Overview of New Labour Codes
Updated: Jan 23
GLOSSARY · Code on Wages, 2019 · Code on Industrial Relations, 2020 (“IR Code”) · Social Security Code, 2020 · Code on Occupational Safety, Health and Working Conditions, 2020 (“OSHW Code”)
WAGES CODE, 2019
• The Labour law legislation’s compliance in India is an intricate and cumbersome process and is often regarded as a tailback in ease of moving forward with business. Industry is in dire need for consolidation and codification of labour laws. The Second National Commission on Labour Laws appointed by Central Government had set forth their report in June 2002.
• The aforesaid commission had opined that the existing set of labour laws should be primarily divided and consolidated into four groups. In alliance with the recommendations, the Union Government has proposed to enact four labour codes, subsuming 29 labour law legislations. The Code of wages, 2019 (“Wage Code”) is the first of the lot to get the legislative acceptance and further, the assent of the President of India on August 8, 2019.
The Wage Code is to amend and consolidate the laws relating to wages, bonuses and matters connected therewith or incidental thereto. The Wage Code subsumes the following four existing labour law enactments:
• The Payment of Wages Act, 1936 (“PWA”)
• The Minimum Wages Act, 1948 (“MWA”)
• The Payment of Bonus Act, 1965 (“PBA”); and
• The Equal Remuneration Act, 1976 (“ERA”)
The Ministry of Labour and Employment has on July 7, 2020 published the draft of Code of Wages (Central) Rules 2020 (“Rules”). These Rules are expected to replace the rules notified under PWA, MWA, ERA and PBA. The Rules ascertain the process and fixation of the minimum wages, the process of making payment, constitution of the Central Advisory Board for fixing floor wage, etc. The provisions of the Wage Code and the Rules are now expected to be notified anytime soon.
The Wage Code comprises of 69 sections divided into nine chapters.
(1) UNIFORM APPLICABILITY
The PWA is applicable to employees drawing wages equal to or below a statutory limit and MWA is applicable only to scheduled employment employed upon prescribed wage-period. The Wage Code now contemplates uniform applicability of the provisions of timely payment of wages and minimum wages to all employees irrespective of their wage ceiling and sectors.
(2) UNIFORM DEFINITION OF WAGES
The definition of ‘wages’ slightly varied across PWA, MWA, PBA and this has led to various litigious conundrums. Therefore, the Wage Code has been promulgated, to provide a single uniform definition of ‘wages’ for the purposes of computation and payment of wages to the employees. As per the Wage Code, the term ‘wages’ means all remuneration whether, by way of salaries, allowances or otherwise, expressed in terms of money and includes basic pay; dearness allowance; and retaining allowance if any.
The Wage Code lays down the list of exemptions which do not form part of the term ‘wages’ which inter alia includes the value of house accommodation, supply of electricity, water, house rent allowance, bonus payable under any law, contributions to a pension or provident fund, sums paid to defray special expenses, remuneration payable under any award or order of a court/tribunal or settlement between parties, overtime allowance, gratuity payable, retrenchment compensation, ex gratia, and other retiral benefits.
An important change under the Wage Code is that in the event the quantum of the exclusions (except gratuity, retrenchment, ex gratia and retiral benefits) is exceedingly more than half or such other notified percentage (“Exclusion Limit”) of the remuneration paid to the employee, then the amount in excess of Exclusion Limit will be treated as wages.
(3) MINIMUM WAGES
The erstwhile MWA prescribed minimum wages only in relation to scheduled employments. Now, the Wage Code empowers the appropriate government to fix wages in all industries. A concept of floor wage has also been introduced. Under the Wage Code, the Central Government is empowered to fix floor wage after taking into account minimum living standards of a worker as applicable variedly for different geographical areas. The State Government is not permitted fix a minimum wage rate which is lower than the floor Wage determined by the Central Government. Further, if the minimum wages are fixed prior to the fixation of the floor wage, then the appropriate government is prohibited from reducing those rates. The Wage Code prescribes that the minimum wages are to be reviewed and revised by the appropriate governments in intervals not exceeding five years.
(4) PAYMENT OF BONUS
There is no significant change from PBA and the provisions relating to the computation of bonus are also consistent with the terms of PBA. Earlier, the applicability was limited to employees drawing wages not exceeding INR 21,000 per month. Whereas now, under the Wage Code, the appropriate government is empowered to fix the wage threshold for determining the applicability. Only addition the Wage Code entails is dismissal from service due to conviction for sexual harassment. that aside the Wage Code lists out the disqualifications for receiving bonus in line with PBA like fraud, riotous or violent behavior, or theft.
(5) EQUAL REMUNERATION
Similar to erstwhile ERA, the Wage Code prohibits discrimination on ground of gender with respect to wages by employers or for purpose of recruitment, with respect to same or work of similar nature of work. The Wage Code ensures non-discrimination against all genders, while under ERA the genders were specifically categorized and limited to male and female human beings.
(6) THE DISTINCTION BETWEEN ‘EMPLOYEE’ AND ‘WORKER’
The wage code provides different definitions of ‘worker’ and ‘employee’. The definition of ‘employee’ is broader than that of ‘worker’. The term ‘worker’ refers to any person except an apprentice employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied and also includes working journalists and sales promotion employees, but excludes persons who is employed mainly in a managerial or administrative capacity; or a person who is employed in supervisory capacity drawing a monthly wage exceeding INR 15,000 or such amount as may be notified by the Central Government from time to time The ‘Employee’ under Wage Code is any person employed other than apprentice on wages by an establishment to do any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied.
(7) INSPECTOR CUM FACILITATOR
The erstwhile enactments had the concept of inspectors to carry out inspections and examinations to ensure compliance of the enactments. Now, under the Wage Code, the inspector regime is replaced with Inspector-cum-Facilitator who shall be a facilitator towards compliance and not just an inspecting authority. The Inspector-cum-facilitator is required to provide the employer an opportunity to rectify the non-compliance within a specified time before initiating any prosecution proceedings. The appropriate government may introduce an inspection scheme which may also provide for generation of a web-based inspection and calling of information relating to the inspection.
(8) TIME-BOUND RESOLUTION OF CLAIMS
The Wage Code establishes a limitation period of three years for filing of claims by an employee as against the timelines prescribed under the existing enactments. The dispute of fixation of bonus or eligibility for payment of bonus be deemed to be considered as an ‘industrial disputes’. An employee or any registered trade union registered of which the employee is a member; or the inspector-cum-facilitator can file an application for claims under the Wage Code before the notified authority. The authority shall then decide the claim within a period of three months. Appeals are to be filed within a period of ninety days, which the appellate authority will endeavour to dispose of within three months. Claims are to be recovered as arrears of land revenue and remit the same to the authority for payment to the concerned employee.
(9) OFFENCES AND PENALTIES
Unlike the provisions of earlier enactments, the penal consequence under the Wage Code are not rigorous and only entail imprisonment for the second and subsequent offences. However, the fines have been significantly hiked. Further, the offences punishable with imprisonment only, be compounded by a gazette officer, as appointed by the appropriate government.
INDUSTRIAL RELATIONS CODE, 2020
The Industrial Relations Code, 2020 (“IRC 20”) has been introduced as part of consolidating labour legislation in terms of the recommendation of the Second National Commission on Labour (2002). In pursuance of the recommendations, Ministry of Labour and Employment has consolidated labour code into four labour codes of
(i) Industrial Relations
(iii) Social Security
(iv) Welfare and Safety.
The IRC 20 consolidates and amends the laws relating to Trade Unions, conditions of employment in industrial establishment or undertaking, investigation and settlement of industrial disputes and for matters connected therewith or incidental thereto. It governs important aspects of the employer-employee relationship such as working conditions, re-skilling, collective bargaining etc. While the Wages Code, 2019 was passed by the parliament in 2019, the Industrial Relations Code, along with the two other codes on social security and safety, were referred to the Standing Committee. Upon incorporating changes suggested by the Standing Committee, the Industrial Relations Code, 2020 was introduced and passed by Parliament. The IRC 20 is yet to receive assent of the President of India.
•The Trade Unions Act, 1926;
• The Industrial Employment (Standing Orders) Act, 1946; and
• The Industrial Disputes Act, 1947.
The definition of “Worker” has been revised to include persons in supervisory capacity getting wages up to eighteen thousand rupees per month.
• Introduction of concept of “Re-skilling fund” has been proposed.
• Registered trade unions may now be recognized by the Centre/State as Centre/State trade unions as per necessity.
• Concept of Negotiating Trade Union and Negotiating Trade Councils has been set forth to streamline negotiations with the employer.
• The definition of “Strike” includes casual leave taken by more than fifty per cent of the employees on a given day. Trade union have to give notice of 14 days before going on any strike.
• Provisions with respect to Standing Orders shall apply to Industrial Establishments with more than 300 employees.
• Establishment with less than 300 workmen can be laid-off, retrenched, closed without government approval.
• An industrial dispute can be voluntarily referred to arbitration by the employer as well as the workers
1) TRADE UNIONS: Negotiating union or negotiating council
i. The IRC 20 provides for a new concept of negotiating union or negotiating council in an industrial establishment. As per the said provision:
a. In case of a single trade union in an industrial establishment, the employer shall recognize the said union as the sole negotiating union of the workers.
b. In case of multiple trade unions, the trade union with 51% membership of workers employed in the industrial establishment shall be recognized as the negotiating union by the employer.
c. In case of multiple trade unions, with none meeting the above 51% membership criteria, the employer shall constitute a negotiating council, consisting of representatives of such registered trade unions, which have support of not less than 20% of total workers of the industrial establishment (1 representative for each 20% of workers).
ii. The IRC 20 also provides that in case the Central/State Government is of the opinion that it is necessary for a Trade Union or a federation of Trade Union to be recognized as a Central/State Trade Union, the respective government may the recognize said trade unions as the same.
2) STRIKES & LOCKOUTS
i. The IRC 20 defines “Strike” to include the concerted casual leaves on a given day by fifty per cent or more workers employed in an industry.
ii. No person employed can go on a strike without giving 14 days’ notice to an employer before a strike. This notice shall be valid for a maximum of 60 days.
iii. Similarly, no employer can lock-out any of its workers without giving a 14 days’ notice of a lock-out. This notice shall be valid for a maximum of 60 days.
iv. Further, IRC 20 prohibits strikes and lock-outs: during and up to seven days after a conciliation proceeding, and (ii) during and up to sixty days after proceedings before a tribunal or an arbitrator (iii) during any period in which a settlement or an award is in operation. Within five days from receiving/giving notice of a strike/lock-out, employers are required to report to the appropriate government and conciliation officer.
3) STANDING ORDERS
IRC 20 entails that the provisions with respect to standing orders shall apply to establishments having had three hundred or more employees on any day of the preceding twelve months.
An employer shall be required to prepare the draft standing orders, basis the model standing order of the Central Government, 14 days’ notice for strike / lock-out Valid for 60 days STRIKE / LOCKOUT
4) RE-SKILLING FUND
IRC 20 provides for setting up of a “Re-skilling fund” for the employees retrenched from the industrial establishment by the employer
ii. The fund shall consist of a Contribution of the employer, equivalent to 15 days wages as last drawn by the worker immediately before being retrenched and Contributions from other sources as maybe prescribed.
iii. The fund must be utilized for paying 15 days wages last drawn by the worker, to his account, within 45 days of the worker being retrenched.
5) LAY-OFF AND RETRENCHMENT
i. IRC 20 states that lay-off is the inability of an employer, due to shortage of coal, or power, material or breakdown of machinery, accumulation of material or natural calamity from giving employment to a worker whose name is on the muster roll and has not been retrenched.
ii. Retrenchment refers to the termination of service of a workman for any reason other than disciplinary action. It does not include retirement, non-renewal of contract, or completion of tenure of fixed term employment or termination on the ground of continued ill-health.
iii. The provisions on lay-off and retrenchment under IRC 20 do not apply to industrial establishments with less than 50 workers on an average per working day or to seasonal industrial establishments.
iv. Employers are required to give to every worker who has completed at least one year of continuous service, :(i) 50% of basic wages and dearness allowance if he is laid off, and (ii) one month’s notice (or equivalent wages) and 15 days’ wages for every year of continuous service for such period to a worker who has been retrenched.
v. Further, factories, mines and plantations, which have three hundred or more workers must take prior permission of the appropriate Government before lay-off, retrenchment and closure.
6) POWER OF GOVERNMENT TO REJECT OR MODIFY TRIBUNAL AWARDS
i. IRC 20 provides that the Government can defer the enforcement of awards passed by the Tribunals in certain circumstances on public grounds of affecting national economy or social justice.
ii. The Industrial Disputes Act, 1947 had similar provisions but in year 2011, the Madras High Court (relying on a 1997 Andhra Pradesh High Court judgement) struck down these provisions on constitutional grounds and held that the power to the executive to decline enforcing an award or to modify it, allows the executive to sit in appeal over the decision of the Tribunal, and therefore, violates the separation of powers between the executive and the judiciary, which forms a part of the basic structure of the Constitution.
7) GRIEVANCE REDRESSAL MECHANISM
i. IRC 20 provides that every industrial establishment employing more than 20 employees must have one or more grievance redressal committees for resolution of disputes arising out of individual grievances.
ii. The committee should consist of equal number of members representing the employers and workers and the chairperson shall be chosen, alternatively from the employees and workers on rotational basis every year.
iii. The number of Grievance Redressal committees cannot exceed 10 and there must be adequate representation of women workers in the said committee and shall not be less than the proportion of women employed in the industrial establishment.
8) DISPUTES RELATING TO TERMINATION OF INDIVIDUAL WORKER
Rs. 10,000 (ten thousand) to Rs. 2,00,000 (two lakhs). The worker may apply to the Industrial Tribunal for adjudication of the dispute. The worker may apply to the Tribunal after 45 days of the application for the conciliation of the dispute.
Inform the conciliation officer within 5 days of receiving/ giving notice within 6 months from the date of commencement of the code in consultation with the recognized negotiating unions or members of the negotiation council with respect to the same. The certifying officer shall certify the same.
9) DISPUTE RESOLUTION MECHANISM
BI PARTITE FORUMS
Industrial Establishment having 100 or more workers may be required to constitute a works committee consisting of employers and workers for securing and preserving good relations between employer and employees.
Industrial disputes may be referred to arbitration on mutual consent.
RESOLUTION OF INDUSTRIAL DISPUTES
for settlement of industrial disputes which: (i) involve questions of national importance, or
(ii) could impact industrial establishments situated in more than one state. Members of the National Tribunal will include: (i) a Judicial Member, who has been a High Court Judge, and
(ii) an Administrative Member, who has been a secretary in the central government.
10) PENALTIES OFFENCES CHANGES
Penalty for unfair labour practice
Rs. 10,000 (ten thousand) to Rs. 2,00,000 (two lakhs).
Penalty for committing unfair labour practice after conviction
Rs. 50,000 (fifty thousand) to Rs. 5,00,000 (five lakhs) and/or
imprisonment upto 3 months.
Penalty for contravention of provisions on lay off, retrenchment or closure.
Rs. 1,00,000 (one lakh) to Rs. 10,00,000 (ten lakhs).
Penalty on contravening the provisions of lay off, retrenchment and closure after conviction once
Fine of Rs. 5,00,000 (five lakhs) to Rs. 20,00,000 (twenty lakhs) and/or
imprisonment upto 6 months.
Penalty in case of violation of:
a. Rights of workers laid off for compensation
b. Conditions for retrenchment of workers
c. Compensation to workers in case of transfer of establishment
d. Compensation to workers in case of closing down of industry
Fine of Rs. 50,000 (fifty thousand) to Rs. 2,00,000 (two lakhs)
Penalty in case of violation after conviction of:
a. Rights of workers laid off for compensation
b. Conditions for retrenchment of workers
c. Compensation to workers in case of transfer of establishment
d. Compensation to workers in case of closing down of industry
Fine of Rs. 1,00,000 (one lakh) to Rs. 5,00,000 (five lakhs) and/or
imprisonment upto 6 months.
SOCIAL SECURITY CODE, 2020
The purpose of the Code on Social Security, 2020 (”SS Code”) is to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and workers either in the organized or unorganized or any other sectors and for matters connected therewith or incidental thereto. SS Code was passed by the Lok Sabha on September 22, 2020 and subsequently, by the Rajya Sabha on September 23, 2020 with a view to integrate, simplify and rationalize the relevant provisions of the nine central labour enactments relating to social security.
The SS Code is yet to receive assent of the President of India.
The SS Code shall come into force on such date as the Central Government may, by notification appoint and different dates may be appointed for different provisions of the SS Code.
SS Code has subsumed the following enactments:
1. The Employees’ Compensation Act, 1923;
2. The Employees’ State Insurance Act, 1948;
3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;
5. The Payment of Gratuity Act, 1972;
6. The Maternity Benefit Act, 1961;
7. The Cine- Workers Welfare Fund Act, 1981;
8. The Building and Other Construction Workers Welfare Cess Act, 1996;
9. The Unorganised Workers’ Social Security Act, 2008.
(1) GENERAL FEATURES
• SS Code is applicable to every establishment subject to the minimum threshold of employees employed therein.
• Every establishment to which SS Code applies shall be required to be registered within such time and in such manner as may be prescribed by the Central Government.
• Maintenance of Records and Registers: The employer of an establishment shall:
• Maintain records and registers containing particulars such as (a) number of hours of work performed by employees, (b) wages paid, (c) leave, leave wages, wages for overtime work, attendance etc.
• Issue wage slips to the employees, in electronic form or otherwise;
• File return electronically or otherwise before the authorized officer.
(2) EMPLOYEES’ PROVIDENT FUND (‘EPF’)
(i) Applicability: The provisions relating to EPF are applicable to every establishment in which 20 or more employees are employed.
(ii) Contribution to Provident Fund:
• Employer: Liable to contribute 10% of the wages payable to each employee to the provident fund.
• Employee: Liable to contribute equal to the contribution payable by the employer i.e. 10% of the wages in respect of each employee to the provident fund.
• The employee may contribute more than 10% of the wages to the provident fund subject to the condition that the employer is not obligated to pay any amount over and above 10% of the wages payable by employer.
• The Central Government can apply the rate of 12% of the wages payable to each employee as contribution towards the provident fund for any establishment or class of establishment.
(iii) Authorising employers to maintain provident fund account: The Central Government may authorize the employer to maintain a provident fund account in the manner prescribed on receipt of the application from the employer and the majority of employees in relation to an establishment employing one hundred or more persons.
(iv) Transfer of accounts: The accumulated amount in provident fund account or pension fund account of an employee relinquishing his employment shall be transferred or dealt with in the manner specified in the Provident Fund Scheme or the Pension Scheme, as the case may be.
(v) Self-employed Workers: Scheme may be framed by the Central Government for providing social security benefits to self-employed workers or any other classes of persons.
(3) EMPLOYEES’ STATE INSURANCE CORPORATION (‘ESIC’)
(i) Applicability: The provisions relating to ESIC are applicable to:
• Every establishment in which 10 or more persons are employed other than a seasonal factory.
• Establishment which carries on hazardous or life-threatening occupation as notified by the Central Government, in which even a single employee is employed.
• Employer of plantation who has opted for application of ESIC.
(ii) Employees State Insurance Fund:
• Contributions, user charges and other moneys shall be paid into a fund.
• Grants, donations, Corporate Social Responsibility Fund and gifts from the Central Government, State Government, local authority or any individual or body whether incorporated or not.
(iii) Purpose of Fund: Fund shall be used for the following purposes:
• Payment of benefits and provision of medical treatment and attendance;
• Payment of fees and allowances to members of Corporation and Committees;
• Payment of salaries, leave and joining time allowances, travelling and compensatory allowances, gratuities etc.
(iv) Insured Persons: Every employee in an establishment shall be insured,
whether electronically or otherwise, as may be prescribed by the Central Government.
• The contribution payable in respect of an employee shall comprise contribution payable by the employer and employee.
• The contribution shall be paid to the Corporation by the employer.
• Employer shall recover the employee’s contribution from the employee by reduction from wages.
(vi) Failure to pay contribution by employer:
• Corporation may pay the benefit to the employee and recover the capitalised value of the benefit paid to the employee from the employer.
(i) Applicability: The provisions relating to gratuity are applicable to:
a. every factory, mine, oilfield, plantation, port and railway company; and
b. every shop or establishment in which 10 or more employees are employed, or were employed, on any day of the preceding twelve months; and such shops or establishments as may be notified by the appropriate Government from time to time.
(ii) Eligibility period for payment of gratuity:
• Gratuity is payable to an employee on termination of employment after continuous service of 5 years.
• For working journalist, gratuity is payable on termination of employment after continuous service of 3 years.
• Completion of continuous service of 5 years shall not be essential where the termination of employment of any employee is due to (a) death or (b) disablement or (c) expiration of fixed term employment
or (d) happening of any such event as notified by the Central Government.
• Gratuity at the rate of 15 days wages or such number of days as may be notified by the Central Government, based on the rate of wages last drawn by the employee shall be payable for every completed year of service or part thereof in excess of six months;
(5) MATERNITY BENEFIT
(i) Applicability: The provisions relating to maternity benefit are applicable to:
a. to every establishment being a factory, mine or plantation including any such establishment belonging to Government; and
b. to every shop or establishment in which 10 or more employees are employed, or were employed, on any day of the preceding twelve months; and such other shops or establishments notified by the appropriate Government.
• Woman shall not work in any establishment during the six weeks immediately following the day of her delivery, miscarriage or medical termination of pregnancy;
• Woman shall be entitled to the payment of maternity benefit at the rate of the average daily wage for the period of her actual absence;
• Woman shall be entitled to maternity benefit of maximum 26 weeks of which not more than 8 weeks shall precede the expected day of delivery;
• Woman shall be entitled to receive a medical bonus of Rs. 3,500/- or such amount as notified by the Central Government from the employer, if no pre-natal confinement or post-natal care is provided for by the employer free of charge.
• Woman shall be allowed 2 breaks of such duration as may be prescribed by the Central Government, for nursing the child until the child attains the age of 15 months.
• The establishment in which 50 employees or such number of employees as may be prescribed by the Central Government, are employed shall have the facility of crèche within such distance as may be prescribed by the Central Government, either separately or along with common facilities.
(6) EMPLOYEE’S COMPENSATION
(i) Applicability: The provisions relating to employee’s compensation are applicable to the employers and employees to whom Chapter IV (Employee State Insurance Corporation) does not apply. It is subject to the list of employees mentioned in the Second Schedule.
(7) SOCIAL SECURITY AND CESS IN RESPECT OF BUILDING AND OTHER CONSTRUCTION WORKERS
(i) Applicability: Every establishment which falls under the building and other construction work. The term, ‘building or other construction work’ has been defined in the SS Code.
• Cess shall be levied and collected for social security and welfare of building workers at the rate not exceeding 2% but not less than 1% of the cost of construction incurred by the employer, as notified by the Central Government.
• Cess shall be collected from every employer undertaking building or other construction work.
• Employer shall be liable to pay interest on the amount of cess not paid by the employer, for the period from the date on which payment is due till the amount is actually paid, at the rate as prescribed by the Central Government.
• The Government may, by notification, exempt any employer or class of employers in a State from the payment of cess, where such cess is already levied and payable under any corresponding law in force in that State.
• The employer shall, within 60 days or such period as may be notified by the Central Government of the completion of building and construction work, pay cess on the basis of his self-assessment, on the cost of construction.
(8) UNORGANISED WORKERS, GIG WORKERS AND PLATFORM WORKERS
(i) The terms, ‘Unorganised Workers’, ‘Gig Workers’ and ‘Platform Workers’ have been defined in the SS Code.
(ii) Schemes: The Central Government and State Government shall frame welfare schemes for such workers.
(iii) Fund for Schemes: The schemes may be funded by the Central Government or State Government or beneficiaries of the Scheme or employers or from corporate social responsibility fund maintained under Companies Act, 2013 or the aggregators. The contribution by aggregators shall be at the rate not exceeding 2% but not less than 1% of the annual turnover of aggregator specified in the Seventh Schedule. The rate shall be notified by the Central Government.
(iv) ESIC: The Central Government may frame ESIC scheme for unorganized workers.
(9) EMPLOYMENT INFORMATION AND MONITORING
(i) The concept ‘Career Centres’ has been introduced in the SS Code. It means any oce (including employment exchange, place or portal) established and maintained for providing career services (including registration, collection and furnishing of information, either by the keeping of registers or otherwise).
(ii) Vacancy: Mandatory for establishments to report the vacancy to career centre before filling up the vacancy. There is no obligation on the employer to recruit through the career centre.
CODE ON OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS, 2020
Pursuant to the recommendations of Second National Commission on Labour, the Ministry of Labour and Employment had introduced the Code on Occupational Safety, Health and Working Conditions, 2020 (“OSHW Code”) in the Lok Sabha in order to consolidate and amend the laws regulating the occupational safety, health and working conditions of the persons employed in an establishment.
The OSHW Code was passed by the Lok Sabha on September 22, 2020 and subsequently, by the Rajya Sabha on September 23, 2020. The OSHW Code is yet to receive assent of the President of India. The OSHW Code shall come into force on such date as the Central Government may, by notification appoint and dierent dates may be appointed for dierent provisions of the OSHW Code.
The OSHW Code seeks to subsume following labour law legislations:
a. The Factories Act, 1948;
b. The Contract Labour (Regulation and Abolition) Act, 1970;
c. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979;
d. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996;
e. The Mines Act, 1952;
f. The Dock Workers (Safety, Health and Welfare) Act, 1986;
g. The Plantations Labour Act, 1951;
h. The Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955;
i. The Working Journalists (Fixation of Rates of Wages) Act, 1958;
j. The Motor Transport Workers Act, 1961;
k. The Sales Promotion Employees (Condition of Service) Act, 1976;
l. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966; and
m. The Cine Workers and Cinema Theatre Workers Act, 1981 (collectively, referred to as “Erstwhile Laws”)
The highlights of the OSHW Code are as follows:
The OSHW Code is applicable to:
(i) every establishment where any industry, trade, business, manufacturing or occupation is carried on in which ten or more workers are employed; or
(ii) a factory, motor transport undertaking, newspaper establishment, audio-video production, building and other construction work or plantation, in which ten or more workers are employed; or
(iii) a mine or port or vicinity of port where dock work is carried out.
• For effective implementation of the OSHW Code, appointment of Inspector-cum-Facilitators has been prescribed.
• Additionally, National and State Occupational Safety and Health Advisory Boards will be constituted to advise and assist Government on matters relating to occupational safety and health.
3) ONE ESTABLISHMENT - ONE REGISTRATION
In order to reduce multiplicity of registration under Erstwhile Laws, every employer of any establishment, which comes into existence after the commencement of this OSHW Code and to which OSHW Code applies, shall within 60 days from the date of applicability of this OSHW Code, make an application for registration of such establishment.
4) DUTIES AND RIGHTS
• Duties of employer inter alia include ensuring that the workplace is free from hazards, comply with occupational safety and health standards, providing annual health examination or tests, issuing a letter of appointment to every employee, compulsory reporting of diseases and accidents etc.
• Duties of employees inter alia include taking reasonable care for the health and safety of himself and co-operate with the employer in meeting the statutory obligations.
• Designers, manufacturers, importers and suppliers of any article used in an establishment are duty bound to ensure such article is safe and does not probe any risk to health of workers.
• Architects, project engineer and designers responsible for any construction work or design of project must ensure safety and health aspects of the building workers and employees at the planning stage.
5) WORKING CONDITIONS AND WELFARE FACILITIES
• The employer is responsible for maintaining health, safety and working conditions such as hygiene, cleanliness, ventilation, humidification and providing arrangements for treatment of wastes and effluents in the establishment.
• Welfare facilities including washing facilities, locker rooms, creche, canteens, sitting arrangements are also to be provided and maintained by an employer in the establishment.
6) WORKING HOURS
• The working hours of a worker in an establishment have been fixed at 8 hours in a day except in case of mines wherein the Central Government may notify additional working hours.
• Further, for working journalists the Central Government may prescribe a maximum of 144 hours of work during any period of 4 consecutive weeks and a period of not less than 24 consecutive hours of rest during any period of 7 consecutive days.
• A worker may, with consent, work overtime and in such a case, the employer shall be liable to pay wages at the rate of twice the rate of wages.
• Workers cannot be required to work in an establishment for more than 6 days in a week.
• Every worker who has worked 180 days or more in a calendar year will be entitled to 1 day leave for every 20 days of his work.
8) SPECIAL PROVISIONS RELATING TO EMPLOYMENT OF WOMEN
Women shall be entitled to be employed in all establishments for all types of work and may also be employed, with their consent to work before 6:00 A.M. and beyond 7:00 P.M. subject to such conditions relating to safety, holidays and working hours.
9) SPECIAL PROVISIONS RELATING TO CONTRACT LABOUR
• The provisions relating to contract labour are applicable to (i) every establishment in which 50 or more contract labour are employed or were employed on any day of the preceding 12 months through contract (ii) every manpower supply contractor who has employed on any day of the preceding 12 months 50 or more contract labour.
• The contractor is required to obtain a license prior to (i) suppling or engaging contract labour in any establishment or (b) undertaking or executing the work through contract labour.
• The concept of renewable ‘work specific license’ has also been introduced which essentially, means that the contractors can obtain license for a specific work order also.
• In order to ensure that requisite information is available in relation to a particular work order of an establishment with the appropriate authority, the contractors shall intimate the appropriate authority whenever work order is received from an establishment either to supply contract labour in the establishment or to execute the contract through contract labour in the establishment.
• The principal employer shall be liable to ensure health and working conditions and provide welfare facilities to contract labour in an establishment.
• The contractor will ensure disbursement of wages to contract labour through bank transfer or electronic mode and inform the principal employer electronically about the amount so paid by such mode.
10) SPECIAL PROVISIONS RELATING TO FACTORIES
• The appropriate Government has been granted the power to declare any place wherein a manufacturing process is carried on as a ‘factory’ irrespective of the number of workers working in the factory.
• Additionally, a site appraisal committee may be set up by the appropriate Government to consider and to give recommendations on an application for grant of permission for the initial location of a factory involving a hazardous process or for the expansion of such factory.
LABOUR CODES -CHALLENGES / CLARITY REQUIRED
Wage definition –
•Clarity on treatment for one time payments, variable pay, last drawn wages for gratuity;
•Instances covered by payment of wages provisions and modified wage definition;
•Illustrations to help in decoding the definition to avoid interpretation issues;
•Timing for computation of wages (monthly, quarterly, annual), option for true up
Benefits in Kind (BIK) –
•Listing of items that need to be considered as BIK –would stock options, car lease be covered?
•Valuation methodology / rules –should we rely on tax provisions?
•Should wages be revised when BIK is issued during / end of the year?
Extent of coverage –
•Does overtime apply to employees also or is it restricted to workers?
•To bring consistency in worker definition, overtime provisions, working hours across codes and state rules;
•Need for review of very short wage settlement timeline (2 working days) –challenges when employees have assets, are working remotely etc.);
•Cap on deductions from wages –statutory deductions to be excluded, mechanism for recovery in case of employee resignation / termination to be provided
Correlation with state rules –
•Whether labour codes will prevail over S&E Act when there’s a conflict or beneficial of the two to be considered?
•Treatment when current policies are more labour friendly;
•Gratuity insurance is mandated by SS code but not included under many state rules – clarity on way forward.
Effective date and implementation window –
•Guidance on the expected date of go live;
•Establishments to be given with a time period (say 3 months) for implementation without invoking penal provisions;
•Query redressal mechanisms / help desk to be made available right from the notification of go live date.
· Analyze the impact – Analyze the salary structure, map components of salary with the definition of Wages under the codes, identify areas of realignment, and quantify financial impact
· Understand the codes – Get an overview of the codes, the salient features, compliances required, and identify the areas of change from the existing regulations
· Review policies and process – Review of the impacted policies, processes, procedures, and compliances to ascertain and make changes wherever required Focus on workforce categorization and identify related compliances
· Communicate to employees – Communicate the changes to employees and create awareness of the new regulations