Central Ministry passed the bill on 23rd Sep'2020 - Three New Labour Codes in India - Brief note about Amendments, Key Highlights, Benefits, Process & Documentations

 The three labour codes are part of the government's reform drive, geared towards simplifying India's labour legislation and improving ease of doing business, which covers 50 crore workers from Organized, Unorganized and self-employed sector.

1st Category:

The below mentioned existing legislations have been converted in to single legislation code as "Industrial Relations Code 2020"

a. Industrial Employment Standing Order Act, 1946

b. Industrial Dispute Act, 1947

c.  Trade Unions Act, 1926

2nd Category:

The below mentioned existing legislations have been converted in to single legislation code as "Occupational Safety, Health & Working Condition Code 2020"

a. Factories Act, 1948

b. Mines Act, 1951

c. Dock Wokers (Safety, Health and Welfare Act, 1986)

d. The Building and other workers Act, 1996

e. The Plantation Labour Act, 1951

f. The contract labour (Regulation & Abolition) Act, 1970

g. The Inter-state migrant workmen Act, 1979

h. The working journalist and other news paper employees Act, 1955

i. The working journalist Act, 1958

j. The motor transport workers Act, 1961

k. Sales promotion employees Act, 1976

l. The Beedi and Cigar Workers Act, 1966

m. The Cine Workers and Cinema Theatres Workers Act, 1981

3rd Category:

The below mentioned existing legislations have been converted in to single legislation code as "Social Security Code 2020"

a. The EPF and MP Act, 1952

b. The ESIC Act, 1948

c. The Maternity Benefit Act, 1961

d. The Building and other Construction workers Cess Act

e. The Payment of Gratuity Act, 1972

f. The Employees Exchange Act, 1959

g. The Cine workers Welfare Fund Act, 1981

h. The unorganized workers social security Act, 2008

i. Employees Compensation Act, 1923

THE INDUSTRIAL RELATIONS CODE, 2020

Key Highlights of "The Industrial Relations Code, 2020

a. Fixed Term Employment, now employer can keep Fixed Term Employees (FTE) for specific duration and retrenchment compensation not to be paid. These FTE will be entitled same salary or social security as regular Employee.

b. The definition of worker will be based on the basis of wages being drawn by him and worker / employees with salary up to Rs.18000/- will fall under the category of worker.

c.  Trade union have to give notice of 14 days before going on strike.

d. Establishment with less 300 workmen can lay-off, retrenched, closed without government approval, earlier this limit was 100 employees.

e. The number of members in the Grievance Redressal Committee has been increased from 6 to 10.

f. Definition of “Employee” has been added in the code and the term 'employee' has been used invariably with the term worker. viz. 'employee/worker' or 'employee and worker' with a view to ensure that there is no discrimination in the applicability of labour laws to the employee/worker"employee"

g. Definition of “ Employer” has been completely modified under section 2 (m) and as per the new definition employer means :-

* Head of the department

* Occupier of the factory

* Manager of the factory under clause (f) of sub-section (1) of sec 7 of the Factories Act.

* The person who, or the authority which has ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager or managing director, such manager or managing director

* Contractor

* legal representative of a deceased employer

h. Definition of Industrial Dispute has been modified to include the dispute arising out of discharge, dismissal, retrenchment or termination of such worker.

i. Metro railway has been included in the definition of railways.

j.  Maximum number of members in the Grievance Redressal Committee has been increased from 6 to 10 in an industrial establishment employing 20 or more workers.

k. A new feature of “Recognition of Negotiating Union” has been introduced.

    THE OCCUPATIONAL SAFETY HEALTH AND WORKING CONDITIONS CODE, 2020

Key Highlights of "The Occupational Safety health & working condition, 2020

a. Code provides single registration for an establishment instead of multiple registrations. This will design a centralized database and develop an ease of doing business.

b. Appointment letter made statutory.

c. Working hours for women as per this new provision shall be from 7pm and before 6am, needs to obtain the consent from women employee as mandatory.

d. The definition of Contract Labour has been modified and includes inter-state migrant worker but excludes part time employee, regular employed and mutually accepted standards of the conditions of employment and entitled to social security benefits.

e. Principal employer to provide welfare facilities, where the contract labour is deployed.

f. Principal employer shall be liable to make payment of wages to the contract labour deployed by him.

g. Definition of "Employee" has been incorporated and includes person doing any skilled, semi-skilled or un-skilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward.

h. The definition of the "Factory" has been revised under section 2 (w) and threshold limit of employees is now 20 in case of use of power and 40 in case of without power and has specifically excludes hotels, restaurants, EDP or computer unit etc.,

i. Definition of "Inter state migrant worker" has been modified and ceiling limit of Rs.18000/- has been introduced.

j. The working hour of different classes of establishment and employees shall be as per the rules prescribed by central or state government. Further, in relation to overtime work, an employee shall be paid twice the rate of daily wages.

                                            THE SOCIAL SECURITY CODE, 2020

Key Highlights of "The Social Security Code, 2020

a. New category of worker has been included in this code. 

"Gig worker" means a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship. Gig workers are in independent arrangement, freelancers, workers who are employed on project based work and short term work.

"Platform worker" means a person engaged in or undertaking platform work. Platform work means a form of employment in which organization or individual use an online platform to access other organizations or individuals to solve specific problems or to provide specific services in exchange for payment. Platform based work where workers earn money by providing specific services, including food delivery services.

b. Definition of wage has been revised.

The First part includes all salary components express in terms of money are capable of being so expressed like basic salary, all reimbursements, all allowances, all benefits.

Second part of the definition provide specific exclusion like:- Bonus payable under any law, Conveyance allowance, House rent allowance, Overtime Allowance, House Accommodation, Supply of light water medical attendance, other amenities/ service excluded by a General or special order of the appropriate government, Commission, contribution to provident fund/pension, Any sum paid to defray special expenses, Gratuity, Retrenchment Compensation, Remuneration payable under any award or settlement between the parties.

The Third part of the definition provides that the total excluded components should not exceed 50% of the total remuneration. The third part of the definition provide limit as the definition very clearly specifies the list of exclusions so anything which is paid to the employees other than the exclusion would be covered and within this specific exclusion the limit cannot be more than 50%.

Impact: As of now HRA is a part of minimum wages and with the implementation of code, HRA will not be part of minimum wages will have an implication of the EPF contribution.

c. Key Changes in "The Employee Provident Fund Scheme"

1. Aadhar based registration is mandated

2. Systems has been designed for covering the category self-employed or any other category under the preview of EPF scheme.

3. Increase penalty amount of INR.10,000/- to INR.1,00,000/- and imprisonment of one to three years on deduction of employee contribution from salary and non-depositing.

4. Subsequent failure to pay contributions attracts imprisonment of two to five years and fine of INR.3,00,000/- rupees.

5. All Establishment having 20 or more  workers come under the purview of EPF, earlier it was applicable only on those establishments included in the schedule. 

d.   Key Changes in "The Employee State Insurance Scheme"

1. If employer and majority of employees agree voluntarily, registrations are allowed even only one employee is employed.

2. Gig Workers and unorganized sectors will also able to link with ESIC

3. Plantation workers will also fall under the purview of ESIC

4. Though any employer fails to pay ESI contributions, ESI has to pass on the benefits to the employee which ESIC can recover it from the employer to the extent of the capitalized value of the benefit net of any payment of contribution amount, interest and damages payable by the employer.

e.   Key Changes in "Gratuity Scheme"

1. Permanent employees would be eligible for gratuity after completing 5 years of service however no such criteria for Fixed-term employees. FT employees will be paid on the basis of their tenure of employment with one organization. Code has fixed different threshold with respect to eligibility for gratuity of permanent and fixed term employees

2. The threshold Gratuity period for working journalists reduces from five years to three years.

f.   Key Changes in "Employment Information and Monitoring"

1. Employers, job seekers looking for vocational guidance, career counseling, self employment requires to register with career centres.

2. All establishment except some exclusion like agriculture, domestic service, employment less than ninety days etc required to notify the vacancies to career centres electronically or otherwise.

3. Filing the return by the employer to the concerned career centre.

g.   Key Changes in "Maternity Benefits"

Every woman is entitled to medical bonus of up to Rs3,500/- where pre-natal confinement and post-natal care is not provided by employer whose upper limit can be amend by the Central government upto Rs.20000/-, this upper limit of Rs.20000/- has been removed under the code.

g.   Key Changes in "Employee's Compensation Act", Building and other construction workers, The un-organized Worker's Social Security Act:

1. Creation of Social Security boards for un-organized workers

2. Coverage of GIG, Platform workers and un-organized workers under the ambit of social security scheme.

3. Bill also makes the provisions for registration of all three categories of workers - GIG, Platform & un-organized workers.

The industry and economists views this as a great reform that shall boost investment and improve ease of doing business. “This reform was two decades in the making. It drastically reduces complexity and internal contradictions, increases flexibility & modernizes regulations on safety/working conditions," 

Please share, comment if this post is useful to you - Vj