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Current Affairs

Labour code bill

Date: 22 November 2019 Tags: Bills & Laws

Issue

The Union Cabinet has approved The Industrial Relations Code Bill, 2019, which proposes to amalgamate The Trade Unions Act, 1926, The Industrial Employment (Standing Orders) Act, 1946, and The Industrial Disputes Act, 1947.

 

Background

The government had floated a draft Note for the Cabinet along with The Labour Code on Industrial Relations Bill, for inter-ministerial consultations. This is the third Code in the government’s proposed codification of central labour laws into four Codes.

 

Details

  • Parliament has already approved The Code on Wages, 2019. The Occupational Safety, Health and Working Conditions Code was introduced in Lok Sabha in July, and is now with the Standing Committee on Labour.

  • The most important aspect of the Bill is that it presents the legal framework for ushering in the concept of ‘fixed-term employment’ through contract workers on a pan-India basis.

  • The move to include it in a central law will help in wider reach, and states are expected to follow similar applicability. The bill will insure the pan-India impact of the move.

Highlights

  • The threshold required for government permission for retrenchment has been kept unchanged at 100 employees, as against the proposal for 300 employees in an earlier draft of the Bill, which was opposed by trade unions.

  • With the introduction of fixed-term employment, companies will be able to hire workers directly under a fixed-term contract, with the flexibility to tweak the length of the contract based on the seasonality of industry.

  • These workers will be treated on a par with regular workers during the tenure of the contract.

Benefits

  • The provision of fixed-term employment helps in the flow of social security benefits to all workers along with making it easier for companies to hire and fire in The Industrial Relations Code Bill.

  • Fixed-term employment will help in keeping salaries and facilities to workers such as PF, gratuity, and medical benefits, the same as those for permanent labour.

  • Inclusion in the central law will help in applicability of fixed-term employment uniformly across the country.

Drawbacks

  • The unclear provision regarding retrenchment would lead to uncertainty, and discretionary behaviour during implementation by the central or state government.

  • The discretion in law leads to uncertainty, lack of clarity, discriminatory implementation, and provides scope for unnecessary usage.