In September, the Indian Parliament passed an important Labour Law reform that introduced three labour codes on industrial relations, social security and occupational safety, health and working conditions (N. 35, 36 and 37 of 2020).

On 13 November, the Union Labour and Employment Ministry notified the draft under the Code on Social Security 2020 and is expected to receive suggestions and objections within 45 days.

Santosh Kumar Gangwar, Minister of State for Labour & Employment, Government of India, during the October 2020 General Meeting of All Indians Organisations of Employers – AIOE (allied body of FICCI and IOE Member) commented that “the new Labour Codes will promote harmonious industrial relations, higher productivity and more employment generation.” He further noted that “the labour codes will establish a transparent, answerable and simple mechanism along with one registration, one license and less return filing for all the Codes.”

This reform resulted from continued consultations with all stakeholders including employers, unions and experts. The objective of the reform is to strengthen the safety net for workers, while at the same time make the labour laws simpler and easier for doing business. Through the codes, the “unorganised sector, gig and platform workers will get access to social security benefits through a government portal.” Also, “fixed-term employment has been introduced and a fixed-term employee will get the same service conditions as regular employees.”

The Industrial Relations Code regulates:

1. Work Committees in companies with more than 100 employees,
2. Grievance Redressal Committees for resolution of disputes arising out of individual grievances in industrial establishments employing 20 or more workers.
3. The establishment of a trade union with a minimum of seven employees in an industrial establishment or industry, and its dissolution.
4. Mechanisms to mediate collective disputes.

Chapter VIII of the Code governs strikes and lockouts. For instance, by requiring a 14 days notification prior to strike action and lockout, ban on strike action and lockout during the period of conciliation, arbitration proceedings and proceedings before a tribunal. The Law also contains provisions on retrenchments and layoffs.  

The Social Security code introduces the concept of universality of the social security coverage, indicates the institutions and funds entrusted with this task, the employees’ coverage and maternity benefits. Chapter IX focuses on social security for unorganised workers, gig and platform workers, concerning:

• “life and disability cover;
• health and maternity benefits;
• old age protection;
• education; and
• any other benefit as may be determined by the Central Government”.

The Code on occupational health and safety and working conditions focuses on the registration of companies with the Government, health and safety procedures, duties of employers and employees, rules about working hours and leave, special rule for women and inter-state migrant workers. The Codes included modifications on the role of inspectors that will be called an Inspector-Cum-Facilitator and will work with an online inspection system.

Chapter I involves “a single licence for staffing firms to hire workers on contract across different locations instead of the previous use of multiple licences. Under the OSH code, the threshold limit of contractor employees will increase from 20 to 50.”

From an employers’ perspective, the licensing process is facilitated. For instance, for extension of factories, if a permission was sent to “the State Government or Chief Inspector-cum-Facilitator in the electronic mode, no order is communicated to the applicant within such period not exceeding thirty days, the permission applied for in the said application shall be deemed to have been granted.”

The changes are highly appreciated by the private sector. “AIOE whole heartedly welcomes the new labour reforms as it opens new horizons to bring India’s large informal sector employees into formal workforce. We are sure the implementation of these codes will enable India to climb up further in the ranking of Ease of Doing Business.”

Rohit Relan, AIOE President, commented that “while complementing the government on the new Labour Codes, these will have a far-reaching impact for peaceful and harmonious labour relations in our country.”

Shishir Jaipuria, AIOE President Elect, stated that “the new Labour Codes would definitely send a positive message to the investors. The reforms brought by the government in operational areas, using ICT in compliance issue, will no doubt reduce bureaucratic hurdles and avoidable paperwork. These reforms are not only going to help the employers and employees during the Covid-19 but will hopefully prove to be progressive and relevant even post COVID too.”

Suchita Dutta, executive director of the Indian Staffing Federation, praised that “The national and state licence for contract staffing under OSH Code will not only be a progressive step to increase formalisation but an opportunity for over 390 million informal workers to be employed through formal staffing organisations that can give them wage protection and social security.”

The reform is to be considered in addition to the introduction of a Code on Wages on August 2019. This Code foresaw that the appropriate Government shall fix the minimum wage rates payable to employees, for time of work or piece of work. The minimum wage rates are periodically revised and are set based on recommendations of a Committee composed of representatives of employers, employees and independent persons. The rate considers the cost of living and distinguishes between skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work.