Highlights Of The New Labour Codes

INTRODUCTION

The four labour codes – Code on Wages 2019, Code on Social Security 2020, Industrial Relations Code 2020, and Occupational Safety, Health and Working Conditions Code 2020 consolidate 29 Central Labour Laws. The Codes received Presidential assent between 2019 and 2020 but the states are yet to finalize their rules under these codes. The key objectives of the consolidation is to simplify, amalgamate and rationalize the relevant provisions of the existing Central Labour Laws.

THE CODE ON WAGES 2019

The Code on Wages, 2019 (commonly referred as the Wage Code) replaces the following laws:

  1. Payment of Wages Act, 1936
  2. Minimum Wages Act, 1948
  3. Payment of Bonus Act, 1965
  4. Equal Remuneration Act, 1976
Highlights
  1. As per the Code – (i) basic pay, (ii) dearness allowance and (iii) retaining allowance have been included as components of ‘wages’. Further, the Code excludes the following components from the definition of wages: (a)bonus payments; (b) value of the house-accommodation, supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by an order of the appropriate Government; (c) employer contributions to any pension or provident fund; (d) conveyance allowances; (e) sums paid to the employee to defray special expenses on him by the nature of his employment; (f) house rent allowance; (g) remuneration payable under award or settlement between the parties or order of court or tribunal; (h) overtime allowance; (i) commission payable to employee; (j) gratuity payments; and, (k) retrenchment compensation or other retirement benefit payable to the employee or any ex-gratia payment made to the employee on the termination of his employment. Where previously the definition of wages varied across labour legislations, the Code now provides a single definition as applicable to minimum wages, payment of wages and payment of bonus.
  2. Contractors are covered by the term ‘employees’ under the Code.
  3. The term ‘floor wage’ has been introduced under Section 9 which mandates that the Central Government shall fix floor wage considering minimum living standards of a worker in a prescribed manner. The minimum floor wage shall not be less than the floor wage fixed by the Central Government.
  4. Exempted components are capped at 50 per cent
  5. Section 17 prescribes the time limit for payment of wages. The payment of wages shall be done before the 7th day of the succeeding month irrespective of the number of employees.
  6. Section 17 further stipulates that in the event of removal, dismissal of an employee from service, retrenchment, or resignation from service by the employee, the wages shall be paid to the employee within two working days of his removal, dismissal, retrenchment or resignation, as the case may be.
  7. Section 29 lays down that persons convicted of sexual harassment would not be eligible for bonus.

The Code on Wages is a well-rounded legislation that seeks to balance the interests of the employer and the employee. It aims to remove the ambiguity in the existing labour laws by having a common definition of ‘wage’. This is likely to have a significant impact on the net payable salary of the employees. The Code will further aid in ease of doing business by replacing obsolete provisions and streamlining the laws.

THE CODE ON SOCIAL SECURITY 2020

The Code on Social Security, 2020 (commonly referred as the Social Security Code) subsumes the following 9 laws:

  1. The Employees’ Compensation Act 1923
  2. The Employees’ State Insurance Act 1948
  3. The Employees’ Provident Fund and Miscellaneous Provisions Act 1952
  4. The Employees Exchange (Compulsory Notification of Vacancies) Act, 1959
  5. The Maternity Benefit Act 1961
  6. The Payment of Gratuity Act 1972
  7. The Cine Workers Welfare Fund Act 1981
  8. The Building and Other Construction Workers Cess Act 1996
  9. The Unorganized Workers Social Security Act 2008
Highlights
  1. The Code has included fixed term employees, platform workers, gig workers, inter-state workers etc. in its ambit.
  2. Section 3 of the Code stipulates that all covered establishments are required to be registered under the Code unless they are already registered under other labour laws.
  3. It has introduced the term ‘career center’ meaning any office (including employment exchange, place or portal) established as prescribed by the Central Govt. for providing career services.
  4. The Code allows for an establishment to voluntarily opt in or out of coverage of Employees’ Provident Fund (Chapter III) and Employees’ State Insurance Scheme (Chapter IV), even if the number of employees is less than the specified threshold. This provision has been inserted as an afterthought in the context of the pandemic.
  5. Section 53(2) of the Code provides that in case of fixed term employees, gratuity shall be paid on pro- rata basis and not on continuous service of five years.
  6. The Code empowers the Central Government. to frame social security schemes for unorganized workers, gig workers, and platform workers as well as members of their families with respect to providing benefits under the Employees’ State Insurance Corporation (ESIC).
  7. The Code also lays down penalties and offences. Highlights are- Section 134 which talks about penalties for repeated offenders and Section 137 which allows the employer an opportunity to correct a non- compliance for any offence under the Act prior to initiation of prosecution or proceedings.
  8. A provision has been made under Section 144 wherein employers’ or employees’ contribution may be deferred or reduced for a period of three months in the event of pandemic, endemic or national disaster.

The goal of this Code is to extend social security to all employees and workers either in the organized, unorganized sector or any other sectors. It also includes gig workers (persons who perform work or participate in a work arrangement and earn from such activities outside of traditional employer-employee relationship) and platform workers (a work arrangement where workers or individuals/ organizations use online platform to solve specific problems or to provide specific services or any other such activity in exchange of payment). Hence, the SS Code has not only extended the social security coverage to more employees but has also enhanced the coverage.

THE OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS CODE, 2020

The Occupational Safety, Health and Working Conditions Code, 2020 (commonly referred as the OSH Code) subsumes the following 13 laws:

  1. The Factories Act, 1948
  2. The Plantations Labour Act, 1951 
  3. The Mines Act, 1952
  4. The Working Journalist and other News Paper Employees (Conditions of Service and Miscellaneous Provision) Act, 1955 
  5. The Working Journalist (Fixation of rates of wages) Act, 1958
  6. The Motor Transport Workers Act, 1961
  7. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966 
  8. The Contract Labour (Regulation and Abolition) Act, 1970
  9. The Sales Promotion Employees (Conditions of Service) Act, 1976
  10. The Inter – State Migrant workmen (Regulation of Employment and Conditions of Service) Act, 1979
  11. The Dock Workers (Safety, Health and Welfare) Act, 1986
  12. The Cine Workers and Cinema Theatre Workers Act, 1981
  13. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
Highlights
  1. This Code applies to all establishments employing 10 workers or more, except mines and docks where the Code would be applicable even with 1 worker.
  2. It stipulates that there shall be registration for all establishments having 10 or more workers.
  3. It has enhanced safety compliance by mandating safety requirement for all establishments.
  4. Section 57 of the Code prohibits employment of contract labour for core activities.
  5. The Code clarifies that a contractor who deploys his own employees and provides statutory benefits is not contractor and the employees, not contract labourers.
  6. Section 55 of the Code stipulates that the contractor shall pay salary via bank transfer only. Where the contractor fails to pay wages, the principal employer shall be liable to pay.
  7. Section 48 lays down that only one license for pan India deployment for a contractor needs to be obtained which shall be valid for 5 years.
  8. Section 32 talks about leave encashment and stipulates that where the total quantum of leave exceeds 30 days, a worker shall be entitled to encash such excess leave. Workers are entitled to encash the remainder of leaves that is not carried forward.
  9. Through the draft rules, the Code sets the overtime threshold at 125 hours per quarter.
  10. Section 2(1)(zf) lays down that the definition of ‘interstate migrant worker’ in the Code includes individual traveling to another state for work, provided the wages are below Rs.18,000/- per month.
  11. Section 61 further lays down that the interstate migrant worker is entitled to yearly journey allowance.

The OSH Code has come at a critical juncture where the rights of the workers have been in debate and their conditions have been brought to the fore owing to the pandemic. The Code clearly addresses issues like that of the migrant workers that needed much attention. Further, it simplifies compliance for employers in the industry by introducing the provision of a single license pan India.

THE INDUSTRIAL RELATIONS CODE, 2020

The Industrial Relations Code, 2020 (commonly referred as the IR Code) amalgamates the following 3 laws:

  1. Industrial Disputes Act, 1947
  2. Trade Unions Act, 1926
  3. Standing Orders Act, 1946
Highlights
  1. Under the Code, the term ‘industry’ now specifically excludes charitable, social, philanthropic and domestic services.
  2. The definition of ‘worker’ has been expanded to include working journalists and sales promotion employees. Further, any individual drawing a salary less than Rs. 18,000 per month has been brought under this definition.
  3. The system of a Grievance Redressal Committee is mandatory for establishments employing 10 or more workers and the Code has done away with the provision of an alternative mechanism.
  4. The Code has replaced ‘Labour Courts’ with ‘Industrial Tribunals’.
  5. The Code introduces a new provision for ‘fixed term employment’ under Section 2(o) which means that engagement of a worker can be made on the basis of a written contract of employment for a fixed period provided that they are eligible for all benefits like that of a permanent worker. Further, they shall be eligible for gratuity if they render services for a period of one year.
  6. The threshold for applicability of the Standing Orders has been raised to 300 from the earlier set limit of 100.
  7. The Code has also decreased its threshold for a trade union to have the status of a sole negotiating union from 75% set in the 2019 Bill to the one that has 51% of the employees as its members.
  8. Further, to constitute a negotiating council, where no single union meets the 51% threshold, the council can be constituted with representatives from various unions provided they have at least 20% of employees as its members.
  9. The Code prohibits strikes and lockouts in all establishments without i) giving a 14 days notice, ii) during pendency of the proceedings before a conciliation officer iii) during pendency of proceedings before the tribunal or iv) during pendency of arbitration or settlement or while an award is in operation.

The Code ensures that industries continue to work smoothly, avoiding repeated disruptions in work by imposing curbs on strikes during pendency of litigation In the same vein, introduction of the sole negotiating union will help reduce the time taken in reaching amicable settlements with employer.

– Sukanya Hosmani, Advocate & Associate

– Ritika Bijay, Advocate & Associate

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2 thoughts on “Highlights Of The New Labour Codes”

  1. Important point is missing in IR code 2020 i.e increasing the threshold limit for layoff, retrenchment and closure from 100 to 300 workmen

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B. Chandrashekar Shetty - Advocate

Mr. Chandrashekar Shetty is a Senior Labour Law Compliance Auditor at BCP Associates and has audited multiple client companies across India. He is also a member of our senior legal advisory practice. Previously he has worked as Deputy Controller, Manager-Industrial Relations and Industrial Relations Officer in KPTCL, Bangalore for more than 30 years. Prior to this, he has dealt with Legal, Personnel and IR matters including Wage Settlements, Grievance Machinery, Manpower Study and Social Security Compliances for about 10 years. He is a Faculty member of Labour Law, HRD Centre, KPTCL Bangalore.

Mr. Shetty holds a B.Com. and L.L.B. degree, Post-Graduate Diploma in Business Administration, Diploma in Public Relations from Bangalore University and PG Diploma in Industrial Relations & Personnel Management from Bharatiya Vidya Bhawan. He is enrolled as Advocate in Karnataka Bar Council and is a Govt. Arbitrator of Chit Funds in Karnataka.

S Venugopal Rao

S Venugopal Rao is an experienced labour law and service matters expert and is a member of the senior advisory team at BCP Associates. Having joined the chambers of Mr. B C Prabhakar in 2012, he is knowledgeable and well versed in multiple employment and labour law topics. S Venugopal Rao holds a Bachelor’s degree in Science from Karnataka University, Dharwar and Bachelor of Law from Bangalore University. He enrolled as advocate in Karantaka State Bar Council in 1976. He joined the chamber of Sri. Kolachalam Srinivasa Rao a leading civil advocate. After practicing for 6 years at Ballari, he joined Orient Paper Mills, Orissa (of G P Birla Group). He was designated as Manager (Law) under the Factories Act in 1995. In 1999, he joined Andhra Pradesh Paper Mills Rajahmundry as Manager Legal and was subsequently elevated as Dy. General Manager (Legal). As Factory Manager & Legal Head, he oversaw compliance of Factories Act and Rules there under towards safety, health and welfare, including compliance under Pollutions and Environmental laws and Explosives Act, etc. Additionally, he is well acquainted with Environment Management System ISO 14001: 2004, Occupations, Health and Safety Series 18000:1999. As Legal head in APPM he has briefed and appeared along with Senior Advocate before Appellate Authority constituted under Water (Prevention & Control of Pollution) Act. He retired from the services of Andhra Pradesh Paper Mills in 2011. As legal head he has handled important cases both in Labour and Civil and has experience in drafting and vetting Contracts, Agreements, Lease Agreement, Conveyance Deeds, , Affidavits and scrutiny of several legal and other documents, Preparing and settling Petitions, Appeals, Plaints, Written Statements, Rejoinders, Affidavits and Written Arguments etc. for submission/pleadings for various legal proceedings.

C K Devappa Gowda - Advocate

C.K. Devappa Gowda (CKD) is an Advocate and Labour Law expert. He holds a Bachelor’s Degree in Science from the University of Mysore and a Degree in Bachelor of Law from Bengaluru respectively. He also holds a Diploma in Social Service Administration from the National Institute of Social Science, Bengaluru. After completing his studies, he had enrolled as a Advocate and initially practiced in the Civil Code attached to the office of BCP. He then worked as Personnel Officer in Chemicals and Textile Manufacturing Industries for 5 years. Thereafter took up employment in one of the largest Public Sector Bank. He has worked in different parts of the country and has extensive experience in the cross country IR domain. The significant part of his service was at corporate level overseeing and implementing HR policies and practices and management of IR. He has been a member of personnel committee of Indian Bank Association. After retirement from service, Mr. Gowda has been working with Mr. BC Prabhakar’s firm for the last 12 years. He has expertise in all areas of people management, drafting of documents relating to service matter including the settlements under the ID Act. He has dealt with all employment laws including appearance before the Courts, Tribunal and Authorities under the different Labour Laws. Mr. Gowda is one of the senior Labour Law experts at BCP Associates.

Srijatha Ghosh - POSH Specialist & Advocate

Srijata Ghosh serves as external member on the Internal Committee of several Companies across various sectors. She handles all kinds of POSH related matters including investigations and inquiries. She provides Training on Sexual Harassment across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members on the legislation (The Sexual Harassment of Women at Workplace Prevention, Prohibition and Redressal Act, 2013). She also formulates Policies for Prevention of Sexual Harassment at Workplace (“POSH”) and advises Companies on setting up of their Internal Committees. Srijata is involved in providing Legal Advisory services on POSH and other labour law matters for various clients.

In her previous experience, she has extensively dealt with End-to-End Contract Management, Due Diligence, POSH Compliances, Legal Advisory, etc. Srijata worked with Companies like Accenture India Private Limited, Quess Corp., Capgemini Business Services (India) Limited and Pramata Knowledge Solutions Private Limited. Srijata has handled varied legal issues including drafting, vetting and negotiation of contracts, drafting policies of various organizations. She has resolved issues relating to employment laws and has worked closely with the HR teams. She has provided legal advisory services to senior management. She was also associated with Kolkata High Court in counselling clients with legal matters such as Property, Due Diligence etc. Srijata has worked in an LPO Service Firm, Manthan Legal Services Private Limited for Legal Research, depositions, medical summaries, demand drafting etc.

Srijata completed her B.A.LL.B from M. S. Ramaiah College of Law, Bangalore University in 2009. Srijata is a member of the Karnataka Bar Council since 2010. She is also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Caroline Lobo - POSH Specialist & Advocate

Caroline Lobo has been with BCP Associates for the past 2+ years. She has been handling matters and Inquiries related to the POSH Act including conducting inquiries and trainings/awareness programmes for Senior Management, employees as well as members of the Internal Committee on the POSH Legislation (The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) to address Workplace Harassment of Women. She is a member of the Internal Committee for many varied companies and organisations and has reviewed and scrutinized numerous hearings and inquiries on matters relating to sexual harassment at workplace.

She has also handled matters relating to employer-employee related Enquiries, wherein she has reviewed and conducted hearings and enquired into the matters and has guided the Internal Committee and provided guidance in providing recommendations to the management. She is also a Member of the Gender Sensitivity Sub-committee of Karnataka Employer Association (KEA).

Prior to joining BCP Associates, Caroline has has a wide range of experience in corporate, commercial and contract law, mergers and acquisition and has undertaken drafting, vetting, negotiating and finalizing legal and commercial transactions. She started her career in litigation then moved onto the Corporate sector. In the span of 13 years, she has worked at Chambers of Advocate Jayashree Murali, Krishnamurthy and Co. Legal Consultants, Colt Technology Services and Oracle India Pvt. Ltd. She always had a keen interest in Women and Child related issues. She has worked with Child Welfare Committee and NGOS’s. In addition, she has worked with Swasthi Health Resource and Centre, where she was the External member to the Internal Committee (IC). She worked closely with the committee in strategizing, planning, reviewing and implementing the assigned tasks, which included building material to raise awareness against sexual harassment at workplace. Further, she has been involved in conducting inquiries into matters related to sexual harassment at workplace.

Caroline earned her Law degree from University Law College, Bangalore, from where she graduated in the year 2005.

Manoj Kumar – Senior Associate

At BCP Associates, Manoj Kumar is involved in managing and conducting labour law compliance audits of principal employer and contractors. He is also involved in client co-ordination and conducting labour law training programs for vendors. He has conducted on-ground labour law audit for factories. Manoj also provides support in advising vendor clients on labour law queries. He completed B.A., LL.B. from BMS College of Law, Bangalore in 2016

Rashmitha Venkatachalam Das - POSH Specialist & Advocate

Rashmitha Venkatachalam Das is the External Member of the Internal Committee of several reputed Organizations across various sectors. Handling complex inquiries has been her forte and she is extremely passionate about it. She is actively involved in providing Training on Sexual Harassment (Prevention, Prohibition and Redressal) Act, 2013 across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members. Rashmitha possesses capabilities in delivering sessions in Hindi and Kannada, in addition to English. She has formulated Policies for Prevention of Sexual Harassment at Workplace (“POSH”), advised companies on setting up of their Committee. Rashmitha is involved in providing Legal Advisory services on POSH for various clients spread across diverse sectors. She has also been handling domestic enquiries for various clients. 

Rashmitha possesses experience both at Law Firms and Corporates in various capacities. She started her career at Krishnamurthy and Co, Legal Consultants and then moved on to work as an In- House Legal Counsel with Companies such as Biocon Limited, Columbia Asia Hospitals Private Limited, Adecco India Private Limited. With a long stint in the Corporate side, Rashmitha decided to pursue further education in Law with a specialization in Labour and Employment Laws. She has rich experience in drafting, vetting and negotiation of various types of contracts, providing legal opinions and has driven the team in formulating process and procedures and their implementation. She has drafted several employment related policies in Corporates. Rashmitha has been a part of various key committees in Organizations and assisted committees in scrutiny of documents pertaining to human organ transplant as well as clinical trials.

Rashmitha holds an LL.M. in Labour and Employment Laws from University Law College, Bangalore, which she completed in the year 2018 with Two Gold Medals. She is also a Rank Holder at the University. She has completed BA, LL.B. from Bangalore Institute of Legal Studies, Bangalore University in the year 2009. Rashmitha is a member of the Karnataka Bar Council since 2009 and also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Manisha Vidyadhar – Senior Associate

At BCP Associates, Manisha Vidyadhar is involved in managing and conducting labour law compliance audits of principal employer and contractors. She is also involved in client co-ordination and conducting labour law training programs for vendors. She has conducted on-ground labour law audit for factories. Manisha also provides support in advising vendor clients on labour law queries.  She completed B.A., LL.B. from BMS College of Law, Bangalore in 2016.

Amrutha Ananth – Senior Associate

At BCP Associates, Amrutha Ananth is involved in managing and conducting labour law compliance audits of principal employer and contractors. She is also involved in client co-ordination and conducting labour law training programs for vendors. She has conducted on-ground labour law audit for factories. She also provides support in advising vendor clients on labour law queries.

Amrutha is also part of the labour law advisory and HR Policy practice and is actively involved in drafting opinions on various aspects of labour laws and formulate and review employment policies and procedure.

Amrutha completed B.A., LL.B. from Christ University, Bangalore in 2015. She is also a semi-qualified Company Secretary.

Sunil Arya – Principle Associate

At BCP Associates, Sunil Arya is part of the labour and employment law advisory and HR Policy practice and is actively involved in drafting and reviewing of employment contracts, opinions, HR policies, employee handbook, show cause notice, etc. for various clients spread across diverse sectors. He conducts training on labour and employment laws. Sunil is also involved in labour law compliance audits of principal employer and contractors and has conducted on-ground labour law audit for factories. In addition, he is engaged in knowledge creation and management of the firm and keenly writes on developments in labour and employment laws.

Prior to joining BCP Associates, Sunil has 10 years of post-qualification experience in diversified portfolios of advisory, drafting, policy analysis and dispute in the domains of contracts, general civil matters, employment law, competition law and construction arbitration matters. Sunil started his career as a Law Researcher in Delhi High Court. He moved on to be part of regulatory analysis team of CIRC, a unit of CUTS International. In addition, Sunil has been part of legal team of Jindal India Thermal Power Limited. He has also taught competition law, tax law and investment law at VIPS, Delhi.

Sunil holds LL.M. from The Indian Law Institute, Delhi. He is First Rank Holder in his thesis. He completed B.A, L.L.B. (Hons.) from I.P. University, Delhi. He also holds First Rank in P.G. Diploma in Competition Policy and Laws from The National Law University, Delhi.

Chandrakala K A – Principle Associate

At BCP Associates, Chandrakala has 12+ years of experience in conducting and managing labour law compliance audits of principal employer and contractors. She is also involved in co-ordination with many clients. She has conducted on-ground labour law audit for factories. She also provides support in advising vendors on labour law queries. Chandrakala is actively involved in research and providing valuable inputs to the firm pertaining to updation in labour law audit function.

Chandrakala started her career in litigation in chamber of Sri. Ashok where she was involved in drafting, pleading and appearance before Karnataka High Courts and lower courts on the criminal side.

Chandrakala completed B.A in Arts from Kuvempu University, Shimoga in 2003 and LL.B. from Mangalore University in 2006.

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