Labor law

The working conditions of labor during industrial revolution was characterized by long working hours (12-16 hour shifts), low wages, unsafe working conditions and lack of worker rights. The labor movements which arose articulated for a need to improve the conditions of labor. The demands included the need to have freedom to form association, collective bargaining, having free labor, equal pay, freedom from employment discrimination, legal working age, eight hour day, annual leave, paid over time, leaves and weekly offs, minimum wage, occupational safety and health and employment protection.

Protecting labor rights is considered fundamental to human dignity. Labor rights at workplace only enables enjoying other economic, social, cultural, political or other rights. Need for maintaining labor standards have been articulated by International Labor Organization (ILO) and UN declaration of Human Rights, 1948.  Sustainable Development Goal 8 of the SDGs Decent Work and Economic Growth also calls for protecting labor rights & promoting safe working environments, promoting full employment and decent work and ending modern slavery.

India too witnessed different stages of labor activism. Despite its limitations such as its failure to cover informal sector workers, declining collective bargaining due to decline of trade unionism, it did contribute to influence on several labor welfare schemes and ensured that management complied with labor laws. The labor laws in India made provisions that ensured that workers take up work of one’s choice, right against discrimination, prohibition of child labor, fair and humane conditions of work, social security, protection of wages, redressal of grievances, right to organize and form trade unions, collective bargaining and participation in management. Trade unionism to an extent ensured that such conditions are followed in organized sector. This is not to deny, that there have been shortages in implementation.

The last decade has seen a call for bringing about labor reforms. Critics have pointed that in the name of labor reforms, a pro-business approach is sought to be implemented, which does not necessarily protect labor. Rather than an attempt to improve conditions of labor, they are more prone to create conditions in favor of business in the name of ‘ease of doing businesses’. It makes a flawed assumption of labor being a major source of cost, which makes business less cost competitive and hence the need to give a free hand to business to have free labor hiring and firing policies to keep its cost under check. Critics say it tends to be anti-labor.

The critic which is emerging on labor code has been given below: –

Industrial Relations Code, 2020

Critics point that practice of ‘hire and fire’ has now been more formalized. The labor code has made provisions for ‘fixed work contracts’, which allow for flexibility of hiring for shorter periods. Though they could continue for longer periods through regular extensions till superannuation, yet they would not attain the status of full time employee. This could affect their bargaining abilities.

The code makes it increasingly difficult for workers to go on a legal strike. Workers can now go on strike through giving a 60 days’ notice period to the employer. In case a strike is to expire, workers cannot go on strike within 14 days of giving notice. This goes against the principle of freedom to form association and collective bargaining. The provisions make it difficult to use strike as a tool for protection of workers’ rights.

In case of industrial disputes, the employer may negotiate with a union which has representation of 51% workers. In case there is no such union with such representation, it could negotiate with negotiating council consisting of trade unions with over 20% representation of workers. If the largest union which the business may wish to speak to tends to be more pro-business, then the labor voices and issues may not get represented and settled during negotiations.

In case of Industrial disputes earlier, the case was to be taken by judicial officer in the Labor courts. Under the current code, this would also include a non-judicial or administrative officer. The administrative officer could be appointed by the Government and could go against labor interests.

The closure of a business earlier required permission of regulatory authority for businesses with about 100 employees.  Now the bar has been raised to 300. Since a larger number of businesses falls within the 300 bracket, now the businesses can be closed with lesser restrictions and need for permission.

Code on Social Security, 2020

Code on Social security seems to intend to universalize social security. However, by redefining the number of employees in establishments for whom social security apply, the upper employee limits have been pushed further. Employee Provident Fund (EPF) would be applicable for establishments with 20 or more employees. Employee State Insurance (ESI) will be applicable for employees with 10 or more employees. Hence many of the micro and small enterprises can now be less compliant to social security provisioning. A larger number are excluded rather than included into social security provisions under the new code. No clear implementation mechanism beyond Boards is put into place for achieving social security. In the past too, similar pronouncements have been made, but has not been able to achieve result.

Despite exhibiting its intent to extend social security to unorganized workers similar to unorganized workers social security act, (UWSSA) 2008, it fails to clearly create mechanisms for achieving it. It retains the earlier provision of having national and state level security boards. It fails to address issues that made UWSSA ineffective in extending social security to unorganized sector workers. National minimum social security which a citizen is entitled to is missing.

Occupational Safety, Health and Working Conditions Code, 2020

Businesses have been made less liable for ensuring good occupational safety and health conditions. Ideally businesses need to ensure proper working conditions such as proper ventilation, space, water and sanitation facilities, work hours etc. Earlier enterprises with 10 employees which use power and 20 workers which do not use power were exempted from ensuring proper working conditions. Now the bar has been raised to enterprises with 20 employees which use power and 40 workers which do not use power. The increase in bar, will keep a larger number of workers outside the scope of being entitled for proper occupational, safety and working conditions. Employer accountability in case of ensuring OSH and support in case of industrial accidents has been eliminated for businesses with less than 40 workers. The bill talks of bringing about 8 hour working days. However, contrary to the same, some states have passed legislations for 12 hour working days.

The codes falls short of ensuring labor rights for the workers both in the organized and unorganized sector. In attempt to create conditions in favor of business, labor rights are curtailed. While intending to extend social security, implementation mechanisms are not put in place.

 T Navin works with an NGO as a Researcher.


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