Criticism of the proposed Code on Social Security has resulted in dropping plans to corporatize the Public Provident Fund
Major Labour Legislation
is on the anvil and was open to public comment till October 25, 2019. Public criticism has forced the government to change its policy.
No these are not gagged union members. We still have time to comment on the proposed Code on Social Security! Binay Tiwary a union official from the Steel Industry offers a face mask to a rickshaw driver in pollution ridden New Delhi
Published October 15, 2019. Edited December 2, 2019
Have unions in India, lost their historic opportunity to represent India’s workers? Given India’s socialistic roots, unions in India have over the last 72 years since Independence been given a series of legislative statutes that have attempted to strengthen the hands of workers and supervise corporate Managements. Depite these laws and a willing partnership with virtually all the political parties. Unions in India may have squandered their opportunities to recruit members among the 93 percent of Indian workers who are not unionized. Only 3 percent of India’s workers are unionized at this point.
Global trends, new
technologies in India and abroad indicate
that the union movement is seriously under threat. New aggregation
tools like Uber software for drivers, or the OYO reservation system for independent
hotels, new management practices such as the increased use of contract labour
and the privatization of government services have together taken large chunks
of people out of the union ranks. The meteoric rise of new technology driven non
union companies like Amazon have also dramatically reduced the role of organized
labour in today's economy.
Given these developments this article
attempts perhaps a historic survey of labour law can give us some clues as to
the best way forward for workers.
One way we can re-boot the
relevance of the union movement is to replace this plethora of laws with a
small number of updated laws that simplifies and supercedes the current maze of
laws and regulations. Public criticism of the (Draft) Code on Social
Security 2019 has resulted in the labour ministry dropping its proposal to corporatise the Employees’ Provident Fund Organisation (EPFO) and instead dust off its earlier proposal to set up a body headed by the Prime Minister to oversee the social security of nearly 500 million workers. The move comes after it was pulled up by the Prime Minister’s Office.
The original draft code on Social Security should still be available at the link below:
This proposed law as above covers the
various instruments through which a worker can save up for retirement. This
includes: Provident Fund, ESIC, Gratuity, Maternity Benefits, Unemployment
Compensation, Building and Other Construction Worker Cess, also Unorganized Worker
benefits etc.
Since this would be a major step
impacting approximately half a million workers, it would be a good idea to read review
the provisions of the Draft Code on Social Security 2019 at the above link. Meanwhile, if you would
like to know how we got to this point, there is a brief overview of the legal
system as it evolved, below:
Labour law defines the
rights and obligations of workers, union members and employers in the
marketplace. Labour law covers the
tripartite relationship between workers, management and the union. It also
covers the individual’s contract with the company and employee rights and
responsibilities. We can further divide Labour Law thus:
Industrial
Relations: Certification of unions, labour management, collective
bargaining & unfair labour practices and,
Workplace health and safety: Employment
procedures, incl public holidays, leave, work hours, unfair dismissals, minimum
wage, lay offs and severance pay.
Labour unions arose during a time when
most workers had to deal with obvious exploitation, unsafe working conditions
and very little scope for redress of employee issues because previously protections
for workers were not built into legislation nor was there adequate judicial
oversight or case law.
The Factories Act, 1893: In India, labour law began to be enacted in an effort to
address the needs of colonial employers. The 1893 Act, was initially a response
to lobbying from the textile magnates of Machester and Lancashire and designed
to make Indian goods more expensive. In the process, several welfare oriented
provisions were passed such as abolition of child labour, the eight hour work
day, and the introduction of overtime time for work over eight hours.
The
Trade Union Act, 1926: The Act provides for registration of Trade Unions so
that unions can lawfully bargain collectively. The Act extends to all of India
and applies to all kinds of unions of workers and associations of employers
which seek to regularize labour management relations. A Trade Union can be
temporary or permanent, formed for regulating relations between workmen and
employers but also between workmen and workmen or between employers and other
employers. The Act like many included here has been updated on occasion.
No strikes or Lock outs: The earliest Indian law to directly impact the Indian employer
and his employees was the Trade Dispute Act of 1927, which restrained the right
to strike or lock out. No dispute
resolution mechanisms were included at this point.
Independent Indian support
for labour: Even before Independence,
the Industrial Dispute Act 01.04.1047 came into being with some protections for
workers and assurances for employers alike. in December 1947 a tripartite
conference was called that laid out a three year plan for uninterrupted production
for employers and fair wages/ working conditions for labour.
Dignity of Labour: Since Labour legislation was listed as a concurrent subject
(for both state legislatures and parliament to rule on,) the Indian
Constitituion in Chapters 3 and 4 recognized the dignity of labour and strengthened
provisions for workers in line with Fundamental Rights of the individual and Directive
principles of State policy. The Universal Declaration of Human Rights in 1948
by the UN also strengthens Human Rights for Indian workers.
Labour laws have also been impacted by
International and Indian Labour Conferences and the recommendations of various Indian
Committees and Commissions. (1969, 1991 and 2002). Also legal judgments
relating to bonded/child/contract labour etc. State legislation and judgments
on a variety of issues also shaped the discussion.
Judicial Redress: In addition to the regular judicial court system there is
also a system of Labour Courts that allow both employers and employees to file
complaints as a first line of redress. Each State has its own labour laws
(Maharashra alone has almost 60!)
Types of Labour Laws in
India:
Laws pertaining to:
-
Industrial Relations such
as the Industrial Disputes Act of 1947
-
Wages, such as the Minimum
Wages Act of 1948
-
Working conditions (for different
types of workers such as Miners, Journalists, etc.
-
Equality and Empowerment
of Women such as the Maternity Benefit Act, (laws are also emerging to protect
the handicapped, transgendered people etc.)
-
Deprived and disadvantaged
sections of society such as the Bonded Labour Act of 1976.
-
Social security, such as the
Unorganized Workers Social Security Act of 2008.
The Payment of Wages Act, 1936 regulates wages, wage periods, mode of payments and
permitted wage deductions.
The
Minimum Wages Act, 1936 considers factors like region, nature of work and minimum
wages payable to skilled and unskilled labourers.
The
Industrial Disputes Act 1947 (IDA)*: Regulated the rights of employees and the
settlement of disputes harmoniously with provisions regulating strikes,
layoffs, unfair labour practices, even lockouts and the closure of an establishment.
According
to the Act, unfair business practices are unlawful. These includes threats of
dismissal for joining a union, threatening to lock out to prevent formation of
a union and granting wage increases at critical points to undermine the
formation of a union. Also disallowed is the formation of employer sponsored
unions.
The
Factories Act of 1948
regulates working conditions in manufacturing units such as cleanliness, bathroom
facilities, availability of canteen (for establishments with over 250
employees), The Act was amended to allow night shifts for women provided safety
and protection are maintained. Factories that engage in hazardous activities
are listed under a separate schedule and have additional requirements.
The
Shops and Establishment Act regulated wages, other service terms, days off,
working hours, overtime etc. for those employed in retail establishments
(including charitable trusts and educational institutions). It was initially
passed in Bombay in 1948 (later updated in 2017). Each State then developed their
own versions of the Act.
The Employee State
Insurance Act of 1948 is an Act that applies to
employees of firms with over ten employees (If no power is used in manufacturing,
the qualifying limit for such firms is 20 employees). Casual and Permanent
employees earning up to Rs. 21,000 per month are now eligible. The ESIC Act is
sometimes not followed by uninformed or callous employers. Activists must
therefore familiarize themselves with its provisions and take action where
necessary.
A June 14, 2019 report in the Economic Times
says, “the government has reduced the contribution under the Employees’ State
Insurance (ESI) Act to 4% from 6.5%.....This includes a reduction of 1.5% in
employers’ contribution to 3.25% from 4.75% and 1% reduction in employees’
contribution to 0.75% from 1.75%.
The Employees Provident Fund Act of 1952 applies
to all firms that employ 20 people or more. The Fund is available for those who
earn up to Rs. 15,000/month. Three schemes available:
1.
Employees Provident Fund Scheme 1952
2.
Employees’ Pension Scheme 1995
3.
Employees Deposit Linked Insurance 1976
The Maternity Benefits Act
of 1961: The Act applies to any business that
has ten employees or more. It does not apply to establishments covered by the
Employee State Insurance Act, 1948. State governments can extend it further to
other categories of workers if deemed necessary. Every pregnant woman is eligible
for six months wages after (and including day of) delivery at the average daily
wage. She is eligible if she has worked for at least 160 days in the 12 months
pior to her delivery. The benefit applies also in cases of miscarriage or death
during delivery,The maximum maternity benefit payable is twelve weeks (six
before and six after delivery). She may not be laid off or have working
conditions changed to her disadvantage while she is pregnant.
The Apprentices Act of 1961 modifies the Workmens Compensation Act of 1923 and provides
for training of young workers and extends to engineering diploma and degree
holders. This particular Act has potential for relieving some of the nation’s
unemployment issues if re-packaged for employers.
The Payment of Bonus Act,
1965 obligated employers to pay bonuses and provide the principle
and formulae for calculation of Bonus, minimum and maximum bonus payable
and enforcement of liabiity for calculation of the bonus.
Contract
Labour (Regulation & Abolition) Act 1970 was passed to control the way
contractors could hire workers for a “principal employer.” This is an area
that needs closer examination as many firms these days have stopped hiring
their own labourers and instead rely in contractors who provide the workers
they need.
Important
provisions of the Contract Labour Act: The Principal Employer (who hires a
licensed contractor must file an application for registration. The Registering
Officer must then register the company and issue a certificate of Registration.
If the company does not obtain this registration, workmen employed by the
contractors would be employed by the Principal Employer or Company. The
following facilities should be provided to the contract labourers if the
contractors do not provide them. Rest rooms, Canteens, Urinals, Deinking Water
and First Aid facilities.
Building
and other Construction Workers (Regulation of Employment & Conditions
of Service) Act, 1996: This legislation purported to benefit construction
workers and particularly regulated issues of safety, health and welfare.
In conclusion, we need to remember that the union
movement has lost much of its steam abroad as well as India. We need to review the legislation available
and simplify as we modernize.
* The
Industrial Disputes
Act excludes persons
employed in army/Navy/Air Force/Police and those employed in mainly
managerial or administrative, supervisory capacity and drawing
wages of more than INR 24,000.
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