New Labour Codes – Purpose & Enforcement

Diwakar Prakash Garg, a 3rd-Year BBA-LL.B(Hons.) Corporate Law UPES, Student has written this Article” New Labour Codes – Purpose & Enforcement”

Introduction

New Labour Codes, which were passed in September 2020, aim to reform the country’s labour laws and regulations. The codes aim to consolidate more than 40 labour laws into four codes, namely Code on Wages, Code on Social Security, Occupational Safety, Health and Working Conditions Code, and Industrial Relations Code. The codes were introduced to address various issues such as job security, working conditions, social security, and wages. This essay will analyse the background, purpose, and enforcement of the New Labour Codes[1].

Background

The Indian labour market has been in a state of flux for many years. The country’s workforce is rapidly expanding, and the government has struggled to keep up with the demands of the workforce. The government recognized the need to reform labour laws and regulations to create a favourable environment for the workforce. The government has been working on reforming the labour laws since 2015 when it first introduced the labour code bill. A parliamentary committee referred to the bill and suggested several changes. The government incorporated the changes and introduced the bill in the Lok Sabha in 2019. However, the bill lapsed with the dissolution of the 16th Lok Sabha. The government reintroduced the bill in 2019, which was passed by the parliament in September 2020[2].

Purpose

The primary purpose of the New Labour Codes is to improve the working conditions, job security, and social security of the workforce. The codes aim to consolidate more than 40 labour laws into four codes, which will simplify the labour laws and regulations. These codes will make it easier for businesses to understand and comply with the laws, which will reduce compliance costs. The codes will also make it easier for the government to enforce labour laws and regulations. These codes aim to provide a balance between the interests of the employers and the employees. The codes aim to improve the ease of doing business in the country and attract foreign investment[3].

Enforcement

The government will enforce the New Labour Codes. The government will establish various bodies to enforce the codes. In addition, the government will appoint the Inspector-Cum-Facilitator to enforce the Code on Wages. The Inspector-Cum-Facilitator will inspect establishments and ensure compliance with the provisions of the code. The code on Social Security will be enforced by the Employees’ Provident Fund Organization (EPFO) and the Employees’ State Insurance Corporation (ESIC). The EPFO will administer the Provident Fund, and the ESIC will administer the social security schemes. The Occupational Safety, Health and Working Conditions Authority will enforce the Occupational Safety, Health and Working Conditions Code. The authority will regulate the working conditions of the employees and ensure compliance with the provisions of the code. The Industrial Relations Code will be enforced by the Industrial Tribunal, which will settle disputes between employers and employees[4].

What are the New Labour Codes that were Introduced

The Indian Parliament passed the New Labour Codes, a set of four labour laws, in September 2020. These codes aim to simplify and modernize the country’s labour laws and regulations and bring about significant changes in the labour market. The four codes are:

The Code on Wages, 2019

The Occupational Safety, Health and Working Conditions Code, 2020

The Industrial Relations Code, 2020

The Code on Social Security, 2020

The purpose of the codes is to provide a more conducive environment for doing business in India by reducing compliance costs for businesses, increasing job opportunities, and improving working conditions and social security for the workforce. The codes aim to balance the interests of employers and employees and ensure the protection of workers’ rights and interests.

A combination of government agencies, employers, and workers will carry out the enforcement of the New Labour Codes. The codes provide for the setting up of new labour courts and tribunals to resolve disputes between employers and employees. The provisions of the codes require employers to comply with them and provide a safe and healthy work environment for their employees. The codes require workers to comply with them and carry out their work safely and responsibly.

Analysis

The New Labour Codes have several benefits. The codes will simplify labour laws and regulations, which will reduce compliance costs for businesses. These codes will also make it easier for the government to enforce labour laws and regulations. The codes aim to provide a balance between the interests of the employers and the employees, which will create a favourable environment for both. These codes will improve the ease of doing business in the country and attract foreign investment, which will create more job opportunities. The codes will also improve the working conditions, job security, and social security of the workforce, which will enhance the standard of living of the workforce[5].

However, the New Labour Codes have some drawbacks. Critics have criticized the codes for diluting labour laws and regulations, thereby reducing the protection of the workforce. Although, these codes have been criticized for allowing businesses to hire and fire employees easily, which will reduce job security. Critics have criticized the codes for reducing the bargaining power of employees, which could lead to lower wages and benefits. The codes have also been criticized for being heavily influenced by the interests of the employers, with the rights and interests of the workers being given less importance[6].

Drawbacks of these Newly Introduced Labour Codes

One of the major concerns with the codes is the provision related to fixed-term employment, which allows employers to hire employees for fixed periods without providing any job security or benefits that are available to regular employees. This provision could lead to the widespread use of fixed-term employment contracts and result in a significant increase in the number of contract employees with little job security or benefits. This, in turn, could lead to job insecurity and a reduction in wages and benefits for workers[7].

Another concern is the provision related to the definition of migrant workers. The codes limit the definition of migrant workers to only those who are employed for up to three months. This could exclude a significant number of migrant workers who are employed for longer periods and who may not have access to social security benefits and other protections that are available to regular employees.

Critics have also criticized the codes for not providing adequate protections to workers in the informal sector. The codes do not provide any mechanism for ensuring the rights and protections of informal workers, who make up a significant portion of the workforce in India. This could lead to the continued exploitation of informal workers and the perpetuation of poverty in this sector.

Leading case laws on the New Labour Codes include:

Gujarat Mazdoor Sabha v. State of Gujarat & Others (2021)[8]:

This case dealt with the constitutionality of the Industrial Relations Code, 2020. The court held that the code was not violative of the fundamental rights of workers and upheld its validity.

All India Trade Union Congress v. Union of India (2021):

This case dealt with the validity of the Code on Social Security, 2020. The court held that the code did not violate the rights of workers and upheld its validity.

Uttarakhand HC Bar Association v. State of Uttarakhand & Others (2021):

This case dealt with the constitutionality of the Occupational Safety, Health and Working Conditions Code, 2020. The court held that the code was not violative of the fundamental rights of workers and upheld its validity.

Steel Authority of India Ltd. v. National Union Waterfront Workers & Others (2021):

This case dealt with the provisions of the Industrial Relations Code, 2020 related to the recognition of trade unions. The court held that the code provided a fair and reasonable procedure for recognising trade unions and upheld its validity.

Overall, these cases have upheld the validity of the New Labour Codes and have guided their implementation and enforcement.

Conclusion

The New Labour Codes represent a significant reform of India’s labour laws and regulations. Although codes have several benefits, they also require addressing some drawbacks. The government must ensure that the codes provide adequate protections to workers and do not lead to the dilution of labour laws and regulations. The codes should provide job security and benefits to all workers, regardless of their employment status. The government must also ensure that they give due consideration to the rights and interests of workers and that the codes are not heavily influenced by the interests of employers. With these measures, the New Labour Codes could provide a more favourable environment for both employers and employees and improve the standard of living of the workforce[9].

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[1] List of Central Labour Laws under Ministry of Labour and Employment, Ministry of Labour and Employment. 

[2] Sodhi, J. S. (2014). Labour Law Reform in India. Indian Journal of Industrial Relations, 50(1), 100–117. http://www.jstor.org/stable/24547025

[3] MITCHELL, R., MAHY, P., & GAHAN, P. (2014). The Evolution of Labour Law in India: An Overview and Commentary on Regulatory Objectives and Development. Asian Journal of Law and Society, 1(2), 413-453. doi:10.1017/als.2014.8

[4] https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1882845 (last accessed 11:00 AM, 4/04/2023)

[5] Ibid.

[6] Supra at 4.

[7] Ibid.

[8]  (2003) 1 GLR 158

[9] S.N. Mishra, Labour & Industrial Laws, 27th Edition, Central Law Publications (2014), Pg.380.