A Summary of Key Differences Between Labour Code Bills 2019 & 2020

 

Animay Singh
Simpliance COE

Biography

Madhu Damodaran
Simpliance COE

Biography

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Labour code bill

Introduction

The resumption of the delayed Monsoon session of Parliament was marked by the introduction of several legislations that have been pending. Amongst these are the three remaining labour codes that are part of the Central Government’s long-standing plan to untangle India’s regulatory framework. Namely, the Code on Social Security Bill, the Industrial Relations Code Bill and the Occupational Safety, Health and Working Conditions Code Bill. On 19th September, the Central Government rescinded the previous versions of the bills as introduced in 2019 and replaced them with new ones.

The move comes after the Bills were introduced three days before they were passed by the Lok Sabha on 22nd September. Together, the three bills contain 411 clauses and 13 schedules which affect every working individual in the country.

The Parliamentary Standing Committee on Labour submitted its reports on the basis of the 2019 version of the bills. There are several portions of the 2020 versions of the labour codes that differ from their 2019 counterparts. This article aims to provide the reader with a summary of the key changes that have taken place and their implications on labour law compliance.

The Changes & Their Implications

The most significant change is the raising of thresholds for applicability across various parts of all the three Code bills. This may be seen under the definition of factory under Section-2(w) under the Occupational Safety, Health and Working Conditions Code bill hereinafter referred to as the OSH Code Bill, 2020. Any manufacturing unit with twenty or more workers using electric power and those without the use of electricity with forty or more workers are considered factories under the Act. This is an increase from the threshold of 10 and 20 workers respectively under the 2019 Code Bill. This will definitely reduce the compliance burden on MSMEs; however, questions remain over its impact on facilitating the shift of labour capital from informal modes of employment to formal modes thereof. One way this can be addressed is by providing for the same under the Rules, provisions relating to an intimation procedure for establishments that fall below the mandated threshold can be implemented. This will ensure a basic level of safety is maintained even in establishments outside the scope of factory.

Similarly, the application of Industrial Standing Orders under Chapter-IV Section-28 of the Industrial Relations Code Bill, 2020 raises the threshold of applicability from 100 under the 2019 Code Bill to 300. While this change has been justified on the basis of State Governments bringing them in as amendments prior to the introduction of the new labour Code Bills, the question that needs to be asked is what happens to the rights of workers in establishments outside the scope of the above threshold. This is because the very objective of the Standing Orders is to ensure that workers are aware of their conditions of work and are notified of any change with regards to the same. The threshold for application with regards to contract labour has been increased from 20 workers under the 2019 Code Bill to 50 under the 2020 Code Bill. This is another change that reflects the general trend seen in State Amendments throughout the year. Section-57 of the OSH Code Bill which brings this provision in is modelled on the Andhra Pradesh Amendment to the Contract Labour (Regulation and Abolition) Act, 1970.

Other changes include increased delegation of rule-making power as well as a general prohibition of deployment of contract labour in core activities. There is a list of permitted non-core activities in which contract labour may be employed. Another change under the OSH Code Bill, 2020 is the green light given to employment of women in operations that may be hazardous to their health and safety. This is a marked departure from the 2019 Bill that empowered the Government to prohibit the same and instead empowers the Government to mandate the maintenance of adequate safeguards. The Standing Committee Report had mentioned a modification to the 2019 Bill to ensure that women workers being employed are not unfairly prejudiced. The Government has ensured that the same does not occur by altering the provision in the current version of the OSH Code Bill.

Conclusion

While most of the new versions of the labour Codes have retained their original structure, the incremental changes brought in affect their scope and application. Most of the changes brought in are reflections of the State Amendments that were brought in following COVID-19 to promote economic recovery and facilitate ease of doing business. There are incidental consequences created by these changes that need to be addressed, either in the Rules to supplement the Codes or by way of delegated legislation/notification by the appropriate Government.

Do you think the changes in threshold brought through the new versions of the three Labour Codes are a step in the right direction? What changes do you believe will facilitate ease of doing business and shift of labour from informal to formal in India?

Drop your thoughts in the comments below.

Disclaimer: This blog is meant for informational purposes and discussion only. It contains only general information about legal matters. The information provided is not legal advice and should not be acted upon without seeking proper legal advice from a practicing attorney.
Simpliance makes no representations or warranties in relation to the information on this article.

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9 thoughts on “A Summary of Key Differences Between Labour Code Bills 2019 & 2020”

  1. It was a good reform by the Indian government in implementing new labour codes. This is definitely an impact in a positive away for all employed individuals.

  2. The worker of Restaurant and hotel must be minimum Salery 18k a month for waiter and captain department by 8hours duty ,,,the labour law must proceed the laws as soon possible …

    Indian hospitality Salery is very less ,In UK a waiter get £650 in one hours (nearly 5k) ….

  3. Delay defeats the very purpose of the amendment hence small correction can be made if required after implementation. We need speed in every action by the government.

  4. The establishments have to provide cool and humid air in the workplace. Does this mean that all manufacturers have to provide air cooling for comfort of workers?

  5. 1) Fixed term employee should get social protection, Employee hired in this category should be paid Gratuity & Retrenchment compensation calculated for 30 days.
    2) How wages will be determined, Clear directions when he is engaged. It should be based on skill sets.
    3) ESI has never improved and gained confidence in providing it`s health related services this has a direct impact on IR.
    IP always try to go for treatment from private Medical Hospital. He should be allowed to go for Mediclaim as an option.
    4) Employee can improve his skill sets ( Max up to 3 levels, Beginner, Master and Specialist) .

    1. Employers pays huge amount of ESI. But due to non having ESI dispenseries near within 10kms workers take medical aid from local doctors. In this way employee can,t get the ESI facility and have to pay.

  6. The threshold limit of persons in OSH bill should also be 40 instead of 20 in case factory/manufacturing unit using power i.e.at par with if no power is being used because to get rid of Law the employer does not show more than 20 person may be there are 30 40 person.
    Due to this there will be no inspector raj for SMSE units which ultimately reduce corruption.

  7. Its right that that the threshold limit of workers should be 40 .there are so many factories having manual work. In this way there will be no inspector raj and this is very important for small industry.

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