Formative Labour Code Bills 2020

24 Sep 2020  Read 1587 Views

Among the many bills rushed through the Parliament during this Monsoon Session, three of them were the very important labour code bills. These are the Industrial Relations Code Bill, 2020, Code on Social Security Bill, 2020 and the Occupational Safety, Health and Working Conditions Code Bill, 2020.

  • The present government has amalgamated 44 labour Acts into four codes for simplifying the process and law relating to it so that the objective to ease of doing business in the country could be increased.
  • These labour codes run into 350 pages, 411 clauses and 13 schedules affecting every person working in India and every employer addressing all the complex issues that could come in the way.
  • As mentioned by the Union Labour Minister Santosh Gangwar that the bill shall provide a healthy and safe environment for 50 crore workers and also said that the bill has been tabled after incorporating as many as three-fourths of the recommendations provided by the parliamentary standing committee.

Hence the due objective to achieve reformation and simplification of labour laws in the country.

Code on Industrial Relations, 2020

The government has permitted companies having upto 300 workers to fire people or close units without prior approval of the government. And companies having more than 300 workers is required to apply for approval but if authorities do not respond to their request then it will be considered approved.

Besides, the code introduces more restrictions like restricting the right of the workers to strike. The new Code on Industrial Relations expands the definition of strike to include the concerted casual leave on a given day by 50% i.e. strike' means cessation "of work by a body of persons employed in any industry acting in combination or a concerted refusal or a refusal beneath a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment and includes concerted casual leave on a given day by 50% or more workers. It also elucidates a notice of 14 days for a strike and discourages flash strikes.

Code on The Occupational Safety, Health and Working Conditions, 2020

This Code consolidates and amend the laws guiding the Occupational safety and health and working conditions of the persons employed in an establishment. The Act replaces 13 earlier central labour laws. Occupational safety and health are multidisciplinary field connected with the safety, health and welfare of people at their occupation.

The 2020 Code authorizes the state government to exempt any new factory from the provisions of the Code in order to enhance economic activity and employment.The new 2020 Code removed the provision which excluded mines from the definition of a factoryand it also includes all establishments where any hazardous activity is carried out irrespective of the number of workers.

Previously, a factory was defined as any premises where manufacturing process is carried out and it employs more than:

  1. 10 workers, if the process is carried out using power or
  2. 20 workers, if it is carried out without use of power.

The new 2020 Code enhances this threshold to: 20 workers for establishments where the manufacturing process is carried out using power and 40 workers for premises where it is carried out without using power.

Code on Social Security for Unorganized workers

Union Minister however said that fixed term workers and regular workers will enjoy equal benefits. He said in the Social security Code talks about universalizing social security by bringing informal workers, gig and platform workers like Uber under its ambit.

  • He said companies having less than 20 workers can voluntarily join EPFO to get social security benefits and internal workers will be free to voluntarily join employee state insurance scheme for getting healthcare benefits.
  • He also mentioned that the code even talks about the platform where companies employing gig can make provisions for one or two percent of their profits for social security need of their workers.

Union Minister also reiterated by saying that workers will now have offer letters and the states as well as the Union will now create a database on migrant workers and will offer them several benefits such as profitability of public distribution system and construction cess benefits. Arguing in favour of too many clauses of the codes being left to the rulemaking process, the labour ministry said it will help in changing the finer nuances of labour laws as per the requirement of time.

The characteristics of these three new Codes passed this year are:

  • These three new codes will allow states to skip on labour reforms and allow them exempt any company or companies from complying with one or more labour laws.
  • It is expected that this shall boom the industrial investment. Having said that, labour code therefore aims to boost new industrial investment including foreign ones and open a platform for India to have a competitive advantage in the global economy.
  • Nonetheless, the codes have taken into consideration the interests of many migrant workers, gig workers and unorganized sector workers and have also ensured operational freedom to manufacturers.


There has been a considerable shift in the bill introduced in 2019 and the present act that has been passed. Certain important issues, have been identified with the laws such as many essential features have not been mentioned in the code but has been said to be delegated by the government through rules. Say, thresholds for application of various security schemes, safety standards etc.

The next issue that has been identified is that whether compliance burden is even relaxed for small enterprises or only available for the gigantic companies. If such Passover is given to the corporations or several loose ends lies with the law, this might lead to the conclusion that law still needs improvisation and scrutinization before it is finally adopted. Hence a review is suggested.


About the Author: Abhilasha Jha | 12 Post(s)

Graduated from Nluo in 2020. Bears core interest in constitutional law. She is also very much interested in teaching law. Worked as a legal content writer for several other platforms before joining finology legal.

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