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Labour Code 2021

Asis Ranjan Sengupta

The labour ministry envisaged implementing the four codes on Industrial relations, wages, social security and occupational health safety & working conditions from April 1, 2021, under new codes.

The most salient feature of the new labour law is that it limits the maximum basic pay to 50 per cent of CTC (cost to company). Cost to company, as it is commonly called, is the cost of the company when hiring an employee. CTC involves a number of other elements and is cumulative of House Rent allowance, Provident Fund, and Medical Insurance and other allowances which are added to the basic salary.

The central government proposes to replace 29 existing labour laws with four codes. The expressed objective is to simplify and modernise or update labour regulations. With the new law, Government is all set to subsume all the existing central labour laws into four broad codes, which are code onwages, industrial relations, occupational safety, health and working conditions and social security.

Pertaining to the new codes, companies will be required to make major changes in employees’ salary structure. There is also a new rule that for any 15 minutes or more overstay will attract overtime payment. There is a ceiling of 48 hours work time in a week as also flexibility of extending working to 12 hours a day, which is now 8 hours. They also proposed a provision for free medical checkups for workers through ESIC. The new industrial relations code will also allow firms with up to 300 workers / employees (presently it was 100) to go for retrenchment, closure, lay offs, hire and fire at free will, without permission or knowledge of the government or any other authority. The central government claimed that this would enhance 'the ease of doing business'.

Now, this and all other new legislations forced forward by the present central government clearly displays majoritarian arrogance of ignoring all debates, exchange of views or critical examination by any committee. The Pandemic crisis offered an opportunity to the global corporates to amass mammoth gains at the cost of majority population, who are pushed into mass deaths, poverty, job losses, further aggravated by high price rise and scarcity. The Modi dispensation shows its eagerness to execute the so-called much hyped “reforms” in a hurry and singular aim of corporate -servicing, using brute majority in both houses. Like CAA, Firm Bills, Abrogation of 370, in this case also, no prior consultation with any stake holders was made, Trade Unions were called into consultation just as a matter of formality, supposed to accept govt requirements or go to hell (in fact they boycotted it at a certain stage). No debate, discussion, or survey was undertaken, but rolled down making a mockery of norms, and flouting the gains the labour and union movements had gained through long struggles and legal battles down the decades right from the days of British rule till date. Similar strain of centralisation and trampling of federal norms, as observed in other cases is also evident in this approach. Labour Laws are in the concurrent list, and there are variations from state to state, and again from Industry to industry, but this law ignores those and runs a steam roller to mow them all in one. Nothing else can be expected from a dispensation with whom, too much of democracy, excess of human rights, too much of constitutional law, all are obstacles in the path of growth and development. Of course they are more preoccupied with "Vikash" of their corporate lords rather than peasants or labour.

Firstly, the basic pay and the linking of the same to 'cost to company concept' is definitely going to reduce wages. In the face of it, the law appears to be for the welfare of the workers, as increase in basic pay will automatically raise the PF, Gratuity and related benefits, but a deeper study reveals the conspiracy. As the enhanced cost is linked with cost to company concept, naturally it is going to put burden on cost factor of the employer, and for that matter 'the company', hence from the point of view of cost accounting, there must be a tendency to lower the basic to minimise the cost to company, and in that way, as the basic must be the 50% of total emoluments, it is surely going to take a toll on the total take-home pay after conceding statutory deductions.

Secondly, the concept of overtime calculation on the basis of 15 minutes over-stay (presently, the basis of such calculation is first half an hour), is just ludicrous, as no employer is going to issue requisition for 15 minutes overtime, unless the basis of calculation is changed, it is a meaningless proposition. Any attempt to implement rigidly most likely to create stress and strain in industrial relations.

Thirdly, the enhancement of working hours from present eight hours to twelve hours is simply draconian step. The eight hours or working a day is a historic right won by workers right from the Hay Market revolt in Chicago, still celebrated as May Day all over the world to make the matter bearable. Forty eight hours of duty in a week is impracticable, given in Indian context. So, it a conspiracy to do away with the working hour rule officially, though in practice, evidently, it is hardly observed specially in unorganised sector. But, at the same time, one must not forget that the historic Railway Strike of 1974, was the culmination of long standing agitation by the Loco Running staff, for limited working hours,as they were exploited with unlimited hours.

Fourthly, the most dangerous and obvious part of the law, is the raising of liberty in favour of the employers to hire, fire, closure, layoff without any restriction up to 300 employees. This is only a beginning of official recognition to the erratic and whimsical actions of employers, already in vogue. Most likely this limit of 300 is going to be enhanced in near future, and the already prevalent chaotic nature of cheap labour market, in the forms of contract labour or apprentice workers, will take uglier shape, awarding a clear advantage to the employers unilaterally. In one stroke this retrograde step, throws out an estimated 74% of the MSME workers out of the legal safety net, let alone the plight of unorganised sector workers. Moreover, it is to be noted that this law or code has nothing for the contract labourers, construction workers or manual scavengers, not even for the acclaimed 'front line warriors' like the ASHA workers, all of whom are hailed before every election and of course in crisis hours, but conveniently forgotten once it is over.

One important issue in regard to these code bill is that, many of the provisions contained therein, have already been in practice from 2014, ever since Modi government came to power. Those have been implemented through various backdoor measures, new schemes and legal amendments to existing laws, to the extent of throwing the labour market open to the total contractualisation across industries and enterprises. Measures such as fixed term employment (FTE), National Employability Enhancement Mission (NEEM), facilitates employers to get even permanent workers’ jobs done by trainees, almost free of cost. For example 2014 amendment of Railway Apprenticeship act, 1961, empowers the authority to frame own rules for hiring, and thereby prevents the entry of trained apprentices in Railway jobs, in the name of efficiency and higher skill, thereby paving the way for privatisation which ultimately leads to further retrenchments, joblessness and insecurity of job markets. The implementation of such flexible norms in Rajasthan and Gujrat have already shown disastrous results on incomes, welfare, employment and security aspects of workers.

Apart from being ill-intentioned, the drafting of the codes demonstrates legal and practical incompetence and inadequacy, as these replete with ambiguity, laxity and casual arbitrariness both in substance and wordings. Such laxity may be deliberate for containing scope for convenient and favourable interpretations, as also of bypassing them as irrelevant. But definitely provisions crafted in such manner will pose difficulty for state governments due to the possibility of unnecessary complications in the rules. For example the law has deployed several loose references, like

— Would be set out in the rules by state governments.
— Competent authorities notified by the government.
— As per by-laws of different organisations.
— By general or special order.
— To be provided by industrial establishments.
— Implemented by inspector cum facilitators.

All such wordings are vague and open to misinterpretation.

So, the pertinent question is whether the government is at all "simplifying, standardising or rationalising" anything, or just complicating it further for future legal hassles for the benefit of the corporates. The matter becomes further clear when it is observed that in 2017, the Satpathy commission had recommended a minimum wage of Rs 375, but this new code of wages stipulates a minimum "starvation wage" of a paltry Rs 178. So the intention is very much clear. That is the reason for constant delay in implementation or notification on the one hand and hurried undemocratic passage of the codes through legislature on the other.

Another horrible chapter in this code is the code for Trade Union activities, without going into lengthy details, in short, it makes formation or registration of Unions next to impossible, it is so hazardous with a series of requirements and formalities, not to speak of getting recognition,that is another round of obstacles, so much so that the RSS affiliated central TU Bharatiya Majdoor Sangha (BMS), which is stated to be the largest labour organisation, has protested vehemently against the whole codification process, going against their mentors, which is BJP. But this is quite natural in a regime which wants to make people believe that all protests or dissents against the government policies, are sedition, and when leading intellectuals, Poets, Writers, Lawyers, human and tribal rights activists are languishing in jails for years together, on fictitious allegations and without trial or farces in the name of trial, and an octogenarian humanist is killed in jail custody without even medical care. So respect for Trade Union Rights cannot be expected.

The moot question is why after rushing through Parliament, the government is delaying implementation, especially when nine BJP ruled states have almost finalised the notifications? Despite pitching them as “big reforms”, the union government appears hesitant, anticipating the anger of the working class, and a possible backlash.

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Vol 54, No. 28, Jan 9 - 15, 2022