Three Codes on labour law were passed by Parliament this week, amid strident criticism and vociferous protests by many trade unions. Hailed by industry as a much-needed reform and rationalisation of labour laws, the Codes on industrial relations, social security, occupational safety, health and working conditions amalgamate and replace several diverse laws on the subject. Last year, a separate Code on Wages was enacted. The Codes enacted now are modified versions of the Industrial Relations Code Bill introduced in 2019. Among these, the Industrial Relations Code is touted as one that would energise industry and spur economic activity, as it aims to free employees from the constraints of earlier labour laws.
What are the main features of the Industrial Relations Code?
The Industrial Relations Code combines the features of three erstwhile laws — the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947. It defines ‘workers’ to include, besides all persons employed in a skilled or unskilled, manual, technical, operational and clerical capacity, supervisory staff drawing up to ₹18,000 a month as salary. It introduces ‘fixed term employment’, giving employers the flexibility to hire workers based on requirement through a written contract. Fixed term employees should be treated on a par with permanent workers in terms of hours of work, wages, allowances and other benefits, including statutory benefits such as gratuity.
The Code says any establishment that employs 300 or more workers must prepare standing orders relating to classification of workers, manner of intimating to them periods and hours of work, holidays, pay days etc, shifts, attendance, conditions for leave, termination of employment, or suspension, besides the means available for redress of grievances. Earlier, the 2019 Bill applied this to units with 100 employees or more. The threshold has been raised to 300 in the 2020 Code. It confers on the ‘appropriate Government’, that is the Centre or the State governments, the power to exempt, with or without conditions, any industrial establishment or class of industrial establishments from all or any of the provisions of the Code, if it is satisfied that adequate provisions exist to fulfil its objectives.
What does it say on trade unions?
Where there is more than one trade union in an establishment, the sole negotiating union status will be given to the one that has 51% of the employees as its members. It has been brought down from the 75% requirement in the 2019 version. Where no union qualifies under this criterion, the employer must constitute a ‘negotiating council’ consisting of representatives drawn from the various unions, with only those with at least 20% of employees as its members.
What are the provisions on lay-off and closure?
The provisions that require the prior permission of the government for lay-off, retrenchment and closure are made applicable to only establishments that had employed 300 or more workers on an average per working day in the preceding 12 months. The Code also allows the government to raise this threshold by notification. A lay-off would be deemed illegal if it is effected without permission or is done despite refusal of permission, but it will not be so if the employee had been offered alternative employment that does not require any special skill or cause undue hardship. The Code prescribes notice period, or payment in lieu of notice period, and prior government permission before retrenchment of anyone who has been in continuous service for a year or more. Such a prior permission requirement is in place also for closure of a unit, with the application to be filed 90 days prior to the intended closure.
How does the new Code affect the right to strike?
The Code prohibits strikes and lock-outs in all industrial establishments without notice. No unit shall go on strike in breach of contract without giving notice 60 days before the strike, or within 14 days of giving such a notice, or before the expiry of any date given in the notice for the strike. Further, there should be no strike during any conciliation proceedings, or within seven days of the conclusion of such proceedings; or during proceedings before an industrial tribunal or 60 days after their conclusion or during arbitration proceedings. Similar restrictions have been given on the employer from announcing a lock-out. The Industrial Disputes Act, 1947, had placed such restrictions on announcing strikes only in respect of public utility services. However, the present Code extends it to all establishments. Even the Standing Committee on Labour had favoured limiting these provisions to public utilities.
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