New Industrial Codes: Questioning the Graph of Development



The Constitution of India provides for various matters in respect to the Centre and the State to function upon as per respective regulations. However, there are certain subjects over which both the Centre and the State have official regulation. One such subject is the Labour Laws of the country which are bound by centralised acts as well as governed by respective state government regulations. The differences between the Centre and the State regulations have significantly led to complexities in the implementation ever since. In this regard, the parliament of the country has taken responsibility to consolidate these acts to provide a uniform regulation.

The Parliament of India had recently approved the enactment of three new codes - Code on Social Security, the Industrial Relations Code, and the Occupational Safety, Health, and Working Conditions Code. The Code on Wages is due to be implemented. The Code on Wages has been formulated to specify the minimum wages which are payable and also governs the process of such paid wages, and applies to all workers of any organisation, both in the organised and unorganised. The adopted laws on social security bring within its ambit the Provident Fund (PF), the Employees’ State Insurance (ESI), maternity benefits, along with other employment entitlements under a single legislation. The Law on Occupational Safety, on the other hand, accommodates the legislations regarding health and hazardous working conditions under one umbrella act.

The rapid economic development of India post-independence was greatly fostered due to the large-scale availability of unskilled and immobile labour. The nature of labour in any developing country revolves around the unskilled and unempowered class which at present poses significant hurdles in economic development. The reason for rising unemployment is the changing nature of technical and skilled occupations which have further reduced the requirement for unskilled and marginal workers. Therefore, the legislature has aimed at the consolidation of these laws.

While some of the proposed changes are progressive, others are contrary to the interests of the employers. The majority of the labour force in India is engaged in the informal and unorganised sector. In this regard, as per the new codified regulations, fixed-term contracts appear to omit employment protection because of the provision for employment under short-term assignments. The informal construction sector has been freed from obligations and, therefore, are free to use labour in their best interests as per their dictates.

The Industries (Development and Regulation) Act, 1951, mandated that the firms employing more than 100 workers needed approval from the government to fire their staff. However, under the amendments introduced in the Industrial Relations Code of 2020, only firms that employ more than 300 workers need government approval to fire their staff. Furthermore, the Code on Social Security still mandates the provision of securities discretionary and not mandatory on unorganised establishments leaving a large chunk of masses out of coverage.

On the bright side, in consideration of the occupational safety and health conditions of the mine-based industries, the Code has mandated the companies to provide the workers with a set of certain privileges, which includes providing annual health examinations without any fee, along with a certified employment letter to ensure employment safety of the marginalised wage workers. Keeping in track the fraudulent practices of the establishment of fake accredited industries, the Code has also mandated the registration to be compulsory for all business establishments which extends to restriction of employment without the registration.

The privilege of a strike by any union is under serious consideration and is being criticised by the unions as the amended provisions with strict implications on notice periods and harsh penalties for defaulters have been introduced. Thus the Unions need to give 14 days prior notice to strike with the notice being valid for 60 days only. Thus, whenever a dispute is being addressed to the courts after the commencement of the strike, workers have been deprived of the right to re-initiate the strike 60 days from the passing of the court directions and the end of the proceedings.

Early demonstration of the prescribed codes has been critically analyzed in the examples of Gujarat and Rajasthan, wherein some of the components of these codes have been in place in the past. In an examination of the results, it can be reasonably made out that the results have not been as promising as they seemed when they were being formulated and argued. Although the stance of the government is strongly advocating the formulation and implementation of the policies. The true nature of the codifications can only be traced when they have been adopted for practical implementation.

The subject matter of industries is a matter of the Concurrent List, therefore, the Centre and the State together have the privilege to make amends and decide upon the laws in place, as per the specific interests of the State, while aligning with the objective of these codes. Thus, a clear examination of the scope for validity and effectiveness of the codes stands vague until the result after implementation. The decision to consolidate acts into specific centralized Codes is nevertheless a strong requirement in the protection of the interest of the wage-laborer and small earners, however, one must only put faith in the Parliament and executive authorities of the State to act in good conscience.

Nonetheless, the marginal group of unskilled workers have been struck hard by the rise of Coronavirus, the goodwill and profit of this marginalised section are the foremost requirements to drive the country out of the quicksand of unemployment and if however, the state fails to pay heed to their interests, we the people can drive democracy by popular public conscience.



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