LEGAL ASPECTS OF BUSINESS AND IPR

Chapter 1: Introduction to Labour

Labour Code
In 2019 and 2020, the Ministry of Labour and Employment introduced 4 bills on Labour codes
to amalgamate 29 central laws. These are:-

➢ WAGE CODE - 4 Laws

➢ SOCIAL SECURITY CODE – 9 Laws

➢ OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS CODE – 13 Laws

➢ INDUSTRIAL RELATIONS CODE – 3 Laws

 IMPORTANCE AND BENEFITS OF THE LABOUR CODE
➢ Benefits under Wage Code, 2019:-
i) Equal remuneration for both male and female workers
ii) 40 crore people working in unorganized sector getting this right for the first time
iii) Provision of floor wage introduced to do away with regional disparity
iv) Minimum wages are to be decided on the basis of criteria like skill level and geographical area
➢ Benefits under Social security Code, 2020
i) It provides free treatment to workers in hospitals and dispensaries of ESIC
ii) ESIC facility will now be open workers of all sectors, including those from unorganized sector
iii) ESIC hospital, dispensaries and branches will now be available in 740 districts of the country (previous 566)
iv) Institutions involved in hazardous areas need to be compulsorily registered with ESIC
v) There will be no minimum service requirement for payment of gratuity to fixed term employer
➢ Benefits under OSH Code :
i) This will make the lives of inter state migrant workers easier, as they can be registered on national portal as inter state
migrant workers
ii) There will be a provision to provide travelling allowance to inter state migrant workers
iii) It will be mandatory to give appointment letters to workers
iv) An interstate migrant worker will get a ration facility in the state he is working and his family would continue to get the
ration facility where they reside. This will be done under “One Nation – One Ration card”
v) The Code also works on women empowerment and gives them rights to work at night with their consent.
➢ Benefits under Industrial Relations code:-
i) Worker will get benefits under Atal Bimit Vyakti Kalyan Yojan which is a kind of unemployment allowance.
ii) 15 days wages for re-skilling to workers at the time of retrenchment
iii) Faster justice will be given to workers and disputes related to them to be resolved within a year.
IMPORTANCE AND BENEFITS OF THE LABOUR CODE …contd
The laws were so far applicable only to the organized sector of workers in India. Now workers of the unorganized sector have
been included and that implies (how the codes will help the laborer)
1. They automatically get organized and recognized as such.
2. All the workers, irrespective of the particular industry that they work for, will be included in the working section.
3. The workers who have so far been in the lowest rung of the ladder and ignored will be rewarded appropriately.
4. They will have job security.
5. They will be able to access medical facilities.
6. The employer will be responsible for any death or injury that occurs during the course of employment.
7. The employer will be liable to pay compensation for any injury or death occurring during the course of employment to the
worker or to the dependents of the worker,
8. The workers in the unorganized sector will be able to have some security in terms of their work environment.

These labour reforms will also augment the ease of doing business in India as it enables employers to access permissions
online and the cancellations of certain previously mandatory requirements. The EPF (Employee’s Provident Fund, Employee’s
Pension Scheme (EPS) and coverage of all types of medical benefits under Employees Insurance will be made available to all
the workers in India.
 Procedure the Central Government has adopted to amalgamate these laws
1. Review and Assessment: The government conducted a comprehensive review and assessment of the existing labor laws to identify areas that
needed reform and consolidation. This process involved consultations with stakeholders, including employers, employees, and labor organizations.

2. Drafting New Legislation: Based on the findings of the review, the government drafted new legislation to replace multiple existing laws. In the case
of labor codes, four major codes were drafted to cover different aspects of labor and employment.

3. Parliamentary Approval: The drafted legislation was introduced in the Parliament as Bills. Members of Parliament debated and discussed the
proposed laws, and the Bills went through the legislative process in both houses of Parliament — Lok Sabha (House of the People) and Rajya Sabha
(Council of States).

4.Committee Scrutiny: Parliamentary committees, such as standing committees or select committees, may have been involved in scrutinizing the
proposed legislation. These committees review the provisions of the Bills, gather expert opinions, and suggest modifications if needed.

5. Amendments and Approval: The Bills may undergo amendments during the parliamentary process based on discussions, feedback, and
recommendations. Once both houses of Parliament approve the Bills, they are sent to the President of India for assent.

6. Presidential Assent: The President's assent is the final step for a Bill to become law. Once the President gives assent, the Bills are officially enacted
as laws.

7. Notification and Implementation: The government issues official notifications to bring the new laws into effect. The codes are then implemented,
and relevant authorities are responsible for enforcing and administering the provisions.

The four labor codes mentioned earlier — Code on Wages, Code on Social Security, Occupational Safety, Health, and Working Conditions Code, and
Industrial Relations Code — were introduced as part of this amalgamation process.
Procedure the Central Government has adopted to amalgamate these laws

Lok Sabha Rajya Sabha Received The Code on

passed the bill passed the bill President’s Wages, 2019 is
on 30th July on 2nd August, assent on 8th an Act yet to be
2019 2019 August, 2019 implemented

Code on Wages, 2019

Replaced Acts Key Changes
The Payment of Bonus Act, 1965
Defined wage-related terms
The Payment of Wages Act, 1936
Introduced the concept of a floor wage
The Minimum Wages Act, 1948
Simplified the calculation of bonus
The Equal Remuneration Act, 1976
Impediments in the former laws and the need to adopt new labour Codes
• Laws on wages, industrial safety, industrial relations and social security were in multiple numbers. Some of these laws were not
applicable to contract labour and migrant workers.
• Some laws were applicable to cine workers construction workers, sales promotional employees and journalists which was very
specific to situation and could not be applied in the generic manner.
• Numerous labour laws both at the Centre and in the states
• Labour laws had been added in bits and pieces over a period of time as necessitated.
• Laws were made for a specific purpose and not to serve a broader perspective
• The definitions given did not match the needs
• Many clauses seemed outdated in the present context
• Common terms such as “appropriate government”, “worker”, “employee”, “establishment”, and “wages” had different definitions
as per different relevant laws resulting on multiple interpretations, which also resulted in elucidations of situations as needed, by
persons according to their convenient interpretations. Hence there was an urgent need for definitions to have common meaning
for the sake of impartial implementation.
• Every worker required humane treatment by being provided with suitable medical aid.
• In case if workers demise, it is expected that the dependents are ensured of basic living conditions by the employer.
• The existing labour laws were not consistent in these issues because they were not applicable to the workers of all the sectors of
industry.
 Comparison of New Labour Codes and the
Old Labour related Acts
1. Domain of Application:- Most labour laws apply to establishments over a certain size as it enables firms managing
compliance. However, basic protections related to wages, social security and working conditions should apply to all
establishments.

2. Advance notice before cost cutting measures:- Firms hiring 100 or more workers need government permissions for closure,
layoffs, ore retrenchments. Some say that it has created an exit barrier for firms. The new IR Code has raised this limit to 300.

3. Difficulty in Compliance of Laws:- Multiple laws means multiple compliances. Collecting fines for enforcement of multiple
labour laws is cumbersome for law enforcing officers. As there are lesser laws in the new labour code, compliance is sufficient.

4. Contract Labour:- Guaranteed wages are not available despite huge number of contract laborers available in the country.
Fluctuations in the economy, production trends, demand oscillations have always created a need labour rather than
permanent worker. The IR Code has introduced a new term labour called Fixed Term Employment (FTE) which takes care of
guaranteed wages for contract labour in the country.

5. Trade Union:- The IR Code creates provisions for recognition of trade unions which was absent so far to enable them to have
better bargaining power.

6. Generalizations and Definitions:- More clarity given to certain definitions.

 Specific Changes made in the Code on Wages, 2019
Sr. no Old Provision
1. In the interval of 5 years, the State or the Central
Government must revise the minimum wages
2. The definition of the term ‘employer’ includes any person
who employs one or more persons at an establishment
3. The Code provides for a Central Advisory Board consisting
of (i) employers (ii)employees in equal number as
employers, and (iii) independent persons (not exceeding
one third of the total members)
4. The Payment of Wages Act was applicable only to
employees under wages below Rs. 24,000/- per month
Latest Provision
The State or Central Government shall not exceed a period of 5 years for
revision of minimum wages
The definition of ‘employers’ includes any person who directly or
indirectly employs one or more persons at an establishment
The Code provides for a Central Advisory Board consisting of (i)
employers (ii) employers in equal number as employers, (iii) independent
persons (not exceeding one third of the total members), and (iv) five
representatives of State Government to be nominated by the Central
Government
There has been removal of such threshold limit for applicability under
Code on Wages. Hence, the Code shall be applicable to all the employees
irrespective of monthly wages
Code on Wages
Objectives and provisions

Understand the objectives and provisions of the Code on Wages, which aims to promote fair and
promote fair and transparent wage policies.

Minimum wage revisions

Learn about the revisions made to minimum wage regulations to ensure better livelihoods for
livelihoods for workers.

Wage payment and enforcement

Explore the mechanisms put in place to ensure the timely payment of wages and effective
effective enforcement of wage-related regulations.
Code on Industrial Relations
1 Trade unions and collective bargaining

Discover the role of trade unions and the changes in collective bargaining processes,
empowering employees to negotiate better terms and conditions.

2 Dispute resolution mechanisms

Explore the new dispute resolution mechanisms introduced to address conflicts

between employers and employees more efficiently.

3 Changes in strikes and lockouts regulations

Learn about the revised regulations governing strikes and lockouts, ensuring a balanced
approach between the interests of the workforce and employers.
Code on Occupational Safety, Health, and
Working Conditions
Ensuring workplace safety
and well-being
Discover the measures
implemented to guarantee a safe
and healthy working environment
for all employees, enhancing
productivity and reducing
accidents.
Working conditions and
welfare measures
Explore the regulations governing
working conditions and the
implementation of welfare
measures to support employee
well-being.
Role of employers and
employees
Understand the shared
responsibility of employers and
employees to maintain a conducive
work environment and prioritize
safety and health.
Code on Social Security
Coverage and benefits

Learn about the expanded coverage and benefits provided under the Code on Social Security to
promote financial security for all workers.

Provident fund and pension schemes

Explore the improved provident fund and pension schemes introduced to safeguard employees'
future financial stability.

Maternity and gratuity provisions

Discover the enhanced maternity provisions and gratuity benefits aimed at providing support during
important life phases.
CENTRAL ADVISORY BOARD
SECTION 2 (b) :- Advisory Board:- Section 2 (b) of the Code on Wages, 2019 defines Advisory Board as the
Central Advisory Board or, as the case may be, the State Advisory Board, constituted under section 42

SECTION 42 (1) :- The Central Government shall constitute the Central Advisory Board which shall consist of
persons to be nominated by the Central Government—
(a) representing employers;
(b) representing employees which shall be equal in number of the members specified in clause
(a);
(c) independent persons, not exceeding one-third of the total members of the Board; and
(d) five representatives of such State Governments as may be nominated by the Central
Government

SECTION 42 (2) One-third of the members referred to in sub-section (1) shall be women and a
member specified in clause (c) of the said sub-section shall be appointed by the Central
Government as the Chairperson of the Board.
CENTRAL ADVISORY BOARD DUTIES

SECTION 42 (3) The Central Advisory Board constituted under sub-section (1) shall from time to time
advise the Central Government on reference of issues relating to––

(a) fixation or revision of minimum wages and other connected matters;

(b) providing increasing employment opportunities for women;

(c) the extent to which women may be employed in such establishments or employments as the
Central Government may, by notification, specify in this behalf; and

(d) any other matter relating to this Code, and on such advice, the Central Government may issue
directions to the State Government as it deems fit in respect of matters relating to issues referred to the
Board.
STATE ADVISORY BOARD DUTIES
SECTION 42 (4):- Every State Government shall constitute a State Advisory Board for advising the State
Government—
(a) in fixation or revision of minimum wages and other connected matters;
(b) for the purpose of providing increasing employment opportunities for women;
(c) with regard to the extent to which women may be employed in such establishments or
employments as the State Government may, by notification, specify in this behalf; and
(d) in any other matter relating to this Code, which the State Government may refer from time to
time to the Board. Central Advisory Board and State Advisory Boards.

SECTION 42 (8) :- In tendering its advice in the matters specified in clause (b) or clause (c) of sub-section
(4), the State Advisory Board shall have regard to the number of women employed in the concerned
establishment, or employment, the nature of work, hours of work, suitability of women for employment, as
the case may be, the need for providing increasing employment opportunities for women, including part
time employment, and such other relevant factors as the Board may think fit.

SECTION 42 (10) :-The Central Advisory Board referred to in sub-section (1) and the State Advisory Board
referred to in sub-section (4) shall respectively regulate their own procedure including that of the
committees and sub-committees constituted by the State Advisory Board, in such manner as may be
prescribed.
STATE ADVISORY BOARD

SECTION 42 (5) :- The State Advisory Board may constitute one or more committees or sub-committees to look
into issues pertaining to matters specified in clauses (a) to (d) of sub-section (4).

SECTION 42 (6) :- The State Advisory Board and each of the committees and sub- committees thereof shall
consist of persons––
(a) representing employers;
(b) representing employees which shall be equal in number of the members specified in clause (a); and
(c) independent persons, not exceeding one-third of the total members of the Board or committee or
sub-committee, as the case may be.

SECTION 42 (7) :- One-third of the members referred to in sub-section (6) shall be women and one among the
members specified in clause (c) of the said sub-section shall be––
(a)appointed by the State Government as the Chairperson of the Board;
(b)appointed by the State Advisory Board as the Chairperson of the committee or sub-committee, as the case
may be.
APPROPRIATE GOVERNMENT
SECTION 2 (d) of the Wage Code, 2019 defines “appropriate Government” as

(i) in relation to, an establishment carried on by or under the authority of the Central Government or

- the establishment of railways, mines, oil field, major ports, air transport service, telecommunication,
banking and insurance company or

- a corporation or other authority established by a Central Act or

- a central public sector undertaking or

- subsidiary companies set up by central public sector undertakings or

- autonomous bodies owned or controlled by the Central Government,

- including establishment of contractors for the purposes of such establishment, corporation or other authority, central public sector
undertakings, subsidiary companies or autonomous bodies, as the case may be, the Central Government;

(ii) in relation to any other establishment, the State Government;

CONTRACTOR
SECTION 2 (f) of the Wage Code, 2019 defines ‘contractor’ as

"contractor", in relation to an establishment, means a person, who—

(i) undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such
establishment, through contract labour; or
(ii) supplies contract labour for any work of the establishment as mere human resource and includes a sub-contractor;

CONTRACT LABOUR
SECTION 2 (g) of the Wage Code, 2019 defines ‘contract labor’ as

"contract labour" means a worker who shall be deemed to be employed in or

- in connection with the work of an establishment when he is hired in or
- in connection with such work by or through a contractor, with or without the knowledge of the principal employer and
- includes inter-State migrant worker but does not include
a worker (other than part-time employee) who ––
(i) is regularly employed by the contractor for any activity of his establishment and his employment is governed by mutually accepted
standards of the conditions of employment (including engagement on permanent basis), and
(ii) gets periodical increment in the pay, social security coverage and other welfare benefits in accordance with the law for the time
being in force in such employment;
 EMPLOYEE

SECTION 2 (k) of the Wage Code 2019 defines “employee” as :-

"employee" means, any person (other than an apprentice engaged under the Apprentices Act, 1961),
- employed on wages by an establishment
- to do any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative,
technical or clerical work
- for hire or reward,
- whether the terms of employment be express or implied,
- and also includes a person declared to be an employee by the appropriate Government, but does not include
- any member of the Armed Forces of the Union;
EMPLOYER
SECTION 2 (l) of the Wage Code 2019 defines “employer” as :-

"employer" means a person who employs,

- whether directly or through any person, or on his behalf or on behalf of any person,
- one or more employees in his establishment and
- where the establishment is carried on by any department of the Central Government or the State Government,
- the authority specified, by the head of such department, in this behalf or where no authority, is so specified the head of
the department (HOD) and
- in relation to an establishment carried on by a local authority, the chief executive of that authority, and includes,—
in relation to an establishment which is a factory, the occupier of the factory as defined in clause (n) of section 2 of the
Factories Act, 1948 and,
where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the said Act,
the person so named;
(ii) in relation to any other establishment, the person who, or the authority which, has ultimate control over the affairs of
the establishment and where the said affairs is entrusted to a manager or managing director, such manager or managing
director;
(iii) contractor; and
(iv) legal representative of a deceased employer;
INDUSTRIAL DISPUTE

SECTION 2(q) of the Wage Code 2019 defines “industrial dispute” as :-

(i) any dispute or difference between employers and employers, or

- between employers and workers or
- between workers and workers which is connected with the employment
or non-employment or
- the terms of employment or
- with the conditions of labour, of any person; and

(ii) any dispute or difference between an individual worker and an employer

connected with, or
- arising out of, discharge, dismissal, retrenchment or termination of such
worker
 WAGES
SECTION 2(y) of the Wage Code, 2019 defines “wages” as :-

wages" means all remuneration

- whether by way of salary, allowances or otherwise,
- expressed in terms of money or
- capable of being so expressed which would, if the terms of employment, express or
implied, were fulfilled,
- be payable to a person employed in respect of his employment or
- of work done in such employment, and includes,—
(i) basic pay;
(ii) dearness allowance; and
(iii) retaining allowance, if any,

BUT DOES NOT INCLUDE ….. CONTD

 WAGES …. contd
but does not include––
(a) any bonus payable under any law for the time being in force, which does not form part of the remuneration payable
under the terms of employment;
(b) the value of any house-accommodation, or
- of the supply of light, water, medical attendance or
- other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate
Government;
(c) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued
thereon;
(d) any conveyance allowance or the value of any travelling concession;
(e) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment;
(f) house rent allowance;
(g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal;
(h) any overtime allowance
(i) any commission payable to the employee;
(j) any gratuity payable on the termination of employment;
(k) any retrenchment compensation or
- other retirement benefit payable to the employee or
- any ex gratia payment made to him on the termination of employment:
WAGES …. contd

For calculating the wages under this clause, if payments made by the employer to the employee
(highlighted in yellow colour) under clauses (a) to (i) exceeds ½ or such other percent as may be
notified by the CG, of all the remuneration calculated under this clause, the amount which exceeds
such ½ or the per cent so notified, shall be deemed as remuneration and shall be accordingly added
as wages under this clause.

Provided further that for the purpose of equal wages to all genders and for the purpose of payment of
wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for computation of
wage.

Explanation.––Where an employee is given in lieu of the whole or part of the wages payable to him,
any remuneration in kind by his employer, the value of such remuneration in kind which does not
exceed fifteen per cent. of the total wages payable to him, shall be deemed to form part of the wages
of such employee
Worker

SECTION 2 (z) of the Wage Code, 2019 defines “worker” as :-

"worker" means
- any person (except an apprentice as defined under clause (aa) of section 2 of the Apprentices Act, 1961)
- employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or
supervisory work for hire or reward,
- whether the terms of employment be express or implied, and includes—
(i) working journalists as defined in clause (f ) of section 2 of the Working Journalists and other
Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955; and
(ii) sales promotion employees as defined in clause (d) of section 2 of the Sales Promotion
Employees (Conditions of Service) Act, 1976,
- and for the purposes of any proceeding under this Code in relation to an industrial dispute, includes
- any such person who has been dismissed, discharged or retrenched or otherwise terminated in connection
with, or
- as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute
 Worker …… contd

but does not include––

(a) who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957; or
(b) who is employed in the police service or as an officer or other employee of a prison; or
(c) who is employed mainly in a managerial or administrative capacity; or
(d) who is employed in a supervisory capacity drawing wage of exceeding fifteen thousand rupees (> Rs.
50,000/-) per month or an amount as may be notified by the Central Government from time to time.
Prohibition of Discrimination on Ground of Gender
CAN AN EMPLOYER DISCRIMINATE ON THE BASIS OF GENDER, WHERE WAGES ARE CONCERNED?

Section 3 of the Wage Code, 2019 prohibits discrimination on ground of gender. It states:-

(1) There shall be no discrimination in an establishment or any unit thereof among employees on the ground of gender in matters relating
to wages by the same employer, in respect of the same work or work of a similar nature done by any employee.

Work of similar
By the same For the same
nature done by
employer work
any employee

(2) No employer shall,— (i) for the purposes of complying with the provisions of sub-section

(1), reduce the rate of wages of any employee; and

(ii) make any discrimination on the ground of sex while recruiting any employee for the same work or work of similar nature and
- in the conditions of employment,

Section 4 of the Wage Code, 2019 provides for decision as to disputes with regard to same or similar nature of work. It states:-
Where there is any dispute as to whether a work is of same or similar nature for the purposes of section 3, the dispute shall be decided by
such authority as may be notified by the appropriate Government.
 Chapter II – MINIMUM WAGES
SECTION 5:- The appropriate government shall fix the minimum rate of wages payable to the employees.
No employer shall pay to any employee wages less than the minimum rate of wages notified by the appropriate
government.

Section 6 (1)- Fixation of Minimum Rate of wages by

Appropriate Government

(2) (a) For time work or (2) (b) For piece work

(3) Where employees are employed on piece work minimum

rate of wages shall be fixed on a time work basis.

(i) By the hour, or

Section 6 (4) Manner of fixing

(ii) By the day, or
the minimum rate of wages on
time work basis
(iii) By the month
 CRITERIA FOR FIXING MINIMUM WAGES
(a) skill of workers required for
working
under the categories of unskilled,
skilled, semi-skilled and highly-skilled
or geographical area or both; and
Section 6 :- Criteria to be considered
by appropriate Govt. while fixing
minimum rate of wages
(b) arduousness of work like
temperature or humidity normally
(c) the norms of such fixation of
difficult to bear, hazardous
minimum rate of wages shall be such
occupations or processes or
as may be prescribed.
underground work as may be
prescribed by that Government; and
 COMPONENTS OF MINIMUM WAGES

SECTION 7 (1) OF THE WAGE

CODE, 2019

(a) (b) (c)

&

SECTION
7 (2)
SECTION 8:- PROCEDURE FOR FIXING AND REVISING MINIMUM WAGES
SECTION 9:- POWER OF CENTRAL GOVT. TO FIX FLOOR WAGE