New Labour Code

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Under the Constitution of India, Labour is a subject in the concurrent list where both the Central and State Governments are competent to enact legislation. As a result, a large number of labour laws have been enacted catering to different aspects of labour namely, occupational health & safety, Employment Laws, Social Security, Industrial Laws etc.

The numerous central &states legislations created a debate point amongst various stakeholders as to how uniformity in Labour Laws can be introduced. The Govt. of India set up the Second “National Commission on Labour” in the year 1999 which submitted its report in the year 2002 recommending amalgamation of Labour Laws to improve ease of compliance and ensure uniformity in labour laws, it recommended the 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 the year 2019 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.

The Evolution of all four Labour Codes

The Code on Wages, 2019

The Code on Wages, 2019 seeks to regulate wage and bonus payments in all employments where any industry, trade, business, or manufacture is carried out.  The Code replaces the following four laws:

  • The Payment of Wages Act, 1936,
  • The Minimum Wages Act, 1948
  • The Payment of Bonus Act, 1965
  • The Equal Remuneration Act, 1976.

Key Highlights on Code on Wages, 2019

  • Uniformity in the Definition like Employer, Employee, Establishment Wages, and Worker
  • The new definition of establishment covers any place where any industry, trade, business, manufacture, or occupations is carried on including Govt. Establishment
  • Equal Remuneration Acts was earlier Applicable the only worker now the scope has been widening and now it covers all Employee and Employers in any establishment
  • Minimum Wages scope has been widened, the concept of schedule employment has been eliminated Now provision applies to all employees and employers
  • Overtime rates shall not be less than twice the normal rate of wages earlier overtime of twice the normal rate was mandatory only in respect of workers covered under Factory Act
  • Full wages are payable to part-time employees also. This is to avoid payment of full wages by showing the employee as part-time
  • No change in a time limit of payment of wages i.e. 7th or 10th as the case may be
  • Deduction from wages maximum up to 50%
  • The upper limit of 21000 from Bonus eligibility removed from the definition and a new limit will be specified
  • Contractor and sub-contractor have been specifically included in the definition of employer
  • Penalties can be imposed by the officer of state govt. not below the rank of Under Secretary

The Code on Social Security, 2020

The Code of Social Security 2020seeks to regulate nine laws related social security, retrial and other benefits

  • The Employee Provident Funds Act, 1952
  • The Employee State Insurance Act, 1948
  • The Maternity Benefits Act, 1961
  • The Employee’s Compensation Act, 1923
  • The Payment of Gratuity Act, 1972
  • The Building and Other Construction Workers Welfare Act, 1996
  • The Unorganised Workers Social Security Act, 2008
  • The Employment Exchange (Compulsory Notification of Vacancies ) Act, 1952
  • The Cine- Workers Welfare Fund Act, 1981

Key Highlights on Code on Social Security, 2020

  • Subsumes nine central labour enactments relating to provident fund, employees’ state insuranceCompensation, gratuity, maternity benefit etc.
  • Code Comprises of 163 sections encased in 14 chapters besides six schedules
  • Definitions provided in Chapter I, Applicable across all chapters and provisions.
  • Chapters III to IX deal with provisions relating to Provident Fund, ESI, Gratuity, Maternity Benefit

Compensation, Social Security for Building and Construction Workers and Unorganized workers.

  • Specific provisions for finance and accounts, Payment of Dues, Claim and Audit, Inspector cum Facilitator, Offences and Penalties, Miscellaneous provisions etc.
  • Applies to all establishments, employees and employers as defined and to the extent specifically calledout in the Code.
  • Definition of wages uniform for all purpose and Gratuity period reduced in some conditions

The Industrial Relations Code, 2020

The Industrial Relation Code, 2020 seeks to regulate three Acts namely

  • The Trade Union Act, 1926,
  • The Industrial Employment (Standing Orders) Act, 1946
  • Industrial Dispute Act, 1947

Key Highlights on Industrial Relations Code, 2020

  • Threshold Limit increased from 100 to 300 for Standing Order
  • 14 days’ notice from strike and lockout is mandatory
  • The threshold for negotiating with trade union reduced from 75% workers as members to 51% of workers
  • Introduction of Fixed Term Employment with all statutory benefits available to permanent employees
  • Prior permission of Govt. before closure, layoff or retrenchment having more than 300 workers instead of 100 workers

The Occupational Safety, Health and Working Conditions Code, 2020

This code seeks to regulate 12 labour laws governing occupational safety, health and working conditions

  • The Factories Act, 1948
  • Plantations Labour Act, 1952
  • Mines Act, 1952
  • Contract Labour (Regulation & Abolition) Act, 1970
  • Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
  • Dock Workers (Safety, Health & Welfare) Act, 1986
  • BOCW (Regulation of Employment & Conditions of Service) Act 1996
  • Cine Workers & Cinema Theatre Workers (Regulation of Employment) Act, 1981
  • Sales Promotion Employees ( Condition of Service) Act, 1976
  • Beedi & Cigar Workers (Condition of Employment) Act, 1976
  • Motor Transport Workers Act, 1961
  • Working Journalist & Other Newspaper Employees (Conditions of Service & Miscellaneous Provision Act, 1955
  • Working Journalist (Fixation of Wages ) Act, 1958

Key Highlights on Occupational Safety, Health and Working Conditions Code

  • Factory definition amended to 20 workers for premises where process uses power and 40 workers where the process uses no power
  • Manpower limit on hazardous conditions removed and applies on contractors employing 50 workers instead for 20
  • Daily work hour limit fixed at a maximum of 8 hours per day
  • Women will be entitled to employment in all premises and all type of work provided employer need to ensure adequate safeguards
  • Workers earning a maximum of Rs. 18000 per month will be allowed to avail benefits like  Public distribution systems (PDS) Building cess, insurance and provident fund etc.
  • Employees include workers and all other persons employed in a managerial, administrative, or supervisory  role (with a monthly wage of at least INR 15,000);
  • Mandatory registration and licensing process for establishments covered by the Code;
  • Work hours, working conditions and welfare facilities to be notified;
  • Entitled to one day of leave for every 20 days of work per year.
  • Bar on civil courts from hearing matters under the Code

Spectra is fully equipped with all aspect of the new labour code, whether it is consulting, implementation, salary structuring, giving training to employee, risk assessment, due diligence etc. Spectra legal professional assist organisation in implementing new labour code with respect to compliance, return filling, advisory service on New Labour Code. We have made a tailor-made module for each code to assist our customer in implementing new labour code. Spectra organise workshop, training session for our customer to appraise all compliance aspect, the risk associated with compliance under new labour code.

  • Salary re-structuring as per “New Labour Law Code”
  • Key Changes Implementation under Code on Wages 2019
  • Key Changes Implementation under Social Security Code 2020
  • Key Changes implementation under Industrial Relations Code 2020
  • Key Changes implementation under Occupational Safety, Health & Working Conditions Code 2020
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