HIGHLIGHTS ON NEW LABOUR CODE

Important Points on New Labour Code

Came into effect from 01.07.2022.
HIGHLIGHTS OF THE NEW LABOUR CODES

 
INTRODUCTION

The four labour codes – Code on Wages 2019, Code on Social Security
2020,Industrial Relations Code 2020, and Occupational Safety, Health and
Working Conditions Code 2020 consolidate of 29 Central Labour Laws.
The Codes received Presidential assent between 2019 and 2020.
The Central Government advised the State Governments to formulate separate
Rules. Except few States all have formulated their own Rules.
Status at Andhra Pradesh
Government of Andhra Pradesh also have circulated the Draft Rules seeking
objections if any. The same may be finalized very soon and shall come into
operation.
Working on changes in New Rules applicable & shall share implications.
1.THE CODE ON WAGES 2019

The Code on Wages, 2019 ( referred as the Wage Code) replaces the following Laws:
Payment of Wages Act, 1936
Minimum Wages Act, 1948
Payment of Bonus Act, 1965
Equal Remuneration Act, 1976
Highlights
As per the Code – (i) basic pay, (ii) dearness allowance and (iii) retaining allowance have been included as
components of ‘wages. Further, the Code excludes the following components from the definition of wages:
(a)bonus payments; (b) value of the house-accommodation, supply of light, water, medical attendance or
other amenity or of any service excluded from the computation of wages by an order of the appropriate
Government; (c) employer contributions to any pension or provident fund; (d) conveyance allowances;(e)
sums paid to the employee to defray special expenses on him by the nature of his employment; (f) house
rent allowance; (g) remuneration payable under award or settlement between the parties or order of court or
tribunal;(h) overtime allowance; (i) commission payable to employee; (j) gratuity payments; and, (k)
retrenchment compensation or other retirement benefit payable to the employee or any ex-gratia payment
made to the employee on the termination of his employment. Where previously the definition of wages
varied across labour legislations, the Code now provides a single definition as applicable to minimum
wages, payment of wages and payment of bonus.
 The Code on Wages 2019
High Lights

Contract Labour are covered by the term ‘employees’ under the Code.
The term ‘floor wage’ has been introduced under Section 9 which mandates that the Central Government
shall fix floor wage considering minimum living standards of a worker in a prescribed manner. The
minimum floor wage shall not be less than the floor wage fixed by the Central Government.
Exempted components are capped at 50 per cent
Section 17 prescribes the time limit for payment of wages. The payment of wages to made before 7 th
day of the succeeding month irrespective of the number of employees.
Section 17 further stipulates that in the event of removal, dismissal of an employee from service,
retrenchment, or resignation from service by the employee, the wages shall be paid to the employee
within two working days of his removal, dismissal, retrenchment or resignation, as the case may be.
Section 29 lays down that persons convicted of sexual harassment would not be eligible for bonus.
The Code on Wages is a well-rounded legislation that seeks to balance the interests of the employer and
the employee. It aims to remove the ambiguity in the existing labour laws by having a common definition
of ‘wage’. This is likely to have a significant impact on the net payable salary of the employees.  
2. THE CODE ON SOCIAL SECURITY 2020.

The Code on Social Security, 2020 (commonly referred as the Social Security Code)subsumes the following 9
laws:
The Employees’ Compensation Act 1923
The Employees’ State Insurance Act 1948
The Employees’ Provident Fund and Miscellaneous Provisions Act 1952
The Employees Exchange (Compulsory Notification of Vacancies) Act, 1959
The Maternity Benefit Act 1961
The Payment of Gratuity Act 1972
The Cine Workers Welfare Fund Act 1981
The Building and Other Construction Workers Cess Act 1996
The Unorganized Workers Social Security Act 2008 
Highlights
The Code has included fixed term employees, platform workers, gig workers, inter-state workers etc. in its
ambit.
Section 3 of the Code stipulates that all covered establishments are required to be registered under the Code
unless they are already registered under other labour laws.
It has introduced the term ‘career center’ meaning any office (including employment exchange, place or
portal) established as prescribed by the Central Govt. for providing career services.
The Code allows for an establishment to voluntarily opt in or out of coverage of Employees’ Provident Fund
(Chapter III) and Employees’ State Insurance Scheme (Chapter IV), even if the number of employees is less
than the specified threshold. This provision has been inserted as an afterthought in the context of the
pandemic.
The Code on Social Security 2020
Highlights:

 The Code brought clarity on contribution to PF, 50% of Salary/Wage to be considered.

Section 53(2) of the Code provides that in case of fixed term employees, gratuity shall be paid on pro- rata
basis and not on continuous service of five years.
The Code empowers the Central Government. to frame social security schemes for unorganized workers,
gig workers, and platform workers as well as members of their families with respect to providing benefits
under the Employees’ State Insurance Corporation (ESIC).
The Code also lays down penalties and offences. Highlights are- Section 134which talks about penalties for
repeated offenders and Section 137 which allows the employer an opportunity to correct a non- compliance
for any offence under the Act prior to initiation of prosecution or proceedings.
A provision has been made under Section 144 wherein employers’ or employees’ contribution may be
deferred or reduced for a period of three months in the event of pandemic, endemic or national disaster.  
The goal of this Code is to extend social security to all employees and workers either in the organized,
unorganized sector or any other sectors. It also includes gig workers(persons who perform work or
participate in a work arrangement and earn from such activities outside of traditional employer-employee
relationship) and platform workers(a work arrangement where workers or individuals/ organizations use
online platform to solve specific problems or to provide specific services or any other such activity in
exchange of payment). Hence, the SS Code has not only extended the social security coverage to more
employees but has also enhanced the coverage.
 
3. THE OCCUPATIONAL SAFETY, HEALTH
AND WORKING CONDITIONS CODE 2020

 
The Occupational Safety, Health and Working Conditions Code, 2020 (commonly referred as the OSH Code)
subsumes the following 13 laws:
 The Factories Act, 1948
 The Plantations Labour Act, 1951
 The Mines Act, 1952
 The Working Journalist and other News Paper Employees (Conditions of Service and Miscellaneous
Provision) Act, 1955
 The Working Journalist (Fixation of rates of wages) Act, 1958
 The Motor Transport Workers Act, 1961
 The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
 The Contract Labour (Regulation and Abolition) Act, 1970
 The Sales Promotion Employees (Conditions of Service) Act, 1976
 The Inter – State Migrant workmen (Regulation of Employment and Conditions of Service) Act, 1979
 The Dock Workers (Safety, Health and Welfare) Act, 1986
 The Cine Workers and Cinema Theatre Workers Act, 198
 The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act,
1996.
 
THE OCCUPATIONAL SAFETY, HEALTH AND
WORKING CONDITIONS CODE 2020

Highlights

 This Code applies to all establishments employing 10 workers or more, except mines and docks where the
Code would be applicable even with 1 worker.
 It stipulates that there shall be registration for all Factories / Establishments having 10 or more workers.
 Code has provision to run Factory for 12 hours in a shift, not exceeding to 48 hours in a week
 It has enhanced safety compliance by mandating safety requirement for all establishments.
 Section 57 of the Code prohibits employment of contract labour for Core Activities.
The Code clarifies that a contractor who deploys his own employees and provides statutory benefits is not
contractor and the employees, not contract labour.
 Section 55 of the Code stipulates that the contractor shall pay salary via bank transfer only. Where the
contractor fails to pay wages, the principal employer shall be liable to pay.
 Section 48 lays down that only one license for pan India deployment for a contractor needs to be obtained
which shall be valid for 5 years.
 Section 32 talks about leave encashment and stipulates that where the total quantum of leave exceeds 30
days, a worker shall be entitled to encash such excess leave. Workers are entitled to encash the remainder of
leaves that is not carried forward.
THE OCCUPATIONAL SAFETY, HEALTH AND
WORKING CONDITIONS CODE 2020

Highlights:

Through the draft rules, the Code sets the overtime threshold at 125 hours per quarter.
Section 2(1)(zf) lays down that the definition of ‘interstate migrant worker’ in the Code includes individual
traveling to another state for work, provided the wages are below Rs.18,000/- per month.
 Section 61 further lays down that the interstate migrant worker is entitled to yearly journey allowance.  
The OSH Code has come at a critical juncture where the rights of the workers have been in debate and
their conditions have been brought to the fore owing to the pandemic. The Code clearly addresses issues
like that of the migrant workers that needed much attention. Further, it simplifies compliance for employers
in the industry by introducing the provision of a single license pan India. 
Flexibility in employing women employees
Issuance of Appointment Letters has been made mandatory
 Health Checks made mandatory for employees above the age group of 45 working at hazardous
operations and mines.
4. THE INDUSTRIAL RELATIONS CODE 2020

The Industrial Relations Code, 2020 (commonly referred as the IR Code)amalgamates the following 3 laws:
Industrial Disputes Act, 1947
Trade Unions Act, 1926
Standing Orders Act, 1946

Highlights
Under the Code, the term ‘Industry’ now specifically excludes charitable, social, philanthropic and domestic
services. The definition of ‘worker’ has been expanded to include working journalists and sales promotion
employees. Further, any individual drawing a salary less than Rs.18,000 per month has been brought under
this definition.
The system of a Grievance Redressal Committee is mandatory for establishments employing 10 or more
workers and the Code has done away with the provision of an alternative mechanism.
The Code has replaced ‘Labour Courts’ with ‘Industrial Tribunals’.
The Code introduces a new provision for ‘fixed term employment’ under Section2(o) which means that
engagement of a worker can be made on the basis of a written contract of employment for a fixed period
provided that they are eligible for all benefits like that of a permanent worker. Further, they shall be eligible
for gratuity if they render services for certain agreed period.
The Industrial Relations Code 2020

Highlights:

 The threshold for applicability of the Standing Orders to the Industries has been raised to 300 from the
earlier set limit of 100 employees.
 The Code has also decreased its threshold for a Trade Union to have the status of a sole negotiating
union from 75% set in the 2019 Bill to the one that has 51% of the employees as its members.
 Further, to constitute a negotiating council, where no single union meets the51% threshold, the council
can be constituted with representatives from various unions provided they have at least 20% of
employees as its members.
 The Code prohibits strikes and lockouts in all establishments without i) giving a 14 days notice,
ii) during pendency of the proceedings before a conciliation officer iii) during pendency of proceedings
before the tribunal or iv) during pendency of arbitration or settlement or while an award is in operation.
 The Code ensures that Industries continue to work smoothly, avoiding repeated disruptions in work by
imposing curbs on strikes during pendency of litigation In same vein, introduction of the sole
negotiating union will help reduce the time taken in reaching amicable settlements with the employer.
 Introduction of new concept called Re-Skilling Fund, Industry to contribute for the said fund
 Overall increase in compensation to be paid to the retrenched employees
 How to reach us for Help & Guidance

Dr. B. Giasuddin
MHRM., LLB., PhD.
Human Resources & Labour Law specialist
Mail: giasuddinbellary@gmail.com
giasuddinb1958@yahoo.co.in
Mobile: 91-9052117749.