New Labour Codes Ensure Benefits To Employees In Terms Of Pay, Leaves & More: All You Need To Know

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New Labour Codes Ensure Benefits To Employees In Terms Of Pay, Leaves & More: All You Need To Know

The new codes have consolidated, clarified, and rationalised India's complex labour law system under the recommendations of the 2nd National Commission on Labour (2002).

India is emerging as one of the most powerful economies globally. Recently we have surpassed the United Kingdom (UK) and have established ourselves as the fifth-largest economy in the world, valued at $3.5 trillion. It's a proud moment for all of us.

However, there are some concerns related to this growth. If you look closely, India's per capita Gross Domestic Product (GDP) is very low. In reality, this denotes the average income of an Indian worker is less than that of other countries. For instance, an Indian worker earns $2,500 a year, whereas, in the UK, workers make around $47,000 per year. Comparing this number to other countries, we are very low.

But why is there a significant difference? The primary reason is that over 90 per cent of India's workforce is in the unorganised sector. Based on these aspects, the Indian government has passed new labour codes.

Latest Labour Codes In Detail

The Indian government has passed four labour codes expected to ensure that the worker's sector has minimum wages and social security. Now let's have a look at them in detail.

  • The Code On Wages

This is a crucial code passed by the Indian government, and it was initially notified in August 2019. This subsumes the provisions of four different laws: the Payment of Wages Act, the Minimum Wages Act, the Payment of Bonus Act 1965, and the Equal Remuneration Act.

This code provides uniform applicability of various provisions and timely payment of wages to all employees. Under this code, the concept of floor wage is introduced. This will be determined by the centre after accounting for the living standards of workers based on the geographical areas.

The state government will not have the power to fix a minimum wage rate lesser than the floor rate determined by the central government. This particular code also terminates discrimination of payment paid for male and female workers.

  • The Code On Social Security

This particular code empowers the centre to implement various social security schemes. This includes ESI, EPS, and EPF benefits to workers in all sectors. This code supports the centre in initiating action regarding self-employed and unorganised workers and protecting the family members.

As per this code, every firm employing more than 20 workers should report the vacancies online. A social security fund can be opened for the workers in case of an organised sector. In certain sectors, employees will have access to a 4-day work week. Under the scenario, the total working hours should not be less than 48 hours.

  • The Code Of Industrial Relations

This code makes sure that the person employed is skilled in multiple aspects. It also protects fixed-term employees and ensures they get the same benefit as permanent employees.

Business accessibility can be increased by enabling businesses with up to 300 employees to proceed with layoffs, retrenchments, and closures without seeking permission from the government. Currently, no company with fewer than 100 employees is required to obtain government approval before conducting layoffs, reductions, or closing.

  • The Code Of Occupational Safety

This applies to factories with at least 20 workers if the manufacturing process is being done with the help of power and 40 workers if it is being done without power, and it combines 13 existing labour laws. Employers are required to provide certain classes of employees with free annual health examinations or tests and to ensure that the workplace is free of hazards that could injure or sicken workers.

Employers are required to give interstate migrant workers a yearly travel allowance if they must travel back and forth to their home state. Furthermore, it is now mandatory to provide the employees with appointment letters.

Advantages Of Labour Codes

  • Regulation On Working Hours

The new labour codes have limited the daily and weekly working hours to 12 and 48 hours, respectively. This has enabled the implementation of a 4-day workweek (assuming 12 working hours every working day in the week).

  • Rules For Annual Leave

The government has attempted to rationalise, in addition to the number of hours worked, the number of leaves that employees are permitted to take while still employed, the carryover of unused leaves to the following year, and the ability to use unused leaves while still employed.

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  • Reduced Capacity For Leave

Under the new labour laws, the required minimum number of days of employment to be eligible for leaves has been reduced from 240 to 180. This implies that a new hire must work 240 days by the rules to be eligible for a leave of absence. However, a new hire only needs to work 180 days to qualify for leave under the current labour laws.

  • Amount Of Time Off

One day of leave is earned for every 20 days of employment, which is a constant amount of leave. Additionally, no changes have been proposed to the 30-day time limit for the carryover of unused leaves. In addition, other than the eligibility requirements, the leave arrangements have not changed.

  • Additional Welfare Benefits For Extra Hours Work

A person who works more than the daily limit of 9 hours or the weekly limit of 48 hours is entitled to pay twice the going rate under the Factories Act. The new Codes maintain this overtime wage rate for any work exceeding the 8-hour daily or 48-hour weekly limit.

Much-Needed Benefits For Employees

The new codes have reduced the number of provisions by 61 per cent and consolidated 29 previous labour laws (from 1,232 to 480). These codes have consolidated, clarified, and rationalised India's complex labour law system under the recommendations of the 2nd National Commission on Labour (2002). The results of this two-decade-long reform process will provide employees with much-needed benefits in terms of pay, leaves, working hours, and social security.

However, because all 36 States and UTs have not yet been notified of state-specific rules, the roll-out of the codes has been significantly delayed. There is still uncertainty regarding their implementation two years after they were passed. As a result, the benefits provided to workers under the codes have been permanently postponed.

The advantages of India's advancement on the world economic stage must be fairly distributed among the workforce in the nation. An important step in this direction will be the prompt implementation of the new labour codes.

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Writer : Vakilsearch
Creatives : Shiva Chaudhary

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