Yash Sharan and Abhishek Nande
Introduction
In July 2024, the Centre began efforts to implement the Labour Codes amidst the protests. The conundrum stems from the testing times of the COVID-19 pandemic when the trade unions of the nation wrote to the International Labour Organisation (“ILO”) regarding the government’s policy of suspension of the then-existing labour laws. This was accompanied by draconian changes which restricted workers’ rights to freedom of association. These problematic changes were soon withdrawn in some states. Simultaneously, replacing forty-four then-existing labour laws, the Central Government introduced four new Labour Codes, namely, The Code on Social Security (“SSC”), The Occupational Safety, Health and Working Conditions Code (“OSHWC”),The Industrial Relations Code (“IRC”), and The Code on Wages (“CoW”). The SSC envisioned building a ‘comprehensive framework‘ for social security for the workers.The OSHWC proposed to ameliorate safety standards and enhance the well-being of the workers. The IRC was focused on simplifying the procedure of forming and registering trade unions and brought changes regarding collective bargaining. The CoW aimed to streamline the wage structure by simplifying the concept of wages. However, the government did not consult the workers before introducing these Codes, which violated the Tripartite Consultation Regarding Labour Standards and ILO Activities (“Convention 144”). Thus, there was not as much discussion as necessary to ‘pet’ this elephant in the room.
Through this article, the authors explore the reasons for the delayed implementation of the Codes, analyse their practicality, and the changes they seek to bring with them. Further, the article, through the lens of different stakeholders, underscores the implications, trends, and lacunae that persist in the newly enacted Codes. The article concludes with a summary and some suggestions for moving forward and ahead.
The Implementation Quandary and the ILO’s Vigil
The Central Government envisioned protecting the interests of the workers when it introduced these four Labour Codes. It wanted to provide the workers freedom from ‘the web of legislation’ because they were required to undergo four steps to get only one benefit. This inefficiency was sought to be removed through the enforcement of these Codes. The Codes seek to infuse uniformity and clarity to the ambiguous thresholds in each code. They aim to ‘compensate, regulate, and manage’ the workforce. However, the Codes have seen delays in their implementation owing to a dearth of resources, lack of preparedness by the states, protests by the trade unions, and an absent political will. Since labour is a concurrent subject, the state governments play a significant part in implementing their specific labour codes. The Central Government has published the rules on their part but the states have not. The Centre and the states have the power to formulate rules on this matter. They must publish the rules in their ‘official gazettes’ which are open for public consultation for 30-45 days. The states have been negligent in making rules and this has led to a delay which has ‘created a legal vacuum’ and has undermined the objective of introducing the codes. This delay is stalling the growth of India’s economy. The government should analyse the financial impact of these codes, draft new human resources policies, align the working systems with modern requirements, and persuade states to ensure smooth implementation of the codes. Decisive and prompt actions have to be undertaken to realise the full potential of these codes, resulting in an equitable improvement in per capita income, robust growth of the economy and creation of job opportunities.
Role of the ILO
Countries that are signatories to the ILO must comply with all the
ratified treaties and conventions. The fact that India is one of the founding members of the ILO places the onus on the nation to comply with and respect the rules of the organization. As discussed above,
Convention 144 of the ILO was violated by the central government by not indulging in a tripartite consultation including the workers, employers and the central government. The ILO actively interfered in this matter because of the concerning numbers related to the workers. Their main aim was to ensure that the workers were free from the clutches of poverty. The ILO has opined that the codes should be implemented efficiently to ensure ‘freedom of association’ and the right to ‘collective bargaining’ which would stimulate an equitable companionship between workers and employers.
Ripples and Rifts: How India’s Labour Reforms Affect the Diverse Workforce Sectors
The government has always recognized the rights of employees in the formal or organized sector, however, the four new labour codes expand across different categories of employees from women to unorganized sector employees. These codes are geared towards supporting the working class. However, with great objectives come great obstacles that require redressal for a more proficient system. The overhaul reform impacts various categories of employees differently ranging from organized sector workers to unorganized, gig workers, women employees, temporary or contract-based employees.
Unorganized Sector and Gig Workers
The lack of social security for approximately 90% of workers in the unorganized sector highlights a significant gap in India’s Labour Protection Framework. NITI Aayog’s Report titled ‘India’s Booming & Platform Economy’ projects that the workers in the gig segment are expected to scale up to 23.5 million by 2029-30. The SSC has expanded its ambit to include unorganised workers, however, it is pertinent to note that the definition of the unorganised sector under Section 2(85) is that the ownership would be individual or self-employed, activities would be production or sale of goods or service provisions and employs fewer than ten workers which does not include wage workers, who are considered as unorganised workers under Section 2(86) which may impact the daily wage workers, leaving their situation unchanged. The SSC also expands to gig workers which are defined under the act moreover the IRC broadens the definition of ‘worker’ to encompass unorganised & gig workers. However, it is imperative to note that there is no mention of gig workers in the two other labour codes which creates inconsistency in worker classification across different codes and may lead to ambiguity in the implementation of the laws, potentially leaving a significant portion of the workforce vulnerable.
The National Social Security Board will be performing the function of recommending the central government to formulate schemes for unorganised & gig workers and survey those schemes as per Section 6(7) of the SSC. However, it is significant to note that the mentioned Board was already introduced in The Unorganised Workers’ Social Security Act, of 2008 but it has, till today, not come into existence. Therefore, if the SSC is duly implemented, commencing the functioning of the board will be a task to consider.
Nevertheless, the Codes do recognise the unorganised or gig workers for social security but to avail its benefits, an unorganised sector employee has to register as per Section 113 of the SSC. In addition, the section poses certain criteria like self-declaration, application for registration to the Central Government, and providing an Aadhar Card. It is suggested that the process itself is redundant due to its unnecessary complexity and involvement of bureaucracy which could be avoided in the first place. The gig worker will now have an opportunity to join the Employee State Insurance Corporation of which Chapter IV of the SSC gives account. Central & State Governments shall establish Social Security Funds for unorganised, platform, and gig workers which are mentioned under Section 115 of the OSHWC, 2020. This development signifies a significant step towards providing comprehensive social security coverage to a previously underserved segment of the workforce.
Fixed Term Employees
The Periodic Labour Force Survey 2018-19 showcases that out of 24% of Regular Wage Salaried Workers 68% of them are on a no-written job contract basis. Section 2(o) of the IRC has given Fixed Term Employment a legislative sanction. They are entitled to the same benefits as minimum wages under the CoW as permanent employees. This marks a significant step towards removing the disparity between them. However, it is pertinent to note that Fixed Term Employees are entitled to the same benefits as regular employees if they are performing similar or identical work. The condition of minimum service of five years has been done away with for payment of gratuity in fixed-term employees which is enshrined in the Proviso to Section 53 of the SSC.
Providing legislative sanction to fixed-term employees comes at a cost of hire & fire policy, if the fixed-term employees are hired, there will be no bone of contention like minimum legal wages, or annual paid holidays. Additionally, this will limit the number of regular or permanent workers consequently making them vulnerable to their job security. To tackle this, the Codes should provide jobs for a fixed term to the regular employees to prevent them from being abruptly fired.
Women Employees
Section 3 of the CoW, prohibits gender discrimination, allowing women to work in any kind of establishment, including night shifts (after 7:00 P.M.) and early mornings (after 6:00 A.M.), provided that safety of the working environment, day off and working time conditions are met. This conforms with Article 15 of the Constitution of India which prohibits the state from discriminating on the basis of, inter alia, sex and Article 16 which guarantees equality of opportunity, prohibiting gender discrimination. In the case of Union of India and Others v. Ex. Lt. Selina John, the Honourable Supreme Court of India strongly came out against the archaic idea with patriarchal overtones. The judgment stated:
“Terminating employment because the woman has got married is a coarse case of gender discrimination and inequality. Acceptance of such [a] patriarchal rule undermines human dignity, right to non-discrimination and fair treatment.”
The Court held that punitive measures for women employees for getting married are ultra vires. The case serves as an epitome in the fight against gender discrimination. In light of this judgment, the Codes can act as a catalyst to obliterate gender discrimination from the society.
If the women’s roles involve hazardous tasks, the employers must ensure their adequate protection, as stipulated in Sections 43 and 44 of the OSHWC which conforms with Article 42 which mentions that the state should make provisions for just and humane work conditions. Additionally, under Section 59 of the SSC, it is unlawful to employ a woman within six weeks of her delivery, miscarriage, or medical termination of pregnancy. The six-week prohibition period is given because it provides the necessary time to recover from physical strain after childbirth and it is in conformity with ILO’s maternity benefit standard. Furthermore, Section 60 of the SSC ensures women have the right to receive maternity benefits which provides economic security by protecting them in their vulnerable state and preventing potential income loss.
In the SSC, women employees face the predicament of claiming maternity benefits if they have done their work for at least eighty days before delivering the child. In succession, many women who fall under this category will not be able to work as they would not be entitled to social benefits. Moreover, maternity benefits can be availed by women working in enterprises having a minimum of ten workers; thus, there is no provision for women in the unorganized sector to avail maternity benefits. Furthermore, the ASHA and Anganwadi workers enjoy the benefits of being workers even though they are not considered ‘workers’ by the government and the Codes lack provisions regarding the same.
Employers
The employer will now have an option of hire and fire their employees based on the demand of their business, this may lead to better cost and resource management. Since they are now allowed to hire Fixed Term Workers, corporations would be in a position to adjust to the changes in demand & supply in the market rapidly since they do not have the concern about retaining fixed-term workers as opposed to full-time employees. One of the benefits is that the old labour codes had fragmented definitions across various acts of terms like “wages”, “worker”, “employee”, “and employer” which created the predicament of multiple interpretations, the new Codes address this issue by providing a uniform definition across the four codes for various terms. This standardization gives certainty, ease of legal understanding and the practical application of the laws making it easier for employers to implement the labour laws.
Union Groups
The trade unions of the nation have been continuously protesting the Codes contending that they curtail the rights of workers. The Payment of Wages (Amendment) Act, 2017 raised the wage ceiling to Rs. 24,000 from the previous Rs. 18,000. However, the wage ceiling is not mentioned in the CoW, which has become a glaring problem for the unions. The government has failed to hit the bullseye by not raising the wage ceiling. The union groups have always sought the raise in the Mahatma Gandhi National Rural Employment Guarantee Act coverage to 200 days from the now-provisioned 100 days. Additionally, they requested to link it with the allied activities of agriculture.
This request by the union groups has also been overlooked by the Codes. Moreover, the Codes fail to incorporate agro-based MSMEs, which could have generated employment in the rural areas. The Codes also fail to reassure unions of a pension, unlike the Old Pension Scheme. Thus, they find no haven in these Codes, calling for their scrap.
Conclusion and Way Forward
The Labour Codes focus on bolstering worker protection and rationalising benefits. Multiple political barriers hinder the implementation of the Codes, such as the Central Government’s lack of adequate resources to ensure the efficient implementation of the codes, and the various states are ill-prepared to deal with the effects of the new codes. The codes apply to organized workers, unorganized workers, gig workers, fixed-term employees and women employees. Areas which may pose challenges include access to conventional worker benefits for the unorganized sector worker, possible uncertainty over jobs for fixed-term employees, and extremely restricted maternity benefits.
The CoW is silent about the inclusion of workers in private households under the ambit of minimum wages which must be clarified by the concerned ministry. Moreover, there should be an adequate representation of workers in the Central and State Advisory Boards. It is imperative that for whom the Codes are introduced must be included in the deliberations & decisions of the advisory board.
The CoW is silent about the inclusion of workers in private households under the ambit of minimum wages which must be clarified by the concerned ministry. Moreover, there should be an adequate representation of workers in the Central and State Advisory Boards. It is imperative that for whom the Codes are introduced must be included in the deliberations & decisions of the advisory board.
The four new labour codes hold promise for improved regulations and workers’ well-being and they have the potential to move unorganised workers out of their misery. Therefore, it is important to adapt and prepare for the new Labour Codes in as much as they are still in the process of formulation to ensure that organisations become ready for the changes as and when they occur. These Codes, however, require a final notification from the Central Government to be implemented nationwide. The Central Government is now striving to implement the Codes by undergoing deliberations with the stakeholders to reach a common ground. Amid the unfolding reconciliations, it is critical to discuss the steps to unlock the full potential of these Codes.
The authors are second year students at Hidayatullah National Law University, Raipur (HNLU).
NUALS Law Journal 