With the government setting the stage for the four new labour codes, there are indications of a staggered implementation with an initial rollout of two codes, The Code on Wages and The Code on Social Security. These will likely be followed by the other two — The Industrial Relations Code and The Occupational Safety, Health and Working Conditions Code — at a later stage.
The proposed phased implementation of the codes, along with social security measures for informal workers, will be part of the discussions at the National Labour Conference of labour ministers and secretaries of all states/UTs and the Centre to be held on August 25-26 at Tirupati.
Senior government officials indicated there is an emerging consensus in favour of a staggered implementation, with most states having pre-published the draft rules for The Code on Wages. “Many discussions have happened with all stakeholders. Concerns were raised about the wage provision, whether allowances can be more than 50 per cent. Those have been sorted out and we are trying to build consensus on other issues. Most states have pre-published draft rules for Wage Code, and for rest also they are doing it. A phased implementation is being considered and discussed,” a senior government official told The Indian Express.
A consensus has emerged on various issues, such as the provision for allowances being capped at 50 per cent of the total salary, for which the industry had earlier sought a review. Industry representatives, including CII, in their recent meeting with Labour & Employment Ministry officials gave their consent for the wage provision and made representations for grandfathering gratuity calculations.
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CII in its representation recommended clarity on calculation of wages, especially defining the basic component. It has also sought that gratuity calculation should be prospective with the new law. “Grandfather the retrospective period as it impacts all companies books of account,” it said.
Earlier, the industry had sought a review for the provision for basic pay and allowances. The labour codes propose to define wages with basic pay to be at least 50 per cent of total salary, which effectively reduces take-home salaries but raises contributions towards social security components such as Employees’ Provident Fund. “The sense was that if the industry asks for a change in the law for tweaking this wage provision, then there could be similar demands for such amendments from other stakeholders. So, we have instead asked for grandfathering of the gratuity, it should be as per old calculations for earlier deductions and that changes should be prospectively applied,” an industry representative said.
The National Labour Conference, which will have a virtual address by the Prime Minister, will discuss a range of issues on the rollout of the labour codes along with discussions on migrant workers’ data and Vision-2047 for workforce.
The first two codes
With 31 states and UTs having prepared the draft rules for The Code on Wages, it will be among the first two codes to be introduced by the Centre. The other, The Code on Social Security, is aimed at providing a security net for informal workers.
Experts said a phased implementation of the codes will give the Centre an edge ahead of the general elections. “It will not be one-go because none of the state governments have notified the rules, all of them have it in draft form. All are waiting and watching … before the elections, the government may like the Wage Code and Social Security Code to be implemented because gig employees are taken care of, universal social security would be there, minimum wage would be there. Electorates are not worried about hire-and-fire, trade unions are worried about that. So for election purposes, it is imperative to pass Wage Code and Social Security Code instantly,” labour economist and professor at XLRI — Xavier School of Management Jamshedpur, K R Shyam Sundar said.
Strategically, he said, it is better to bring Wage Code and Social Security Code first, and those on OSH and IR later. “It is a strategic move for the government to hard pedal the industry to introduce Wage Code, thereby earn legitimacy and also satisfy the credibility gap and also introduce social security to be inclusive about gig workers, and then through the backdoor introduce the IR code and the OSH code.”
With labour being a concurrent subject, the Centre and states have to frame laws and rules. While Parliament cleared the labour codes in 2020, and the Centre pre-published the draft rules, some state governments are yet to complete the process. Thirty-one states and Union Territories (UTs) have pre-published the draft rules for the Code on Wages, while 26 have done for the Industrial Relations Code. 25 states have pre-published draft rules for the Code on Social Security and 24 have done for the Occupational Safety, Health and Working Conditions Code.
Some of the key features of the proposed labour codes include bringing in a national minimum wage, widening of coverage of social security to cover informal and gig/ platform workers, providing greater flexibility to employers in hiring decisions without government permission by raising the threshold for requirement of a standing order – rules of conduct for workmen employed in industrial establishments – from 100 workers to 300 workers.
Source: The Indian Express
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