Parliament passed the three labor law drafts on Wednesday – the Code of Occupational Safety, Health and Working Conditions, 2020; the Industrial Relations Code, 2020; and the Social Security Code, 2020 – Bringing together 24 key labor laws to significantly advance labor reforms. The government of the National Democratic Alliance has now grouped 29 key laws into four codes. In August 2019, Parliament passed the first code, the wages code.
The 2020 Labor Relations Code contains new rules for hiring and firing workers in medium and large industries that will facilitate the cut. This effectively brings the “North American rent and fire model into the Indian backcountry economy in the hope that businesses will recover and create more net jobs,” said KR Shyam of XLRI, Jamshedpur, labor economist.
How will the three codes affect workers?
The reforms allow industry flexibility in hiring and cutting. They will make industrial strikes more difficult by creating new conditions and expanding the social security net for both formal and informal workers.
What are the changes in the rules for hiring employees?
Under the Industrial Relation Code, the government has allowed companies with up to 300 workers to lay off workers or close plants without prior government approval. Previously, prior approval was required. Companies with more than 300 employees still have to apply for a permit. However, if the authorities do not respond to their request, the proposed reduction is considered approved. Previous labor laws required 30 to 90 days’ notice before “workers”, who are mostly manual workers, were fired. Production units, plantations, and mines with 100 or more workers also required government approval. Of course, 90% of the Indian workforce employed in the informal sector will not be affected by these changes.
What is the economic rationale for this?
Economists have long argued that India’s outdated labor laws need to be changed. Companies with more than 100 employees had strict rules for hiring employees, making it virtually impossible to lay off workers. This was an incentive for smaller businesses to stay small so they could evade the rules. According to the World Bank, with less restrictive laws, India could create around 2.8 million more jobs in the formal sector of good quality annually.
How does it affect workers’ right to strike?
The Industrial Relation Code sets new conditions for workers’ right to strike. The unions must now resign on strike for 60 days. If a case is pending in a Labor Court or the National Labor Court, workers cannot go on strike for 60 days after it is closed. These conditions apply to all industries. Previously, workers could go on strike with a notice period of two to six weeks. Lightning strikes are now prohibited.
What are the new occupational safety rules?
The 2020 Code of Work Safety, Health Protection and Working Conditions will change laws regulating work safety, health and working conditions for employees. The code authorizes a state government to exempt any new factory from the provisions of the code in order to create more economic activity and jobs. It sets the maximum daily work limit to eight hours per day. Women have the right to be employed in all types of work in all companies. If they are required to work in dangerous or hazardous workplaces, the government may require employers to take appropriate safety precautions prior to employment.
Has the social safety net expanded?
Yes. The Social Security Code 2020 promises universal social security for the first time, including for organized and informal workers, as well as gig and platform workers. The Government, according to the Code, will formulate and notify appropriate welfare systems from time to time, including systems related to “Retirement Funds; Work injury benefit; Casing; Educational programs for children; Improving workers’ skills; Funeral aid; and old people’s homes ”. Government may have recourse to Corporate Social Responsibility Funds (within the meaning of the Companies Act, 2013) or any other source specified in the system. The Social Insurance Code provides for the establishment of a National Social Insurance Committee to recommend appropriate schemes to the central government for unorganized workers.
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