Labour Codes: Suit-boot ki sarkar?

Labour Loss: Workers’ hard-won rights are being diluted in the name of labour law reforms
Last Updated 17 August 2019, 18:15 IST
K R Shyam Sundar
K R Shyam Sundar

Since the 1991 economic reforms liberalizing the product market and foreign trade, investments and technology and reducing the role and presence of government and the government sector, employers have been demanding reform of labour laws and the inspection system so that the full benefits of economic reforms could be reaped by employers, workers and consumers. Employers argued that the existing labour laws are complex, numerous, archaic and hence need to be rationalised and simplified so as to allow firms freedom to quickly respond to volatile market forces. The labour inspection system is a source of harassment, thanks to the multiple inspection visits, bribe-seeking and threatening inspectors. The trade unions have stridently contested the employers’ arguments and reform demands and they, in fact, call for universalizing the labour laws and their effective implementation.

The Narendra Modi government has sought to codify the 40-odd central labour laws into four Codes -- Wages (WC), Industrial Relations (IRC), Social Security (SSC), Occupational Safety and Health and Working Conditions (OSHWC). In October 2017, the Wages Code 2017 was placed in Parliament and was referred to the Parliamentary Standing Committee (PSC), which gave its report in December 2018. The Modi 2.0 government has now enacted the WC 2019.

The WC 2019 seeks to provide for a universal statutory minimum wage to all workers in the organized and unorganized sectors (in place of restricted application to workers in notified scheduled employments), a statutory national and zonal ‘floor level’ wage (for the first time), ensure timely and correct payment of wages to all, prohibits gender-based discrimination, and a transparent, honest and randomized inspection system, among others. The biggest merit of WC 2019 is the removal of threshold restrictions and widening the ambit of applicability.

But WC 2019 suffers from several infirmities. It provides for a national and zonal floor level minimum wage which was not existent in WC 2017 nor it was recommended by the PSC. The floor level fixation will greatly depress the national minimum wages as the floor constitutes the lowest level. More seriously, the formula for fixation of minimum wages is not included in the Code though social and judicial consensus exists on the norms for the same.

The government claims that 500 million workers will get minimum wages, but it is not clear whether the 250 million self-employed and the own-account workers and employers who constitute 38.6% of the self-employed will get minimum wages due to the use of formal sector language like terms of employment, lack of definition of ‘industry’ and the interchangeable use of the terms ‘employees’ and ‘workers’.

Further, agriculture is not specifically mentioned in the Code. Even if all 457/500 million workers are covered, the question is whether the government is equipped to ensure that these will get the stipulated, albeit low, minimum wages? This assumes serious significance as the Code provides for a limited and not universal inspection system by randomizing inspection visits. The provisions relating to inspection, by not providing for frequent, anytime and adequate inspection, violates the Labour Inspection Convention of ILO, 1947, which India has ratified and is hence bound by.

While the Equal Remuneration Act, 1976, prohibits gender-based discrimination in wages, recruitment, promotion, training and transfer for workers performing same work and requires constitution of a Board to promote female employment, the WC 2019 prohibits gender-based discrimination only in terms of wages and recruitment. Instead of expanding the frontiers of anti-discrimination provisions and promoting employment of vulnerable categories of workers, WC 2019 reduces even existing protections against discrimination.

The WC 2019 and the OSHWC do not specify concretely the number of hours of work, spread-over, rest intervals and for determination of overtime, etc., and leave the same to be determined by the appropriate governments, which will lead to differential standards of hours of work and, perhaps, a race to the bottom of the standards, given the competition for capital by the states.

The OSHWC is an uneasy amalgam of disparate laws and hence cannot be faulted for its omissions and commissions. Worryingly, it does not deal with OSH issues adequately and even dilutes the existing provisions concerning them. It has removed the compulsory provision for constitution of bi-partite Safety Committees and Schedule II, which defines the permissible threshold limits of exposure to chemical and toxic substances in manufacturing processes, leaves the same to be notified by the appropriate government, which is not a good law-making process. It may weaken workers’ right to a safe workplace as the rules to be notified may be weak in response to pressure from employers. Workers’ safety is a universal concern and safety provisions such as the employment of a safety officer should be made applicable to all establishments.

Section 47(2) of OSHWC allows labour supply contractors to secure “renewable work specific licence” to execute a specific work mentioned in it even if they do not fulfil the requisite qualifications/criteria for getting a normal licence. This is a dangerous provision that can hurt conditions of work of vulnerable contract workers. What could anger the working class is that despite a Supreme Court ruling on and the universally agreed labour market norm of equal pay for equal work, the government is refusing to legislate the same though it exists in the rules framed under the Contract Labour Act.


The banning of outsiders in the executive committee of a trade union, failure to provide for bargaining agent or forum, construing coincidental mass casual leave as a strike, steep penalties on workers for conducting/participating in illegal strikes (and the Code makes going on strike pretty tough), providing for easy hire-and-fire, and a confused industrial disputes termination process have compelled trade unions to oppose the IR Code (March 2015 draft).

The SS Code again promises universal social security, though in a phased manner, and dismantles established institutions like EPFO and ESIC and the numerous welfare boards, gives scope for investment of social security funds in the stock market, includes private intermediaries, levies the same 12.5% social security contribution from workers in the formal and the informal sectors, and bureaucratises heavily the substantive and administrative processes with inadequate representation to workers, especially the vast unorganised sector. Uncertainty reigns as to whether the millions of registrations under existing welfare boards will have to be redone post-SS Code and what will happen to the huge cess money collected from builders for construction workers’ welfare. Activists see the introduction of private agencies as leading to privatisation.

Codification of the labour laws thus far makes huge promises but fails to secure their realization, fails to incorporate long-pending demands of workers, does not broaden the frontier of rights, especially concerning gender and OSH, dismantles long-established institutions, and it is a mechanism to introduce provisions that dilute existing labour rights. Put simply, it has neither legal sturdiness nor a social vision. If the passage of WC 2019 is any indication, then it does not inspire much confidence about the remaining Codes. The OSHWC and SS Code demonstrate that codification is not always a virtue.

(The writer is Professor, XLRI, Xavier School of Management, Jamshedpur)

(Published 17 August 2019, 17:56 IST)

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