Key Highlights of the Labour Code- 2020- by Suparna Sachar (Senior Partner)

The Occupational Safety, Health and Working Conditions Code Bill, 2020, the Industrial Relations Code Bill, 2020, and the Code of Social Security, 2020  passed by the parliament is a part of the government objective to do ease of business. The key changes are highlighted below :

Industrial Relations Code Bill, 2020

Earlier, industries with 100 or more workers had to comply with standing orders. Code has raised the threshold for applicability of the standing orders. This has now been increased to 300 workers.

Establishment with less 300 workmen can lay-off, retrenched, closed without government approval, earlier this limit was 100 employees.

The definition of worker will be based on the basis of wages being drawn by him and Worker / Employees with salary up to Rs 18,000 will fall under the category of worker.

Fixed Term Employment- now employer can keep Fixed Term Employees (FTE) for specific duration and retrenchment compensation shall not be paid. These FTE will be entitled same salary or social security as regular Employee.

Trade union have to give notice of 14 days before going on strike.

Definition of “ Employer” has been completely modified under section 2 (m) and as per the new definition employer means :-

Head of the department, Occupier of the factory, Manager of the factory under clause (f) of sub-section (1) of sec 7 of the Factories Act, The person who, or the authority which has ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager or managing director, such manager or managing director; Contractor; and  legal representative of a deceased employer;

Code on Social Security, 2020

This code provides for social security funds for unorganised workers, gig workers and platform workers set up by the central government. These workers are also to be registered. Gig workers and platform workers are to have national social security. It regulates aggregators and provides for contribution from aggregators. This is a new and welcome change.

Definition of wages has been revised:-The First part includes all salary components express in terms of money are capable of being so expressed like basic salary, all reimbursements, all allowances, all benefits.

Second part of the definition provide specific exclusion like:- Bonus payable under any law, Conveyance allowance, House rent allowance, Overtime Allowance, House Accommodation, Supply of light water medical attendance, other amenities/ service excluded by a General or special order of the appropriate government, Commission, contribution to provident fund/pension, Any sum paid to defray special expenses, Gratuity, Retrenchment Compensation, Remuneration payable under any award or settlement between the parties.

The Third part of the definition provides that the total excluded components should not exceed 50% of the total remuneration. The third part of the definition provide limit as the definition very clearly specifies the list of exclusions so anything which is paid to the employees other than the exclusion would be covered and within this specific exclusion the limit cannot be more than 50%.

Code on Occupational Safety, Health and Working Conditions, 2020

Code provides single registration for an establishment instead of multiple registrations. This will design a centralized database and develop an ease of doing business.

The definition of Contract Labour has been modified and includes inter-State migrant worker but excludes part time employee, regularly employed n mutually accepted standards of the conditions of employment and entitled to Social Security benefits.

The new definition of Core Activity provides that activity for which establishment is set-up and other activity like housekeeping, Security, canteen etc not to be treated as core activity.

All establishments where hazardous activities are carried out come under the purview of this Code. It also makes provisions for benefits for inter-state migrant workers and unorganized workers, including access to the public distribution system, a database for inter-state migrant workers, and a social security fund for the welfare of unorganised workers.

It prohibits contract labour in core activities, with certain exceptions. It places a limit of 8 hours per day as daily work hours. It entitles women to be employed in all establishments for all types of work.

Key Highlights of Labour Code-2020
Suparna Sachar (Senior Partner)