The article discusses the Ministry of Labour and Employment’s initiative and regulations, including the four labour codes replacing 29 sets of labour laws. These labour codes are: Code of Wages Act 2019, Industrial Relations Code Bill, 2020, Social Security Code Bill, 2020, Occupational Safety, Health and Working Conditions Code Bill, 2020.
Understanding the Labour Codes
The Code of Wages Act 2019 aims to transform obsolete labour laws into accountable and transparent ones by introducing minimum wages and labour reforms. It regulates wage and bonus payments across various employment sectors and brings under its purview the Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976.
The act ensures that all employees receive timely wages irrespective of sector or wage ceiling. Furthermore, it empowers the Central Government to set floor wages considering workers’ living standards.
The Industrial Relations Code Bill, 2020, obligates employers of an industrial establishment to clearly define employment conditions. The bill changes the provision for standing order to apply to establishments employing 300 or more workers. The new code proposes reskilling funds for retrenched workers contributed by the employer.
For the Social Security Code Bill, 2020, it suggests a National Social Security Board, which will recommend suitable schemes for unorganized labour forces, gig workers, and platform workers.
Lastly, the Occupational Safety, Health and Working Conditions Code Bill, 2020 defines interstate migrant workers as workers who have sought employment in another state on their own and earn up to Rs. 18,000 monthly.
Benefits of Labour Codes
The implemented labour codes bring several benefits. The Code of Wage Act 2019 noticeably reduces litigation through streamlined wage definitions and reduces minimum wages from over 2000 rates. This ensures that every worker receives a minimum wage, leading to an increase in their purchasing power and stimulating economic growth.
Apart from wage benefits, the three codes (IR, SS & OSHW) simplify labour laws by absorbing 25 central labour laws. This consolidation simplifies licensing and dispute resolution, paving the way for businesses’ smoother operation and the resolution of disputes more efficiently.
The implementation of these labour codes is expected to boost investment and enhance ease of doing business. It also promotes fixed-term employment, reduces trade unions’ influence and expands the social security network for informal sector workers.
Challenges faced by Labour Codes
Despite the many benefits, the labour codes also face several challenges. One is a constitutional challenge resulting from labour being a concurrent subject between the Centre and states, meaning both are required to frame laws and rules. The Industrial Relations Code Bill decreases labour rights for workers in smaller establishments with less than 300 workers. In terms of wage, the new wage code may push starvation wages further by increasing the income capacity and purchasing power of informal workers.
Concerns about exclusion due to mandatory registration of all workers for social security benefits, Aadhaar-driven exclusion, and lack of information among workers are also present. Furthermore, the codes don’t provide the majority of informal sector workers, predominant in rural areas, any form of social protection.
Proposed Measures
To address these challenges, certain measures should be considered. For instance, the draft rules must clearly state how they will apply to the migrant informal workforce. Corporate houses could take responsibility for skilling people in unorganized sectors under CSR expenditure. Also, a national policy for domestic workers should be enacted to recognize their rights and promote better working conditions. Lastly, a robust social security package needs to be created for workers in unorganized sectors.
