The Union Cabinet has approved the Industrial Relations Code Bill that would amalgamate The Trade Unions Act, 1926, The Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947.
- The Industrial Relations Code is one of the four codes that the government has proposed in order to codify Central labour laws.
- The Parliament has already approved the Code on Wages, 2019.
- The Occupational Safety, Health and Working Conditions Code has been introduced in the Lok Sabha earlier this year.
- This is the third code in the line that has passed through inter-ministerial consultations and is set to be introduced in the Parliament.
Important Aspects of The Bill
- The Bill provides a degree of flexibility in government approvals for the retrenchment of employees.
- It presents a legal framework for ushering in the concept of ‘fixed-term employment’ through contract workers on a pan-India basis.
- While companies currently hire contract workers through contractors, the fixed-term employment concept allows the companies to hire contract workers directly.
- It also allows for tweaking of the contract term based on the seasonality of the industry.
- During the contract tenure, the workers will be treated on par with regular workers.
- It helps the companies to hire and fire workers easily and also provides social security to contract workers.
- Contract workers will now be eligible for getting PF, gratuity, medical benefits, etc., similar to regular workers during their contract periods.
- By placing the concept in the central bill, the government is expecting that it will have a wider reach and states will follow suit.
- Amid opposition from trade unions over raising of the threshold for retrenchment to 300 employees for government permission in the draft bill, the government has retained the earlier provision of 100 employees threshold for government permission in the new bill.
- But, it has now given the flexibility to increase or decrease the threshold via a notification.
- The Industry has often sited the rigidity in laying off employees in the current labour laws that are limiting scalability and employment generation.
Opposing the Bill
- Critics to the Bill argue that the unclear provision of retrenchment may lead to discretionary behaviour during implementation by the Central or State government.
- They argue that the fixed-term employment needs to be implemented with adequate safeguards as it may lead to turning permanent employment into fixed-term employment.
Cheering the Bill
- Retrenchment has been a major hurdle for the industry with the existing labour laws.
- With the flexibility provided in the new Bill, the industry is welcoming the Bill.