Chapter 8 Labour Codes – CS Professional Labour Laws and Practice Notes is designed strictly as per the latest syllabus and exam pattern.
Labour Codes – CS Professional Labour Laws and Practice Study Material
Question 1.
Explain any two most important recent reforms/ ammendments in labour laws. (Dec 2019, 6 marks)
Answer:
Ministry of Labour and Employment has taken a number of initiatives for bringing transparency and accountability through reforms and enforcement of Labour Laws, with the objective of strengthening the safety, security, health, social security for every worker and bringing ease of compliance for running an establishment to catalyze creation of employment opportunities. These initiatives include:
- Legislative reforms by simplifying, amalgamating and rationalizing the existing labour laws into 4 labour codes i.e., Labour Code on Wages, Labour Code on Industrial Relations, Labour Code on Occupational Safety, Health & Working Conditions and Labour Code on Social Security & Welfare.
- Governance reforms through use of e-governance measures: Unified Online Annual Returns have been made mandatory in respect of eight (8) Central Labour Acts.
- Facility for exemption from Labour Inspections under six (6) Central Labour Acts is being provided to the Start-ups which submit self-certified declarations through Shram Suvidha Portal.
- Government of India has launched two pension schemes for old age protection and social security of Unorganized Workers in 2019.
- The Payment Of Gratuity (Amendment) Act, 2018, provides flexibility to the Central Government firstly to increase the ceiling limit of gratuity to such amount as may be notified from time to time and secondly to enhance the calculation of continuous service for the purpose of gratuity in case of female employees whoare on maternity leave to such period as may be notified from time to time.
- Payment of Wages (Amendment) Act, 2017 enabling payment of Wages to employees by Cash or Cheque or crediting it to their bank account.
- Maternity Benefit Amendment Act, 2017, increases the paid maternity leave from 12 weeks to 26 weeks.
- The Employee Compensation (Amendment) Act, 2017 seeks to rationalize penalties and strengthen the rights of the workers under the Act.
Question 2.
The Code on Wages, 2019 amalgamate, simplify and rationalize the relevant provisions of the following four Central Labour enactments relating to wages, namely :
- The Payment Wages Act, 1936
- The Minimum Wages Act, 1948
- The Payment of Bonus Act, 1965; and
- The Equal Remuneration Act, 1976
Based on the above enactment of the Code, answer the following questions:
(a) How is the wages fixed for an employee working overtime?
(b) What are the conditions for fixing the minimum wages?
(c) When deduction can be made from wages?
(d) What is not included in wages? (Aug 2021, 3 marks each)
Answer:
(a) Under Section 14 of the Code on Wages, 2019, where an employee whose minimum rate of wages has been fixed under the Code by the hour, by the day or by such a longer wage-period as may be prescribed, works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess, at the overtime rate which shall not be less than twice the normal rate of wages.
(b) Under Section 6 of the Code on Wages, 2019, the appropriate government (Central or State) shall fix a minimum rate of wages based on time work or piece work. While fixing the minimum wages, the government may take into account factors such as, skill of workers, and difficulty of work.
Also, by Section 8 of the Code, the minimum wages shall be revised and reviewed by Central or State Government at intervals of not more than Five Years.
(c) According to Section 18 of the Code on Wages, 2019, there shall be no deductions from the Wages of the employee’s. But in the following cases deduction can be made which is explained in Section 18(2) of the Code they are:
- Fines imposed on him; or
- Absence from duty; or
- Damage to or loss of goods which was entrusted to him for custody; or
- House accommodation provided by the employer; or
- For amenities and services provided for the employee.
These deductions should not exceed 50 percent of the employee’s total wage.
(d) The definition of Wages excludes bonus payable to employees, value of house accommodation and utilities, any travelling allowance, employer contribution to pension and provident fund, any special expenses, award or settlement, overtime allowance, commission payable to employee,and gratuity payable on termination of the employment. The specified exclusion however may not exceed 50 percent of all remuneration and if exceeding, that amount shall be deemed as remuneration and will be considered as Wages.
Question 3.
Necessity of Consolidation of labour laws is the need of hour. Discuss in the context of the Code on Industrial Relations, 2020. (Dec 2021, 6 marks)
Answer:
Labour law reforms are an ongoing and continuous process and the Government has been introducing new laws and amending the existing ones in response to the emerging needs of the workers in a constantly dynamic economic environment.
The Second National Commission on Labour, which submitted its report in June, 2002 had recommended that the existing set of labour laws should be broadly amalgamated into the following groups, namely:- (a) industrial relations; (b) wages;(c) social security; (d) safety; and (e) welfare and working conditions. The Labour Code is a mean to consolidate various statutes into a pruned and uncomplicated form. The amalgamated form of multiple statutes thus obtained is called a labour code.
This operation is done with a view to have a unified law which can be understood and implemented with ease.
Industrial Relations Code, 2020 is an Act to consolidate and amend the laws relating to Trade Unions, conditions of employment in industrial establishment or undertaking, investigation and settlement of industrial disputes. It amalgamates, simplifies and rationalises the relevant provisions of – (a) the Trade Unions Act, 1926; (b) the Industrial Employment (Standing Orders) Act, 1946; and (c) the Industrial Disputes Act, 1947.
The important salient features of the Industrial Relations Code, 2020, inter alia, are as follows:
- to provide for fixed term employment with the objective that the employee gets all the benefits like that of a permanent worker (including gratuity), except for notice period after conclusion of a fixed period, and retrenchment compensation.
- to bring concerted casual leave within the ambit of the definition of strike;
- to provide the maximum number of members in the Grievance Redressal Committee up to ten in an industrial establishment employing twenty or more workers.
- to provide for appeal against non-registration or cancellation of registration of Trade Union before the Industrial Tribunal;
- to empower the Central Government and the State Governments to recognise a Trade Union or a federation of Trade Unions as the Central Trade Union or State Trade Unions, respectively;
- to provide for applicability of threshold of three hundred or more workers for an industrial establishment to obtain certification of standing orders, if the standing order differ from the model standing order made by the Central Government;
- to set up Industrial Tribunals in the place of existing multiple adjudicating bodies like the Court of Inquiry, Board of Conciliation and Labour Courts;
- to remove the reference system for adjudication of Industrial Disputes, except the reference to the National Industrial Tribunal for adjudication;
- to provide that the commencement of conciliation proceedings shall be deemed to have commenced on the date of the first meeting held by the conciliation officer in an industrial dispute after the receipt of the notice of strike or lock-out by the conciliation officer;
- to prohibit strikes and lock-outs in all industrial establishments without giving notice of fourteen days;
- to provide for the obligation on the part of industrial establishments pertaining to mine, factories and plantation having three hundred or more workers to take prior permission of the appropriate Government before lay-off, retrenchment and closure with flexibility to the appropriate Government to increase the threshold to higher numbers, by notification;
- to set up a re-skilling fund for training of retrenched workers.
- to provide for penalties for different types of violations to rationalise with such offences and commensurate with the gravity of the violations;
- to empower the appropriate Government to exempt any industrial establishment from any of the provisions of the Code in the public interest for the specified period.
Question 4.
The Code on Wages, 2019 is a complete code to amend and consolidate the laws relating to wages, bonus and matters related thereto. Substantiate your answer with salient features of the code. (June 2022, 12 marks)
Question 5.
Distinguish between Old laws on Wages and Code of Wages, 2019.
Answer:
| Basis | Old laws on wages | Code on Wages, 2019 |
| Coverage | Minimum Wages Act: For scheduled employments with more than 1,000 employees, wages were fixed.
Payment of Wages Act: Applies to employees whose wages do not exceed ₹ 24,000 per month. Payment of Bonus Act: Applies to employments with 20 or more persons and for employees whose wages do not exceed ₹ 21,000 per month. |
All employees are entitled to a minimum wage.
Provisions are applicable to all employees regarding the payment of wages. Bonus will apply to employees whose wages do not exceed a monthly amount notified by central or state governments. |
| Revision of minimum wages | Minimum Wages Act: Minimum wages must be revised by the central or state governments at least once every five years. | Mandates that minimum wages be revised in five-year intervals. |
| National minimum wage | No provision. | The Central Government may set a national minimum wage and may set different national minimum wages for different states and regions. |
| Overtime wage | Minimum Wages Act: Allows the relevant central or state governments to set overtime wage. | Sets overtime wage at two times the normal wages. |
| Gender discrimination | Equal Remuneration Act: Prohibits gender discrimination in wage payment.
Prohibits gender discrimination in recruitment, transfers, and promotions. |
Prohibits gender discrimination in wage payment.
No provision. |
| Inspections | Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, and Equal Remuneration Act: Inspectors are appointed to carry out (i) surprise checks, and (ii) examine persons and require them to give information, among other powers. | Appointment of a Facilitator to carry out inspections, and provide information to employers and employees for better compliance.
Inspection will be done on the basis of an inspection scheme, which will include a web-based inspection schedule. |
| Minimum Wages Act: Offences include (i) paying employees less than minimum wages, and (ii) not providing for a day of rest in the week. Penalties include fine up to ₹500 and imprisonment up to six months.
Payment of Wages Act: Offences include (i) nonpayment of wages at specified time period, (ii) unauthorised deductions from wages. Penalties include fine up to ₹ 7,500. Payment of Bonus Act: In case a person or company does not comply with the Act, they can be punished with imprisonment up to six months or fine up to ₹ 1,000. Equal Remuneration |
The inspection scheme will be decided by the central or state governments
Employers who pay less than what is due under the Code will pay a fine of up to ₹ 50,000. If an employer is guilty of repeat offence within five years, penalties include imprisonment up to three months or a fine of up to ₹ 1 lakh or both. Employers who do not comply with any other provision of the Code will pay a fine of up to ₹ 20,000. If an employer is guilty of the same offence again within five years, penalties include imprisonment up to one month or a fine of up to ₹ 40,000 or both. |
Question 6.
What is meant by Labour Code?
Answer:
- Labour code refers to the task of consolidating various labour laws into specific codes.
- The objective of labour coding is to simplify, align and amalgamate the varied statutes into proper classifications.
- The 44 statutes have been codified into 4 Labour Codes.
- Ministry of Labour and Employment has taken steps for codification of existing Central labour laws into 4 Codes:
- The Code on Wages, 2019
- The Occupational Safety, Health and Working Conditions Code, 2020
- The Industrial Relations Code, 2020
- The Code on Social Security, 2020
Question 7.
Explain in brief ‘Labour code on wages’.
Answer:
- The Labour code on Wages aims at regulating and rationalising the wages and bonuses in the country and encompasses all industries and businesses.
- Labour Code on Wages Bill, 2015 (Wage Bill) was introduced by the Ministry of Labour & Employment, Government of India and was approved by The Union Cabinet on 25 July 2017.
- The labour codes on wages are collected in the Code on Wages, 2017.
- The code has 9 chapters and 68 sections.
- Following of the previous acts are accumulated in this code:
- Payment of Wages Act, 1936
- Minimum Wages Act, 1948
- Payment of Bonus Act, 1965
- Equal Remuneration Act, 1976.
Question 8.
Explain in brief ‘Labour code on Industrial Relations’.
Answer:
- The Labour code on Industrial Lawsaims at regulating and rationalising the laws relating to industrial relations (including investigation and settlement of disputes, registration of Trade Unions, conditions of employment etc)
- Labour Code on Industrial Relations was drafted by the Ministry of Labour & Employment, Government of India and passed in the year
- The labour codes on wages are collected in the Code on Wages, 2017.
- The code has 13 chapters and 107 sections.
- Following of the previous acts are accumulated in this code:
- The Industrial Disputes Act 1947
- The Trade Unions Act 1926 (TU Act)
- The Industrial Employment (Standing Orders) Act 1946
Question 9.
Explain in brief ‘Labour code on Industrial Relations’.
Answer:
- The Labour code on Industrial Laws aims at regulating and rationalising the laws relating to industrial relations (including investigation and settlement of disputes, registration of Trade Unions, conditions of employment etc)
- Labour Code on Industrial Relations was drafted by the Ministry of Labour & Employment, Government of India and passed in the year 2015.
- The labour codes on wages are collected in the Code on Wages, 2017.
- The code has 13 chapters and 107 sections.
- Following of the previous acts are accumulated in this code:
- The Industrial Disputes Act 1947
- The Trade Unions Act 1926 (TU Act)
- The Industrial Employment (Standing Orders) Act 1946
Question 10.
Explain in brief ‘Labour code on Safety & Working conditions’.
Answer:
- The Labour code on Safety and working conditions aims at regulating the occupational safety, health and working conditions of the persons employed in an establishment.
- Labour Code includes following 13 earlier laws:
- Factories Act, 1948
- The Mines Act, 1952
- The Dock Workers (Safety, Health and Welfare) Act, 1986
- The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
- The Plantations Labour Act, 1951
- The Contract Labour (Regulation and Abolition) Act, 1970
- The Inter-State Migrant workmen (Regulation of Employment and Conditions of Service) Act, 1979
- The Working Journalist and other News Paper Employees (Conditions of Service and Misc. Provision) Act, 1955
- The Working Journalist (Fixation of rates of wages) Act, 1958
- The Motor Transport Workers Act, 1961
- Sales Promotion Employees (Condition of Service) Act, 1976
- The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
- The Cine Workers and Cinema Theatre Workers Act, 1981.
Question 11.
What are the duties of Employer under Occupational Safety, Health and Working Conditions Code, 2020
Answer:
- Every employer shall ensure to his employees that work place is free from hazards
- Employer shall comply with the Occupational Safety and Health standards made under this Code and of the regulations, rules, bye-laws and orders made there under.
- Employer shall ensure the periodical medical examination and prescribed tests of the employee.
- Provide a working environment that is safe and without risk to the health of the employees.
- Shall furnish to every worker on his appointment in the establishment, a letter of appointment within three months.
- No employer shall levy or permit to be levied on any employee, any charge in respect of anything done or provided for maintenance of safety and health at work place the duties of an employer shall particularly in respect of factory, mines, dock, building and other construction work or plantation include –
- Provision and maintenance of plant and systems of work in the workplace that are safe and without risks to health
- Arrangements in the workplace for ensuring safety and absence of risks to health in connection with the use, handling, storage and transport of articles and substances
- Provision of such information, instruction, training and supervision as are necessary to ensure the health and safety of all workers at work
- Maintenance of all places of work in the workplace in a condition that is safe
Question 12.
What are the reasons of Code on Wages, 2019?
Answer:
Following is the reason for enacting Code on Wages:
- Provides for all important elements relating to wages, equal remuneration, payment and bonus.
- Provisions relating to wages shall be applicable to all employments covering organised and unorganised sectors.
- Provisions relating to timely payment of wages and authorised deductions from wages, (under old law applicable for employees drawing wages upto18000 p.m., now applicable for all).
- Provides that the wages to employees may also be paid by cheque or through digital or electronic mode or by crediting it in the bank account of the employee.
- Provides for national minimum wage for different geographical areas so as to ensure that no State Government fixes the minimum wage below the national minimum wage (wage notified by the Central Government for the area).
- Provides for graded penalty for different types of contraventions of the provisions of the proposed legislation;
- Provides that the Facilitator shall give an opportunity to the employer before initiation of prosecution proceedings in cases of contravention.
- Provides for compounding of those offences which are not punishable with imprisonment
- Provides that where a claim has been filed for non-payment of remuneration or bonus or less payment of wages or bonus or on account of making deduction not authorised by the proposed legislation, the burden shall be on the employer to prove that the said dues have been paid to the employee.
- Period of limitation for filing of claims by a worker has been enhanced from current fluctuating 6 months -2 years to flat 3 years now.
- Power to fix minimum wages continues to be vested in the Central Government as well the State Government.
- Power to Appropriate Government to determine the factors (skills required, the arduousness of the work assigned, geographical location) by which the minimum wages shall be fixed for different category of employees.
- Power to Appropriate Government to appoint Facilitators in the place of Inspectors, who would supply information and advice the employers and workers.
- Power to Appropriate Government to determine the ceiling of wage limit for the purpose of eligibility of bonus and calculation of bonus.
- Power to Appropriate Government to appoint one or more authorities to hear and decide the claims under the provisions of the proposed legislation.
- Power to Appropriate Government to appoint an appellate authority to hear appeals so as to ensure speedy, cheaper and efficient redressal of grievances and settlement of claims.
- Power to Appropriate Government to constitute Advisory Boards at Central and State levels to advice the Central Government and the State Governments.
Question 13.
Explain in detail the salient features of the Code on Wages, 2019.
Answer:
Following are the salient features of Code on Wages 2019:
- It provides for all elements & payment of:
- Wages
- Equal Remuneration
- Bonus
- Covers both organised and unorganised sectors
- Minimum wages may be fixed by Appropriate Govt (Central Govt & State Govt.)
- Enables Appropriate Government to determine the factors by which the minimum wages shall be fixed for different category of employees
- Payment of wages – timely payment and authorised deductions from wages made applicable to all employees (which was ₹ 24000 earlier)
- Payment to employees may be through cheque/ digital / electronic mode
- Empowers Appropriate Government to determine the ceiling of wage limit for the purpose of eligibility of bonus and calculation of bonus
- Provides for graded penalty for different types of contraventions of the provisions of the legislation
- Provides for compounding of those offences which are not punishable with imprisonment
- Period of limitation for filing of claims by a worker increased to 3 years to provide more time to worker to settle his claims.
Question 14.
Explain in detail the salient features of the Occupational Safety, Health and Working Conditions Code, 2020.
Answer:
The salient features are:
- Applicable to establishments having 10 or more workers (other than the establishments relating to mines and docks)
- Provides for “one registration” for all establishments having 10 or more employees.
- Provides for employment of women in all establishments for all types of work. Further, can also work at night- beyond 7 PM and before 6 AM subject to the conditions relating to safety, holiday, working hours and their consent
- Code to provide flexibility in adapting technological changes and dynamic factors, in the matters relating to health, safety, welfare and working conditions of workers
- Provides for issuing of appointment letter mandatorily by the employer of an establishment to promote formalisation in employment
- Provides for free of cost annual health check-ups for employees above the specified age in all or certain class of establishments
- Provides for constitution of:
- National Occupational Safety and Health Advisory Board to give recommendations to the Central Government
- State Occupational Safety and Health Advisory Board at the State level to advice the State Government
- Safety Committee by the appropriate Government in any establishment or class of establishments.
Question 15.
Explain in detail the salient features of Code on Social Security, 2020.
Answer:
The salient features are:
- Enhances laws relating to social security to all employees and workers
- Covers both organised or unorganised sectors
- Provides for an establishment to be covered under EPF & ESIC on voluntary basis even if the number of employees in that establishment is less than the threshold.
- Empowers Central Government to frame schemes for unorganised workers, gig workers and platform workers and the members of their families for providing benefits relating to ESIC
- Provisions for maternity benefits such as prohibition from work during certain periods, provision of nursing breaks, creche facility, claim for maternity benefits, etc.
Question 16.
Explain in detail the salient features of Industrial Relations Code, 2020.
Answer:
The salient features are:
- Broadened the scope of:
- Workers: Includes the persons in supervisory capacity getting wages up to ₹ 18000 or an amount as may be notified by the Central Government from time to time
- Industry: Any systematic activity carried on by co-operation between the employer and workers for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes
- Prohibit strikes and lock-outs in all industrial establishments without giving notice of fourteen days
- Provides for fixed term employment with the objective that the employee gets all the benefits like that of a permanent worker (including gratuity)
- Provides for a new feature of recognition of negotiating union : fixed at 51% or more workers on a muster roll of that industrial establishment. Trade Union having support of every 20% of workers will get one seat in the negotiating council
- Standing Orders – Provides for applicability of threshold of 300 or more workers for an industrial establishment to obtain certification of standing orders, if the standing order differ from the model standing order made by the Central Government.
Labour Codes Notes
Labour Code
- Labour code refers to the task of consolidating various labour laws into specific codes.
- The objective of labour coding is to simplify , align and amalgamate the varied statutes into proper classifications.
- Ministry of Labour and Employment has taken steps for codification of existing Central labour laws into 4 Codes:
- The Code on Wages, 2019
- The Industrial Relations Code, 2020
- The Code on Social Security, 2020
- The Occupational Safety, Health and Working Conditions Code, 2020
The Code on Wages, 2019 has been passed by both Houses of the Parliament and assented by President on 8th August, 2019.
Other 3 codes- Industrial Relations Code, 2020; Code on Social Security, 2020, and Occupational Safety, Health and Working Conditions Code, 2020 received the assent of President on 28th September, 2020.
The Code on Wages 2019
- Aims at regulating and rationalising the wages and bonuses in the country and encompasses all industries and businesses.
- Following of the previous acts are accumulated in this code:
- Payment of Wages Act, 1936
- Minimum Wages Act, 1948
- Payment of Bonus Act, 1965
- Equal Remuneration Act, 1976.
The Industrial Relations Code, 2020
- Aims at regulating and rationalising the laws relating to industrial relations (including investigation and settlement of disputes, registration of Trade Unions, conditions of employment etc)
- Following of the previous acts are accumulated in this code:
- The Industrial Disputes Act 1947
- The Trade Unions Act 1926 (TU Act)
- The Industrial Employment (Standing Orders) Act 1946
The Code on Social Security 2020
- The labour code on social security aims at providing social security to the mass workers and increase the ambit of current coverage
- The labour code replaces pre-existing laws on social security.
Aims to rationalise the relevant provisions of thefollowing security related laws:
- The Employees’ Compensation Act, 1923
- The Employees’ State Insurance Act, 1948
- The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
- The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
- The Maternity Benefit Act, 1961
- The Payment of Gratuity Act, 1972
- The Cine Workers Welfare Fund Act, 1981
- The Building and Other Construction Workers Welfare Cess Act, 1996
- The Unorganised Workers’ Social Security Act, 2008.
Occupational Safety, Health and Working Conditions Code, 2020
- Aims at regulating the occupational safety, health and working conditions of the persons employed in an establishment.
- Following of the previous acts are accumulated in this code:
- Factories Act, 1948
- The Plantations Labour Act, 1951
- The Mines Act, 1952
- The Working Journalist and other News Paper Employees (Conditions of Service and Misc. Provision) Act, 1955
- The Working Journalist (Fixation of rates of wages) Act, 1958
- The Motor Transport Workers Act, 1961
- The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
- The Contract Labour (Regulation and Abolition) Act, 1970
- Sales Promotion Employees (Condition of Service) Act, 1976
- The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
- The Cine Workers and Cinema Theatre Workers Act, 1981
- The Dock Workers (Safety, Health and Welfare) Act, 1986
- The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996