5 Things to Know About India's Revamped Labour Codes

On September 22nd, the Indian Parliament passed three bills that will impact the way business is conducted in the country. The three labour codes are part of the government’s reform drive, aimed to improve the ease of doing business in the country and simplifying India’s much debated labour legislation.

The Industrial Relations Code 2020, the Occupational Safety, Health & Working Conditions Code 2020 and the Social Security Code 2020 are the result of the amalgamation of 29 Central Labour Laws. Here are some of the highlights of the new bills:

Strikes

The rules for legal strikes by workers of private companies are now brought at par with workers of public utilities like telephone, water, electricity, etc. Now, Worker Unions will have to give a 60 days’ notice, up from the previous rules where a notice of two to three weeks was required. If proceedings are pending before a labour tribunal or the National Industrial Tribunal, the workers cannot go on strike for 60 days after they are concluded. Flash strikes are now made illegal. The code has been expanded to cover all types of industries.

The laws also seek to amend the definition of ‘strike’ to bring ‘mass casual leave’ under it’s ambit. If over 50% of a company’s workers take a concerted casual leave, it will be considered as strike under the new laws.

Hire & Fire Rules

Under the new laws, hiring and firing workers has been made more flexible. Companies with up to 300 workers can now retrench and close establishment without government approval. Previously, only companies under 100 workers were exempt from requiring government approvals.

The threshold for requiring a standing order is also increased. Industrial establishments with less than 300 workers will no longer be required to furnish a standing order.

However, firms with more than 300 workers still need to apply for approval. If the authorities do not respond to their request in a timely manner, the retrenchment proposal will be considered approved.

The bill also provides a legal framework for fixed-term employment and ease of firing contract workers. A provision under the new law entails that staffing firms now require a single license to hire workers on contract across different locations, as against multiple licenses required previously. In addition to this, the threshold limit for contractor employees has also been increased from 30 to 50, while opening up hiring of contract workers in all areas.

The goal of the new hire and fire policy is to increase the net employment generation.

Redefinitions

The news laws have redefined (or in some cases, defined for the first time) what it means to be a ‘gig worker’, a ‘platform worker’ and a ‘unorganised worker’. These definitions make it easier to classify workers according to modern business conditions, so as to be able to provide both the workers and businesses suitable benefits.

Gig Worker is a person who performs work or participates in a work arrangement and earns from such activities outside of the traditional employer-employee relationship. This covers those working as delivery persons for online food delivery platforms, e-commerce sites, etc.

Platform Worker is a person who has work arrangement outside of the traditional employer-employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such activities which may be notified by the Central Government, in exchange for payment.

Unorganized Worker means a home-based worker, self employed worker or a wage worker in the unorganised sector and includes a worker in the organised sector who is not covered by the Industrial Disputes Act, 1947 or Chapters III to VII of the Code(Section 2(86)).

Every gig worker, platform worker or unorganised worker is required to be registered under the Code. The worker should be at least 16 years of age and Aadhaar number is mandatory for the registration.

Interstate Migrant Worker is a person who has come on his own from one State and obtained employment in an establishment of another State, and is earning upto rs. 18,000 per month. This also includes self-employed persons.

Employers are not longer mandated to provide accommodation near workplace to migrant workers. They can provide journey allowance for the worker to travel from his native place to place of work.

Social Security

The news laws promise universal social security for the first time for both, the organised and unorganised sector, gig and platform workers. The government has proposed setting up a National Social Security Board, which is a body whose job will be to formulate suitable schemes for contract labour and migrant workers, in consultation with the central government. The government shall formulate and notify from time to time, various different schemes relating to:

• Employee provident fund
• Employee injury benefits
• Housing
• Educational schemes for children
• Skill upgradation / reskilling of workers
• Funeral assistance
• Old age homes

The government can make use of the corporate social responsibility funds (under the boundaries of the Companies Act, 2013), or any other such source as specified in the scheme.

Role of Aggregators

For the first time, new age companies like aggregators are brought under the ambit of the law. Schedule 7 list 9 categories of aggregators like

• Ride sharing services
• Food & grocery delivery services
• Content & Media services
• E-marketplaces

The code states that the schemes for gig workers and platform workers may be funded through a combination of contributions from the central government, state government and aggregators. Any contribution from such an aggregator may be at a rate notified by the government, falling between 1%-2% of the annual turnover. However, such a contribution cannot succeed 5% of the amount paid or payable by an aggregator to gig workers and platform workers.