Shortfalls of the Labour Codes, 2019-20 (Part II)

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SHORTFALLS OF THE LABOUR CODES, 2019-20 (PART II)

Pratyush Jena, Subhajit Lodh Chowdhury; 2nd Year, B.A. LL.B(Hons.), West Bengal National University of Juridical Sciences Kolkata

Editorial Note: This is the final section in a two-part series highlighting the shortfalls of the Labour Code in India. In this part, the authors analyse the various issues pertaining to the Code on Wages, 2019 and pen down their concluding observations.

The first part analyzed the provisions of the code which deals with exempting powers of the government and migrant labourers. It also discussed how the new labour codes curb the power of calling strikes. The second part will now discuss in detail the issues pertaining to the code on wages and generalization of labour laws.

Code on Wages, 2019 (‘CoW, 2019’)

The Parliament passed CoW, 2019 in August last year subsuming four major legislations on wages into one. This consolidation was in line with the recommendation of the Second National Commission on Labour in 2002.[1]

The CoW, 2019 empowered the Central and State Governments to frame rules for implementing itself.[2] Under this provision, the Central government notified the Draft Code on Wages (Central) Rules, 2020 (RoW, 2020) on July 7th, 2020.[3] Although contentious provisions exist in theCoW, 2019 too, for the purpose of this paper the authors shall only address the concerns around RoW, 2020. 

Determination of Minimum Wages:

The CoW, 2019 empowers the Central and State Governments to determine minimum wages for all employees covered under the Code.[4] Rule 3 of the RoW, 2020 lays down the procedure and components for determining the daily minimum wage rate. Under this rule, the standard working-class family consisting of four units amounts to three ‘adult consumption units’.[5]Clothing requirement is set at 66 metres per year per standard working-class family[6]andit also pegs housing rent expenditure at 10% of food and clothing expenditure.[7]

The recommendations at the 15th Labour Conference of 1957 and a Supreme Court judgment of 1992[8] was largely used to determine the aforementioned numbers.[9]Therefore, the very basis for determining such standard are decades old and does not account for the important changes that have occurred over time. For instance, the Expert Committee on Determining the National Minimum Wage of 2019 studied the NSSO Consumer Expenditure Survey (2011-12) to find that an average household consists of 4.4 units amounting to 3.6 adult consumption unit.[10] Considering that a working-class family may also include dependable elders that one is obligated to maintain under the Maintenance and Welfare of Parents and Senior Citizens Act, 2007, the average size and consumption units within the family only goes up beyond the NSSO survey.[11] These aforementioned factors that drastically increase the financial burden on working persons have been failed to be accounted for in proposed draft rules.

Further problems include non-accounting of costs incurred towards transport, mobile phone and internet connection bills that have become a basic requirement in the present day, extremely low clothing requirement set at 66 metres ignores the extra clothing requirement in colder regions and significant rent escalation since the standard set at 15th Labour Conference in 1957 further adds to the woes of the workers.[12] 

Hence, considering the glaring shortfalls in the computation of the minimum wages, Rule 3 of RoW, 2020 has to be updated in accordance with the present-day requirements. 

Floor Wage Fixation and Revision: 

The RoW, 2020 only vaguely mentions the broad components like food, housing, clothing and other factors that may be used to determine the floor wage.[13]Unlike the minimum wage, the procedure and the weightage of each component towards the determination of a floor wage has been left open-ended allowing scope of arbitrariness.

The importance of floor wage becomes pronounced acting as benchmarks for determining the wage in sectors where a fixed minimum wage does not exist.[14] It is also extremely important to review the consumption units from three adults currently to suggested four adults and above as suggested in the articlepreviously for determining a floor wage. The Expert Committee had recommended the exact procedure and components for determining a floor wage in its 2019 report using NSSO data that may be used for arriving at a floor wage.[15]

While the CoW, 2019 providesfor mandatory revision of the minimum wage every five years, corresponding provisions for floor wage do not exist in the code.[16] The RoW, 2020 covers for this lacuna but leaves it at the discretion of the government as it states that the floor wage ‘may’ be revised every five years and adjustments may be made for cost of living ‘periodically’ with the Central Advisory Board.[17]

Leaving the revision of floor wage at the discretion of the government leaves scope for its stagnation and defeats the purpose of its inclusion in the first place. The recommended period of revision every five years is also concerning given that the present framework under NFLMW calls for revision in floor wage every two years.[18]As the government is required to set the minimum wage equal to or above the floor wage under the CoW, 2019, mandatory determination of the floor wage at an earlier interval helps in regularised adjustments serving the needs of the workforce.[19]

Therefore, laying of exact procedure for determination of floor wage along with provision relating to mandatory revision within a shorter time period becomes important for establishing transparency and accountability. 

Concerns Regarding Work Hours: 

The RoW, 2019 provides a working day to comprise of eight hours of work and intervals of rest that must not stretch beyond nine hours of work in a day.[20] It further provides that the spread over of work shall not be more than twelve hours per day.[21] These thresholdsare contentious as it not only violates conventions of the ILO but also provisions of other statutes.

As per Article 2 of Convention of the ILO (C001)[22], which India has ratified, the maximum workhourscan only stretch up to eight hours per day and forty-eight hours per week.[23]The new limit introduced under the RoW is directly in contravention of the country’s international obligations.Further, no limit on weekly work hours has been mentioned in the rules, therebyproviding a possible loophole for the employers to exploit and consequently violate the aforementioned ILO Convention.[24]

The Factories Act, 1948 which was replaced by the OSHWCC, 2019 provided that the work period of a worker, inclusive of intervals, in a factory shall not spread over ten-and-a-half hours in a day.[25] The RoW, 2020 instead of taking a progressive step by reducing this period, has added to the woes of the workers by further increasing it.

The disputed provisions of the RoW, 2020 is not only regressive but also violates binding international obligations of the country. Thus, in light of these concerns, Rule 6 of the RoW, 2020 must be amended to comply with the present regulations. 

Generalisation of Labour Laws:

It can be argued that the outcome of the new labour codes will be the generalization of labour–capital relations, which will be based on reduced state intervention or deregulation, and bipartite industrial relations. For instance, the new codes have introduced self-certification of employers’ which will lead to the reduction of compliance with labour laws in small and micro industrial establishment and the exemption of these establishments from the ambit of crucial labour laws. Once employed, the workers will be under the blanket authority of the employers. The labour inspection has shifted towards “self-certification system and third-party inspection by the employer,” which means that the employers will have more autonomy and power and State intervention will be limited to the use of criminal law framework to curb labour interest. Furthermore, the new codes mandate that the establishments having less than 300 workers will have unequivocal authority to deal with matters related to closure, lay-off or retrenchment of the workers. These new provisions will effectively push out a large section of workers employed in numerous medium-sized enterprises from the ambit of crucial government interventions in Industrial relations.[26]Such norms may result in exploitation of workers at the hands of the employees who may abuse the leeway provided to them by the codes. This is one of the main reasons why many cliques are contending that the new reforms are pro-employer and anti-employee.[27]

 Conclusion

Although the government asserts that the new reforms will simplify labour laws, reduce complexities, ensure transparency and accountability and help both employers and employees, the actual benefits remain suspect. Even before the introduction of the Codes, the labour law situation in the country as a whole was in a dismal state, where nearly 80% of the workforce remained outside the purview of the laws[28]. The new Codes do not provide any effective remedy to deal with the said problem and do not go far enough to justify the legislative effort. The positive changes introduced are mostly illusory and do not do enough to rectify the poor conditions workers of our country face. While, on the other hand, certain other provisions have been introduced, which, if anything, have the potentiality to aggravate the situation further and adversely affect India’s precarious labour sector. Therefore, certain efficacious steps are needed to be taken to ensure that the Codes which have been introduced to empower the labour sector, do not conjure up to be the biggest reason behind its downfall.

 

 

[1]K. Chandru, A wage code that is a hasty composition, September 30, 2020, also available at:https://www.thehindu.com/opinion/lead/a-wage-code-that-is-a-hasty-composition/article32726499.ece(Last visited on December 14, 2020).

[2]Code on Wages, 2019,§67(1), 2019.

[3]RamapriyaGopalakrishnan,A Critique of The Draft Code on Wages (Central) Rules, 2020, 13 August, 2020, also available at:https://www.livelaw.in/columns/a-critique-of-the-draft-code-on-wages-central-rules-2020-161344(Last visited on December 14, 2020).

[4]Code on Wages, 2019, §6.

[5]Draft Code on Wages (Central) Rules, 2020, Rule 3(1)(I).

[6]Id, Rule 3(1)(III).

[7]Id, Rule 3(1)(IV).

[8]Workmen represented by Secretary v. Management of Reptakos Brett and Co. Ltd. and another, AIR 1992 SC 504.

[9]Gopalakrishnan, supranote31.

[10]Ministry of Labour and Employment, Report of the Expert Committee on Determining the Methodology for Fixing the National Minimum Wage, January 2019, Ch. 4, Para 4.9, Pg. 35, also available at:https://labour.gov.in/sites/default/files/Commitee_on_Determination_of_Methodology.pdf(Last visited on December 14, 2020).

[11]Gopalakrishnan, supra Note 31.

[12]Id.

[13]Draft Code on Wages (Central) Rules, 2020, Rule 11(1).

[14]Gopalakrishnan, supra Note 31.

[15]Ministry of Labour and Employment, Report of the Expert Committee on Determining the Methodology for Fixing the National Minimum Wage, January 2019, Ch. 4, Para 4.53, Pg. 51, also available at:https://labour.gov.in/sites/default/files/Commitee_on_Determination_of_Methodology.pdf(Last visited on December 14, 2020).

[16]Code on Wages, 2019, §8(4).

[17]Draft Code on Wages (Central) Rules, 2020Rule 11(4).

[18] International Labour Organisation, Discussion Paper: Wage code and rules – Will they improve the welfare of low-paid workers in India?, August, 2020, Pg. 6, also available at: https://www.ilo.org/newdelhi/whatwedo/publications/WCMS_753465/lang--en/index.htm(Last visited on December 14, 2020).

[19]Id.

[20]Draft Code on Wages (Central) Rules, 2020 Rule 6(1).

[21]Id, 6(2).

[22]Hours of Work (Industry) Convention, 1919 (No. 1), International Labour Organization, Article 2.

[23]Art. 2, International Labour Organisation, C001 - Hours of Work (Industry) Convention, 1919 (No. 1), also availableat:https://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312146(Last visited on December 14, 2020).

[24]PRS Legislative Research, Draft Rules under Code on Wages, 2019, also available at:https://www.prsindia.org/billtrack/draft-rules-under-code-wages-2019(Last visited on December 14, 2020).

[25]Code on Wages, 2019, §56.

[26]Maya John, New Labor codes will force workers into a more precarious existence, October 15, 2020, available at https://indianexpress.com/article/opinion/columns/india-new-labour-laws-6725325/(Last visited on December 14, 2020).

 

[27]Id

[28]PRS Legislative research, Overview of labour law reforms, available at https://www.prsindia.org/billtrack/overview-labour-law-reforms (Last visited onDecember 14, 2020).

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