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Power to the promoter: The new labour codes – I

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A slew of amended labour laws were pushed through the Rajya Sabha session which ended on Wednesday. IL News Service has already published an analysis of the Farm Bills that have been passed. We will now, in stages, deal with the amended labour laws.

By Priyanka Payal

In the first tranche, we deal with the important points of The Industrial Relations Code Bill, 2020.

The Industrial Relations Code Bill, 2020

In 2019, The Union Cabinet  approved The Industrial Relations Code Bill, 2019, which proposed to amalgamate The Trade Unions Act, 1926, The Industrial Employment (Standing Orders) Act, 1946, and The Industrial Disputes Act, 1947. Subsequently, the bill was sent to the Parliamentary Standing Committee on Labour for suggestions. The committee submitted its report and suggested its changes. The government incorporated many of those changes and replaced the old Bill with new one on September 19, 2020.   

The Industrial Relations Code Bill, 2020 in detail:

  • Raised Threshold: In the Industrial Relations Code Bill, 2020, the government has proposed to introduce more conditions restricting the rights of workers to strike. Alongside, however, the threshold relating to layoffs and retrenchment in industrial establishments have also been raised. Earlier sackings were next to impossible in industries employing 100 or more workers, now that threshold is 300.

    This has been made to provide more flexibility to employers for hiring and firing workers without government permission.

    Analysts say the increase in the threshold for standing orders will water down labour rights for workers in small establishments having less than 300 workers.

    Right to strike: The 2020 Bill requires all parties to give a prior notice of 14 days before going for a strike or declaring a lock-out.  This notice is valid for a maximum of 60 days. The Bill also prohibits strikes and lock-outs:
    (i) during and up to seven days after a conciliation proceeding, and
    (ii) during and up to 60 days after proceedings before a tribunal.
    This may impact the ability of workers to strike and employers to lock-out workers.  

    This prior notice of a strike or a lock-out has to be shared with the conciliation officer within five days. Conciliation proceedings will start immediately and strikes or lock-outs will be prohibited during this period. If the conciliation is not successful and there is an application to a Tribunal by either party, the period of prohibition on strikes or lock-outs will be further extended. This time could extend beyond the 60-day validity of the notice.  Therefore, these provisions may impact the ability of a strike or lock-out on the appointed date given in the notice. 

    The rationale for extending the provisions on notice to all establishments is unclear. The Standing Committee, while examining an identical provision in the 2019 Bill had recommended that the restriction on strikes should only apply to public utility services.

    A public utility service includes railways, airlines, and establishments that provide water, electricity, and telephone service.

    Migrant workers: The 2020 Bill adds that any person who moves on his own to another state and obtains employment there will also be considered an inter-state migrant worker. The 2020 Bill also specifies that only those persons will be considered as inter-state migrants who are earning a maximum of Rs 18,000 per month, or such higher amount which the central government may notify.

    Tribunals: The 2020 Bill provides for the constitution of Industrial Tribunals and a National Industrial Tribunal to decide disputes under the Bill. It states that the awards passed by a Tribunal will be enforceable on the expiry of 30 days. However, the government can defer the enforcement of the award in certain circumstances on public grounds affecting national economy or social justice.

    The question is whether such a provision would violate the principle of separation of powers between the executive and the judiciary, since it empowers the government to change the decision of the tribunal through executive action. Further, it raises the question of whether there is a conflict of interest, as the government may modify an award made by the Tribunal in a dispute in which it is a party.

    Industrial disputes: Under the 2020 Bill, a single trade union will be the negotiation agent with the management of the company. If there is more than one registered trade union of workers, the trade union having more than 51 percent of the workers as members would be recognised as the sole negotiating union. In case no trade union meets this criterion, a negotiating council will be formed with representatives of unions that have at least 20 percent of the workers as members. It is unclear as to what will happen in case there are multiple registered trade unions which enjoy this support (of 10 percent of members) but no union has the required support of at least 20 percent workers to participate in the negotiating council.

    Privacy issue: The 2020 Bill mandates an employee or a worker (including a worker in the unorganised sector) to provide his Aadhaar number to receive social security benefits or to even avail services from a career centre. This may violate the Supreme Court’s judgment in the Justice K.S. Puttaswamy (Retd) vs Union Of India case on September 26, 2018. The court had ruled that the Aadhaar card/number may only be made mandatory for expenditure on a subsidy, benefit or service incurred from the Consolidated Fund of India. Applying this principle, the Court has struck down the mandatory linking of bank accounts with Aadhaar.

    Work statutes: The rules regarding working hours, classification and retrenchment have also been classified:
    The classifications are: (i) classification of workers, (ii) manner of informing workers about work hours, holidays, paydays, and wage rates, (iii) termination of employment, and (iv) grievance redressal mechanisms for workers.
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