This article has been written by Harshita Chaudhary. She completed her bachelor’s in Science from Chhatrapati Shahu Ji Maharaj University, Kanpur, and is now in her second year, currently pursuing an LLB from Lloyd School of Law, Greater Noida.
Abstract
This article is giving light to the impact of new labor laws on corporate culture, Labor law is the body of law, rulings, precedent address the legal rights, and restrictions on working people, trade union. The Indian Government codified various employment laws under four Codes – the Code on Wages, 2019, the Code on Social Security, 2019, the Industrial Relations Code, 2019 and the Occupational Safety, Health and Working Conditions Code, 2020. Out of the four codes, gig work finds reference in the Code on Social Security in section 2(35), The Code recognizes ‘gig workers’ including platform workers, it distinguishes between employees and gig workers. Labour law violations may lead to fines, penalties, court cases, and reputational harm for the company. The basis of just and equitable work practices is created by these laws, which range from the fundamental values safeguarded by The Employment Act of India to the intricate regulations controlling employment periods, personnel classifications, and statutory benefits.
Introduction
Labor law is the body of law, rulings, precedent addressing the legal rights of, and restrictions on, working people and there trade union. It centers around the relationship between employer, employee, and trade unions. It defines the rights and obligations as workers, union members, and employers in the workplace. Generally it covers industrial relations, workplace health and safety; Employment standards; including general holidays, annual leave, working hours, etc. .[1] Labor is the subject in the concurrent list of the Indian Constitution. The Indian Government has codified various employment laws under four Codes – the Code on Wages, 2019, the Code on Social Security, 2019, the Industrial Relations Code, 2019 and the Occupational Safety, Health and Working Conditions Code, 2020.[2]
New Four Codes:
- Labour Code(Wage Code),2019: The Code replaces the following four laws: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976. The Code prohibits employers from paying wages less than the minimum wages. Minimum wages will be notified by the central or state governmentsWhile fixing minimum wages, the central or state governments may take into account factors such as: (i) skill of workers, and (ii) difficulty of work. The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature. Work of similar nature is defined as work for which the skill, effort, experience, and responsibility required are the same. The Code specifies penalties for offences committed by an employer, such as (i) paying less than the due wages, or (ii) for contravening any provision of the Code. Penalties vary depending on the nature of offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees. he central or state government may fix the number of hours that constitute a normal working day. In case employees work in excess of a normal working day, they will be entitled to overtime wage, which must be at least twice the normal rate of wages,etc.[3]
- The code on social security,2020: The Code on Social Security ,2020 subsumes nine central labour legislations.ie., The Employees’ Compensation Act, 1923, The Employees’ State Insurance Act, 1948,The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959, The Maternity Benefit Act, 1961, The Payment of Gratuity Act, 1972, The Cine Workers Welfare Fund Act, 1981, The Building and Other Construction Workers Welfare Cess Act, 1996 and the Unorganised Workers’ Social Security Act 2008.[4]
- The Industrial Relations Code,2020: The Code has been introduced in order to amalgamate, simplify and subsume the following 3 central labour acts under one Code: (i) The Trade Unions Act, 1926 (ii) The Industrial Employment (Standing Orders) Act, 1946 (iii) The Industrial Disputes Act, 1947. The Code is designated to safeguard the rights of employers and employees by providing easy labour reforms and facilitating ease of Doing Business. The Code is designed to consolidate & amend the laws regarding Trade Unions, conditions of employment in Industrial establishment or undertaking, and sleek settlement of industrial disputes. The code regulates the subsequent areas: Registration, Cancellation & Alteration of Name of Trade Union · Constitution of Work Committee & Grievance Redressal Committee · Incorporation of a Registered Trade Union · Recognition of Negotiating Union · Preparation of Standing Order · Register of Standing Order · Constitution of Industrial Tribunal · Illegal Strikes and Lock-outs · Procedure for Retrenchment and Re-employment of Retrenched Worker · Compensation to Workers in case of Transfer of Establishment · Prohibition of Lay-off · Closure of an Industrial Establishment.[5]
- The Occupational Safety, Health And Working Condition Code,2019: It subsumes and replaces 13 labour laws relating to safety, health and working conditions. These laws include: Factories Act, 1948; Mines Act, 1952; Dock Workers Act, 1986; Contract Labour Act, 1970; and Inter-State Migrant Workers Act, 1979. The Code sets up occupational safety boards at the national and state level to advise the central and state governments on the standards, rules, and regulations to be framed under the Code. The Code seeks to regulate health and safety conditions of workers in establishments with 10 or more workers, and in all mines and docks. Establishments covered by the Code are required to register within 60 days (of the commencement of the Code) with registering officers, appointed by the central or state government. Manufacturers, importers, designers and suppliers must ensure that any article created or provided by them for use in an establishment is safe, and provide information on its proper handling. The Code bars civil courts from hearing any matters under the Code. [6]
Changes In Labor Laws In 2024:
- Increase in Minimum Wages– The new wage code, once implemented, would prohibit employers from paying workers less than the stipulated minimum wage. Further, minimum wages would need to be revised and reviewed by the central and state government at an interval of not more than five years. Regional disparities in minimum wage floors are evident in India. Geographically, the minimum wage can range from INR 160 (US$1.92) per day in Bihar to INR 423 (US$5.07) per day in Delhi, in accordance with the Minimum Wages Act of 1948. Specifically, the Kerala region stands out with the highest minimum daily rates for non-labourer’s, while other parts of the country maintain relatively uniform minimum wage levels for such workers. The average Indian salary for unskilled work ranges between INR 2250 (US$26.95) to a maximum of INR 70,000 (US$838.50) per month, under the Minimum Wages Act. According to data released by World of Statistics on May 1, 2023, India has an average monthly wage of INR 46,861 (US$561.33).[7]
- Worker Classification: Under various employment legislations in India, workers are divided into three main categories: Employees: These individuals are directly employed by the company on its payroll. The company is liable for providing social security benefits such as PF, insurance, gratuity, maternity benefits etc. The terms of engagement of employees are governed by the local shops and establishments act or the factories act. Contract Workers: These individuals are engaged by a company (principal employer) through a manpower supply contractor company (contractor). These individuals are not on the payroll of the principal employer but of the contractor, who is responsible for wages and benefits. Consultants/Freelancers: These individuals are engaged by a company directly pursuant to a service or consultancy contract, which governs the terms of their engagement. They are engaged independently by a company on a retainership and typically their engagement is non-exclusive.[8]
- Workers’ Rights: The Labour Laws were also influenced by important human rights and the conventions and standards that have emerged from the United Nations. These include right to work of one’s choice, right against discrimination, prohibition of child labour, just and humane conditions of work, social security, protection of wages, redress of grievances, right to organize and form trade unions, collective bargaining and participation in management. [9]
- Remote Work Legislation: The Indian government has not introduced any labour laws or guidelines around remote working. However, India is in the process of codifying several of its national-level labour laws into four codes, and one of the labour codes in this regard is the Industrial Relations Code, 2020. The Industrial Relations Code, 2020 contains provisions relating to Standing Orders that mandate employers in certain establishments to adopt certain work rules for their employees. Additionally, the law on maternity benefits allows a female employee (who has returned from maternity, and whose nature of work is such that it may be performed remotely) to request permission from her employer to work remotely on mutually accepted terms and conditions.[10]
Changes In Employment Models:
Niti Aayog’s report ‘India’s Booming Gig and Platform Economy’ estimates that nearly 23.5 million workers will be engaged in the gig economy by 2029. Out of the four codes, gig work finds reference only in the Code on Social Security in section 2(35). Collective bargaining, a fundamental principle of modern labour law, is instrumental in ensuring workers’ rights despite the inequality in bargaining power between employers and employees.[11] Although the Code recognizes ‘gig workers’ including platform workers, it distinguishes between employees and gig workers. The Code provides for mandatory provision of gratuity, employee compensation, insurance, provident fund, and maternity benefit to employees. On the other hand, it has provided for framing of suitable social security schemes (Schemes) by the Central and State Governments for gig workers on matters relating to life and disability cover, accident insurance, health and maternity benefits, old age protection, etc.The Code further requires the Central Government to establish a social security fund (Fund) for gig workers. It imposes an obligation on the gig employers such as, ride sharing services, food and grocery delivery services or other goods and services provider platform to contribute 1-2% of their annual turnover into the Fund which may be used for carrying out the Schemes.[12]
Conclusion
In motto of ease of doing business and to harmonize the multiple labour legislations prevailing in the country, the government has consolidated 29 central labour laws (out of 44 existing central laws) into four labour codes i.e. Code on Wages, 2019; Code on Social Security, 2020; Industrial Relations Code, 2020 and Occupational, Safety, Health and Working Conditions Code, 2020 – (collectively referred to as the “Labour Codes”).[13] Private businesses must abide by labour regulations in order to protect themselves from lawsuits, preserve positive working relationships, and sustain moral corporate conduct. Labour law violations may lead to fines, penalties, court cases, and reputational harm for the company.[14] India has a sophisticated and adaptable legal framework for employment that protects both employers’ and employees’ rights. The basis of just and equitable work practices is created by these laws, which range from the fundamental values safeguarded by The Employment Act of India to the intricate regulations controlling employment periods, personnel classifications, and statutory benefits. Essentially, companies may cultivate a culture of justice, lawfulness, and trust by emphasizing compliance and keeping up with changes in regulations. This will set them up for long-term growth and success in the ever-changing Indian labour market.[15]
[1] ncib.in , https://ncib.in/pdf/ncib_pdf/Labour%20Act.pdf (last visited Oct.24,2024).
[2] Employment & Labour Laws and Regulations India 2024,ICLG, https://iclg.com/practice-areas/employment-and-labour-laws-and-regulations/india (last visited Oct.24,2024)
[3] The Code On Wages,2019 ,PRS INDIA, https://prsindia.org/billtrack/the-code-on-wages-2019#:~:text=The%20Code%20on%20Wages%2C%202019%20was%20introduced%20in%20Lok%20Sabha,or%20manufacture%20is%20carried%20out. (last visited Oct.24,2024).
[4] The Code on Social Security, 2020, V.V GIRI NATIONAL LABOR INSTITUTE , https://vvgnli.gov.in/en/code-social-security-2020 (last visited Oct.24,2024).
[5]The Industrial Relations Code 2020 , Dattopant Thengadi National Board for Workers Education & Development , https://dtnbwed.cbwe.gov.in/images/upload/The-Industrial-Relations-Code-2020_GV7I.pdf (last visited Oct.26,2024).
[6] The Occupational Safety, Health And Working Condition Code,2019, PRS Legislative Research, https://prsindia.org/billtrack/the-occupational-safety-health-and-working-conditions-code-2020 (last Visited Oct.26,2024).
[7] Dezan Shira& Associates, A Guide to Minimum Wage in India in 2024,INDIAN BRIEFING(Sept.27,2024) https://www.india-briefing.com/news/guide-minimum-wage-india-19406.html/#:~:text=Geographically%2C%20the%20minimum%20wage%20can,Minimum%20Wages%20Act%20of%201948.
[8] Hiring Dynamics In India: Worker Classification Risk And Strategies, LEGAL 500 (April.30,2024) https://www.legal500.com/developments/thought-leadership/hiring-dynamics-in-india-worker-classification-risks-and-strategies/ .
[9] LABOUR LAWS IN INDIA, NCIB.IN, https://ncib.in/pdf/ncib_pdf/Labour%20Act.pdf (last visited Oct.26,2024)
[10] New ways of working, NISHITH DESAI ASSOCIATES, https://www.nishithdesai.com/Content/document/pdf/Articles/New%20Ways%20of%20Working%20.pdf (last visited Oct.26,2024)
[11] Sahaj Mathur, Labour Law and the Gig Economy: Towards a Hybrid Model of Employment ,INDIA CORP LAW (Dec.25,2022) https://indiacorplaw.in/2022/12/labour-law-and-the-gig-economy-towards-a-hybrid-model-of-employment.html .
[12] India: Rules Governing the Gig Economy, LEXOLOGY, https://www.lexology.com/library/detail.aspx?g=0a14cdc3-5b43-472c-8974-5bcd43e74096 (last visited Oct.26,2024).
[13] Parizad Sirwalla, Labour codes: Accelerating India’s labour law revolution, TIMES OF INDIA (May. 06,2024) https://timesofindia.indiatimes.com/blogs/voices/labour-codes-accelerating-indias-labour-law-revolution/ .
[14] INDIAN LABOUR LAWS FOR PRIVATE COMPANY, SANKHALA CONSULTANTS ( May.09,2024) https://sankhlaco.com/indian-labour-laws-for-private-company/#:~:text=In%20India%2C%20labour%20rules%20are,a%20number%20of%20labour%20laws.
[15] Employee Laws in India – A Complete Details,LLOYD LAW COLLEGE, https://www.lloydlawcollege.edu.in/blog/employee-laws-in-india.html (last visited Oct.26,2024)
