New codes don’t promote ‘hire and fire,’ says Labour Ministry

Labour Minister Santosh Kumar Gangwar.  

The Union Labour and Employment Ministry issued a statement on Monday addressing the criticism of the three labour codes passed by Parliament on September 23. The codes, it said, did not enable a “hire and fire” policy and the rights of workers and unions had been protected.

Parliament passed the Code on Social Security, the Occupational Safety, Health and Working Conditions Code and the Industrial Relations Code, 2020 amid an Opposition boycott. Workers’ unions, including the RSS-affiliated Bharatiya Mazdoor Sangh, hit out at the move. They termed the codes, which merge 25 laws, anti-worker.

In its statement, the Ministry said the codes were a historic game changer and the criticism was unfounded.

The IR Code increased the threshold beyond which companies have to take prior approval from the government to terminate employees from 100 workers to 300 workers. The Ministry said the Parliamentary Standing Committee on Labour, to which the 2019 versions of the Bills had been referred to, also recommended increasing the threshold to 300.

“It is only the aspect of prior permission of the appropriate government which has been removed and other benefits and workers’ rights have been kept intact. The workers’ rights, such as notice before retrenchment, compensation at the rate of 15 days wages per completed year of service, and pay in lieu of notice period, have not been compromised,” the Ministry stated.

The IR Code also introduced a new Reskilling Fund to be created to give monetary benefit equal to 15 days of wages, it said. “There has been no empirical evidence to suggest that higher threshold promotes hire and fire,” the Ministry said.

It said the Economic Survey 2019 had pointed out the problem of “dwarfism” in Indian firms, as the companies were not increasing the number of employees beyond 100, the threshold under the Industrial Disputes Act, 1947. Rajasthan had increased the threshold to 300 workers in 2014 and the “average number of factories in Rajasthan having more than 100 increased significantly as compared to the rest of India.” Fifteen other States had followed suit, it added.

The Ministry said fixed-term employment had already been notified by the Central government and 14 States. It was “pro-worker” and such employees would be eligible for all benefits and service conditions that a regular employee enjoyed, it said.

“Non-availability of fixed-term employment implied that an employer had options to either employ on regular basis or through contractual basis. The employment of workers through contractual basis means higher transaction cost to employer, lack of permanence of contract labour, untrained, unskilled contract labour,” it said.

The Ministry said the provisions of the Inter-State Migrant Worker Act, 1979 had been subsumed in the OSH Code and its provisions had been strengthened. “The OSH Code expands the definition of migrant worker to include those workers who would be directly employed by the employer besides by contractor.” It said a national database of unorganised workers would be set up.

The Ministry said new welfare measures had been introduced through the OSH Code, including mandatory appointment letters, extension of Employees’ State Insurance cover to plantation workers and free annual health checks.

Responding to criticism that the IR Code had reduced the influence of trade unions and affected the right to strike by imposing a 14-day notice period, the Ministry said the “position of trade unions has been strengthened by introducing decentralised registration process” and the notice “only adds an opportunity for resolving the labour grievance before going on strike, mandating establishments to attempt solving the issues”.

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Printable version | Oct 28, 2020 4:48:04 PM |

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