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Reforms in India Labour Laws:- Pros and Cons

Abstract:- This blog takes a close look at the recent changes in Indian labour laws, going from the old ones to the big reforms in 2019-2020. They've combined 44 laws into four groups about wages, social security, work relations, and safety. While we see positive steps towards being fair and flexible, the blog also looks at worries people have.


The blog talks about the important changes, like the Code of Wages (2019) and Social

Security Code (2020), which aims to make sure people get paid fairly and are financially secure. At the same time, it doesn't ignore the problems, like pay differences, some missing social security parts, and possible issues with safety rules.

Encouraging a balanced view, the blog suggests we should support ideas that cover everyone with social security, set fair minimum wages, and create new ways for fair working conditions. It says finding a balance between businesses and workers is crucial, suggesting specific ways to make dispute-solving and penalties better.


Introduction:- Labour laws have changed over time, starting with laws like the Factories Act, of 1948, the Industrial Dispute Act, of 1948, the Minimum Wages Act, of 1948, the Trade Union Act, the Maternity Benefit Act, and Establishments (Standing Orders) Act, 1946. These laws protect workers, as seen in the Bijay Cotton Mills Ltd. v. State of Ajmer case, where they made sure workers get fair pay and are not taken advantage of. In another case, Randhir Singh vs Union of India, the Supreme Court talked about Equal pay for Equal work; using Articles 14, 16, and 39(c) of the Constitution. These judgements ensure that everyone is treated fairly in the law, has equal chances for jobs, and stops too much money from going to just a few people.


To make things clearer, recent changes combine old rules and introduce new ones for a better understanding of job-related regulations. Both the Central and State governments in India can work together on labour laws, but some matters are solely under the Central government's control.


India made significant changes to its labour laws to adapt to the modern workplace and boost economic growth. The overhaul involved replacing 44 existing labour laws with four new codes focusing on wages, social security, industrial relations, and occupational safety. This effort aimed to simplify and streamline the complex web of regulations governing the nation's workforce. With India expected to have the world's largest working population from 2022 to 2034, accommodating this growing workforce was crucial. However, challenges existed, requiring substantial reforms to address rigidities and administrative complexities in the previous labour system.


To improve Labour laws conditions and simplify rules, four sets of regulations have been combined:-


  • Code of Wages, 2019

  • Social Security Code, 2020

  • Industrial Relations Code, 2020

  • Occupational Safety, Health, and Working Conditions Code, 2020.

These reforms aim to provide clarity on aspects like pay, safety, collaboration, and health.


In 2019, the government introduced the Code of Wages to make sure everyone is paid fairly. The Minister of Labour, Mr. Santosh Gangwar, talked about it on July 23, 2019. This code sets a minimum national salary, stopping states from paying less. Changing the basic salary impacts almost half of the total pay, affecting how companies decide wages and how employees and employers handle their money.


Then, in 2020, the Social Security Code aimed to improve financial safety. It increased

savings limits, offered extra rewards for good work, and provided better benefits for new mothers. This code didn't leave out gig and platform workers; they can now access these benefits through the Employees' Provident Fund Organization (EPFO) and Employees; State Insurance Corporation (ESIC), which already help regular workers.


The Industrial Relations Code, also from 2020, simplified things for both bosses and workers. If a company has fewer than 300 workers, bosses no longer need special permission to stop work. Temporary workers now have similar conditions to permanent ones, making it easier for employers to manage. Certain job types have specific pay rules, making regulations clearer. The code also allows existing workers to become temporary for short periods or when needed. Work stoppage is defined as over half of employees not showing up on the - day they agreed on without telling their boss 14 days before.


Lastly, in 2020, the Occupational Safety, Health, and Working Conditions Code focused on women's rights. It allows women to work in any job for as long as they want. If a job is risky, the boss must ensure safety before women start. This code prioritizes good working conditions, fair wages, ways to address complaints, toll-free helplines, protection from abuse, and social security for all types of labours, including migrants.


Problems and issues raised:- In India, there is a growing concern that the existing Labour Laws are considered too rigid and haven't adapted to the changing times. People are worried because they believe that workers face difficulties, especially when times are tough economically. This is because there are strict rules about hiring and firing, and there aren't enough safety measures in place to protect them. Critics argue that these conditions can lead to poor working environments, resembling modern-day slavery. Recent changes in labour laws have sparked questions, with some fearing that these alterations may be utilized in a deceptive manner.


The specific issues within the new Indian labour codes:-

Code of Wages, 2019

People express apprehension about the restriction on states from setting wages below a certain level, but raising concerns about varying wages and prompting discussions on establishing a standardized minimum wage. Dispute resolution being entrusted to Gazetted Officers is viewed doubtfully, as concerns arise about their expertise in ensuring fair judgments. Similarly, the granting of penalty imposition power to non-judicial officers is seen as challenging the constitutional separation of powers, necessitating a careful review.


Moreover, exemptions for employers from penalties, provided due diligence is proven, trigger worries about potential exploitation and emphasize the need for a more robust accountability framework.


The Code on Social Security, 2020

It faces criticism for excluding workers based on the size of the company, with calls for universal benefits to ensure fairness. Limiting benefits to higher-income employees raises concerns about equity, emphasizing the importance of providing the same benefits to all workers. The lack of innovation in delivering social security benefits is seen as a hindrance to adaptability, prompting the suggestion to explore new and improved ways to ensure all workers receive the support they need. Additionally, the requirement of Aadhaar for benefits is viewed as a potential violation of privacy and may contradict a Supreme Court judgment, urging a reconsideration of identification methods.


Industrial Relations Code, 2020

In the Code on Industrial Relations (2020), stringent requirements for strikes and lockouts raise worries about impeding workers' rights to voice grievances, highlighting the importance of a balanced approach. The enforceability of tribunal honours, with the provision for authorities to waive requirements on public grounds, requires careful scrutiny to prevent potential misuse.


Occupational Safety, Health, and Working Conditions Code, 2020

Concerns regarding the Code on Occupational Safety, Health and Working Conditions (2020) involve potential professional discrimination due to specified working conditions for certain roles, prompting a call for a more inclusive approach. The omission of non-profit entities from the code raises questions about comprehensive coverage, emphasizing the need for regulations tailored to the unique nature of these organizations.


Suggestion:- In India, there's a growing concern about the strictness of labour laws not keeping up with the changing times. Workers worry that these rules, especially in hiring and firing, and the absence of safety nets, make working conditions tough, almost like modern-day slavery.


Recent changes in the laws are also being questioned because some fear they might be used in a tricky way. To address these issues, it's important to suggest a more flexible approach, adapting laws to fit the current work environment. Safety nets and social security measures should be established to protect workers during tough economic times. Hiring and firing rules should strike a balance between protecting workers and giving employers some flexibility. To avoid modern-day slavery-like conditions, there should be strict regulations against exploitative labour practices, with regular audits to ensure compliance.


Code on Wages (2019):- Looking specifically at the Code on Wages (2019), it's essential to review minimum wage structures and advocate for a standardized minimum wage across states. Dispute resolution can be improved by training Gazetted Officers and involving independent experts. Penalties should involve judicial officers to ensure fairness, and exemptions for employers need careful review to prevent misuse.


The Code on Social Security, 2020:- For the Code on Social Security (2020), the focus

should be on providing universal social security coverage, regardless of the size of the

company. Innovative approaches to delivering benefits should be explored, utilizing

technology while respecting privacy. The requirement of Aadhaar for benefits should be reconsidered in favour of alternative identification methods, aligning with privacy concerns and Supreme Court judgments.


Code on Industrial Relations (2020):- For the Code on Industrial Relations (2020), strike and lockout regulations should respect workers' rights, with arbitration mechanisms in place. The enforceability of tribunal honours needs clear guidelines to prevent misuse.


Occupational Safety, Health, and Working Conditions Code, 2020:- In the Code on

Occupational Safety, Health and Working Conditions (2020), working conditions should be standardized to avoid discrimination, and non-profit entities should be included in the regulations with tailored considerations for their unique nature.


In conclusion, India's recent changes in labour laws are a positive step toward creating a work environment that includes everyone and can adjust to different needs. While recognizing these good changes, it's important to address remaining concerns and make the rules better. Finding the right balance between protecting workers and allowing businesses to be flexible is crucial for long-term economic growth. The new laws about wages, social security, industrial relations, and safety are a good start but need ongoing improvement, focusing on more flexibility, standard minimum wages, and universal inclusion.


Encouraging social security for everyone through creative, business-friendly methods and making sure that working conditions are fair contribute to a fair and just system. Building better relationships between workers and employers, along with ongoing communication and checks involving everyone, improves adaptability.


Looking ahead, India has the chance to lead in creating labour laws that prioritize fairness and justice for everyone in the changing workforce. Upholding principles of openness, responsibility, and fairness makes India a positive example for global labour practices.


Frequently Asked Questions FAQs:-


Q1: Why did India change its labour laws, and how does it affect the growing number of people working?

Ans: India updated its labour laws to make things simpler. With a lot of rules (over 200 state laws and nearly 50 central laws), the goal is to create a friendlier environment for businesses, get more foreign investment, and offer more flexibility in how people work. The aim is to help India's large workforce grow and boost the country's economy.


Q2: How do the new rules make it easier for businesses and attract foreign investment in India?

Ans: The new rules are simpler and clearer, making it easier for businesses to operate in India. Old-fashioned paperwork is being replaced with electronic systems, reducing extra work. This is expected to make India more attractive for foreign companies to invest because the rules are more consistent and predictable.


Q3: How do the new labour rules try to help both workers and businesses?

Ans: The recent changes in India's labour rules want to make sure workers are treated well while also making things easier for businesses. The Code of Wages (2019) sets a minimum national salary, making sure workers are not paid too little. The Social Security Code (2020) even includes gig and platform workers, making the rules more inclusive and protective for different kinds of workers.


Q4: How do the new labour rules make things similar in different states and help businesses?

Ans: The new labour rules aim to make laws the same in all states through 'One nation, one law' This makes it less confusing for businesses that work in many states. Employers also get more freedom in deciding where to put workers and when to let them go. This flexibility is meant to help businesses run more smoothly and boost the economy.


Q5: What are some issues people have with the new labour laws, especially about the

'Inspector-cum-Facilitator' and who counts as a worker?

Ans: Some folks are concerned about the 'Inspector-cum-Facilitator' role because it has two jobs, which might cause issues. Also, the rules don't clearly say who is considered a worker or employee, causing confusion about who gets protection. These problems could make it tricky to enforce the new labour laws and make sure workers' rights are kept safe.

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