New Labour Law Codes and its Implications

The Wage Code:
The new wage code consolidates regulations pertaining to wages, bonuses, and associated matters. It introduces a standardized definition of ‘wages,’ encompassing an employee’s basic pay, dearness allowance, and retaining allowance (if applicable), with a minimum requirement of 50% of the total cost to the company. This could lead to a reduction in take-home salary in certain instances, as it may positively impact provident fund contributions and other social security benefits, which are calculated based on an employee’s basic pay or wages. Furthermore, the Act mandates the establishment of minimum wages, potentially imposing an additional financial burden on employers.

The OSH Code:
The OSH Code applies to workers, i.e., persons not engaged in managerial or administrative role, or supervisory role with a monthly wage exceeding INR 18,000. However, the provisions relating to health and working conditions apply to all employees.
The Code provides a national database for interstate migrant workers to collect, compile and analyse occupational safety and health statistics. The OSH Code also requires mandatory health checkups in establishments. Further, consent is required from the workers for overtime work for which they shall be remunerated twice the wages.

The SS Code:
The SS code provides for a separate social security fund for the unorganized workers. Under the SS Code, the Employees’ State Insurance benefits shall be extended to all industries involved in hazardous processes, i.e., irrespective of the number of employees engaged by such industries. Also, the gratuity will have to be paid on a proportionate basis to the employees employed on fixed-term contracts. The increased focus on the social security provisions for workers will ensure the optimisation of the labour force and the availability of skilled labour for employers.

The IR Code:
The IR Code looks to optimise the ease of doing business with various changes such as, the increase in threshold limit from 100 to 300 workers for the applicability of standing orders to industrial establishments. The threshold of workers for permission for layoff, retrenchment and closure in industrial establishments is increased to 300 workers. Workers’ disputes are to be resolved within 1 year by the Industrial Tribunals which will have 2 members to facilitate faster disposal of cases. Mass casual leave by more than 50% of workers on a day and strikes can be done only after adhering to certain requirements such as notice, etc.

The code emphasizes on recognition of trade unions in industrial establishments for collective bargaining. Under the IR Code, where only one trade union of workers is functioning in an industrial establishment, then the employer shall, subject to such criteria as may be prescribed, recognise such trade union as the sole negotiating union of the workers. If more than one trade union of workers functioning in an industrial establishment, then the trade union having support of 51% or more workers shall be recognised by the employer as the sole negotiating union of the workers. However, in industrial establishments in which no trade union has a membership of more than 51%, a negotiating council of trade unions shall be constituted for the purpose of collective bargaining.

Further, as per the IR Code, at the time of retrenchment of workers, the employer should contribute to the reskilling fund set up for the reskilling of retrenched workers.

The Code also restricts the engagement of contract labour/third party employees in certain core activities, which will require the organizations to review their arrangements for the engagement of the workforce.