The Upcoming Labour Codes and its possible implications on your business
Are you struggling to keep up with the various, and often confusing compliances prescribed under the numerous labour laws presently in force?
Relax, take a deep breath as we take you through the changes in the labour policies and compliances suggested under Code on Wages Bill, 2017; Code on Occupational Safety, Health and Working Conditions, 2018; and Labour Code on Social Safety and Welfare,2018 (Collectively the Codes). The Government is in the process of bringing about path breaking labour reforms. As a part of its initiatives around ease of doing business, 38 Labour Acts are being rationalized by framing 4 labour codes viz. Code on Wages, Code on Industrial Relations*, Code on Social Security and Code on occupational safety, health and working conditions.
Not that the incoming Codes are bound to introduce a host of new provisions and conflict with the existing labour compliances, but the primary aim of the Codes is to merge the existing legal provisions under various laws making way for easier comprehension and compliance. The changes are related to crucial areas of wages payable to workers, social security and health and safety policies practised in businesses, among other aspects.
Although the Codes are yet to gain the force of law, it is always wise to start planning in advance to ease implementation of the changes proposed in these Codes in your business and into the lives of people who earn livelihood out of it.
In this blog we inform you about some of the vital steps proposed to be taken and plans to be made in the light of the changes suggested by these draft Codes and how they may affect your business, your employees and their cost to company
How will the Codes affect you?
First up, the Codes aim to improve and standardise the conditions and standards of workers, employed in both the organised as well as the un-organised sectors. In essence, the Codes make you an employer in relation to people who help you at home, office, and even with work which you consider to be ‘unofficial’, for example: your domestic workers, drivers etc.
The Codes are trying to bring together all essential elements relating to wages and the social security and occupational safety of workers by consolidating enactments and removing the multiplicity of definitions and authorities; simplifying the implementation of employers’ duties under the existing labour laws.
Post enactment, the Wage Code shall repeal the four existing laws on wages, the Occupational Safety Code will amalgamate 13 existing laws on health, safety and working conditions of workers and the Social Security Code will make the present 15 laws on social security redundant. The regulators are on the look-out for suitable resting places for laws like Minimum Wages Act, Payment of Wages Act, Factories Act, Employees Provident Fund Act, Employees’ State Insurance Act, etc.
Points requiring your attention (To Dos):
Contact your accounts department and have a conversation over the following:
- How are wages currently being paid in your organisation? If it’s through cheque or through digital or electronic mode or by crediting it in the bank account of the employees then you are in line with what’s coming up, as crediting salaries online may become a mandate for your industry or establishment.
- Payment of contributions to the Social Security Fund and the Gratuity Fund under the Social Security Code. As an employer, you may have to pay a maximum of 17.5 % of the wages for Social Security Fund and 2 % of the wages for Gratuity Fund. Moreover, if the sufficient amount is not available in your gratuity fund account, the Commissioner will direct you to pay the gratuity to the employee from your own funds within 15 days.
- Take stock of contract labourers who are close to completing continuous service as under the Social Security Code if an employee meets the qualifying continuous service, serving for a Principal employer, the said principal employer shall pay the Gratuity, else Gratuity will payable by Contractor to contract labourers who have rendered continuous service under him (the contractor).
- Administrative charges can be raised up to 4% of your share of contribution to Social Security Schemes.
- Making provisions for providing relief to families of workers who die or are seriously injured in the course of work.
- Give directions to ensure that no charge is levied on the employees for maintenance of healthy and safe conditions at work
Connect with the Administration department for:
Communicating with Facilitators appointed under Wage Code and the Occupational Safety Code.
The function of such Facilitators under the Wage Code will be to supply information and advise you (as the employer) and your workers regarding the most effective ways of complying with its provisions.
Whereas, under the Occupational Safety Code, the duty lies on you. If any employee approaches the management regarding:
- inadequate provision for protection of his safety or health in the workplace; or
- with any reasonable apprehension that there is a likelihood of imminent serious personal injury or death or imminent danger to health;
then immediate remedial action is required and a report of the action taken has to be sent to the Facilitator. Even if you are not satisfied about the existence of any imminent danger as apprehended by the employee, refer the matter to the Facilitator, whose decision on the same will be final.
Under the Social Security Code, the facilitators will be christened as ‘Samajik Suraksha Mitras’ solely to help your workers for using the Code to their benefit. Nothing to worry here, if you know your compliances and are doing them well and within time.
Reach out to Human Resource Department and give directions to:
I. Check your employment policies to ensure that there is no gender discrimination in matters relating to payment of wages and social security of workers. Prepare them to comply with the following:
- equal pay for equal work, irrespective of the gender of the worker,
- making subscription to different social security schemes like Maternity Benefit Scheme, Pension Scheme, Sickness Benefit Scheme etc., available to every worker, irrespective of their gender.
- making provisions for transgender workers.
- Removal of distinction between death/disablement due to employment for a worker and his family, in respect of pension schemes.
- Registering yourself as an employer and your workers under the Social Security Code.
Also ensure that such policies do not require any women employees to participate in any operations declared dangerous by the Central Government.
II. Ensure that appointment letters are mandatorily furnished to every future employee at the time of joining.
In case of existing employees, who were not furnished with such appointment letters, make provisions for providing them with the same within three months of the commencement of the Occupational Safety Code.
III. Ensure proper regulation of regular working hours as well as hours of overtime in your establishment.
Establish proper communication between the Accounts department and the HR team to ensure proper payment of overtime wages.
IV. Make provisions for maintaining healthy and safe working conditions for the employees like:
- cleanliness and hygiene
- potable drinking water;
- adequate standard of lighting, humidification, ventilation and temperature control;
- adequate standards to prevent overcrowding and to provide sufficient space to workers;
- first-aid facilities;
- sufficient arrangement for latrine and urinal accommodation and washing facilities, separately for male, female and transgender workers;
- effective arrangements for treatment of wastes and effluents; etc.
The Occupational Safety Code will also impose added responsibilities like medical examination of workers, canteens, creche facilities etc., on crossing certain thresholds of number of employees.
For your workers employed in factories, mines, docks, building and other construction works or plantations, ensure their health and safety by
- providing safe working conditions,
- ensuring absence of health risks at the place of work and
- provision of such information, instruction, training and supervision as are necessary.
- Wage Code will help you by enabling maintenance of one register containing the details of your workers, muster roll, wages etc., instead of having to maintain different registers under the different labour laws,
It exempts employers employing not more than five persons for agriculture or domestic purpose from this requirement.
- As per the Wage Code, whenever a claim will be filed under it for non-payment of remuneration or bonus or less payment of wages or bonus or of making unauthorised deductions, the claimant will not be required to prove such averments, and instead the burden of proof would be on you, as an employer, to prove that the said dues have been paid to the employee or no unauthorised deductions have been made.
- The Wage Code also proposes that certain suits for the recovery of minimum wages, any deduction from wages, discrimination in wages and payment of bonus shall not be entertained by any Court.
Thus, as an employer you have to be prepared for the changes the Codes would bring along, once enacted. The Codes have made detailed changes in the existing labour laws. This document is only a broad overview of some of the important changes that you need to prepare for.
Hope you had a nice time reading! Please reach out to us on email@example.com to have a detailed discussion.
*The draft industrial code is not out in public domain and is, therefore, not covered in this blog.
- Zaheer Tarafdar AVP – Legal Operations
- Madhura Bagchi, Legal Associate
- Anurag Mitra, Legal Associate
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