Progressive Code

Context: The three labour codes introduced by the Parliament, address basic needs — to revive the economy and tackle barriers in the expansion of firms.

Benefits of three labour codes: 

• Reduced compliance burden: While previously, the firms have remained small due to compliance burden, the labour code addresses the matter of expansion of firms by increasing the threshold for retrenchment.

• The Industrial Relations Code 2020 has increased the threshold of workers from 100 to 300.

• In 2014, Rajasthan had brought similar provisions which helped firms to set up larger operations in Rajasthan.

• Fixed-Term Employment (FTE): Uncertain global fluctuations, and limitation of contract employment (low wages, no social security and working condition) is being compensated through FTE.

• FTE is an intervention to enable the hiring of employees directly instead of hiring through contractors, which will ensure flexibility.

• Such employees will get all statutory entitlements and service conditions.
• The Code on Industrial Relations also extends the benefit of gratuity even for an FTE contract of one year.

• Strengthened safety and social protection systems:  through following provisions.

• Inclusion of the gig and platform workers in the Social Security Code 2020.

• The provision for insurance coverage has been extended to plantation workers.
• Free annual health check-ups and a bipartite safety committee have been introduced for establishments such as factories, mines and plantation sectors in place of hazardous factories. 
• Employees' State Insurance Corporation (ESIC) and Employee Provident Fund Organisation (EPFO) requirements will now apply to establishments employing less than 10 and 20 workers respectively.

• Supports Female labour force participation: The new Code ensures the employment of women in night shifts for all types of work.

• Expands the definition of migrant worker: It includes workers who would be directly employed by the employer besides those employed through a contractor.

• Provision of Self-declaration: A migrant can declare himself a migrant worker by registering on an electronic portal based on self-declaration seeded with Aadhaar.

• Reduces workers' exploitation:  For de-licencing /de-registration, it is mandatory to notify registering officers about the closure of their establishment and certify payment of dues to all employed workers. 

• Matching corporate needs in the digital world: through the introduction of conducting web-based inspections.

• Provisions for better resolution of issues:  The provision for a 14-day notice period before strikes and lockdowns would allow both workers and employers to attempt resolving the issues.

• Institution of a Reskilling Fund: to promote lifelong learning mechanism. 

Conclusion: The reforms introduced in the three labour codes are progressive and will help to build a future of work that is safer, fairer, greener and more resilient.