By ARUNIMA PANKAJ
In India, labour laws come under the concurrent list which means both the center and the state have the power to make laws on the same. There are more than 44 laws under the purview of the central government and over 100 laws by different state governments.
Employment elasticity, the multiplicity of labour laws, and poor coverage of workers in the unorganized sector are the well-known problems, the imposition of compliance costs on mid-sized and large firms has incentivized small firms to remain smaller. This combined with the slow pace of labour reform has led to the informalization of the workforce.
Firms hire contract workers as they are considered employees of the contractor and not the firm which helps the firms stay small enough and are exempted from labour laws. These informal workers have almost twenty times fewer wages as compared to formal workers and lack social security benefits.
In order to reduce the complexity of labour laws, the Government of India introduced the 4 labour codes in the parliament in 2019, these codes were Code on Wages; Industrial relations code bill; Code on social security; Occupational Health.
The Code on Wages has already been passed in the Parliament last year. However, the government reintroduced the 3 labour codes with modifications recently. There has been growing opposition to these labour codes by trade unions as it is said that the reform measures go against the interest of the workers.
CODE ON WAGES
According to the code, the central government shall fix a floor wage taking into account the standard of living of the workers which may be different for different geographical areas. The minimum wages set by the center or state must be higher than the floor wage.
To make compliance easier, the code brought the concept of a facilitator who is responsible for carrying out inspections and provides both employers and employees with information on how to improve their compliance with the law.
But instead of simplifying the labour laws, it has made the process bulkier and more complex as rules need to be formulated by the government and the code does not consist of acts that may be directly implemented.
The code also exempts employers from penalties if they can prove that they had used due diligence in enforcing the execution of the code and it was the other person who had committed the offense without his knowledge or consent. The fine even when imposed is meager and will not discourage firms from violating the law.
INDUSTRIAL RELATIONS CODE BILL
The 2020 bill introduces provisions on fixed-term employment. This allows employers to hire for a fixed duration which may not be permanent. Contracts are to be negotiated directly between employers and employees eliminating middlemen.
The unequal bargaining powers between employees and employers will harshly affect the rights of the workers. Also, the bill does not restrict the type of work in which the employees may be hired.
The IR Code states that all industrial establishments with 300 or more workers must prepare standing orders on the matters related to (i) classification of workers, (ii) manner of informing workers about work hours, holidays, and wages, (iii) termination of employment, and (iv) grievance redressal mechanisms.
Previously, this provision was applicable to establishments with 100 or more workers, this change means that small scale industries are no longer required to lay down standing orders which will lead to exploitation of their workforce.
An establishment having 300 workers is required to seek prior permission of the government before closure, lay-off, or retrenchment.
Again, an increase from 100 to 300 workers allows small firms to hire and fire as per their will.
The 2020 Bill requires workers to give prior notice of 14 days before a strike or lock-out. The Bill also prohibits strikes and lock-outs: (i) during and up to seven days after a conciliation proceeding, and (ii) during and up to sixty days after proceedings before a tribunal.
This provision clearly limits the ability of workers to carry out strikes or lockouts and further hampers the bargaining power of the workers.
CODE ON SOCIAL SECURITY
1. Industries employing workers above a certain threshold level would be required to make contributions towards various social security benefits such as Provident Fund, Insurance etc.
This provision has been opposed as it gives the Government power to lay down the criteria for eligibility for the contribution to Social Security Schemes.
2. Workers must provide their Aadhaar number to receive social security benefits.
This directly violates the Supreme Court’s judgment in the Puttaswamy Case where it was ruled that the Aadhaar number may only be made mandatory for expenditure on a subsidy, benefit, or service incurred from the Consolidated Fund of India.
OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS CODE BILL
1. It defines a factory as any premises where the manufacturing process is carried out and it employs more than (i) 20 workers, if the process is carried out using electricity, or (ii) 40 workers if it is carried out without using electricity.
Safety Standards should be applicable to all Industries irrespective of size.
2. Government has the power to exempt any new factory from the provisions of the Code in order to create more economic activity and employment.
This has given the government unnecessarily higher discretionary powers to exempt any factory for personal gains or deals.
From the archaic labour laws in the country and the problems caused, to the new proposed labor laws ultimately worsening the situation for workers by taking away their bargaining power and giving more number of firms the power to flout these laws or be exempted from them, has, in turn, led to worker protests with, unfortunately, little effect. With an eerily similar situation with the farmers’ bill, one can see a surge of changes towards a capitalist economy which seemingly can only be stopped by a classic Marxian class struggle to liberate the working class of the country.
AUTHOR
Arunima is a second-year student pursuing economics honors and is an executive member at the Finance and Investment cell. She loves baking and cooking and has a keen interest in fashion. She loves to travel and hopes to experience different cultures and cuisines around the world. She is a firm believer in living in the moment and is excited to see where life takes her!
Disclaimer: The views expressed in this article are the author’s own and do not necessarily reflect the views of the organization.
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