Parliament Clears Three Codes To Reform Indian Labour Laws [Read Bills]


23 Sep 2020 10:49 AM GMT

  • Parliament Clears Three Codes To Reform Indian Labour Laws [Read Bills]

    The Rajya Sabha today passed three Labour codes namely: Occupational Safety, Health & Working Conditions Code, 2020The Industrial Relations Code, 2020The Code on Social Security, 2020 These Bills were introduced by Labour Minister Santosh Kumar Gangwar. They were passed in the Lok Sabha yesterday. The three codes are part of the four codes that consolidate 29...

    The Rajya Sabha today passed three Labour codes namely:

    • Occupational Safety, Health & Working Conditions Code, 2020
    • The Industrial Relations Code, 2020
    • The Code on Social Security, 2020

    These Bills were introduced by Labour Minister Santosh Kumar Gangwar. They were passed in the Lok Sabha yesterday.

    The three codes are part of the four codes that consolidate 29 central labour laws. In 2019, the Code on Wages was passed.

    These three Bills relax labour laws to ease operational requirements for the Industries while introducing social security for all workers, including inter-state migrants and unorganized workers.

    In Lok Sabha, Congress leaders Manish Tewari and Shashi Tharoor opposed the introduction of these Bills. They pointed out that whereas the 2019 Bills were published for public consultations, the Government withdrew the 2019 Bills and moved the "fundamentally changed" 2020 Bills, without further consultations.

    They said that the Codes were a "blow" to the rights of workers as there were no safeguards to protect the unorganised sector workers.

    Tharoor also said that the bills were discriminatory since there was no specific provision on women's welfare.

    With respect to the industrial relations code, he said it severely restricts the right of workers to strike and also allows state or central governments to amend the threshold for applicability relating to layoffs and retrenchment.

    Clarifying this aspect, Gangwar said that the right to strike has not been withdrawn. Rather, he said,

    "The provision of 14 days' notice prior to strike is intended to enable employees and employers reconcile during this period."

    1. Code on Occupational Safety, Health and Working Conditions

    The Bill empowers the state government to exempt any new factory from the provisions of the Code in order to create more economic activity and employment.


    The Bill defines factory as any premises where manufacturing process is carried out and it employs more than: (i) 20 workers for premises where the manufacturing process is carried out using power, and (ii) 40 workers for premises where it is carried out without using power.
    Factories includes mines.

    [Earlier the threshold was 10 and 20 respectively.]

    Establishments engaged in hazardous activity

    The Bill defines an establishment as a place where any hazardous activity is carried out regardless of the number of workers.

    [Earlier there was a threshold of 10 or more workers.]

    Contract workers

    The Bill applies to will apply to establishments or contractors employing 50 or more workers (on any day in the last one year).

    [Earlier the limit was 20 or more contract workers.]

    It prohibits employment of contract labour in core activities, except where: (i) the normal functioning of the establishment is such that the activity is ordinarily done through contractor, (ii) the activities are such that they do not require full time workers for the major portion of the day, or (iii) there is a sudden increase in the volume work in the core activity which needs to be completed in a specified time.

    [The appropriate government will decide whether an activity of the establishment is a core activity or not.]

    However, the Bill defines a list of non-core activities where the prohibition would not apply. This includes:

    • sanitation workers
    • security services
    • any activity of intermittent nature even if that constitutes a core activity of an establishment.

    Daily work hour limit

    8 hours per day.

    Employment of women

    The Bill provides that women will be entitled to be employed in all establishments for all types of work (earlier they were precluded from being employed in dangerous operations). However, the employer may be required to provide adequate safeguards prior to their employment.

    Inter-state migrant workers and unorganized workers

    Inter-state migrant workers include a person who:

    • has been recruited by an employer or contractor for working in another state
    • moves on his own to another state and obtains employment there

    Further, only those persons will be considered as inter-state migrants who are earning a maximum of Rs 18,000 per month, or such higher amount which the central government may notify.

    Benefits for inter-state migrant workers

    • Option to avail the benefits of the public distribution system either in the native state or the state of employment
    • Availability of benefits available under the building and other construction cess fund in the state of employment
    • Insurance and provident fund benefits available to other workers in the same establishment.

    Database for inter-state migrant workers

    The Bill requires the central and state governments to maintain or record the details of inter-state migrant workers in a portal. An inter-state migrant worker can register himself on the portal on the basis of self-declaration and Aadhaar.

    Social Security Fund

    The Bill provides for the establishment of a Social Security Fund for the welfare of unorganised workers. The amount collected from certain penalties under the Code (including the amount collected through compounding) will be credited to the Fund. The government may prescribe other sources as well for transferring money to the Fund.

    2. Code on Industrial Relations

    Applicability of standing orders

    The Bill provides that all industrial establishment with 300 workers or more must prepare standing orders on the matters listed in a Schedule to the Code, such as (i) classification of workers, (ii) manner of informing workers about work hours, holidays, paydays, and wage rates, (iii) termination of employment.

    [Earlier this threshold was 100 workers.]

    Change in employee strength

    The Bill removes the earlier provision where once an establishment is covered under the provisions related to standing orders, these provisions continued to apply even if its employee strength reduced below the threshold (100 workers) at any time thereafter.

    Closure, lay-off and retrenchment

    An establishment having at least 300 workers is required to seek prior permission of the government before closure, lay-off, or retrenchment.

    [Earlier this threshold was 100 workers.]

    Sole Negotiating Union

    The Bill provides that if there were more than one registered trade union of workers functioning in an establishment, the trade union having more than 51% of the workers as members would be recognised as the sole negotiating union.

    [Earlier it was 75%]

    Negotiation Council

    In case no trade union is eligible as sole negotiating union, the Bill provides that a negotiating council will be formed consisting of representatives of unions that have at least 20% of the workers as members.

    Disputes relating to termination of individual worker

    The Bill classifies any dispute in relation to discharge, dismissal, retrenchment, or otherwise termination of the services of an individual worker to be an industrial dispute. The aggrieved workers may apply to the Industrial Tribunal for adjudication of the dispute. They may apply to the Tribunal 45 days after the application for the conciliation of the dispute was made.

    3. Code on Social Security

    Changes in definitions

    The 2020 Bill changes the definitions of certain terms in the Code. These include:

    • expanding the definition of 'employees' to include workers employed through contractors
    • expanding the definition of "inter-state migrant workers" to include self-employed workers from another state
    • expanding the definition of "platform worker" to additional categories of services or activities as may be notified by the government
    • expanding the definition of audio-visual productions to include films, web-based serials, talk shows, reality shows and sports shows
    • exempting construction works from the ambit of "building or other construction work" if the total cost of construction work exceeds Rs 50 lakhs (and if they employ more than a certain notified number of workers).

    Social security entitlements

    The Bill states that the central government may, by notification, apply the Code to any establishment (subject to size-threshold as may be notified).

    [Earlier Bill social security (based on thresholds) was mandatory.]

    Social security funds for unorganised workers, gig workers and platform workers

    The Bill states that the central government has to set up funds for unorganised workers, gig workers and platform workers.

    Further, state governments will also set up and administer separate social security funds for unorganised workers.

    National Social Security for gig workers and platform workers

    The Bill provides for establishment of a national and various state-level boards for administering schemes for unorganised sector workers, gig workers and platform workers.

    The Board shall comprise of:

    • five representatives of aggregators, nominated by the central government
    • five representatives of gig workers and platform workers, nominated by the central government
    • Director General of the ESIC
    • five representatives of state governments.

    Role of aggregators

    The Bill clarifies that schemes for gig workers and platform workers may be funded through a combination of contributions from the central government, state governments, and aggregators. For this purpose, the Bill specifies a list of aggregators in Schedule 7 including:

    • ride sharing services
    • food and grocery delivery services
    • content and media services
    • e-marketplaces.

    Offences and penalties

    The 2020 Bill changes the penalties for certain offences. For example, the maximum imprisonment for obstructing an inspector from performing his duty has been reduced from one year to six months. Similarly, the penalty for unlawfully deducting the employer's contribution from the employee's wages has been changed from imprisonment of one year or fine of Rs 50,000 to only fine of Rs 50,000.

    Additional powers during an epidemic

    The Bill adds new clauses which may become applicable in the cases of an epidemic. For example, the central government may defer or reduce the employer's or employee's contributions (under PF and ESI) for a period of up to three months in the case of a pandemic, endemic, or national disaster.

    [Source: PRS Legislative Research]

    Click Here To Download Bill [Occupational Safety]

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