Centre’s new labour codes leave room for rule-making, interpretation

NARAYANAN V Chennai | Updated on October 06, 2020

Though the labour code’s aims are lofty, it’s silent on matters like determination of minimum wages, eligibility criteria


Last week, the Centre notified three labour codes on — Industrial relations, Social security and Occupational safety, health and working conditions, which were passed during the recently concluded monsoon session of parliament. Through the social security code, the government intends to universalise the social security benefits to all constituents of the labour market, including informal, gig and platform workers.

The move will benefit millions of gig and informal workers, who are hitherto deprived of any form of social cover including basic healthcare or maternity benefits. However, recruitment firms and labour law experts say the code has left a lot of space for rule-making and interpretation beside being silent on important matters like determination of minimum wages and eligibility criteria.

Also read: New labour codes to be implemented soon: Gangwar

“Today, EPFO and ESIC (are) managed at central level and they are doing a great job in doling out social benefits,” Subramanyam S, Founder and CEO of Ascent HR, said, adding, “but the code has contemplated something called Central Board and possibly national and state-level social security boards for unorganised workers.”

“If they are going to dilute these social security boards at the state-level to include unorganised workers then they will face serious challenges in implementation,” Subramanyam added.

The code talks about establishing a National Social Security Board which shall recommend to the central government formulation of suitable schemes for different sections of unorganised workers, gig workers and platform workers.

Experts also believe that measurement of wages will be another major challenge since gig or freelance workers don’t have a fixed salary structure, computation of which may increase the cost and compliance burden of employers.

“Fixing minimum wages for gig workers will be a bit complex. For example, a driver in a ride sharing platform may do four rides today but only two rides tomorrow and six rides the day after,” said Rishi Agrawal, Founder and CEO of Avantis, a regulatory compliance unit of staffing company TeamLease.

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“It will lead to complexity in calculation. Hence, technology platforms will play an important role in making sure the compliance around this is established,” Agrawal added.

However, he also added that clarity will emerge on compliance burden, operational effectiveness, complexity in calculation and periodicity of returns only when the rules are notified.

For gig and platform workers, the code seeks to provide for framing of schemes by the Central Government on matters relating to life and disability cover, accident insurance, health and maternity benefits, old-age protection, crèche and any other benefits as may be determined by the Central Government.

“There are 500 million employees in the country but only four to five crore are formal employees while the remaining are informal with no social cover,” Agrawal said, adding, “If ESI is introduced, all these informal workers will have access to healthcare, and income security, especially in cases of unemployment, sickness, invalidity, work-related injury and maternity.”

He also added that the social security cover will also increase the participation of more workers in the gig economy.

According to Betterplace, a tech platform for blue-collar workforce management, the overall demand for jobs in 2020 will be 14 lakh, of which the gig economy will lead 80 per cent of the total demand.

Published on October 06, 2020

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