Recap: New Labour laws

Another important topic for mains is the reforms in the labour laws. Revise this topic again with this piece of article.

  • The Parliament has passed new versions of three labour codes — Industrial Relations Code Bill, 2020, Code on Social Security Bill, 2020 and Occupational Safety, Health and Working Conditions Code Bill, 2020.
  • The Code on Social Security 2020, which received the Presidential Assent on 28 September 2020, subsumes major regulations relating to social security, retirement and employee benefits.

What is Social Security?

  • Social security is “any government system that provides monetary assistance to people with an inadequate or no income”.
  • It refers to the action programs of an organization intended:
  • to promote the welfare of the population through assistance measures guaranteeing access to sufficient resources for food and shelter and
  • to promote health and well-being for the population at large and potentially vulnerable segments such as children, the elderly, the sick and the unemployed

Why need Social Security?

  • India has a very basic social security system catering to a fairly small percentage of the country’s workforce.
  • Traditionally, Indians relied on their extended families for support in the event of illness or other misfortunes.
  • However, due to migration, urbanization, and higher social mobility, family bonds are less tight and family units much smaller than they used to be.

Social Security System in India

  • India’s social security system is composed of a number of schemes and programs spread throughout a variety of laws and regulations.
  • Keeping in mind, however, that the government-controlled social security system in India applies to only a small portion of the population.
  • Furthermore, the social security system in India includes not just an insurance payment of premiums into government funds (like in China), but also lump sum employer obligations.

Generally, India’s social security schemes cover the following types of social insurances:

  • Pension
  • Health Insurance and Medical Benefit
  • Disability Benefit
  • Maternity Benefit
  • Gratuity

While a great deal of the Indian population is in the unorganized sector and may not have an opportunity to participate in each of these schemes, Indian citizens in the organized sector (which include those employed by foreign investors) and their employers are entitled to coverage under the above schemes.

Code on Social Security 2020

The 3 bills which were passed are

  1. Industrial Relations Code, 2020
  2. Code on Occupational Safety, Health & Working Conditions Code, 2020 &
  3. Social Security Code, 2020

All the labour laws (29 in number) being amalgamated into 4 labour codes are :

Name of the Code Amalgamated laws
Wage Code  4 laws – The Payment of Wages Act, 1936 The Minimum Wages Act, 1948 The Payment of Bonus Act, 1965 The Equal Remuneration Act, 1976
IR Code  3 laws – The Trade Unions Act, 1926 The Industrial Employment (Standing orders) Act, 1946 The Industrial Disputes Act, 1947
OS Code  13 laws – The Factories Act, 1948 The Plantations Labour Act, 1951 The Mines Act, 1952 The Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 The Working Journalists (Fixation of Rates of Wages) Act, 1958 The Motor Transport Workers Act, 1961 The Beedi and Cigar Workers (Conditions of Employment) Act, 1966 The Contract Labour (Regulation and Abolition) Act, 1970 The Sales Promotion Employees (Conditions of Service) Act, 1976 The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981 The Dock Workers (Safety, Health and Welfare) Act, 1986 The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
Social Security Code  9 laws – The Employees’ Compensation Act, 1923 The Employees’ State Insurance Act, 1948 The Employees Provident Fund 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 The Unorganised Workers’ Social Security Act, 2008

Here are the key features of these bills:

 (A) Social Security Code, 2020

  • The facility of ESIC would now be provided in all 740 districts. At present, this facility is being given in 566 districts only.
  • EPFO’s coverage would be applicable to all establishments having 20 workers. At present, it was applicable only on establishments included in the Schedule.
  • Provision has been made to formulate various schemes for providing comprehensive social security to workers in the unorganised sector.
  • A “Social Security Fund” will be created on the financial side in order to implement these schemes.
  • Work to bring newer forms of employment created with the changing technology like “platform worker or gig worker” into the ambit of social security has been done in the Social Security Code.
  • Provision for Gratuity has been made for Fixed Term Employee and there would not be any condition for minimum service period for this.
  • With the aim of making a national database for unorganised sector workers, registration of all these workers would be done on an online portal and this registration would be done on the basis of Self Certification through a simple procedure.

 (B) Occupational Safety, Health & Working Conditions Code, 2020

  • Free health checkup once a year by the employer for workers which are more than a certain age.
  • A legal right for getting Appointment Letter given to workers for the first time.
  • Cine Workers have been designated as Audio Visual Worker so that more and more workers get covered under the OSH code. Earlier, this security was being given to artists working in films only.

(C)  Industrial Relations Code, 2020

Efforts made by the Government for quickly resolving disputes of the workers include:

  • Compulsory facility for Helpline for redressal of problems of migrant workers.
  • Making a national database of migrant workers.
  • Provision for the accumulation of one day leave for every 20 days worked when work has been done for 180 days instead of 240 days.
  • Equality for women in every sphere: Women have to be permitted to work in every sector at night, but it has to be ensured that provision for their security is made by the employer and consent of women is taken before they work at night.
  • In the event of the death of a worker or injury to a worker due to an accident at his workplace, atleast 50 % share of the penalty would be given. This amount would be in addition to Employees Compensation.
  • Provision of “Social Security Fund” for 40 Crore unorganized workers alongwith GIG and platform workers and will help Universal Social Security coverage
  • Occupational Safety & Health Code to also can now over cover workers from IT and Service Sector.
  • 14 days notice for Strike so that in this period amicable solution comes out.

Now let’s look up at the various loopholes of these Bills one by one:

A. The Code on Social Security, 2020

  1. No robust entitlements:
  • To begin, the Code does not emphasise social security as a right, nor does it make reference to its provision as stipulated by the Constitution.
  • In addition, it does not stipulate a clear date for enforcement, which will leave millions of workers vulnerable without clear social protections.

2. No universalization

  • A model scheme covering the issues such as education, health, social security, pensions and other benefits which can assure a dignified life for workers.
  • It is essential that social security protections be made universal for the entire Indian workforce, i.e. that such protections be universal.
  • Instead of this, the Code makes arbitrary categorizations that will leave millions of working poor out of its protections. While the Code defines multiple categories, most definitions are ambiguous.

3. Migrant workers find NO special mention

  • Interstate migrant workers should have been mentioned as a separate category with the establishment of a sizable Welfare Fund with contributions by sending and receiving states and employers.
  • Given the particular distress faced by such workers in the last few months, there are no provisions established for migrant workers who face very specific vulnerabilities.
  • There is not even a provision for the portability of social security which takes into account their continuous movement within the country.
  • There is no consideration for unemployment protection for unorganised workers, which is particularly important at times of great recession and crisis.

4. Pro-employer

  • Finally, the Code makes it easier for employers to flout legally required social protection for workers.
  • For instance, there is no stringent penalty for non-contribution of Provident Fund dues by employer/contractor.
  • As an effective deterrent and policy tool to ensure timely payment of dues, penal provisions should be incorporated for large employers who have the capacity to pay regular Provident Fund contributions.

B. The Occupational Safety, Health and Working Conditions Code, 2020

  1. Ignores key economic activities
  • The Code excludes many branches of economic activities, most notably, the agriculture sector which employs more than 50% of total working population of India.
  • Further, the employees in other unorganised sectors such as small mines, hotels & eating places, machinery repairs, construction, brick kilns, etc find no mention.
  • Also those employed as informal workers in organized sectors, including new and emerging sectors such as IT and IT enabled services, digital platforms, e-commerce, have also not found coverage under the Code.

2. Ambiguous occupational safety

  • It is appalling that the Code has got away by not fixing any responsibility on employers with respect to safety and health.
  • It does not specify even minimum standards for Occupation Safety and Health, or daily and weekly working hours and everything has been delegated to the Central government to be stipulated through notification.
  • A minimum Occupation Safety and Health standard should have been specified in the Code itself.

3. Issue of fair treatment

  • The Code does not contain any provisions for equal treatment for contract labour that perform work of a similar nature as that of permanent workers in the same establishment.
  • Contract labour that is engaged in similar work in the same establishment should have been treated on par with permanent workers in the matter of wages and other conditions of employment.

C. The Industrial Relations Code, 2020

  1. Restrictions on ‘Freedom of Association’
  • The definition of strike has been broadened to include “the concerted casual leave on a given day by fifty percent or more workers employed in an industry”.
  • This constrains workers’ ability to participate in collective bargaining processes and demonstrations.
  • Beside this, there are several restrictions made on right to strike – workers will be subject to penal sanctions for the mere fact of organizing or participating in a peaceful strike.
  • Imposing such sanctions on strikes that are justified amounts to a grave violation of the principles of freedom of association.

2. Definitional issues

  • The definition of “industry” includes terms like “charitable”, “philanthropic”, “social”, etc. which are undefined and can be misused.
  • A manufacturer of sanitary pads or toilet paper, for instance, may claim to be a social activity and therefore not an industry.
  • The change in the definition of “wage” is either the result of muddled thinking or made with malicious intent.
  • It will have the effect of reducing retrenchment compensation, subsistence allowance etc., which is deplorable.

3. Fixed-term contracts

  • There is an institutionalization of “fixed term contracts” as tenure of employment.
  • Workers employed on a fixed term basis may be terminated on the completion of their contract, even while there is an actual need for their services.
  • In other words, they may be terminated from service without any just and reasonable cause. This will further create instability and massive labour market unrest.
  • The fixed term employment does not guarantee the right to receive notice or wages in lieu of notice prior to the termination of services.


  • The government needs to work more to recognise that focusing on economic growth without redistribution of wealth leads to jobless growth and socially unaccountable prosperity.
  • Every law has to aim to maintain the best possible balance between competing interests and should try to give as much comfort to the weaker of the two sides, as much possible in the larger interest of our nation.
  • Ultimately these laws will be as good as their implementation, mere letters of law have no meaning.
  • The government has to ensure that they are implemented with honesty and integrity, then only the country will be able to achieve the desired goal of speeding up economic growth and unleashing the untapped potential of thousands and thousands of our industries, businesses and entrepreneurs to take the nation to new heights.


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