Parliament and the new labour codes

Source- The Hindu

Syllabus- GS 3- Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

Context- Labour Minister Santosh Gangwar told that four new labour codes will become operational before the year ends. In the brief monsoon session of Parliament, three new labour codes were bulldozed into passing and now await the President’s assent.

What are these new labour codes?

  1. The Industrial Relations Code, 2020
  2. The Social Security Code, 2020
  3. The Occupational Safety, Health and Working Conditions Code, 2020
  4. The Code on Wages, 2019

What is the Code on Wages, 2019?

1.One single code- It seeks to consolidate and simplify four pieces of legislation into a single code. The four pieces of legislation are as following-

  • Payment of Wages Act, 1936
  • Minimum Wages Act, 1948
  • Payment of Bonus Act, 1965 and
  • Equal Remuneration Act, 1976

2.More coverage of workers- The new Code has dispensed with the necessity of having a minimum number of workers and the inclusion of such employment into the schedule.

  • It would expand the coverage of workers in all industries in the unorganised sectors as the old Minimum Wages Act covered only 30% of the total workforce.
  • While there were 10,000 slabs of minimum wages that existed, they would now be reduced to 200 slabs.

3.Reduction in sections- While the previous four pieces of legislation had a total of 119 sections, the new Code has 69 sections.

What are the challenges in consolidating four different legislations into a single one?

The combining of asymmetrical laws into a single code is not an easy task and will only create its own set of new problems. Such as-

  1. Impact on the previous legislation- Considering that the repealed legislations each had a definition section, inspectors, penalties, a competent authority, an appellate authority, and rule-making powers, any consolidation will impact their length.
  2. Framing of rules – Section 67 had authorised the framing of rules relating to as many as 38 provisions of the Act. As a result, the delegated pieces of legislation (Rules) will be bigger than the Code.
  3. Barring a few new concepts– The new Code retains almost all provisions. like the procedure for fixing minimum wage, limit for fines and deductions in wages, minimum and maximum bonus etc.
  4. No difference in definition of worker- The Code will have the same definition of the term “worker”; but, a person employed in a supervisory capacity drawing up to ₹15,000 will also be considered a worker.
  5. State’s power to fix the minimum wage- The central government will have the power to fix a “floor wage”. Once it is fixed, State governments cannot fix any minimum wage less than the “floor wage”.
  6. Provision on penalty-  A new provision (Section 52) has been introduced where an officer (not below the rank of an under-secretary to the government) will be notified with power to impose a penalty in the place of a judicial magistrate.
  1. Compounding of offences– The Code also exempts employers from penal provisions if they were able “to prove that they had used due diligence in enforcing the execution of the code and it was the other person who had committed the offence without his knowledge, consent or connivance”.

Way forward-

The Labour rights are of utmost importance as they are fundamental freedoms, which have a struggle of hundred years behind them. In this context, the three bills will bring industrial peace and harmony in the country which will immensely help the country in bringing much needed economic growth and will help in employment generation. They will also help promote investment and will create harmonious industrial relations in the country.

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