Amendments to labour laws under the Modi government: No love for labour

Print edition : August 16, 2019

A protest rally by the Joint Committee of Indian Trade Unions in Bengaluru on January 8 against the Centre’s proposed labour law reforms. Photo: V. Sreenivasa Murthy

Santosh Kumar Gangwar, Minister of State for Labour and Employment, speaking in the Budget session of the Lok Sabha on July 1. Photo: PTI

Bandaru Dattatreya, Minister of State for Labour and Employment, with trade union leader Gurudas Dasgupta during the inauguration of the 46th Indian Labour Conference in New Delhi on July 21, 2015. Photo: Sandeep Saxena

The second Modi government has begun its march against workers’ rights by introducing Bills that seek to merge existing laws, brazenly dismantle labour protection and give industry a free hand.

Prime Minister Narendra Modi, who has always held forth on his “humble origins”, once referred to himself, during his first term, as the son of a mazdoor (worker). However, despite such evocation from public platforms, in terms of real policymaking, the first term consistently worked against the interests of labour and the working class. The second one seems to be no different.

On July 23, Union Labour Minister Santosh Gangwar introduced in the Lok Sabha the Code on Wages Bill, 2019, and the Code on Occupational Safety, Health and Working Conditions Bill, 2019, and said that it was a historic step. However, it was historic for the wrong reasons since for the first time in post-Independence India, labour laws enacted by governments through the unrelenting efforts of trade unions and activists are sought to be dismantled in a brazen fashion, diluting workers’ rights, to ensure that industry has a free hand.

In 2015, there were attempts to do away with 44 laws, each of them enacted by Parliament after considerable thought, debate and trade union intervention, by amalgamating them under four Codes. There was a lot of opposition from the central trade unions, including those ideologically affiliated to the Bharatiya Janata Party (BJP). The present government, with greater strength in Parliament, is more resolute than ever in its intention to complete the process it began in the previous term.

The four labour Codes—on Wages, Industrial Relations, Social Security and Occupational Safety, and Health and Working Conditions—are supposed to provide workers with wage security, social security, safety, health and grievance redress mechanisms, which presumably had not been provided for under existing laws. But the four Codes have been designed keeping the interests of industry and the business class in mind more than labour.

The Economic Survey 2018-19 tabled in Parliament early on in the Budget session stated that “deregulating labour law restrictions can create significantly more jobs as seen by the recent changes in Rajasthan when compared to the rest of the States”.

In 2014, the BJP government in Rajasthan undertook sweeping reforms in many crucial labour laws, which were emulated by other States too. At the crux of all these reforms was making trade unionism difficult and hire-and-fire easy.

Factories employing up to 300 persons were not required to take the permission of the government before shutting down operations, compared with the earlier threshold of 100 workers. The minimum number of workers required to form a trade union as a percentage of the total workforce was increased and a time limit of three years was fixed for workers to raise objections pertaining to their terminations. Earlier, there was no such time limit.

The other States that introduced such reforms were Maharashtra, Uttar Pradesh, Gujarat, Haryana and Punjab.

Ease of compliance

On July 8, replying to a question in the Lok Sabha, Gangwar said that the labour reform initiatives would reduce the complexity of compliance resulting from the multiplicity of labour laws, facilitate the setting up of enterprises, create an environment for the development of business and industry and generate employment opportunities without diluting the basic aspects of safety, security and health of workers.

The Code on Wages subsumes the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976. It was introduced in 2017 and was referred to a Standing Committee, which submitted its report in December 2018. The Bill lapsed after the dissolution of the 16th Lok Sabha. The Bill was riddled with several flaws, including its formula of a national minimum wage of Rs.178, much lower than what trade unions demanded and what the Seventh Pay Commission had recommended.

The Code on Occupational Safety, Health and Working Conditions subsumes 13 laws, including the Factories Act; the Building and Other Construction Workers’ Act; the Working Journalists Act (Fixation of Rates of Wages) Act, 1958; the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions) Act, 1955; and the Contract Labour (Abolition and Regulation) Act, 1970.

Members of Parliament from the Congress, the Left parties and the Trinamool Congress protested against both the Bills, and the Centre of Indian Trade Unions (CITU) gave a call for an all-India protest.

The Code on Wages amalgamates some 12 definitions of wages and provides for a single definition of minimum wage applicable to the entire workforce. Fixing the minimum wage itself would be based on “geography and skills”.

The single definition, in the words of a government release, is “expected to reduce litigation” and entail “lesser cost of compliance for an employer”. Clearly the objective, right from the beginning, was meeting the interests of industry rather than labour. The focus is on simplifying procedures for employers, not protecting labour rights.

“An establishment will also be benefited as the number of registers, returns, forms, etc., not only can be electronically filed and maintained but it is envisaged that through rules, not more than one template will be prescribed,” the release said.

It provides for the introduction of a statutory floor wage that would be computed on minimum living conditions and “geography and skills”. However, this computation based on minimum living conditions has not gone down well with the trade unions, which argue that the method of computing minimum wage based on calorific requirements and family size was done long ago.

The Code on Wages Bill, 2019, purports to bring about many “changes in the inspection regime, including Web-based randomised computerised inspection scheme, jurisdiction-free inspections, calling of information electronically for inspection, [and] composition of fines” which will be “conducive for enforcement of labour laws with transparency and accountability”.

Inconsistencies in Bill

The Standing Committee to which the Code on Wages was referred pointed out several inconsistencies in the Bill. It stated that workers and employees had been defined differently and the lack of consistency in this could lead to employers discriminating between the two.

It recommended that since minimum wage was a matter of right, a common and comprehensive definition of employee/worker should be given in the Code. The definition of an employer in the Code made it difficult to identify the principal employer, the Committee said.

On revision of minimum wages, the Code stipulates that it must be done every five years, while the Standing Committee suggested that this should be replaced by a provision that allows for a revision at an interval not exceeding five years, meaning that it could be done earlier too.

On the fixing of a national wage by the Centre for the States, the Committee had serious reservations. It recommended that State governments ought to be consulted before the fixing of a national wage by the government and that the Central government should obtain the advice of the Central Advisory Board as well as State Advisory Boards.

The composition of the Central Advisory Board itself was bereft of any State government representatives and the Standing Committee recommended that at least five representatives of State governments be nominated to the Central Board by the Central government.

In the section on prohibition of gender discrimination in wage matters, the Code did not prohibit such discrimination at the time of recruitment and conditions of employment, which was pointed out by the Committee.

On the number of hours of work, the Standing Committee pointed out that the Code ought to specify that the number of working hours would not exceed more than eight rather than just arrogate the right to Central or State governments to fix the number of hours that would constitute a normal working day.

Evidently, the Code on Wages had been drafted in a hurry without taking into account the interests of workers, although on the face of it, the reforms are supposedly in the interests of labour.

Ease of doing business is one of the primary motives behind the introduction of the Codes, and that is reflected in the features in the Codes introduced in Parliament. The Code on Wages allows for various deductions by an employer from employees’ wages without any corresponding obligation to deposit, or penalty for failure to deposit in the appropriate fund.

In keeping with the spirit of “ease of doing business”, the Codes underplay the role of labour inspectors. The inspectors would be called facilitators and as per the Code on Wages, they would carry out inspections and provide information to employers and employees for better compliance.

The Standing Committee rejected outright the use of the term “facilitator” and said it should be replaced by “inspector”.

However, the term has not been dropped in either of the two Codes introduced in Parliament. The penalties provided for in the Code for violations ranged from Rs.10,000 to Rs.1 lakh, which the Committee felt were not “substantial enough to act as a deterrent”. It recommended a penalty in the range of Rs.50,000 to Rs.10 lakh.

National minimum wage

Tapan Sen, general secretary of the CITU and Polit Bureau member of the Communist Party of India (Marxist), told Frontline that pursuant to the introduction of the Code on Wages Bill in 2017, the government had appointed an Expert Committee in January 2018 to determine the methodology for fixing the national minimum wage. This committee recommended a national minimum wage ranging from Rs.8,892 to Rs.11,622 a month for unskilled workers, which was far below what the Seventh Pay Commission had recommended on the basis of recommendations of successive Indian Labour Conferences (ILCs).

It even reduced the calorific requirement for the determination of minimum wage from 2,700 to 2,400 calories, perhaps oblivious of the fact that Indian workers are hugely malnourished. India ranks 100 out of 119 countries in the Global Hunger Index.

In 1992, the Supreme Court had recommended that more “items” should be taken into account before determining a minimum wage. The decision of the ILC in 1957, to which the Indian government was a party, regarding the criteria to fix a need-based minimum wage for a worker based on a family size of three adult units and calorie requirements of 2,700 per unit, 65 grams of protein and 45-60 grams of fat (Dr Wallace Aykroyd formula) has been a benchmark for the fixing of minimum wages. Aykroyd was the first Director of the Department of Nutrition at the Food and Agricultural Organisation.

ILC recommendations

The 15th ILC also recommended clothing requirements, a minimum area for industrial housing by the government (a feature which does not exist any more) and other requirements such as fuel and lighting. The Supreme Court upheld all these in 1961 (U. Unichoyi vs State of Kerala) and in 1991 it held in the famous Raptakos Brett vs Workmen judgment that another 25 per cent of the total minimum wage should be given for children’s education, medical treatment, recreation, festivals and ceremonies.

The Code on Wages Bill has been formulated without looking at the history of wage fixation or Supreme Court judgments. Interestingly, all these issues were reiterated in the 44th, 45th and 46th ILCs, the last one inaugurated by the Prime Minister himself in 2015. No ILC has been held since then.

The Occupational Safety, Health and Working Conditions Code, 2018, which subsumes 13 pieces of labour legislation, is also fraught with problems. (These laws include those pertaining to wages and working conditions of factory workers, mine workers, contract employees, sales promotion employees, and journalists and other newspaper employees.) It has made easy the process of registration of establishments under separate legislation.

The focus, therefore, is again on “ease of compliance” for the employer. Further, it has merged 622 sections into 134 sections, touting this as a big achievement. This would result “in simple legislation with flexibility in changing the provisions in tune with emerging technologies and makes the legislation dynamic”, a government release said.

Appointment letters would be issued to every employee of the establishment (not worker), which the Code claims will lead to formalisation of employment and prevent exploitation. Going by this logic, the mere issuance of an appointment letter, irrespective of the features and terms of employment contained in it, is expected to prevent exploitation of employees.

Unlike the Code on Wages, this Bill was not referred to a Standing Committee. It does not make the distinction between employee and worker and leaves the determination of working hours to rules prescribed by Central or State governments. It does not lay down any fixed number of or maximum number of working hours, but fixes rates for overtime work.

The objective of the Code is to enhance the “coverage of the safety, health and working conditions”. It covers all establishments employing more than 10 workers. This practically excludes a large number of small-scale units that employ up to 10 or fewer than 10 workers. The imposition of a threshold in this context is, thus, meaningless.

The inspectors provided under this Code are also called Inspector-cum-Facilitator. Inspections are to be carried out only after giving a notice in writing to the employer regarding conducting a survey of a factory or mine or such other establishment or class of establishments under the Code.

The Code also provides for a Chief Inspector-Facilitator who would have the powers to prohibit the exercise by any individual or class of Inspector-cum-Facilitator.

The Code has exempted start-up establishments from such inspections. Instead, as per the Code, a panel of empanelled experts appointed by the Central government would conduct third-party audit and certification of such establishments. The panel would submit reports to employers and the Inspector-cum-Facilitator for compliance. This is again in keeping with the spirit of “ease of compliance and ease of doing business”, with little or no benefit to the worker.

While the Code is about occupational safety, health and working conditions, the provision of welfare facilities such as canteens, creches, first aid, welfare officer is not guaranteed and would be provided as far as “practically feasible”.

Canteens would have to be provided in establishments that employ over 100 workers; an ambulance room where more than 500 are employed; restrooms and shelter rooms in establishments with more than 50 workers; welfare officers where more than 250 workers are employed; and creches for children under six where more than 50 workers are employed.

When the two Bills were introduced in the Lok Sabha, MPs from the opposition parties demanded more time for discussion. Adhir Ranjan Chaudhary from the Congress, Saugata Roy from the Trinamool Congress and N.K. Premachandran from the Revolutionary Socialist Party also demanded that the two Bills be sent to a Standing Committee for scrutiny. There is likely to be more resistance when the two other Codes on Social Security and Industrial Relations are introduced.

The “rationalising” of labour laws owes its genesis to Congress regimes, but stiff trade union opposition and the strong presence of the Left in Parliament ensured that little was done in that regard. The situation has changed considerably now.

The BJP is well on its way to overhauling labour laws. This is something that the regimes led by the Congress had been unable to achieve for decades.

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