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Blog / 26 Nov 2019

(Daily News Scan - DNS English) Labour Code on Industrial Relations

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(Daily News Scan - DNS English) Labour Code on Industrial Relations


Important Points:

The UNION Cabinet approved the Industrial Relations Code Bill 2019. This bill proposes to merge the Trade Union Act 1926, The Industrial Employment Act 1946 and the Industrial Disputes Act 1947.

In today’s DNS we will know about the importance of the bill.

The labour code on Industrial relations 2019 was approved by the government, making it the third code under labour reforms. It will allow companies to hire workers on fixed term contract of any duration on a pan India basis. Fixed term employment means a worker can be hired for a specific duration like 3months, 6months or a year depending on orders or seasons.

Currently companies hire contract workers through contractors. The introduction of fixed term employment will make the companies able to hire workers directly under a fixed term contract. The workers belonging to the fixed term group will be treated on a par with regular workers during their tenure of work. This move to include it in the central law will help in wider reach and states are expected to follow similar applicability.

The government had earlier tried a move to apply a fixed term employment across central sphere establishments that is the establishments under the authority of central government, Railways, mines, oilfields etc but failed to bring out the desired results. This happened so because the states did not notify similar provisions for it. But now the bill ensures a pan India impact of this move.

Now let’s talk about the changes in the bill. The threshold required for government permission for retrenchment has been kept unchanged at 100 employees against the proposal made for 300 employees in earlier draft of the bill. The government has provided flexibility for changing the threshold through notification. At present any company having 100 workers or more has to seek government approval for retrenchment. Last year the government had included the Fixed term Employment Workman for all sectors in the Industrial Employment (standing orders) Act 1946. This was only applicable to the central sphere establishment.

There is some opposition to this bill. Oppositions are claiming that the unclear provision regarding retrenchment will lead to uncertainty and discretionary behaviour during implementation by central or the state government. Fixed term employment needs to be introduced with adequate safeguards else it creates a risk of encouraging conversion of permanent employment into fixed term employment.

Though there were oppositions but at the same time industry has welcomed the bill. This new bill has met their demands of providing flexibility in retrenchment. Within the fixed term employment the workers will be getting all the benefits like the permanent worker get, salary or other facilities such as PF, gratuity and medical benefits. The bill has a provision of setting up of two member tribunal wherein important cases will be adjudicated jointly and the rest by a single member resulting speedier disposal of cases. It has also vested powers with the government officers for adjudication of disputes involving penalties as fine.

The Industrial relations code is the third out of the four labour codes that have got approval from the cabinet. The Labour code on Wages has been approved by the Parliament in august whereas the Labour Code on Occupational safety Health and Working Conditions has been referred to the standing committee of labour.