Labour Bill: Centre still wary of hire-and-fire clause – Key proposals

The Centre has been adopting a policy of blowing hot and cold when it comes to labour reforms. (Representative image)

Showing its resolve to ease labour law rigidities, the Narendra Modi government is set to ensure passage of the Code on Industrial Relations (IR) in the upcoming, delayed and curtailed monsoon session of Parliament.

According to sources, the relevant bill, introduced in the Lok Sabha in November last year, has since been vetted by the standing committee on labour, but the government will likely retain most of the industry-friendly provisions. Of course, a provision to allow a much larger number of firms to take retrenchment and closure decisions without government permission, has been dropped.

However, a window will be made available for the state governments to raise the relevant threshold from establishments with up to 100 workers now, to those with, say, up to 300 workers. The states can take the ‘notification route’ to raise the threshold. Already, nine states namely Andhra Pradesh, Assam, Haryana, Jharkhand, Madhya Pradesh, Rajasthan, Uttarakhand, Uttar Pradesh and Gujarat have raised the limit through state laws; the IR Code, sources said, might “protect such amendments”.

Also, the provision for full-benefit fixed-term employment (FTP), already in force in all sectors thanks to March 2018 notification, will be buttressed, with the Code explicitly providing for it. The government chose to retain the FTP provision, despite the standing committee vehemently opposing it. The committee, headed by Biju Janata Dal MP, Bhartruhari Mahatab, said FTP would lead to situation where employers replace all the present and future permanent vacancies with flexible contracts, which, it believes, is “highly inappropriate and inapposite”.

While these two changes will afford a great degree of labour flexibility to firms, the Code will also make it a little more difficult for workers to resort to sudden strikes, and limit the number of trade unions in an establishment by introducing the title of “negotiating union”. As per the proposal, only such unions that have the support of 75% or more workers on the muster roll can negotiate labour terms with the management. If no union has the requisite support, then a negotiating council will be constituted.

The code will also extend the provision for a mandatory 14-day prior notice for strikes and lock-outs, now applicable to public utility services, to other firms, to encourage resolution of disputes through tripartite negotiations. Definition of ‘strike’ is also being amended to include ‘mass casual leave’ within its ambit. Concerted casual leave on a given day by 50% or more workers will be treated as strike, the sources added. However, a proposal in the original version of the Code to bar outsiders from becoming office bearers of trade unions has been omitted in the revised draft.

The Centre has been adopting a policy of blowing hot and cold when it comes to labour reforms. The Wages Code, signed into law by President, on August 8 last year, included many worker-friendly provisions, such as a universal minimal wages policy, with the Centre fixing the floor levels and provisions for timely payment of wages for all workers.

The Centre blocked attempts by some state governments to bring in sweeping changes in their labour laws, including extension of work time to beyond eight hours a day and suspend key labour laws for three years or more, in the wake of the disruptions caused to industry due to Covid-19 pandemic. “The labour ministry has said that extension of working hours beyond eight hours is illegal and can’t be allowed to happen,” Mahatab had told FE earlier.

IR Code is at the centre of labour reforms. The Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947 will subsumed under the Code. The bill was referred to the Parliamentary Standing Committee on labour on December 12, which submitted its final report on April 24, 2020.

Immediately after assuming office, the Modi dispensation embarked on long-pending labour reforms by proposing to amalgamate 44 existing labour Acts into four codes — on IR, wages, operational safety, health (OSH) and social security and working conditions — with the aim of simplifying the laws and ensuring a conducive and harmonious environment for doing business. Only the wages Code has become law so far.

The labour ministry is hopeful of the passage of the Occupational Safety and Health Code in the Monsoon session, that mandates employers to provide free of cost annual health check-up for employees above prescribed age. Provision for appointment letter to every employee is also there in the Code.

Both the IR Code and the OSH code will need Cabinet approval before being introduced in Parliament since these have been modified following the recommendations of the standing committee. The code on Social Security is unlikely to be tabled this time around since it would require some broad-based modifications.