As the Lok Sabha passed the most significant labour law reform in recent times, the event was marked by empty Opposition benches as the parties were protesting the hurried Sunday passage of the Agriculture Bills in the upper house.
Like most of the bold initiatives of this government, be it demonetisation, GST or even the agrarian reforms just passed, on paper and in theory, the Codes passed on Tuesday, 22 September, by the Lok Sabha, have the potential to be game-changers in the domain of Industrial Relations – by freeing up both labour and capital from a moribund system that has not effectively served either.
One makeover that touched my heart the most is the extinction of the gendered ‘workman’ and its substitution with the gender-neutral ‘worker’!
What Does The Social Security Code Cover – And Achieve?
The Parliament had already passed the Wage Code which had brought under one umbrella the laws relating to wages such as The Minimum Wages Act, the Payment of Wages Act and the Gratuity Act. Now it has passed the remaining Codes – on Industrial Relations, Occupational Safety and Social Security.
Insofar as the target of consolidation of the multiple labour legislation under four broad Codes is concerned, this legislative effort deserves to be complimented. However, the question that we have to ask ourselves is – what does this codification achieve – beyond codification?
While the Social Security Code brings the existing laws – addressing provident funds, building and construction workers and unorganised workers, maternity benefit, employees’ compensation and employees state insurance – under one roof, the value addition comes in the form of Chapter IX.
Chapter IX deals with unorganised, gig and ‘platform workers’ such as Uber/Ola drivers and Zomato/Swiggy delivery boys.
It stipulates their registration and framing of schemes for them for life cover, health and maternity benefits, etc. Aggregators now have to contribute upto five percent of amounts payable to gig /platform workers.
- The Parliament had already passed the Wage Code which had brought under one umbrella the laws relating to wages such as The Minimum Wages Act, the Payment of Wages Act and the Gratuity Act.
- Now it has passed the remaining Codes – on Industrial Relations, Occupational Safety and Social Security.
- The Social Security Code brings the existing laws – addressing provident funds, building and construction workers and unorganised workers, maternity benefit, employees’ compensation and employees state insurance – under one roof.
- But the value addition comes in the form of Chapter IX, which deals with unorganised, gig and ‘platform workers’ such as Uber/Ola drivers and Zomato/Swiggy delivery boys.
- Labour reform is always controversy-ridden and it is understandable for the government to be cautious.
Introduction Of A ‘Negotiating Trade Union’: What This Means
Labour reform is always controversy-ridden and it is understandable for the government to be cautious. For example, when the Supreme Court in Rajappa’s case gave a broad definition of ‘industry’ – to bring in even the local paanwala and the Tirupati Temple into the regulatory ambit of Industrial Law – the Parliament amended the definition in 1983. However, successive governments have not mustered the courage to notify the same.
Well, even the Industrial Relations Code sidesteps this and retains the broad definition of ‘industry’ expounded by the Court. It does not bite the bullet to filter out small traders, mom-and-pop shops and charitable organisations from the definition of ‘industry’.
It even carries over relics from the 1947 law such as ‘Works Committees’ and ‘Grievance Redressal Committees’ which were hardly operationalised in any industrial set-up under the existing Industrial Disputes Act, 1947.
However, it introduces the concept of ‘a negotiating trade union’ when one union has a 51 percent membership or a council, and when there are multiple unions. While this is a welcome step, it leaves it to rules as to how this majority status shall be determined and who shall undertake such an exercise.
Most trade union disputes have centred around this. However, it does provide for a Tribunal to decide disputes between trade unions, members and federations. Absence of a forum for dispute resolution was a major lacuna in the Trade Unions Act 1923.
Abolishing Distinction Between Labour Courts & Industrial Tribunals: What This Implies
Insofar as the requirement of Standing Orders (which set out the classification of workers as well as the disciplinary rules), the threshold has been raised to include establishments engaging more than 300 workers. The threshold for requiring the government’s sanction for lay-offs, retrenchment and closure, has also been raised from Rs 100 to 300. The IR Code does introduce a ‘Worker Re-skilling Fund’ – to be fleshed out by employers depositing 15 days’ wages for every worker it retrenches. From this Fund, every worker retrenched shall be paid 15 days’ wages.
The details are left vague however, and in a country such as India, the harassment to an honest worker and potential of abuse for a dishonest one need not be over-emphasised.
The IR Code abolishes the distinction between Labour Courts and Industrial Tribunals. While this is welcome, its solution is setting up two-member Industrial Tribunals having a judicial and an administrative member. The experience of ‘tribunalisation’ in India has belied the hope that such ‘administrative’ members would bring domain expertise to niche adjudication. In most cases, such members have turned out to be out of depth with the nuances of adjudication, and such posts have only served the ends of post-retirement rehabilitation of bureaucrats.
‘Old Wine In A New Bottle?’
It is inexplicable as to why a government, which at one stage was seriously reconsidering all tribunals, should now go in for this failed system wholesale in this Code.
So, the Codes are high on intent. However, the devil lies in the detail.
Other than permitting ‘hire-and-fire’ for establishments employing below 300 workers, sadly, the Codes are just old wine from many bottles poured into four new ones!
They betray a lack of clear vision to administer that radical treatment that a moribund legal regime requires to instil a dynamism needed in Industrial Relations – so that industry can truly become an engine that powers India’s growth to greater heights.
(The author is an advocate practising in the High Court of Delhi and in the Supreme Court of India. He tweets @advsanjoy. This is an opinion piece and the views expressed are the author's own. The Quint neither endorses nor is responsible for them.)