India Consolidates and Codifies its National-Level Labour Laws
India, one of the most labour-intensive countries of the world, has finally taken a leap of faith and codified 29 of its national-level labour laws into 4 codes. This is a bold and progressive move given that several labour laws were almost 70-80 years old and enacted largely in the industrial era. Indian economy has changed considerably since, and finally it’s the time for our labour laws to change. The efforts to codify our labour laws had originally started in early 2000 and finally have seen the light of the day.
The remaining 3 codes, being the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020, were enacted on September 29, 2020. The effective date of the codes is yet to be notified in order for them to come into force.
While the codification exercise was primarily focused on consolidation of the labour laws relating to employment conditions, social security, wages and occupational health and safety and working conditions the exercise has, in this process, also led to:
A closer look at the codes reveals that while consolidating the national level laws, several new changes have been introduced which are likely to have an impact on employers in India.
A. Industrial Relations Code, 20203
The Industrial Relations Code, 2020 (IR Code) seeks to consolidate and amend the laws relating to trade unions, conditions of employment in industrial establishment or undertaking, investigation and settlement of industrial disputes.
It repeals and replaces the following three national labour laws:
The draft central rules to the IR Code, being the Industrial Relation (Central) Rules, 2020 have been released for public comments on October 29, 2020.
B. Code on Social Security, 20204
The Code on Social Security, 2020 (SS Code) seeks to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and workers either in the organised or unorganised sector.
It repeals and replaces the following nine national labour laws:
The draft central rules to the SS Code, being the Code on Social Security (Central) Rules, 2020 have been released for public comments on November 13, 2020.
C. Occupational Safety, Health and Working Conditions Code, 20205
The Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) seeks to consolidate and amend the laws regulating the occupational safety, health and working conditions of the persons employed in an establishment.
It repeals and replaces thirteen national labour law, as follows:
The draft rules to the OSH Code, being the Occupational Safety, Health and Working Conditions (Central) Rules, 2020 have been released for public comments on November 19, 2020.
While the government intends to implement all the four labour codes by April 20216, each of the codes will need to have corresponding rules that will need to be finalized and notified based on public comments received. Additionally, state governments are also likely to notify separate rules for implementation of the codes, excluding possibly the SS Code.
As the changes are multifarious in nature, it may be possible that the government implements the codes and/or the provisions thereunder in a phase-wise manner, as seen in case of Companies Act, 2013.
The look and feel of the codes may appear more as an act of consolidation rather than reform. However, the codes introduce several changes that employers in almost all industry sectors, location and size will need to closely understand and implement.
1. The labour codes introduce employer-centric aspects such as:
These should certainly have a long-term positive impact on the industry and should contribute towards ease of doing business, an important focus of the current government.
2. The labour codes also contain some employee-centric aspects such as:
The government seems to have made a conscious effort towards balancing the rights of employees’ vis a vis those of employers.
3. Certain new and interesting concepts have been introduced including provisions in relation to fixed term employees, worker reskilling fund, social security for gig workers and platform workers, definition of core activity for engaging contract labour, recognition of trade union, notice period for strikes, compounding of certain offences, etc.
4. The social welfare measures such as worker reskilling fund and social security for gig workers, platform workers and unorganized workers proposed in the codes are innovative and commendable - if implemented pragmatically, it can have scope to immensely benefit India’s working-class demographic.
5. Practical functionality and implementation of certain provisions such as toll-free helpline, electronic database for migrant workers and related compliance measures may however, remain subject to the proactivity of the policy makers in directing the information received through such avenues to proper channels.
While the effective date of implementation of the new labour codes is not yet certain, employers are advised to assess the impact of the changes and be ready to implement the codes once they are made effective, including legal, financial, accounting, human resources, workforce management, compensation & benefits, policies & processes and compliance requirements.
We take this opportunity to congratulate the Indian government for their stupendous efforts towards codification of Indian labour laws. We sincerely hope the codes fulfil the promise of ease doing business in India and at the same time ensure benefits and protection for the workers, thereby ensuring that the Indian economy succeeds and thrives in a post-Covid world.
2 Notified in the government official gazette on August 8, 2019. Effective date of applicability yet to be notified.
3 The Industrial Relations Code, 2020 was passed in the Lok Sabha on September 22, 2020. It was subsequently passed by the Rajya Sabha on September 23, 2020, thereafter received Presidential assent on September 28, 2020. The Code was published in the government official gazette on September 29, 2020.
4 The Code on Social Security, 2020 was passed by Lok Sabha on September 22, 2020. It was subsequently passed by the Rajya Sabha on September 23, 2020, thereafter received Presidential assent on September 28, 2020. It was published in the government official gazette on September 29, 2020.
5 The Occupational Safety, Health and Working Conditions Code, 2020 was passed by the Lok Sabha on September 19, 2020. It was subsequently passed by the Rajya Sabha on September 22, 2020 thereafter received Presidential assent on September 28, 2020. It was published in the government official gazette on September 29, 2020.