Industrial Democracy: A Way Forward

Authored by- Stuti Agarwal, School of Law, Christ (Deemed to be University)


1. Introduction

The category ‘labour’ is encompassed within the concurrent list of the Indian Constitution. The Parliament has passed three labour code bills on September 22 namely- (a) The Industrial Relations Code Bill, 2020 which effectively entails the Trade Unions Act 1926, Industrial Disputes Act 1947 and Employment (Standing Orders) Act 1946 (b) The Occupational, Safety, Health and Working Conditions Bill which has replaced 13 labour laws. (c) The Code on Social Security Bill 2020, which has replaced nine laws on social security which include the Maternity Benefit Act, 1961 and the Employee Provident Fund Act, 1952.

The attempt of the government to consolidate a bundle of Central and State Labour laws for the ease of carrying out business will have a transformative effect. The ‘Code on Wages Act’ has already been passed in 2019, this combined with the above-mentioned bills is an effort by the government to rationalize archaic labour laws and revamp it to suit the current modern-day needs.

On the recommendation of the Second Law Commission (2002) on Labour, these labour codes were enacted. The Commission suggested amalgamating 100 State laws and 40 Central laws spread across numerous industries and regions.

2. Industrial Relations Code Bill, 2020

The Industrial Relations Code Bill aims to address laws regarding the trade unions, a legal strike by the employees, conditions of employment for various industries as well undertakings and the dispute resolving as well as the settlement system.

Some of the essential provisions of the Bill are as follows-

  • The government in this Bill has increased the limit of the employees employed in the companies from 100 to 300 in terms of the requirement of the standing order. The Bill stated that the companies which engage up to 300 employees would not be required to frame the standing order or the rules of conduct. Previously, furnishing the standing order was mandatory for companies engaging up to 100 employees.  The hiking of the employees from 100 to 300 had been recommended by the Standing Committee on Labour in the month of April. The Standing Committee has proposed the same on the note that some state governments, like Rajasthan, has already increased the limit of the employees and such a move according to the labour ministry has helped in increasing productivity and consequently reducing retrenchment. Such a proposal gives a free hand to the employers by vesting them with more power to introduce whimsical service conditions for the workers.
  • The Bill also proposes to include fresh conditions regarding the legal strike. It stated that in case an employee working in a factory desires to go on a strike, he cannot do so without proving the employer with a 60-day notice. The employee cannot go on a strike when the dispute is sub judice in the National Industrial Tribunal or any other tribunal as well as 60 days after the proceedings have been concluded.  The Bill has focused on expanding its ambit to include all the industrial establishments regarding the notice period as well as other conditions for the legal strike. Presently, the employees associated with the public utility service cannot go on a strike unless they provide the employer with a six-week notice in advance or within fourteen days of proving such a notice, which the Industrial Relations Code Bill, 2020 aims to apply for all the establishments.
  • Every industrial establishment which seeks to employ 20 or more employees will have to form one or more Grievance Redressal Committees to resolve disputes arising within the organization.
  • Lastly, Industrial Relations Bill, 2020 has introduced the formation of a worker re-skilling fund. The fund would be created from the contribution of the employers which would amount to fifteen days’ wages drawn by the worker immediately preceding retrenchment as well as the contribution from ‘such other sources’. It is to be noted that ‘such other sources’ for the purpose of the reskilling fund is ambiguous.

3. Occupational, Safety, Health and Working Conditions Code Bill, 2020

Occupational, Safety, Health and Working Conditions Code 2020 was enacted upon the recommendation of the Second Law Commission on Labour and also after the discussions done in the tripartite meeting which comprised of the industry representatives, employees, and the government. The bill seeks to replace and simplify the relevant provisions of Central labour-related enactments concerning occupation, health, and safety conditions of the workers.

The key provisions of the bill are as follows-

  • The Bill aims to provide better flexibility and protection to workers in terms of occupation, safety, health, and working conditions. The changes proposed in the code are applicable to all the establishments employing ten or more workers except establishments that relate to mines and docks.
  • The code introduced ‘one registration’ for all the establishments employing ten or more workers. As far as applicability of other provisions of the code is concerned regarding factories, except in the case of registration, the limit has been fixed to 20 in factories with power and forty in factories with no power.
  • The bill seeks to provide free health check-ups of workers annually who are above a specified age so that diseases can be diagnosed at an early stage, and proper treatment can be administered to them.
  • The Bill states that the provisions relating to interstate migrant workers shall be applicable to establishments where ten or more migrant workers are employed or were employed one any day preceding twelve months. Additionally, the bill also mentions that a particular worker may register himself as a ‘migrant worker’ on the portal on the basis of self-declaration and Aadhar card. The ‘migrant worker’ can avail certain portability benefits in the destination state with respect to ration.
  • At the central level, a National Occupational Safety and Health Advisory Board shall be formed with the purpose to recommend Central Government on policy matters relating to occupation, health, safety and working conditions of the workers. At the state level, a State Occupational Safety and Health Advisory Board shall be formed with the aim to advise the state government on matters arising out of the administration of the code proposed. The bill also seeks to constitute a Safety Committee in any establishment or class establishments by any appropriate government.
  • A progressive step taken by the government through this bill is to empower women by stating that women can be employed in all establishments and are eligible to do all types of work. The bill states can women can even work at night i.e. after 7 PM and before 6 AM subject to conditions regarding safety, health, working conditions and their consent. The labour codes also recognize the right of the transgender and mention that it is mandatory for all employers to provide separate washrooms, bathing rooms and locker rooms to male, female and transgender employees.
  • The bill has led to the introduction of the ‘common license’ for factory, contract labour, beedi and cigar establishments. The single all India license has been introduced for a period of five years to engage the contractual labour.
  • In order to aid the workers who are victims of the accident, the labour code has vested the courts with the power to provide such victims with a portion of monetary penalties which may reach up to 50 percent. The labour code has made such policies to provide a sense of security of such workers who end up becoming victims of accidents and to their legal heirs in case of his death. The bill has made provisions to provide overriding powers to the central government to ensure the general well-being of the persons residing in any part of India in situations of an epidemic, a pandemic, or a natural disaster. The bill proposes to create a Social Security Fund for the welfare of the workers employed in the unorganized sector and also to make adequate provisions to impose the penalties proposed in the code.

4.  Code on Social Security Bill, 2020

The Code on Social Security Bill 2020 has replaced nine laws which include the Employees Provident Fund Act, Maternity Benefit Act, and Employees Compensation Scheme among many others.

  • This code has extended its horizon of providing benefits by including gig workers, platform workers, workers employed in the unorganized sector, fixed-term employees, migrant inter-state workers and the contract employees. For the first time, the benefits of social security provisions under this code have also been extended to agricultural workers. Hence, it has become significant for the establishments to revisit the implications under this code and carry out its business accordingly.
  • The Code on Social Security has helped in bringing about uniformity in terms of determining wages for the purpose of social security benefits. The act of the government of bringing uniformity in wages is undoubtedly a welcome move as in the current legislation, there was a lot of ambiguity in terms of the wages. This move has not only broadened the ambit of wages but also mentioned about the specific inclusions which would discourage inappropriate structuring of the wages, which might lead to the exclusion of social security benefits.
  • The code has helped in bringing about a facilitative approach by the concerned authorities as now the inspectors will act as a facilitator as well as carry out the diligent duties of an inspector. This step will enable the establishments to seek advice from these inspectors in order to understand better and fulfil the due compliances required under the code.
  • This code has taken a progressive step by mentioning that all the records would be maintained and returns have to be maintained electronically. The digital maintenance of records will aid in the easy exchange of information among the various stakeholders. This will lead to better governance as well as due compliance of the provisions mentioned under the code.
  • The code has reduced the time limit for receiving the gratuity payment from continuous five years of service to one year. This shall be applicable to all the employees, including daily labour and monthly labour, contract labour and the fixed-term employees.
  • In order to ensure due adherence of provisions of the code and to deter non-compliance, the code has not failed to mention about the stringent penalties. It states that in case an employer fails to deposit the employee contribution it will not only lead to a fine of Rs 10,000 but also imprisonment which could be of one year and could be extended up to three years. In case the offence is repeated, it will attract more stringent prosecution and penalties and the compounding of the offence will not be permitted under any circumstances.

5. Conclusion

The government’s move of finally revamping and rationalizing the archaic and stringent labour laws is definitely a welcoming move. The initiative of the government through these labour code bills to widen the ambit of social security to include inter-state workers and gig workers is stepping in the correct direction. Also maintaining a database for the migrant workers as well as adequately funded social security fund are progressive steps which were much needed to match the modern-day needs.

However, there are numerous questions that are being raised regarding the coverage and design of the schemes and also how the portability of such benefits will be ensured. The idea of the execution of the framework regarding the gig workers considering their temporary nature is still vague.

There is undoubtedly a pressing need to amend the labour laws which are existing for centuries. However, given the situation of economic distress in the country, the policy matters relating to labour should be placed at the centre level. In times of acute instability, the government should advance in a direction that aids the reasonable functioning of the labour market with an adequate degree of social security, instead of taking steps in the opposite direction.

The new laws simplify and consolidate the compliance procedure which paves the way for creating incentives for the formalization of the workforce. The new labour codes will not only help in the elevation of the creation of jobs for the rapidly growing workforce but also help in absorbing out the migrant workers from the agricultural sector. This way India will be in a position to capitalize on its inherent labour and skill cost which will help in quick recovery especially post Covid-19.