New Labour Codes: Clarion Call by PM for embracing changes to Labour Law Reforms, ever witnessed in the Indian history; having engulfing impact on both the Organizations and the Workforce.
Karma Global is in the business of establishment and vendor compliance management. It has hundreds of elite domestic clients on its excellent service dispensing list. The expert staff on its roll deals with thousands of regulatory compliance acts on a Pan India basis, some of the acts being state-specific while others are enacted by the Central Government.
Karma Management has now become Karma Management Global Consulting Solutions Pvt. Ltd. which was incorporated in the year 2004 and has now completed almost 18 years of its existence.
As late as April 2021, Karma Global took a very bold step of venturing into foreign shores in terms of shoving up its business in countries like the US, UK, UAE, Canada, Philippines, and Asia to cater to the expanding needs of global enterprises.
Since then, it has already made its mark in terms of providing excellent services in the areas of payroll, outsourcing, recruitment and talent acquisition, regulatory compliance, and advisory.
In this blog, Karma takes forward the clarion call given by our PM to the Labour Ministers of all States and UTs to discuss various significant labour-related issues which will help create further synergy amongst the Centre and State Governments in re-thinking the issues and challenges and ensuring effective implementation of schemes for the welfare of workers.
New Labour Codes: Changes, challenges, confrontations, crossing overs, and canvassing; maximizing impact for employees and employers
The Conference was held on the basis of four thematic sessions on :
Integrating the e-Shram portal for onboarding social security schemes to universalize social protection;
Swasthya se Samriddhi for improving medical care through ESI hospitals run by State Governments and integration with PMJAY;
Framing of rules under four Labour Codes and modalities for their implementation
Vision Shramev Jayate @ 2047 with focus on just and equitable conditions of work, social protection to all workers, including gig and platform workers, and gender equality at work among other issues
Bringing Organized and Unorganised sectors together on a common platform
India has been trying to reform its labour laws for the past 20–25 years, so as to align them in the context of the present workplace ecosystems with the aim of bringing in more uniformity and flexibility across both the organized and unorganized sectors.
In a historical move, it is finally all set to replace 29 existing labour laws with the four new labour codes, dealing with ‘wages’, ‘social security, ‘industrial relations, and ‘occupational safety, with an objective to rationalize, consolidate and simplify complex labour legislations.
In accordance with our History. Indian labour law is closely connected to the Indian independence movement, and the campaigns of passive resistance leading up to independence. In earlier historic times, India was under colonial rule by the British Raj; labour rights, trade unions, and freedom of association were all regulated by the: Indian Slavery Act, 1843.
Historically speaking, the law on these matters was at one time described as the law of master and servant. It implied a contractual relationship in which one party agreed to be under the control of the other, in the sense that the servant was bound to obey orders not only as to the work that he would execute but also as to the details of the work and the manner of its execution. In return, the master had to pay a wage and grant certain minimum conditions for the protection of the worker.
As the law developed, the implied terms and statutory incidents attached to this relationship concerning such matters as termination of employment, dismissal procedures and compensation, minimum wages, conditions of work, and social security rights began to limit freedom of contract.
The individual employment relationship continues, however, to be the subject matter of labour law to which general legal principles, as opposed to statutes and collective agreements, apply.
Overhauling and revamping need of the hour
Industry experts think and feel that with the new labour codes, drastic changes in organized and unorganized sectors are expected to re-condition workplaces by improving working conditions and revamping existing processes to achieve company higher growth and results more sustainably.
Most of the people that we spoke to, opined that industries obey most laws most of the time. For anything to be successful, a more cautionary and disciplined approach needs to be taken. So also, in this instance, maximizing obedience is a crucial element in law being successful and that is why we see the Government instilling confidence in the stakeholders and having dozens and dozens of meetings to set off the apprehensions and anxieties of all the people concerned.
It is said that anything in overdoses that strikes the heart of civil society in bad in nature, however, upholding laws also brings in enjoining of good behavior and therefore compliance is a must and a straightforward measure to achieve the much-desired goals.
Another impact of the law is that the overall effects of the law’s interaction with social, political, and economic forces have to be seen. It is so because gauging the consequences of any particular law has to explore the relationship of law and society in general.
Elements of labour law
The basic subject matter of labour law can be considered under nine broad heads:
- employment;
- individual employment relationships;
- wages and remuneration;
- conditions of work;
- health, safety, and welfare; social security;
- trade unions and industrial relations;
- the administration of labour law;
- and special provisions for particular occupational or other groups.
A heartening move
Complications and complexities in labour legislation, in the present context, do not seem to favor businesses and do not go hand in hand, and are a hindrance to the overall texture and expansion of any organization, especially in the scenario of going globally on a massive scale.
From the employee’s point of view, labour laws should aim to correct the imbalance between the employer and the employees, so that the employer can take action against the workers for misconduct in a fair manner, and at the same time, the employees should recognize the process by which workers should contribute to the overall prosperity of an organization without much ado of trivial issues and confrontations, disputes and litigations.
“Social security, social equity, health, ease of doing business are the most prominent factors which should be aimed at providing social and economic security to the workers, and at the same time, the laws should dismiss anything aimed at reduction of production losses due to industrial disputes and to ensure timely payment of wages and other convenient amenities to workers. And thus this sets the importance of the labour that is desirable to bringing in sweeping reforms and enabling industries to be more self-reliant and self-sufficient.
THE FOUR LABOUR CODES – Let us take a closer look at some of the features of this Code on Wages, 2019
- The definition of ’employers’ includes any person who directly or indirectly employs one or more persons at an establishment.
- The Payment of Wages Act applies only to employees under wages below Rs. 24,000 per month. This threshold limit is now being removed under the Code on Wages. Hence, the Code shall apply to all employees irrespective of monthly wages.
- The Code provides a standard definition of the term ‘Wages’, as opposed to the different definitions given under the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, and the Payment of Bonus Act, 1965.
- According to the conditions applicable in the Code, the employer shall pay wages not less than 50% of the total remuneration. The computation of wages will include basic pay, dearness allowance, and retaining allowance, and it excludes house rent allowance, conveyance, statutory bonus, overtime allowance, and commissions. Minimum 50% of Cost-to-Company shall comprise basic pay and dearness allowance.
- It prohibits employers from paying wages less than the minimum wage. The Central or State Governments, as the case may be, are required to notify minimum wages based on (i) the time or number of pieces produced, (ii) the skill of workers, and (iii) work difficulty.
- The Central and State governments shall constitute Advisory Boards per the Code’s provisions. Central Advisory Board shall comprise members representing employers and employees, including independent persons and five state government representatives. State Advisory Board shall comprise representative members of employers and employees, including an independent person.
- State Advisory Boards will consist of employers, employees, and independent persons. Further, one-third of the total members of the central and state Boards will be women. The Boards will advise the respective governments on various issues, including (i) fixation of minimum wages and (ii) increasing employment opportunities for women.
- As per the Code, the Central Government will fix the floor wage, considering workers’ living standards. It is to be noted that the floor wages will be different for different geographical locations.
- The minimum wages decided by the Central or State Governments must be higher than the floor wage. If the minimum wages fixed by the Central or State Governments are higher than the floor wage, they cannot reduce the minimum wages.
- The employer has the right to deduct wages on the grounds including fines, absence from duty, accommodation provided by the employer, or the advance payment made to the employee. It is to be noted that the deductions should not be more than 50% of the employee’s total wage.
- The employees whose wages do not exceed a specific monthly amount are entitled to an annual bonus of at least 8.35% of their wages or Rs. 100/-, whichever is higher. As per the Code, an employee can receive a maximum bonus of 20% of his annual wages.
Conclusion
As said above, Karma Management Global Consulting Solutions Pvt. Ltd. which is a keeper of all laws and regulations on behalf of the clients whose compliance services it handles, is also of the strongest opinion that in our country as well, legislations are made for the benefit of all the stakeholders, be it the employers or the employees and therefore, the same has to be adhered with, in the strongest sense of its functionalities or face action at the hands of the authorities in case of breaches knowingly done.
The rules of different systems
In the United Kingdom, for instance, the tradition has been to allow a maximum of initiative and freedom to employers’ and workers’ organizations in the regulation of their mutual relations and the determination of conditions of work. Most countries on the Continent, by contrast, have detailed legislative provisions on these matters.
In Australia and New Zealand, conciliation and arbitration tribunals determine matters normally dealt with in other countries by legislation or collective agreement, such as wages, hours, and conditions of work.
In the United States, the first attempt of the Franklin D. Roosevelt administration to regulate hours and wages by codes of fair competition during the Great Depression was also held to be unconstitutional as an improper delegation of legislative power by Congress to the executive branch. But thereafter the temper of judicial review changed, and the validity of federal legislation guaranteeing free collective bargaining in private industry, regulating wages and hours, and establishing social security was upheld
In Canada, a pioneer in establishing a labour department, restrictive judicial interpretations of the powers of the federal government had a similar effect, and only after World War II did federal-provincial cooperation afford a basis for achieving greater uniformity and more rapid progress.
Much of the French Labour Code became applicable through the 1952 Labour Code for Overseas Territories to the states that were formerly French dependencies and remains the basis of their labour law
The U.S. legislation of the period from the 1930s onward has been exported to Japan, the Philippines, Liberia, and other countries.
The Mexican Labour Law of 1931, varied by elements derived primarily from European models, had considerable influence on the early development of labour law in a number of Latin American countries.
Proprietory blog of Karma Global Tech Management Firm
This blog has been compiled by the internal staff of Karma with the knowledge and expertise that they possess, for its monthly newsletter Issue 03 of September 2022 in case of specific or general information or compliance updates for that matter, kindly reach out to the
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