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Labor laws in India have traditionally been governed by contracts as well as by diverse and fragmented legislation, both at the central level and at the state level. With a view to harmonizing and consolidating the various laws relating to employment, social security, wages, labor disputes and other relevant matters relating to labor and employment, the Ministry of Labor and employment (“Ministry“) introduced four bills in 2019 to amalgamate 29 central laws related to labor law. These bills were codified and enacted as:

  • The Wages Code, 2019;
  • The Industrial Relations Code, 2020;
  • The Code of Safety, Health and Working Conditions at Work, 2020; and
  • The social security code, 2020.

We have summarized below the essence of each code in order to highlight the changes that can be anticipated once the 4 codes and rules are in force.

  • The Wages Code, 2019(“salary Coded“)

The Wages Code unified and encompassed four different laws, namely the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Premium Payment Act, 1965 and the Equality Act. remuneration, 1976. The implementation of the wages code is awaited. to have far-reaching implications for a majority of industries and therefore it is crucial to understand the key aspects of the Wages Code and how they differ from previous regulations.

The Wages Code changed the definition of “employee” from the current definition contained in the Minimum Wages Act of 1948. Under the Minimum Wages Act of 1948, “employees” were limited to workers. of certain specified categories of regular employment which, by virtue of the law The Wages Code has been extended to all types of establishments, whether they fall within the organized sector or not. This implies that the benefits provided by the Wages Code with regard to the payment of wages and the minimum wage to all employees, including those engaged in skilled, semi-skilled or unskilled, manual, operational, supervisory work. , managerial, administrative, technical or office, and regardless of whether the conditions of employment were expressly conveyed or simply implied, thus considerably widening the scope. This development is particularly beneficial for the large number of workers in India’s unorganized sector, who often do not have written contracts to rely on.

In addition, “wages” have now also received a unified structure as opposed to the different definitions previously stipulated. The definition of “salary” in the Salary Code encompasses (i) basic salary; (ii) the cost allowance; and (iii) the maintenance of the allowance and categorically excludes items such as statutory bonuses, housing value, overtime, tips, etc., unless these exclusions exceed more than 50% (fifty percent ) of all remuneration, in which case the amount in excess of 50%% (fifty percent) will be considered as remuneration and will be added to the remuneration thereof[3]. The Wage Code also introduced the concept of a “floor wage” which will be set on the basis of the minimum standard of living of a worker in the geographic area concerned, and when the minimum wage rate set by the state government concerned is higher than the minimum wage. , the first must be kept.

  • The Industrial Relations Code, 2020 (“IR Code”)

The IR Code incorporates and amends the following statutes (i) the Labor Disputes Act, 1947, (ii) the Trade Union Act, 1926; and (iii) the Industrial Employment Act 1946 (permanent regulations).

The IR Code introduced a “single bargaining union” in establishments where there is more than one union. Such a single bargaining union must have 51% or more of workers as members. Only the only negotiating union is authorized to negotiate the conditions with the employer. The IR Code contains provisions allowing workers to keep their jobs after being made redundant. It also sets out a mechanism for the resolution of labor disputes which will be constituted by the central government composed of a national labor court and one or more labor courts. It also requires a worker to address the grievance committee.

The IR Code also sets out the notice periods that must be provided by a worker before initiating a strike and lockout in breach of contract. The IR Code provides that the provisions relating to standing orders apply to all industrial establishments with three hundred (300) workers compared to the previous hundred (100) workers. The IR Code includes other provisions that touch on issues related to layoffs, layoffs, closure of an establishment, industrial forums, etc.

  • The Code of safety, health and working conditions at work, 2020 (“SST code “)

The OSH Code encompassed several key pieces of legislation on working conditions at work and consolidated them into a single comprehensive law, including, inter alia, the Contract Labor (Regulation and Abolition) Act, 1970, the Act on factories, 1948, etc. among the important definitions that the OHS Code amended are contract labor, employee, employer, establishment, principal employer, wages and workers.

The OHS Code sets out certain obligations of each employer with regard to his workplace and his employees. Under the OSH Code, the employer is also required to provide and maintain welfare activities for employees which may be prescribed by central government and as required for a decent standard of living of employees. In addition, the OSH Code prescribes a set of stricter obligations for employers with regard to factories, mines, docks, buildings and other construction works or plantations. The OSH Code further clarified that it is the responsibility of the architect, project engineer or designer responsible for any building or construction work or the design of any project relating to such a building, to ensure that, at the planning stage, proper consideration is given to the health and safety aspects of construction workers and employees who are employed in the erection, operation and execution of such projects.

The OHS Code has changed the minimum number of contract labor to fifty (50) instead of twenty (20) for the OHS Code to apply. Welfare facilities as specified in the OSH Code are to be provided by the primary employer of the establishment to contract labor employed in that establishment. The OSH Code also protected the rights of interstate migrant workers by ensuring that the entrepreneur extends all benefits available to a worker under various labor laws to interstate migrant workers as well. In addition, the employer of each establishment concerned is required to pay each interstate migrant worker a lump sum for the return journey between his place of origin and his place of work.

  • The Social Security Code, 2020 (“SS Code”)

The SS Code was promulgated to amend and consolidate laws relating to social security with the aim of extending social security to all employees and workers in organized and unorganized sectors or any other sector. The SS Code encompassed several key pieces of legislation such as the Employees Compensation Act, 1923, the Employees Provident Fund Act and Miscellaneous Provisions, 1952, the Payment of Bonuses Act, 1972, the Act on maternity benefits, 1961, etc. The code introduces new definitions in this context which are as follows:

  • Aggregator“has been defined as a digital intermediary or marketplace that allows a buyer or user of a service to connect with the seller or service provider.
  • Gig Worker “under the SS Code has been defined as a person who performs work or participates in a work arrangement and gains such activities outside of the traditional employer-employee relationship.
  • Platform work“has been defined as a working arrangement outside of a traditional employer-employee relationship in which organizations or individuals use an online platform to access other organizations or individuals in order to resolve specific issues or provide specific services or any other activity that may be notified by the central government, in exchange for payment and a “platform worker“has been defined as a person engaged in or undertaking work on the platform.
  • SocialSecurity“under the SS Code means the protective measures afforded to employees, non-union workers, concert workers and platform workers to ensure access to health care and ensure income security, in particular by cases of old age, unemployment, sickness, invalidity, industrial accident, maternity or loss of a breadwinner by means of the rights conferred on them and of the supervised regimes, by virtue of the SS Code.
  • Unorganized sector“means an enterprise owned by individuals or self-employed persons and engaged in the production or sale of goods or the provision of services of any kind, and where the enterprise employs workers, the number of such workers is less to ten (10).
  • Unorganized worker“means a home worker, a self-employed worker or a salaried worker in the unorganized sector.

One of the main changes made by the SS Code is to include in its scope benefits for platform workers and labor workers. Although the SS Code currently does not provide for any specific social security to be provided to Gig workers and platform workers, it does, however, give the right to the central government and the state government to notify plans for these workers regarding the life and disability coverage, health and maternity, contingency funds, work accident compensation, housing, etc. The SS Code states that schemes can be funded by a combination of contributions from central government, state governments and aggregators. The SS code also states that every unorganized worker, concert worker or platform worker must be registered. Each unorganized worker, concert worker or qualifying platform worker must apply for registration with prescribed documents, including Aadhaar number, and a distinctive number will be assigned to that worker for their application. Whether these schemes would be applicable to all unorganized workers, Gig workers and platform workers, regardless of the amount of salary they earn, will depend on the final form of the schemes introduced by the ‘State or central government. The SS Code also ushered in a host of other changes to provident fund benefits, bonus benefits and other social security measures currently in place.

In view of the above changes that the new labor codes have made to existing labor laws in India, it will be important for establishments to assess the implications and review the compliance requirements under each code, once established. ‘it will have entered into force with the final rules and state modifications.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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