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The parliament of India enacted four labour law codes in 2019 and 2020: the Code on Social Security, 2020, the Code on Wages, 2019, the Industrial Relation Code, 2020, and the Occupational Safety, Health, and Working Conditions Code, 2020, to replace 29 labour laws. While the President of India has given approval to all of the codes, the government is yet to put them into effect.

The Code on Wages, 2019: It has subsumed the Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976.  

The Code on Social Security, 2020: It has subsumed the Employee’s Compensation Act 1923, Employees’ State Insurance Act 1948, Employees’ Provident Funds and Miscellaneous Provisions Act 1952, Employment Exchanges (Compulsory Notification of Vacancies) Act 1959, Maternity Benefit Act 1961, Payment of Gratuity Act 1972 and the Cine-Workers Welfare Fund Act 1981. 

The Occupational Safety, Health and Working Conditions Code, 2020: It has subsumed the Factories Act 1948, Contract Labor (Regulation and Abolition) Act 1970, Mines Act 1952, Dock Workers (Safety, Health and Welfare) Act 1986, Building & Other Construction Workers (Regulation of Employment and Conditions of Service) Act 1996, Plantations Labor Act 1951, Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act 1979, Working Journalist and Other Newspaper Employees (Conditions of Service and Miscellaneous Provision) Act 1955, Working Journalist (Fixation of rates of wages) Act 1958, Cine Workers and Cinema Theatre Workers Act 1981, Motor Transport Workers Act 1961, Sales Promotion Employees (Conditions of Service) Act 1976 and the Beedi and Cigar Workers (Conditions of Employment) Act 1966. 

The Industrial Relations Code, 2020: It has subsumed the Trade Unions Act 1926, Industrial Employment (Standing Orders) Act 1946 and Industrial Disputes Act, 1947. 

Features of New Labour Code:

• Broader Applicability

The Codes have expanded their applicability criteria to encompass a greater number of establishments and employees. In the past, the Minimum Wages Act of 1948 was only applicable to workers in scheduled employment, but with the Code on Wages of 2019, it applies to all establishments and employees. The Payment of Wages Act of 1936 previously had a threshold applicability limit of ₹24,000, but this has been eliminated. Additionally, the Employee's Provident Fund Act of 1952 was only applicable to scheduled employment listed on the portal. The Code on Social Security of 2020 removes this industry-specific applicability criteria.

• Narrower Threshold Limits

The new Occupational Safety, Health and Working Conditions Code of 2020 has introduced two significant threshold that limits the extent of its applicability. Previously, the Contract Labour (Regulation and Abolition) Act of 1970 applied to any establishment that employed 20 or more contract labourers. However, under the new Code, this threshold has been raised to 50 workers. Additionally, the Factories Act of 1948 had a minimum applicability limit of 10 workers (using power) and 20 workers (not using power). The new Code increases this minimum threshold to 20 and 40 workers, respectively. As a result of these provisions, workers in smaller establishments will be unable to take advantage of the benefits offered by the new Codes.

• Working hours

There will be a significant shift in the working hours of employees across all sectors. Currently, the working hours are regulated by the Factories Act of 1948 for workers in factories and similar workplaces at the national level, while office workers and other employees are governed by the Shops and Establishment Acts of each state. However, the new labour laws impose a maximum limit of 12 hours of work per day and 48 hours per week for all employees. This allows companies and factories to implement a four-day work week. Furthermore, the maximum allowable overtime hours have been increased from 50 hours to 125 hours per quarter for all industries.

• Additional Welfare Provisions for Overtime Work

The Factories Act stipulates that if an employee works beyond the daily limit of 9 hours or weekly limit of 48 hours, they are entitled to double the ordinary rate of wages. This overtime wage rate has been retained in the new Codes for any work done beyond the limit of 8 hours per day or 48 hours per week. In addition, there are some new provisions related to overtime work to safeguard workers' welfare. Firstly, the period of overtime is to be calculated based on whichever is more beneficial to the worker, whether daily or weekly. Secondly, workers cannot be required to work overtime without their consent. Thirdly, any fraction of an hour between 15 and 30 minutes will be counted as 30 minutes for the purpose of calculating overtime, and any fraction over 30 minutes will be counted as an hour.

• Salary structure of employees

The recently introduced labor laws indicate that employees must receive a basic salary equivalent to no less than 50% of their gross salary. This new regulation will also result in a higher contribution to the Provident Fund by both employers and employees. This change will result in an increase in the retirement corpus and gratuity amount, but a decrease in take-home salary, particularly for those employed in the private sector.

• Number of leaves

The number of leaves per year will remain unchanged, but the new regulations state that employees will now earn one day of leave for every 20 days of work, as opposed to the current standard of 45 days. This is positive news for employees. Additionally, under the new rules, new employees will be entitled to earn leaves after completing 180 days of employment instead of the previous requirement of 240 days of work.

• Varying Threshold Limit for Gratuity

Under the new Codes, the requirement for a mandatory minimum gratuity threshold of 5 years has been removed for certain categories of workers. While permanent and regular employees are required to work for at least 5 years to qualify for gratuity, fixed-term workers do not have any such restrictions. Instead, their gratuity payment will be calculated proportionately. Seasonal workers, on the other hand, will receive gratuity payments equivalent to their salary for 7 days for every work season.

• Stronger Grievance Redressal Mechanism

As per the Industrial Relations Code, 2020, any organization that employs 20 or more individuals is obligated to form a Grievance Redressal Committee. This committee can consist of a maximum of 10 members, which is an increase from the maximum of 6 members required by the Industrial Disputes Act, 1947. The Committee should comprise an equal number of members representing the employer and the employees, with the chairperson being elected alternately from among the employees and the workers on a rotational basis annually. Additionally, there should be sufficient representation of women, with the proportion of women workers in the establishment not being less than the number of women representatives in the Committee.

Implementation: 

The implementation of new labour codes in India appears to have experienced a delay. The Ministry of Labour and Employment of India issued a press release on March 21, 2022, which updates the progress of the new labour codes, but fails to provide information regarding their effective date. As per the press release, draft rules under the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health, and Working Conditions Code, 2020 have been pre-published by 27, 23, 21, and 18 States/Union Territories, respectively. As these codes have an impact on the salary structure, the start of the next fiscal year is deemed an appropriate time for their rollout. Experts have suggested that April 2023 is the final chance for the government to implement the codes before the country's general elections the following year. Currently, there is no timeline provided by the Centre for the implementation of the codes.

References:

https://ksandk.com/labour/decoding-the-new-labour-code-faqs/

https://www.moneycontrol.com/news/trends/current-affairs-trends/4-day-work-week-decreased-in-hand-salary-likely-changes-under-new-labour-codes-8734041.html

https://www.financialexpress.com/money/what-the-new-labour-codes-mean-for-employees/2668611/

https://m.economictimes.com/news/economy/policy/fate-of-labour-codes-hangs-in-balance-as-states-head-for-polls/articleshow/95342593.cms