While proponents of labour market flexibility claim that it promotes productivity, several studies by Buchele and Christiansen find that protecting workers` rights has a positive effect on their hourly productivity (cited in Jha, 2016). In addition, the links between a country`s high flexibility and strong economic growth were considered rather weak. Increased flexibility without adequate socio-economic protection for workers can further strain capital-labour relations and lead to a decline rather than an increase in productivity. Provides for the abolition of the system of debt bondage. This study critically examined the features and implications of the Industrial Relations Code, 2020. The four recent labour laws on wages, social security, occupational health and safety, and industrial relations are the result of long-standing calls for labour law reforms. Whether these are reforms in the strict sense is controversial, as they do not seem to strike a balance between the interests of employers and employees. Certain elements of the Industrial Relations Code are prejudicial and detrimental to the interests of industrial relations. Moreover, the allegations of rigidity in Indian labour markets, from which several provisions of the Code flow, are not very valid because Indian markets appear to be quite flexible. There is no strong empirical evidence that labour laws are a burden or barrier for employers wishing to expand and invest. Cumbersome compliance procedures can be relaxed to achieve efficiency, but nowhere should this mean the suspension or extreme dilution of proper procedural and labor regulations.
In 2019, the Ministry of Labour and Employment introduced four draft labour laws aimed at consolidating 29 key laws. These codes regulate: (i) wages, (ii) industrial relations, (iii) social security and (iv) occupational safety, health and working conditions. While the 2019 Wages Act was passed by Parliament, bills on the other three areas were referred to the Standing Working Committee. The Standing Committee presented its reports on all three bills. [3] The government replaced these laws with new ones in September 2020. This note examines some of the most important issues relating to labour law and the provisions of the four new codes. This note is to be read in conjunction with our legislative submissions on the four codes and the note on the three new bills. In the context of the labour market flexibility argument, it is interesting to take a look at the Industrial Relations Code 2020.
It summarizes three basic labour laws: the Trade Unions Act of 1926; Industrial Employment (Standing Orders Act), 1946; and Industrial Disputes Act 1947 (IDA) (Nath, 2020). These previous Acts are now repealed. The Industrial Relations Act consolidates and amends the Trade Unions, Conditions of Employment and Industrial Disputes Acts. It consists of 14 chapters with 104 sections and three appendices dealing with topics such as definitions, two-tier forums, trade unions, rules of procedure, strikes and lockouts, dismissals, cuts and closures, violations and sanctions. It should be noted that the new labour laws have been welcomed by the industry, but criticised by trade unions, workers` rights organisations and activists. In this context, some state governments have issued regulations and new regulations that affect labor law and enforcement. About 10 states have made changes to labour laws, mainly the Factories Act of 1948, the Industrial Disputes Act of 1947 and the Labour Code (exemption from filing of tax returns and record-keeping by certain establishments) of 1988. State governments have asserted that these measures are necessary to (i) stimulate economic activity, (ii) attract foreign investment and (iii) improve growth prospects.
The watering down of labour law has been done for a good cause, but some questions can be raised about its implementation. These measures were taken hastily and the implementation of these changes was not sufficiently considered. Workers are now defenseless in the hands of their employers, who can extract every ounce of work without regard for their well-being and health. The respective state governments must reconsider the suspension of social security and social benefits, as this would only lead to a deterioration in the quality and productivity of work in the long run. Third, there are some changes related to contract work. The 2019 bill applied to establishments employing at least 20 contract workers and contractors employing at least 20 workers. These thresholds have been increased to 50 employees. The 2020 Code prohibits the employment of contract workers in a main activity and, in particular, allows employment in a specific list of non-essential activities, including canteen, safety and sanitation services.
Labour law fulfils the essential function of redistributing wealth and bargaining power. These are designed to protect workers from wage changes, unsafe employment conditions, arbitrary dismissals and resignations, to name a few. Instead of formalizing the informal economy, the deterioration of labor rights and wealth leads to the institutionalization of informality (Venkatesan, 2020). The relationship between labour and capital is full of conflicts, disputes and contradictions. Since the two are not equal, unions provide workers with space for collective representation and negotiation. Far from being a battlefield, the company can be transformed into a space for discussion, negotiation and participatory decision-making (Janardhan, 2003). Only time will tell if these labor laws will be able to balance conflicting interests and achieve this change in the workplace. The government is telling workers, in a way, that they must work according to the whims of employers; that it would not interfere in labour disputes; that workers cannot form trade unions or apply to labour courts.
[30]. Communication GSR 235(E), Ministry of Labour and Employment, 16 March 2018 labour.gov.in/sites/default/files/FTE%20Final%20Notification.pdf. However, it has been found that contract workers` rights to wages and social security contributions have not been enforced to the same extent as those of permanent employees and that they face precarious working conditions.2 In addition, various studies have shown that the enforcement of working conditions in India has been weak and has not sufficiently protected workers. and labour law coverage was inadequate.5,[9] The Periodic Labour Force Survey report (2018-19) shows that 70% of paid workers/regular employees in the non-agricultural sector did not have a written contract, 54% were not entitled to paid leave and 52% did not receive social security benefits. [10] The watering down of labor laws was conducted with the intention of promoting economic growth within states, but these changes neglected and trampled on several social protections to which workers were entitled. This circumvention of social measures for economic growth directly interferes with certain fundamental rights to which workers are entitled. These amendments directly violate article 21 of the Constitution, which is the fundamental right to life and personal liberty, and article 23 of the Constitution, which prohibits forced labour. These changes have been made to the detriment of several social security and social protection measures that have promoted and improved workers` working conditions.
The case of Maneka Gandhi v. The Union of India[1] has expanded the scope of Article 21 to include the “right to live in dignity” in its scope. This right to live in dignity means that a person has the right to health, nutrition and a hospital working environment. It can therefore be said that the weakening of the social provisions of the Labour Code directly violates articles 21 and 23 of the Constitution. When we closely analyse the precedent in the landmark case of Sunil Batra v. Delhi Administration,[2] the Court held that the right to health is an integral part of the right to life under Article 21 of the Constitution and that the amendment of labour laws increases workers` working time without providing for overtime pay. It also increases the threshold for the number of people who can work in a factory or other manufacturing plant. We are also signatories to the 1976 International Tripartite Consultation Convention on Labour Standards, which requires government ratification to consult interest groups – employers and workers` organizations – before taking a policy decision on the labour market.
This means that employers looking to resume production face constraints such as the unavailability of raw materials due to an interrupted supply chain. They will also face barriers to market access.