Labour Ministry allays fears about Labour Codes

The ministry said that a fixed term employee (FTE) has been made statutorily entitled for all benefits and service conditions equivalent to that of a regular employee. In fact the code on Industrial Relations also extends benefit of gratuity even for an FTE contract on Pro-rata basis which is five years in case of regular employee, it added.

The Ministry of Labour and Employment on Monday allayed apprehensions about the Labour Codes passed last week by Parliament, saying the "criticisms being aired are misfounded". The ministry in a statement termed the bills as historical game-changer reform bills. "The criticisms being aired are misfounded", it asserted.

In a pointed clarification on raising the employee limit of smaller units for closure to 300, the ministry has underlined that the department-related Parliamentary Standing Committee had also recommended an increase in threshold from 100 workers to 300 workers for seeking prior permission for retrenchment, lay-off, and closure. It is only the aspect of prior permission of the appropriate Government which has been removed and other benefits and workers' rights have been kept intact, it added. The workers' rights such as notice before retrenchment, compensation at the rate of 15 days wages per completed year of service, and pay instead of notice period have not been compromised. Further, the IR (industrial relations) Code envisages an additional monetary benefit equivalent to 15 days of wages under the newly created Reskilling Fund. There has been no empirical evidence to suggest that a higher threshold promotes hire and fire, it pointed out.

The ministry also said that the Economic Survey, 2019 has analyzed the pain of dwarfism prevalent in Indian firms. Dwarfism refers to firms which are surviving for more than 10 years but their growth in terms of employment is stunted. One of the inhibiting factors in the creation of employment was observed to be the threshold of 100 workers under the Industrial Disputes Act, 1947. It was observed that the threshold under labor legislation creates a perverse incentive to remain small, it added. Rajasthan in 2014 had increased the threshold from 100 to 300 workers and done away with the requirement of prior permission before retrenchment etc., in case of firms having less than 300 workers. The impact of the increase in threshold in Rajasthan showed that the average number of factories in Rajasthan having more than 100 workers increased significantly as compared to the rest of India. As many as 15 more states have already enhanced the threshold to 300 workers.

​The ministry explained that fixed-term employment has already been notified by the Central Government and 14 other states. ​The non-availability of fixed-term employment implied that an employer had options to either employ on regular basis or through a contractual basis. There have been allegations that the contractors charge the full amount in terms of minimum wage and other entitled benefits like EPF, ESIC but do not pass on the same to the contract labor. The ministry said that a fixed-term employee (FTE) has been made statutorily entitled to all benefits and service conditions equivalent to that of a regular employee.

In fact, the code on Industrial Relations also extends the benefit of gratuity even for an FTE contract on Pro-rata basis which is five years in case of a regular employee, it added. Talking about the definition of Inter-State Migrant worker, the Inter-State Migrant Worker Act, 1979 has been subsumed in OSH (occupational safety health) Code. The various provisions of the erstwhile Act have been further strengthened in the OSH Code. The OSH Code expands the definition of the migrant workers to include those workers who would be directly employed by the employer besides by contractor.

Further, it has also been made possible that a migrant, who comes on his own, in the destination state, can declare himself a migrant worker by registering on an electronic portal based on self-declaration seeded with Aaadhar. The registration on the portal has been made simple and there is no requirement of any other document except Aaadhar. The ministry in this regard has also taken steps to develop a national database to enroll unorganized workers including migrants, which will inter-alia help migrant workers get jobs, map their skills and provide other social security benefits. It will also help in better policy formulation for unorganized sector workers, in general.

A statutory provision for a helpline for migrant workers has also been made. The migrant workers will also be able to enjoy the benefits of portability in respect of ration and avail benefits from building and another construction cess. They will also get all other benefits of ESIC, EPFO, and annual medical check-up, etc.

It also said that for working journalists provisions have been strengthened. These include expansion of the definition Working Journalist to include Journalists working in electronic and digital media and allowing Earned Leave for "working journalist" on full wages equivalent to not less than one-eleventh of the period of service. The ministry has also said that the position of Trade Unions has been strengthened by introducing a decentralized registration process. The ministry has dubbed apprehensions regarding a 14 day notice period (for strike) as totally misfounded. It has said that it only adds an opportunity for resolving the labor grievance before going on strike.