An overview to Labour Laws:
Indian labour laws are meant to regulate labours and their provisions in India. Indian governments seek to ensure a high degree of protection for workers but since the subject of labour is listed under Concurrent List it differs due to the form of government – central and state.
The Constitution of India directly concerns with labour rights in its Articles 14-16, 23-24, 38 and 41-43. Article 14, 15, 16 states everyone should be equal before the law, no discrimination amongst the citizens and equal opportunity for employment, respectively. Also, article 23 and 24 prohibits trafficking and forced labour as well as prohibition of child under 14 years of age to work in a factory, mine or any other hazardous employment. Article 38 provides that the state should strive to promote the welfare of the people through the social order and principles of justice, social, economic and political and also minimise the inequalities in income. Article 41-43 creates a right to work, make provision for securing just and humane conditions in work area and for maternity relief and also that the workers should have the right to a living wage and ensure the decent and standard conditions of work and life. Indian labour law makes a distinction between people who work in organised and unorganised sectors and also to which the labour laws apply.
The major reformation in the labour laws was seen in the Industrial Disputes Act, 1947, thereby there have been additional 40-45 national laws and another hundreds of another state laws controlling the relationships between the worker and the company and mandating all aspects of employer-employee interaction; thereby regulating various areas and issues concerned with resolution of industrial disputes, wages, social security and working conditions. Having numerous laws and finding the existing legislation to be complex and conflicting and having inconsistent definitions, there felt a need of improving the same for easy compliance and uniformity in the laws for the labour class and to consolidate such Central labour laws into broader groups and classify them as – industrial relations, wages, social security, safety and welfare and working conditions.
The Ministry of Labour and Employment introduced 4 Bills in 2019 viz. i) The Code on Wages; ii) Code on Industrial Relations; iii) Code on Social Security and iv) Code on Occupational Safety, Health and Working Conditions. These Bills were introduced in order to consolidate and regulate laws relating to labour which covers various aspects of labour such as resolution of industrial disputes, wages, social security, safety and welfare, working conditions and others. The Code on Wages, 2019 was passed by the Parliament in the year 2019 itself but the Bills on other 3 areas were referred to the Standing Committee. The reports submitted by the Standing Committee on those 3 Bills brought reformations and changes and the new 3 Bills were introduced on 19th September, 2020 in the Lok Sabha. By this it not only increases the ambit of social security for the workers including gig workers and inter-state migrant workers but also proposes to provide greater flexibility to employers enabling them to hire and fire without the interference or permission of the government.
HIGHLIGHTS OF THE 3 BILLS INTRODUCED IN SEPTEMBER 2020:
a. Central Government to be an appropriate Government for Central PSUs:
These Bills stipulate that the Central Government will continue to be the appropriate Government for Central PSUs (Public Sector Undertakings) irrespective of the holding of Central Government in those PSUs i.e. even if the holding becomes less than 50%.
b. Central Government to be the appropriate Government for many specific industries:
Apart from industries such as Railways, Mines, Telecom and Banking, the 2020 Bills also bring certain other industries being controlled by the Union categorised as ‘Controlled Industry’ declared by any Central Act under the governance of the Central Government.
c. Legal implications on offences and scope of compounding (settling) the matters:
The offences punishable with imprisonment up to one year, the compounding may be allowed for sum of 75% and for the offences punishable with fine, it may be allowed for a sum of 50% of maximum fine provided for offence.
CERTAIN CONCERNS THAT THESE BILLS REFLECT:
a. The hold of Central Government as an appropriate Government:
The Central Government, until the earlier Codes on Industrial Relations, has exercised its powers only over those PSUs (Public Sector Undertakings) in which it held more than 50% stakes. But now according to 2020 Bills, the Central Government will continue to be the appropriate Government for Central PSUs irrespective of its holding in them i.e. even if the holding becomes less than 50%. There is no clear reasoning behind such continuance of its jurisdiction over such establishments in which it does not own controlling stakes.
b. The power to make laws:
It is usually the Legislature that makes the Law and it delegates certain rule making powers to the Government in order to allow it to implement the same. But the Bills delegate various essential rule making powers to the Government with respect to entitlements, benefits and contributions such as governing the increase in the threshold of lay-offs, retrenchment, closure, social security schemes as well as to specify safety standards and working conditions to be provided by the establishments. The power to frame the legislative policy or forming the principles of law should be retained by the Legislature and whether such functions and powers should be delegated to the Government.
c. Inconsistent discretion between the Central and State Governments :
The Factories Act, 1948 provided the Government with the power to exempt any establishment from its provisions only in the case of public emergency and that too for a limited period of three months. But now according to 2020 Bills, they provide the appropriate Government (i.e. Central Government) with the power to exempt any establishment from any or all of its provisions, if it is in public interest, for a period to be specified in the notification. It also enables the State Government to exempt any establishment or factory in order to gain more economic activity and generate employment. Hence, there is a confusion of discretion provided to Central and State Governments since it can be interpreted broadly as it has wide range of provisions including retrenchment process, working hours, contract labours, safety standards, etc.
d. Confusion as to inclusion of which establishments under these Bills:
The Bill on Industrial Relations and Occupational Safety allows the Government to exempt any new establishment from its provisions in the public interest. Also, the Bill on Industrial Relations provides for separate thresholds for layoffs, retrenchment and closure. Apart from this, the Occupational Safety and Social Security applies to establishment over a certain size in order to provide mandatory benefits such as provident fund and pension. This raises the question of the extent to which establishments should be covered by the Bills. As mentioned, to promote the economic growth, it is desirable to reduce compliance burden by keeping thresholds based on number of employees but it might lead to provision of an undue advantage to such establishments in order to avoid from complying with labour regulation by not increasing the size of their establishments.
e. Provisions of basic mechanisms for unorganised and migrant workers:
The basic provisions such as enforcement of wages, social security and safe working conditions should be applied to all the establishments, irrespective of their size. The Bill on Occupational Safety mentions about the provisions to safeguard the health and safety of unorganised workers and also specifies the safety, health and working conditions for inter-state migrant workers and plantation workers by inserting specific chapters for the same in the code. But the Social Security Bill does not address or provide for any framework to achieve universal social security within a definite time frame inspite of being recommended by the Standing Committee.
In order to avoid such discrepancies, the 2nd National Commission on Labour (2002) recommended that there should be a separate law for small scale establishments having less stringent provisions governing the aspects of retrenchment and closure, welfare facilities, payment of wages, social security and resolution of disputes. Also, the National Commission for Enterprises in the Unorganised Sector (NCEUS) suggested 2 separate Bills for the establishments in the agricultural and non-agricultural sector each in order to govern and address social security as well as minimum conditions for work therein.
It may be noted that not all countries have exempted smaller enterprises from the labour regulations entirely. However, certain obligations under these laws are only applicable to enterprises with employees over a certain size. The International Labour Organisation (2005) shows that only a few of its member States have exempted micro and small enterprises from labour regulation altogether whereas majority of them have adopted a mixed approach towards the labour regulations.
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