Labour Bills 2020: Parliament passes 3 Labour Bills, making it easier for employers to hire and fire

Parliament on Wednesday passed the three key labour reform bills that will provide greater flexibility to employers to hire and fire while ensuring social security for workers. The three bills---- 1. Code on Occupational Safety, Health and Working Conditions, 2. Industrial Relations Code and 3. Social Security Code, were passed in the Upper House by voice vote amid boycott by the opposition over suspension of eight members.

Parliament passes three Labour bills: Here are the key changes (Image | ET)

 
Replying to the debate on the three labour reforms bills in the house, Labour Minister Santosh Gangwar said: "The purpose of labour reforms is to provide a transparent system to suit the changed business environment." The minister informed the house that as many as 16 states had already increased the threshold for closure, lay off and retrenchment in firms with up to 300 workers without government permission. “States have been given flexibility to tweak labour laws as per their need,” he said.

He maintained that it is not good for employment generation to keep the threshold low at 100 because it discourages employers to recruit more workers than this and they deliberately keep their workers' strength below it. “Investors will be encouraged to set up big factories and employ more and more workers,” minister Gangwar said explaining the rationale behind this provision. 

Image | ET

He said these bills would safeguard the interest of workers and provide universal social security to workers by expanding the ambit of Employees' Provident Fund Organisation and Employees' State Corporation of India. He also said that there would be a social security fund to cover around 40 crore unorganised sector workers. 

Commenting on the Social Security Code, the minister said, Employee Provident Fund Organisation benefits can now be availed by all firms with 20 or more employees as the existing Schedule defining establishments has been done away with. “Besides, employees with firms less than 20 workers will be able to join EPF while the government will also extend the benefits of EPFO to self-employed,” the minister said. 

Image | ET

The minister sought to allay the apprehension that workers’ right to strike had been withdrawn under the new Code. “The provision of 14 days’ notice prior to strike is intended to enable employees and employers reconcile during this period,” he added. Industry has welcomed the codes. 

“The comprehensive reforms promise to reset the entire regulatory framework to benefit millions of workers and provide enterprises with flexibility, transparency and clarity,” Chandrajit Banerjee, director general of the Confederation of Indian Industry said. 

According to the Indian Staffing Federation, the larger impact of these legislations will be easier, faster and compliant management of the workforce in India in coming years. 

“The direct advantage to ease of doing business will make India even a bigger magnet to overseas investment in the goods and transport sector, logistics, agri and agro industries, manufacturing and supply chains besides increasing formalisation of the workforce,” Lohit Bhatia, president of the Indian Staffing Federation said. 

However, all trade unions, including the RSS affiliate Bhartiya Mazdoor Sangh, have objected to sweeping powers given under the Codes to bureaucrats to make changes while objecting to certain provisions of the Industrial Relations Code. Pointing to the new provision in the IR Code on negotiating union, BMS said it is an overt attempt to monopolise single union and eliminate all other unions. 

"The ensuing National Conference of BMS to be held between October 2 and 4, 2020 will decide the future course of action on the anti-worker provisions in the Labour Codes," BMS general secretary Vrijesh Upadhyaya said. 

The labour ministry had drafted four codes to consolidate 29 central laws. The code on wages has already been enacted, but yet to be implemented. The three codes approved by Parliament will now go to the President for his assent. 

The Occupational Safety, Health and Working Conditions Code, 2020, will consolidate and amend the laws regulating the occupational safety, health and working conditions of persons employed in an establishment and related matters. The government has, under the code, allowed a single licence for staffing firms to hire workers on contract across different locations instead of multiple licences needed earlier. It has increased the threshold limit of contractor employees from 20 to 50 under OSH Code while opening up hiring of contract workers in all areas will ease the compliance for employers. 

The Industrial Relations Code, 2020, seeks to consolidate and amend laws relating to trade unions, conditions of employment in industrial establishments or undertaking, investigation and settlement of industrial disputes. The government has raised the threshold on number employees needed in an organisation for retrenchment and closure of establishments without government approval to 300 from 100, significantly improving the ease of firing for employers. 

The Code on Social Security, 2020, will amend and consolidate laws relating to social security. It intends to provide for universal social security to all workers, including the unorganised and the gig and platform workers. These together account for over 90% of India’s total workforce estimated at 50 crore.

Source