterparts.

Now, all workers who come from one state to another state earning less than Rs 18,000 a month will come under the definition of migrant labour and will get the benefit of welfare schemes of the government at the place of work.

Labour and employment minister Santosh Gangwar, in his concluding remarks in Rajya Sabha on Wednesday, said, “Labour Codes will establish transparent, answerable and simple mechanism reducing to one registration, one license and one return for all codes.” An effective dispute resolution mechanism is being ensured through Industrial Relations Code providing for time-bound dispute resolution system in every institution.

There will be no need to have multiple registrations or multiple licenses to set up industries. “As far as possible, now we are going to arrange to provide registration, license etc. in a time bound manner and under online process”, Gangwar said.

The government has proposed to allow establishments to be covered under employees’ provident fund organisation (EPFO) and Employees’ State Insurance Corporation (ESIC) on voluntary basis even if they have less than the mandatory employee threshold of 10 and 20 respectively. Enabling provision has been made to include self-employed and any other class of persons into EPFO and ESIC.

Chandrajit Banerjee, director general, CII said, “We believe that these new legislations would facilitate expansion of establishments to create employment opportunities and help India become a preferred investment destination.”

RSS-affiliated Bharatiya Mazdoor Sangh (BMS), however, objected the exemption of industrial employment standing orders law for industries up to 300 workers. It said proposal to change standing orders were not even discussed in the consultation process and this might amount to violation of ILO convention 144. In the IR Code, the government has said it will make model standing orders relating to conditions of service and other matters incidental thereto or connected therewith.

Reforms of India’s labour market were not part of the economic liberalisation measures unleashed in early 1990s; the first serious attempt at labour reforms was the report of the second National Commission on Labour (NCL) that proposed major changes in labour laws. In 2002-2003, the then prime minister Atal Bihari Vajpayee had said that reforms can’t wait. However, he could not act on the second NCL report till he demitted office and the subsequent two UPA governments turned a blind eye to the commission’s recommendations.

The wage code is still not under implementation as the relevant rules haven’t yet been notified. Analysts said the implementation of the provisions under the codes would determine India’s chance of attracting investment from both within and outside India.

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