Understanding the comprehensive reform of India's labour legislation and its impact on industrial relations, social security, and occupational safety.
The Lok Sabha, on 22nd September 2020, passed three new labour bills – The Industrial Relations Code Bill, 2020, Code on Social Security Bill, 2020 and the Occupational Safety, Health and Working Conditions Code Bill, 2020. These three labour bills are part of the government's reform formulated in order to simplify India's labour legislation and improve the ease of trade and commerce in the nation.
Labour falls under the Concurrent List of the Indian Constitution, which means Parliament as well as the State Legislatures can make laws regarding labour. According to the Central government, there are over 100 state and 40 central laws regulating various aspects of labour. In 2002, the Second National Commission on Labour on finding that the existing legislation to be complex, it recommended the consolidation of central labour laws into broader groups such as industrial relations, social security, safety and welfare and working conditions, to improve ease of compliance and ensure consistency in labour laws.
In 2019, to consolidate 29 central laws, the Ministry of Labour and Employment introduced four Bills. These Codes included Wages, Industrial Relations, Social Security, and Occupational Safety, Health and Working Conditions. The Code on Wages was passed by the Parliament in 2019, but the Bills on the other three areas were referred to the Standing Committee on Labour. The Standing Committee submitted its report on all three Bills and the government replaced these Bills with new ones on September 19, 2020.
According to the 2019 labour bill, the central government was authorized to act as the appropriate government for any central public sector undertaking (PSUs). The 2020 Bills lay down that the central government will continue to be the appropriate government for a central PSU even if the holding of the central government in the PSU becomes less than 50% after the commencement of the Bills.
It was specifically mentioned in the 2019 Bills that the central government would be the appropriate government for industries such as railways, mines, telecom and banking, whereas, the 2020 Bills lay down that the central government will also be the suitable government for any “Controlled Industry”.
The 2019 Bills permitted settling of offenses which were not punishable with imprisonment, or with imprisonment and fine, subject to certain conditions. Compounding or settling of offenses was allowed for a sum of 50% of the maximum fine. According to the 2020 Bills compounding is allowed for a sum of 50% of the maximum fine for offenses with fine and offenses with imprisonment compounding is allowed for a sum of 75%, whereas in the Bill on Occupational Safety, 50% can be compounded where a ‘penalty’ is imposed for non-maintenance of registers and 75% for ‘offenses’ for falsification of records.
The Industrial Relation Code Bill is formulated with the main motive to energize the industry and economic activity and free employees from the constraints of earlier labour laws.
The Industrial Relations Code amalgamates the features of three laws namely: the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947.
The new Code states that any establishment employing 300 or more workers must prepare standing orders relating to:
Note: Earlier, the 2019 Bill applied this to units with 100 employees or more, which has now been raised to 300 in the 2020 Code.
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