Labour codes reforms

Source- The Indian Express

Syllabus- GS 3 – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

Context- The three labor bills will immensely help the country in bringing much needed economic growth and will help in employment generation.

What are the new labour codes?

The government has introduced new versions of three labour codes in Lok Sabha which are-

  1. Industrial Relations Code Bill, 2020.
  2. Code on Social Security Bill, 2020.
  3. Occupational Safety, Health and Working Conditions Code Bill, 2020.

These three bills are part of four labour code envisaged incorporating 29 labour laws. First code on wages has already been enacted.

What are the benefits of labour codes 2020?

  1. Raised the threshold for requirement of a standing order– The expansion of firms by increasing the threshold for retrenchment/closure or lay-off without requiring government approval, from 100 to 300 workers.
  2. Fixed term employment [FTE] – It is an intervention to enable the hiring of employees directly instead of hiring through contractors, which will ensure flexibility.
  • The code also reduces the time limit for receiving gratuity payment from the continuous service of five years to one year for all kinds of employees, including fixed-term employees, contract labour, daily and monthly wage workers.
  1. Social protection system– The inclusion of the gig and platform workers in the Social Security Code 2020 is a step towards strengthening the formal economy.
  • The provision for insurance coverage has been extended to plantation workers and free annual health check-ups. A bipartite safety committee has been introduced for hazardous factories.
  1. Gender equality and empowers the women workforce– Female labour force participation is a driver of growth and, therefore, participation rates indicate the potential for a country to grow more rapidly.
  • Women will be entitled to be employed in all establishments for all types of work and, with consent can work before 6 am and beyond 7 pm subject to such conditions relating to safety, holidays and working hours.
  1. Inclusion of inter-state migrant workers in the definition of worker: It has been made possible that a migrant, who comes on his own to the destination state, can declare himself a migrant worker by registering on an electronic portal based on self-declaration seeded with Aadhar Card.
  • Registration on the portal has been simplified and there is no requirement of any other document except Aadhaar Crad.
  • For de-licencing/de-registration, it is mandated to notify registering officers about the closure of their establishment and certify payment of dues to all employed workers, which will ensure that workers will not be exploited even during the closure of the concerned establishment.
  1. Reskilling Fund– Industrial Relation code also proposes setting up of a reskilling fund to help skill retrenched workers.
  • To set up a re-skilling fund for training of retrenched workers with contribution of the employer of an amount equal to 15 days last drawn by the worker.
  • The lifelong learning opportunity is provided to match the evolving skill sets required for technology and process changes.
  1. Notice period– Under Industrial Relations Code 2020, the provision for a 14-day notice period before strikes and lock downs would allow both workers and employers to attempt resolving the issues.

Way forward-

The reforms introduced in the three labour codes will help to build a future of work that is safer, fairer, greener and more resilient. The reform measures address basic needs – to revive the economy and tackle barriers in the expansion of firms. Moreover, they promote the employment of women as well as reskilling of the workforce for the deployment of migrants.

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