3 New Labour Codes passed by both Houses of the Parliament

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Three labour codes, i.e., the Code on Social Security, 2020, the Industrial Relations Code, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 have now been passed by both houses of the Parliament, i.e. the Lok Sabha and the Rajya Sabha. The codes will become law once they receive the President’s assent, are notified in the Official Gazette and made effective.

As per the Government’s Press Release, the new codes will prove to be a game changer in labour reforms impacting more than 500 million organized and unorganized workers in the country, including new-age work structures such as gig workers. Set out below is a brief overview of the three new labour codes.

The Code on Social Security, 2020 intends to consolidate, into a single code, 9 central labour statutes related to social security, which inter alia include the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, the Employees’ State Insurance Act, 1948, the Maternity Benefit Act, 1961, the Payment of Gratuity Act, 1972 and the Unorganized Workers’ Social Security Act, 2008. It proposes to extend the social security benefits to all the employees and workers, in both, the organized and the unorganized sectors, including ‘gig workers’.

The Industrial Relations Code, 2020 intends to consolidate and amend the existing laws relating to conditions of employment in an industrial establishment and proposes to subsume, into a single code, 3 central labour statutes viz., the Industrial Disputes Act, 1947, the Trade Unions Act, 1926 and the Industrial Employment (Standing Orders) Act, 1946. A key feature of the Code on Industrial Relations 2020 is that it proposes to increase the threshold for applicability of the provision relating to the requirement of taking the prior permission of the appropriate Government before lay-off, retrenchment and closure from 100 to 300 workmen. It also seeks to provide fixed term employees with all the benefits akin to permanent workers (including gratuity), except for notice upon conclusion of a fixed period and retrenchment compensation. The employer has been provided with the flexibility to employ workers on a fixed term basis based on requirement and without restriction on any sector.

The Occupational Health, Safety and Working Conditions Code, 2020 seeks to consolidate and amend the laws regulating the occupational health, safety and working conditions of the persons employed in an establishment. It subsumes and replaces 13 central labour statutes including inter alia the Factories Act, 1948, the Mines Act, 1952, the Dock Workers Act, 1986, and the Contract Labour Act (Regulation and Abolition) Act, 1970.

Date: September 24, 2020