The Union Labour Ministry on Monday clarified that raising the threshold of workers in an organisation for getting Government approval before retrenchment will not affect workers’ right.

Both houses of Parliament approved three Labour Codes — Industrial Relations (IR) Code, Occupational Safety, Health & Working Conditions Code (OSH) and Social Security (SS) Code. Now, these are expected to be assented by the President before they become laws. Raising the threshold to 300 from 100 for organisation for seeking Government’s approval for lay off is part of IR Code.

Allaying various apprehensions and doubts over the Codes and pointing one particular clause becoming headline, the Ministry underlined that Department-related Parliamentary Standing Committee had also recommended an increase in threshold for seeking prior permission for retrenchment, lay-off and closure.

Prior permission

“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 Ministry said in a statement.

Further, 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 has not been compromised. Further, the IR Code envisages an additional monetary benefit equivalent to 15 days of wages under newly created Reskilling Fund. There has been no empirical evidence to suggest that higher threshold promotes hire and fire, it said.

The Ministry referred to the Economic Survey, 2019 which analysed about the pain of dwarfism prevalent in Indian firms. Dwarfism refers to firms which are surviving for more than 10 years but their growth in terms of employment is stunted. One of the inhibiting factors in creation of employment was observed to be the threshold of 100 workers under the Industrial Disputes Act, 1947. It was observed that threshold under Labour legislation creates perverse incentive to remain small.

Increase in output

In 2014, Rajasthan increased the threshold from 100 to 300 workers and did away with the requirement of prior permission before retrenchment etc. The impact of an increase in threshold in Rajasthan, showed that average number of factories in the State having more than 100 workers increased significantly as compared to the rest of India. The total output in those factories also increased. “15 more States have already enhanced threshold to 300 workers,” the Ministry said.

​Refuting rumours that Fixed Term Employment introduces hire and fire, the Ministry said that Fixed Term Employment has already been notified by the Central Government and 14 other States including Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jharkhand (apparel and made up) Karnataka, MP, Odisha, Punjab, Rajasthan, UP (textile and EOU), and Uttarakhand.

The Ministry also said new welfare provisions under OSH Code include ESIC coverage for plantation workers, mandatory appointment letter, free annual health check-up and strengthening of provisions relating to inter-state migrant worker and including provision of annual journey allowance to visit home-town, beside others.

The Ministry explained that position of trade unions has been strengthened by introducing decentralised registration process. It dubbed apprehensions regarding 14 days’ notice period as totally misfounded. It said it only adds an opportunity for resolving the labour grievance before going on strike, mandating establishments to attempt solving the issues.

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