In keeping with the underlying essence of the mantra “Shramev Jayate”, the government, devoted to the welfare of labour, has undertaken an arduous and long journey to roll out the much-needed labour law reforms. A journey that started several decades ago reached its climax in 2020, the year that saw the passing of the path-breaking labour codes by the Parliament. This is indeed a turning point in the economic history of India which has authenticated the positions of all stakeholders who have been determined in this journey.
The four new labour codes viz. the Industrial Relations Code, 2020, the Occupational Safety, Health & Working Conditions Code, 2020, the Social Security Code, 2020 and the Wages Code, 2020 envisage to cover over 50 crore workers from the organized, unorganized and self-employed sectors. The erstwhile 29 labour laws have now been subsumed in the simplified, easy to understand and transparent new labour codes, keeping the interest of the labour class at the forefront. The codes are a part of the government’s earnest desire to bring in much needed labour welfare reforms in the country, a task which was not been done for the last seven decades.
The revamped labour laws, in the form of the four labour codes, are essentially both pro-labour and pro-employer – making it a win-win situation for both the stakeholders. The broad benefits that emanate from the re-classification of the labour laws into the four labour codes are far too many and deserve to be transcribed. For the employers, these labour codes enormously decrease the difficulty in compliance due to a wide array of labour laws. That’s not all – they will also facilitate the ease of doing business. For perspective, India’s present ranking on the World Bank’s EODB Index is 63, and it aspires to grab a spot among the top 50 countries in the world.
The biggest positive externality that emerges from these big-bang labour reforms is the fillip that they will impart to employment generation. This will happen without distorting the fundamental features of securing employee rights, safety, security and health of workers, and the standardization of operating definitions under the different labour laws. The key mantras behind these labour reforms are essentially two-fold: simplification and rationalization. For example, the provision of a single license/single registration and single return will aid in saving precious time and monetary resources. Moreover, the cost of compliance will significantly come down as there will be a single, decentralised authority for execution.
The benefits that accrue for employees and workers are also multifarious. For instance, under the Social Security Code, 2020 a provision has been made to formulate various schemes for providing comprehensive social security to workers in the unorganised sector. The creation of a “Social Security Fund” on the financial side in order to implement these schemes is a step in the right direction. Besides, the Social Security Code envisages bringing within the ambit of social security work related to newer forms of employment like platform workers or gig workers, which have been created due to fast-evolving technology. India is one of the very few countries where this unprecedented and bold step of including workers of this category under social security has been taken.
It is also for the first time that a fixed term employee working for a determined period on a contract basis has been given the right of social security just like a regular employee. With the intention of making a nationwide database for the unorganised sector workers, registration of all these workers would be done through an online portal on the basis of self-certification through a hassle-free and easy-to-understand procedure. It would facilitate the extension of the benefits of various social security schemes to beneficiaries in the unorganised sector.
The most important factor for getting a job is to get access to information regarding job vacancies. With this objective in mind, it has been made compulsory for all establishments with 20 or more workers to periodically report the vacancy position in their respective establishments. This information would also be made available online.
Under the Occupational Safety, Health & Working Conditions Code, 2020 there is a provision for a free health check-up once a year by the employer for workers who are above a certain age. Besides, getting an appointment letter from the employer has been made a legal right for the first time.
It is an open secret that, until now, it took years for worker disputes to be resolved. The Industrial Relations Code, 2020 visualizes sincere efforts for resolving such disputes, not just effectively but also in a transparent and time-bound manner. A provision for two members instead of just one member in the Industrial Tribunal has been made. Therefore, in case of the absence of one member, work can still be undertaken without unwarranted delays. In case the disputes are not getting resolved at the conciliation stage, provisions have been kept for escalating disputes straight to the Tribunal. With the overall objective of ensuring the democratic participation of trade unions, a provision for a “Negotiating Union” and a “Negotiating Council” has been made for undertaking negotiations on any dispute.
It is worth mentioning that a provision for a re-skilling fund has also been made in the statute for the first time. Its target would be to re-skill those workers who have been removed from their jobs, so that they are well-qualified with appropriate skill sets to match the kind of jobs in the market easily. For this, workers would also be given 15 days’ salary within a period of 45 days.
These changes and reforms in labour laws have been conceptualised keeping in mind the fast-changing scenario over the years. It is imagined to make them futuristic so that India marches on a faster growth trajectory and eventually becomes the world’s favourite investment destination. With these labour codes, peaceful and harmonious industrial relations will be promoted across the country, which in turn will propel the engine of growth of industry, employment and income, and ensure balanced regional development. Besides, it will also put more disposable income in the hands of our workers. These path-breaking labour reforms in the form of the four labour codes will help our country attract foreign direct investment and also induce domestic investment from entrepreneurs. Most importantly, these futuristic labour codes will aid in ending the vicious cycle of Inspector Raj in the country and bring much-needed transparency in the system. Indeed, a win-win situation.
The writers are Indian Economic Service officers. The views expressed are personal.