LABOUR LAW REFORMS

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Definition:

  • Industrial legalizations are the laws enacted by the Government to provide economic and social justice to the workers in industries. Generally these laws provide guidelines to the employers/industrialists in dealing with the matters of wages, wage incentives, facilitates for workers and the working conditions of labour.

Necessity:

  • Improves industrial relation i.e. employee-employer relations and minimizes industrial disputes.
  • Prospects workers form exploitation by the employers or management
  • Helps workers in getting fair wages
  • Minimizes labour unrest
  • Reduces conflicts and strikes etc.
  • Ensures job security for workers
  • Promotes welcome environment conditions in the industrial system
  • Fixes rest pauses and work hours etc.
  • Provides compensation to workers, who are victims of accidents.

 

 

Principles of Industrial Legislation:

  • Social justice:
  • The first step in establishing social justice is to protect those who can’t protect themselves. Industrial laws provide social justice to the workers by ensuring suitable distribution of profits and benefits among the employer and employees. It also provides better working conditions in industry.

Social equality/welfare:

  • Another objective of labour law is to ensure social welfare of workers. These laws help the employees to improve their social status i.e. material and morale of the workers by providing adequate wages and safety measures, ensuring appropriate working hours and health facilities.

National economy:

  • National economy is another guiding principle of labour legislation. It ensures normal growth of industry for the development of nation. It increases the efficiency of workers and satisfies their needs. Thus efficient industry finally contributes a lot to improve national economy.

International uniformity:

  • In attaining international uniformity International Labour Organization (I.L.O.) has played an important part. It aims at securing minimum standard on uniform basis in respect of all labour matters. Uniformity of standards can be maintained only by enforcing various industrial laws.

What has been the government doing in this regard:

  • India’s labour law regime has always been at loggerheads with industrial development and the ease of doing business. Since its inception, the government has attempted to reconcile this by amending the Apprentice Act (1961), making it more responsive to industry and youth, and substituting complex inspection regimes with technology friendly portals.
  • ShramSuvidha, a unified labour portal scheme, has been launched to provide timely redress of grievances and facilitate self-certification by industry. This also encourages a more transparent labour inspection regime, with inspection reports uploaded within 72 hours.
  • A focus on cutting down red tape, by amending nearly 40 Central and 150 State labour laws, has been launched, with significant consequences on hiring and firing.
  • Proposals for exempting small-scale industries, employing up to 40 workers, from 14 basic laws, including the Factories Act, the Industrial Disputes Act and the Maternity Benefits Act, are being considered

 

  • Labour is a concurrent list subject, thus there is multiplicity of laws at Centre and the State levels. Amidst this, the focus of labour reforms should be twin-fold: to promote creation of formal sector jobs, and to not stifle employers by over-protection of workers.

 

  • In the organized sector, entrepreneurs choose to stay away from labour-intensive industries and opt for highly capital- or skilled-labour-intensive technologies in the industries that they enter. In order to incentivize entrepreneurs to accelerate the creation of regular salaried jobs, greater flexibility in labour laws is required.

 

 

  • Agenda for Labour Reforms : Consolidation and simplification of numerous States’ and Centre labour laws • Introduction of fixed term employment, to curb tendency for employing (socially insecure) contract labour • Definition of start-ups, to ease burden of compliance.

 

  • Labour Codes in the Making: The 2nd National Commission of labour had recommended simplification, amalgamation and rationalisation of Central Labour Laws and following 4 Labour Codes are being drafted on the same lines: • Labour Code on Wages Bill, 2017, • Labour Code on Industrial Relations Bill 2015, • Labour Code on Social Security & Welfare, 2017 and • Labour Code on Occupational Safety, Health & Working Conditions, 2018

 

 

LABOUR CODE ON INDUSTRIAL RELATIONS BILL 2015:

 

  • This proposed code would replace three laws i.e. Trade Unions Act, 1926; Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947. It aims to create greater labour market flexibility and discipline in labour – to improve upon ease of doing business and also to encourage entrepreneurs to engage in labour-intensive sectors. Key Provisions of the Draft Bill are as follows:
  • It increases the employee limit from 100 to 300 above which, the government approval is needed for layoff/retrenchment/closure – this provision has been criticized sharply by the labour groups and trade unions
  • It provides that 10% of workers shall apply (be applicant) for registering a trade union – this has also invited opposition from various worker groups and trade unions
  • It prohibits a person from holding office in more than 10 unions
  • Registration of a trade union may be cancelled if it fails to hold bi-annual elections and fails to submit annual returns
  • For employers employing < 50 employees, the requirement to provide a minimum of 1 months’ notice and retrenchment compensation (severance) is to be removed
  • It raises the retrenchment/closure compensation payable to workers from 15 days wages to 45 days wages for every completed year of service.

 

  • With the Centre’s plans to amend the Industrial Disputes Act 1947 taking time due to protest from the trade unions, States are going ahead with their own labour law changes to ease retrenchment norms in a bid to attract business locally. Till date, Assam, Madhya Pradesh, Haryana, Rajasthan, Andhra Pradesh, Uttarakhand and Jharkhand have allowed larger firms to retrench workers without seeking its permission by bringing their own amendments to the Industrial Disputes Act.

 

LABOUR CODE ON SOCIAL SECURITY & WELFARE, 2017:

  • The need for this Code arises from the fact that almost 90% of the current workers are not covered under any social security and current thresholds for wage and number of workers employed for a labour law to be applicable creates tenacious incentives for the employers to avoid joining the system which results in exclusions and distortions in the labour market. The Labour Code derives its understanding of Social Security from the fundamental ILO Convention on Social Security (C102).some provisions include:
  • Definition of employee and categorization of workers covers all kinds of employment including part-time workers, casual workers, fixed term workers, piece rate/ commission rated workers, informal workers, home-based workers, domestic workers and seasonal workers
  • Funding of social security will be a combination of o employer / employee funded and
  • It requires all workers (who are currently active) to get registered under the (Aadhaar based) Universal Registration system envisaged in the Code for universal applicability and portability of registration
  • It defines separately the terms – Entity, Establishments, Enterprise and Business, to distinguish between the enterprises which engage workers for any economic activity and households who engage workers for domestic requirements
  • It prescribes a detailed grievance redressal mechanism, in order to make social security a right of each and every worker
  • Wage Ceiling and Income Threshold: The term 'wage ceiling' is for the purpose of determining a maximum limit on contribution payable; whereas the term 'income threshold' is for the purpose of enabling the government to provide for two different kind of schemes (for same purpose) for two different class of workers
  • Borrowing form western jurisdictions, it provides for Community Service Order i.e. to undertake unpaid work as directed by the court, in an offence with regard to social security legislation
  • Contribution Augmentation Funds would be established through which governments could contribute to the social security in respect of workers who are unable to pay contribution
  • National Stabilization Fund will be used for harmonizing the Scheme Funds across the country and will be managed by the Central Boards
  • It prohibits unauthorized access, download, stealing, tampering or destroying of the data of any Social Security Organization (SSO) and strive to protect privacy of personal data Once put into effect, this Labour Code will replace nearly 15 social security legislations.

 

DRAFT LABOUR CODE ON OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS, 2018:

  • The proposed code is the first single legislation prescribing standards for working conditions, health and safety of workers and it will apply on factories with at least 10 workers. It will amalgamate 13 labour laws including the Factories Act, 1948; the Mines Act, 1952; the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; the Contract Labour (Regulation and Abolition) Act, 1970 etc. Highlights include the following:
  • Centre has been empowered to prescribe standards on occupational safety and health.  Annual health check to be made mandatory in factories and its charge will be borne by the employers

 

  • Appointment letters for all workers (including those employed before this code), underlying their rights to statutory benefits.  At least 50% of penalty levied on employers could go towards providing some relief to families of workers who die or are seriously injured while working

 

  • Employers will need to register under one law, instead of going for separate registrations under labour laws for construction, contracts, plantations etc.  National Occupational Safety and Health Advisory Board has been proposed to recommend standards on related matters. Similar body such as State Occupational Safety and Health Advisory Board at the state level as well as safety committee and safety officer in certain factories and establishments is also proposed

 

  • Appointment of facilitators with prescribed jurisdiction for inspection, survey, measurement, examination or inquiry has been proposed.  Mandatory license for every contractor who provides or intends to provide contract labour. Also, license is needed for industrial premises as well .
  • Various allowances such as journey allowance and displacement allowance have been proposed for interstate migrant workers