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Crucial labor reform bills introduced in the parliament

• By Amruta KelkarSreshtha
Crucial labor reform bills introduced in the parliament

Currently, there are over 100 state and 40 central laws in India regulating various aspects of labor such as resolution of industrial disputes, working conditions, social security and wages. In order to ensure uniformity in labor laws, the Second National Commission on Labour recommended consolidation of central labour laws into broader groups such as: (i) industrial relations, (ii) wages, (iii) social security, (iv) safety, and (v) welfare and working conditions.

In 2019, the Ministry of Labour and Employment introduced four Bills to consolidate 29 central laws. These Codes regulate: (i) Wages, (ii) Industrial Relations, (iii) Social Security, and (iv) Occupational Safety, Health and Working Conditions. While the Code on Wages, 2019 has been passed by the Parliament, bills in relation to the other three areas were referred to a Standing Committee.  

Upon receiving recommendations from the Standing Committee, the 2019 bills were withdrawn, and following news bills were introduced in the Lok Sabha on September 19, 2020: 

Occupational Safety, Health and Working Conditions Code, 2020

The 2020 bill intends to simplify and subsume 13 central laws regulating health, safety and working conditions of workers, such as the Factories Act, 1948, Inter-State Migrant workmen (Regulation of Employment and Conditions of Service) Act, 1979, Contract Labour (Regulation and Abolition) Act, 1970, Dock Workers (Safety, Health and Welfare) Act, 1986 etc. It aims to provide workers with wage security, social security, safety, health, and grievance redressal mechanisms. The following key changes are proposed by this bill:

Reduced Coverage. The 2020 Bill now regulates:

Inter-state migrant workers:

Industrial Relations Code, 2020

This bill seeks to combine and simplify the Trade Unions Act, 1926, Industrial Employment (Standing Orders) Act, 1946 and Industrial Disputes Act, 1947. The objective of the bill is to advance the progress of industry by bringing about the existence of harmony and cordial relationship between the employers and workers and to minimise friction between them. Salient features of the bill are as follows:

Revised thresholds for applicability:

Sole negotiating union:

Individual worker disputes. Any dispute in relation to discharge, dismissal, retrenchment, or otherwise termination of the services of an individual worker will be considered as an industrial dispute and the worker may apply to the Industrial Tribunal for adjudication of the dispute.

Code on Social Security, 2020

This bill aims to subsume, simplify and rationalise 9 central labor enactments relating to social security, such as the Employees' Compensation Act, 1923, Employees' Provident Funds and Miscellaneous Provisions Act, 1952, Employees' State Insurance Act, 1948, Payment of Gratuity Act, 1972, Unorganised Workers' Social Security Act, 2008 etc. The objective of the bill is to provide comprehensive social security coverage to avoid deprivation of basic needs of workers. Key changes proposed by the bill are as follows:

Setting up of social security funds and schemes:

The way forward

The labor reform bills have been introduced with a view to balance the interests and rights of employees and employers in the country. These bills intend to provide a competitive advantage to India in the global economy as well as boost industrial investment, including foreign investments. The bills take into consideration the interests of unorganized workers, gig workers and platform workers by ensuring more social security funds and schemes are organised for them, along with inter-state migrant workers by including self-employed workers from other states as well. Establishments aiming to expand will benefit from the reduction in compliance burden, which will in turn help in creating jobs on a larger scale across all sectors. Additionally, the new provisions will provide relief to small enterprises aiming to avoid additional costs related to labour compliances. Finally, one hopes that this positive step by the Government  will help towards promoting ease of doing business in India.