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Labour Law Reforms

The central government has passed three labour law bills namely the Code on Social Security, 2020; the Industrial Relations Code, 2020 and the Occupational Safety, Health and Working Conditions Code 2020, which are yet to be notified. These three bills along with the Wages code, which was passed in August last year, have consolidated twenty nine central labour law legislations. The good thing about consolidation is that now, one does not have to go hop scotch to find which provision from which legislation is applicable to them, as a worker or as an industrial unit. It has by and large retained the provisions as they were in the previous legislations, with some additional relaxations with the objective, as touted by the central government, of increasing the ease of doing business in India which would in result have a positive impact on the economic growth, to get rid of the inspector raj and provide larger protection to the entire workforce. The new code has also added the gig workers under its scope, in an attempt to bring in regulation of an unregulated area of working. Another good thing about the reforms is the use of gender neutral terminology that is use of worker in lieu of workmen. 

Prima facie these changes might seem to be a welcoming change, especially when the economy is in dwindles. But a closer look at the reform brought in the codes will help us understand the actual impact it would have on the working force after implementation. 

The first thing of concern is the increase in the threshold limit of asking for permission from the appropriate government before lay off, retrenchment and closure from a unit of a hundred workers to three hundred workers. What this essentially does is that now units with less than three hundred workers don’t have to seek permission from the appropriate government before lay off, retrenchment or closure. Another aspect which is worth look into in the IR Code, 2020 is the preconditions laid down before going on a strike and lockouts. As opposed to the earlier code, which had a distinction between industries of public utility services and non-public utility services, now there is no such distinction and the rule applies to all industrial establishments uniformly. Also the notice period has been increased from six weeks to sixty days and also included prohibition during the pendency of arbitration and tribunal’s proceedings. All the restrictions, in effect would extremely reduce the probability and viability of going on a strike and lock outs, hence reducing the power of collective bargaining to a very great extent. The new code has also done away with labour courts and has also added an administrative member (along with a judicial member) on the bench of Industrial tribunal. This raises the question of how would such a large change would occur as there is no clarity about the manner of implementation and also the question of appointing the administrative person on the tribunal vis a vis the understanding of separation of powers. With respect to modifications in the Standing Orders, which essentially is the handbook regarding the code of conduct for the workers and mode of functioning of the undertaking. Here as well the applicability of Standing Orders has been extended from a unit of a hundred workers to that of three hundred. So those establishments with less than three hundred workers can by and large function on the whims of the employer. Also, the appropriate government has been given the power of exempting the application of any of the provisions under the standing orders chapter to any industrial establishment. This again raises the question of giving a lot of power in the hands of the government. 

Are you looking for this?  Labour Condition in India

The problem of increase in the threshold is also evident in the definition of factory, which has gone up from ten workers to twenty workers. In the case of social security, its applicability or rather the implementation procedure is not laid down in the code, rather what is envisaged is a scheme based application, wherein the government that is the executive would make the scheme. So what happens is that until and unless there is no scheme to enforce, the legislation is practically toothless. The executive on the other hand can always procrastinate on the grounds of lack of time and money. This again raises the issue of extend of delegation of power from one the legislature to the executive and the blurring that line of separation and the effective functioning of a democracy. 

To conclude, the general problem is the increase of threshold across various acts, so even if the legislation are progressive and for better protection of the working conditions of those employed, it does not matter if they don’t fall under the purview of the Act. The second major problem is building upon the premise that relaxation in labour standards would lead to better business and hence a stronger economy. This stands on a very shaky ground because what the employer struggles from is the corruption in government, tax issues, skilled labour and availability of electricity. So, rather than focusing the energy on doing away with the labour laws, it should be on these other grounds. Lastly there is a problem of a lot of delegation and blurring the separation of powers. For an effective implementation of beneficial legislations, they should not be scheme based left at the mercy of the executive rather mandatory and statutory in nature. 

Are you looking for this?  Labour Condition in India

Cite this article (The Bluebook 20th ed.)-

Aditi Mehta, Labour Law Reforms, Ex Gratia Law Journal, (March 5, 2021),

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Aditi Mehta
Student - Tamil Nadu National Law University