Code on Wages, 2019 (Wages Code)
The Wages Code replaces four legislations including the Payment of Wages Act, Payment of Bonus Act, Equal Remuneration Act and Minimum Wages Act.The Wages Code seeks to bring uniformity across all the previous laws, however, many substantive aspects of the law are very similar to the extant laws. Key changes include a uniform definition of “wages”, “employees” have been defined to include managerial/supervisory employees and there is now an obligation on an employer for timely payment of wages, etc.to to all “employees”.
Employers will now need to ensure that the CTC breakup of allowances should not exceed 50% of wages – any excess of this percentage is now included as part of the wages, with a corollary impact on computation of payouts linked to “wages”, such as retrenchment, gratuity, etc. Payment for overtime is introduced, which cannot be less than twice the normal wages.
The Code on Industrial Relations Code, 2020 (IR Code)
The IR Code will consolidate and amend the laws relating to trade unions, conditions of employment in industrial establishments/undertakings and matters relating to industrial disputes. With a view at gender neutrality, the term “worker” replaces the term “workman” under the Industrial Disputes Act, with an increase in the supervisory role monthly wages cap to Rs. 18,000 per month, up from the previous monthly wages cap Rs 10,000.Fixed term employment has been introduced, which is the engagement of a worker through written contract for a fixed period and where a fixed term worker will have parity as a permanent worker engaged in the same/similar work in terms of work hours, wages, allowances and other benefits. A fixed term worker is also eligible for all statutory benefits available to a permanent worker proportionately according to the period of service rendered by him, even if the employment period does not extend to the qualifying period of employment required in the statute, including payment of gratuity if he renders service for a period of one year. However, retrenchment provisions will not apply.There is a key change in Standing Orders, with the provisions now applicable to establishments with 300 or more workers (as compared to 100 workmen under the IESO Act). A similar increase in threshold of workers is seen in relation to factories, mines, plantations with 300> workers where prior permission of Government will be required by an establishment with 300 workers before closure, lay-off or retrenchment.
The Code on Social Security, 2020 (SS Code)
The SS Code merges and amalgamates 9 central labour laws dedicated to social security of employees.
New definitions have been included with a rationalization of other definitions. These include Contract labour, Contractor, Confinement, Dependant, Employee (expanded to include workers employed through contractors), Employer, Employment injury, Exempted employee, Factory, Family, Fixed term employment, Inter-state migrant worker (expanded to include self-employed workers from another state), Self-employed worker, Social Security Organisation (EPF Board, ESIC, National Social Security Board for Unorganised Workers, State Unorganised Workers’ Social Security Board, State Building and other Construction Workers’ Welfare Boards, any other Board by Gov), Unorganised sector / unorganised worker and Wages.
The unorganised sector has obtained representation and coverage. New categories include Gig worker (workers outside the traditional employer-employee relationship), Home-based worker (person engaged in the production of goods or services for an employer in his home or other premises of his choice other than the workplace of the employer, for remuneration, irrespective of whether or not the employer provides the equipment, materials or other inputs) and Platform work / platform worker (Workers who access organisations or individuals through an online platform and provide services or solve specific problems engaged in additional categories of services or activities as may be notified by the government).
One of the key changes relates to the unorganised sector, from existing law. The SS Code introduces the categories of Home-based and self-employed workers, gig workers and platform workers. The Central Government is to set up social security funds for life and disability cover; health and maternity benefits; old age protection; education; and any other benefit. The State Government is to set up social security schemes for PF; employment injury benefit; housing; educational schemes for children; skill upgradation of workers; funeral assistance; and old age homes. Registration of workers required, which will require – completion of 16 years of age or such age as may be prescribed by the Central Government; submission of self-declaration electronically or otherwise in such form and in such manner containing such information as may be prescribed by the Central Government and submission of documents including Aadhaar number.
Aggregators have been defined as a digital intermediary or a marketplace for a buyer or user of a service to connect with the seller or the service provider. Schemes for gig workers and platform workers may be funded through a combination of contributions from the Central Government, State Governments and aggregators. Schedule 7 to the Code has a list of aggregators, including ride sharing services, food and grocery delivery services, content and media services and e-marketplaces. Any contribution from an aggregator may be at a rate notified by the government between 1-2% of the annual turnover of the aggregators. The contribution cannot exceed 5% of the amount paid or payable by an aggregator to gig workers and platform workers.
Code on Occupational Safety, Health and Working Conditions, 2020 (OSHWC Code)
The OSHWC Code replaces and consolidates 13 Acts including key enactments such as the outdated Factories Act, Contract Labour Act, etc. An employer now has specific duties including issuing a formal letter of appointment to every employee on appointment in the establishment and ensuring that workplace is free from hazards which cause or are likely to cause injury or occupational disease to the employees.
The definition of a factor has seen a threshold increase, to now include premises where manufacturing process is carried out and it employs more than: (i) 20 workers, if the manufacturing process is carried out using power, or (ii) 40 workers if it is carried out without using power.
Contract workers now cover establishments or contractors employing 50 or more workers and manpower supply contractor who has employed 50 or more contract labour, an increase from the previous threshold of 20 contract workers. Contract labour prohibited in core activities except where: (i) the normal functioning of the establishment is such that the activity is ordinarily done through contractor, (ii) the activities are such that they do not require full time workers for the major portion of the day, or (iii) there is a sudden increase in the volume work in the core activity which needs to be completed in a specified time. Appropriate government to decide whether an activity of the establishment is a core activity or not.
List of non-core activities included where prohibition will not apply, including: (i) sanitation workers, (ii) security services and (iii) any activity of intermittent nature even if that constitutes a core activity of an establishment.
The Code also details aspects on work hours, leave and overtime in a uniform manner.
The writer is Partner at Induslaw.
