ESSENCE OF NEW LABOUR LAW LEGISLATION
NEW LABOUR CODES: “BIG REFORMS”
The new labour laws which have come into place, four codes were passed in both Rajya Sabha and Lok
Sabha, namely The Code on Wages,2019, The Industrial Relations Code,2020, The Occupational Safety
Health and Working Conditions Code,2020, and the Code on Social Security, 2020. 44 central labour
leglislation have been acculturated into these four codes. The aim of the new labour codes passed is to
consolidate and simplify the existing labour laws and regulations, and provide better protection to
workers.!These codes will act as guidelines, the government claims that this will overhaul the rigid labour
code in the country and strike a balance between what employers want and what employees want. It gives
opportunity for industry to be more flexible the way they hire and fire it cuts down the ability of workers to
go on strike but it also expands the ambit of social security by bringing into it gig workers, aggregators etc.
There are two!aspects to the new codes passed, first labour reforms!and second ease of doing business and
both of these things are related, if you do reforms in labour laws then there will be ease in doing business.
Labour acts in India, is under the!concurrent list. i.e., both the central as well as state government can make
laws on them. Earlier before passing of these codes the labour compliance!of our country became complex.
The former labour provisions were very old and outdated and bringing reforms was thus needed (as
submitted by the second national commission on labour in their report of year 2002). The essential parts of
the law include increasing the threshold of companies that require to adhere to standing codes to 300
workers instead of just 100.
HOW THESE LAWS WILL MAKE A DIFFERENCE: The government has been in a rush to clear their labour
reforms and three codes at the same time it is one of the most deliberated, piece of legislation spread over
five years, this is the distilled version which has come out well:
The first one, Code on Wages,2019 got president assent on 8 august 2019, this code is made from 4 acts:
Payment of wages act, 1936; minimum wages act, 1948; payment of bonus act, 1965; equal!remuneration
act, 1976.
Compared to the old acts there are major changes in this act:
oApplicability of the regulation in both organised and unorganised sector, gig workers, freelancer.
oCentral government now has power to set national floor minimum wages, this is advantageous!as
earlier in some states the floor wages implemented were as less as Rs.50, but because of this code a
floor wage will be decided at national level and states can only increase the level!of minimum wage
and not below that.
oClear definition of wages and allowances, it is instrumental as this will benefit the compliance
person, HR manager etc. In the previous acts there were different definition of wages according to
different acts.
The second one, Code on Industrial Relation, 2020 - Which gives firms that have 300 or fewer than 300
employees the right to shut down a unit and to retrench staff without the approval of centre [in earlier laws
that used to be for firms that had 100 or fewer than 100 employees]. This code legalizes the hiring of
employees for a fixed term, this tend to deal a lot with contractual workers, under this code there is a single
license that firms need to get in order to contract workers on board. Also, its mandatory that each worker
gets an appointment letter. The court also ensures the portability of the public distribution system and other
benefits to help migrant workers who travel between states looking for work on a contractual basis. It also
helps the centre and the state to create the database of migrant workers. As the name suggests this code
governs the relations between employee and employer related as to when lockout, strikes can be done,
termination, punishment, forming of unions. This code subsumes 3 codes:
