Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

The Industrial Relations Code Bill, 2019Priority 1

Note4Students

From UPSC perspective, the following things are important :

Prelims level : The Industrial Relations Code Bill, 2019

Mains level : Significance of the Bill



The Union Cabinet has approved The Industrial Relations Code Bill, 2019.

The Industrial Relations Code Bill, 2019

  • It proposes to amalgamate
  1. The Trade Unions Act, 1926,
  2. The Industrial Employment (Standing Orders) Act, 1946, and
  3. The Industrial Disputes Act, 1947.
  • This is the third Code in the government’s proposed codification of central labour laws into four Codes.

Importance of the Bill

  • The most important aspect of the Bill is that it presents the legal framework for ushering in the concept of ‘fixed-term employment’ through contract workers on a pan-India basis.
  • Currently, companies hire contract workers through contractors.
  • With the introduction of fixed-term employment, they will be able to hire workers directly under a fixed-term contract, with the flexibility to tweak the length of the contract based on the seasonality of industry.
  • These workers will be treated on a par with regular workers during the tenure of the contract.
  • The move to include it in a central law will help in wider reach, and states are expected to follow similar applicability.

Changes in the Bill

  • The threshold required for government permission for retrenchment has been kept unchanged at 100 employees, as against the proposal for 300 employees in an earlier draft of the Bill, which was opposed by trade unions.
  • Instead, the government has now provided flexibility for changing the threshold through notification.
  • The rigidity of labour laws about laying off labour has often been cited by industry as the main reason limiting scalability and employment generation.
  • At present, any company having 100 workers or more has to seek government approval for retrenchment.
  • The provision of fixed-term employment, which helps in the flow of social security benefits to all workers along with making it easier for companies to hire and fire, in The Industrial Relations Code Bill.

Fixed Term Employment Workman

  • Earlier the government had included the category of ‘Fixed Term Employment Workman’ for all sectors in the Industrial Employment (Standing Orders) Act, 1946.
  • This was only applicable to ‘central sphere’ establishments, and the states did not follow suit.
  • Finance Minister saif that workers under a fixed-term contract would be taken up depending upon the seasonality of the industry, but would be treated on a par with regular workers.

Criticisms of the bill

  • The unclear provision regarding retrenchment would lead to uncertainty, and discretionary behaviour during implementation by the central or state government.
  • The moment the law will provide flexibility for the applicability, it leaves the matter to the discretion to the appropriate government (states or Centre). Then the clause can be misused.
  • Any discretion in law leads to uncertainty, lack of clarity, discriminatory implementation, and provides scope for unnecessary usage.
  • The government should be clear whether to increase the threshold or retain the threshold and face the consequences.
  • Also, fixed-term employment needs to be introduced with adequate safeguards, otherwise it runs the risk of encouraging conversion of permanent employment into fixed-term employment.

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