Labour Codes and the game of thresholds

KR Shyam Sundar | Updated on October 20, 2020

Exemptions and thresholds in the new labour codes cannot be justified in the name of protecting small enterprises

The Colonial hangover continues to haunt lawmakers in India even as we have almost crossed two decades of the 21st Century. The British government enacted different versions of the Factories Act starting in 1881 by making it applicable to units using mechanical power and employing not less than 100 persons which was revised to 50 in 1891 and later in 1922 to 20..

Post-Independence, many Acts were passed with generic thresholds based on the size of employment and wages/salaries, and within each law, there were different thresholds, for example, safety officer (1,000 or more workers), welfare officer (500 or more), and crèches (30 or more).

The government created the thresholds on three grounds — the stage of development of the economy, the economic capacity of the employers to have special facilities, and the administrative capacity to implement the laws. But later laws raised the thresholds.

The idea of delimitation continued well into the 21st Century even as successive governments — the NDA-1, UPA 1 and 2 and the present NDA 1 and 2 — boasted of faster economic growth rates of 7-8 per cent. The working class, especially the unorganised lot — that is, wage workers excluded by the thresholds — logically expected that the three reasons for imposing generic and intra-law thresholds would go away and they would be afforded full and complete legislative protection.

And the NDA government did not disappoint them as the Wage Code (though it is yet to be notified even a year after its enactment, in early August 2019) extended the statutory right of minimum wage (however calculated) and the regulations governing the payment of wages to the last worker standing. . So workers and analysts expected that the more crucial and fundamental existential right of safety at workplace and social securities would be universalised. To be sure, these are no less important than the minimum wage.

But the three labour codes on industrial relations (IRC), occupational safety and health and working conditions (OSHWCC) and social security (SSC) have disappointed both workers and analysts by erecting thresholds even though there are some minor relaxations. Let us look into the “wheels within wheels” kind of “thresholds within thresholds” in each of the Codes to demonstrate the continuing conservatism of lawmakers even now.

The IRC in a generic sense covers all kinds of workers and now supervisors who earn less than ₹18,000 a month or such wages notified by the government. This discretionary power vested with the government pervades across the chapters in each of the Codes. The government also clothes itself with extraordinary powers to “exempt” an establishment or class of establishments and, unlike in the old laws, say, the Industrial Disputes Act, 1947, does not specify the “conditions” for exemption. Most worryingly, the Code on working conditions, does not exclude provisions relating to “safety” from the discretionary exemption clauses even with conditions.

The government revels in creating ambiguities to keep all industrial relations actors in a permanent state of guessing. Lawmakers tinker with the thresholds to (a) provide substantial flexibility to employers (increasing the threshold for standing orders and hire-and-fire clauses from 100 to 300 or factories from 10 to 20 and 20 to 40 and contract labour from 20 to 50), (b) revise the worker-friendly thresholds conservatively downwards (labour welfare officers in factories from 500 to 250, plantations 300 to 250) and (c) at worst retain the thresholds — works committee (100+), ESI (10+) or EPF (20 +), crèches in plantations (50+), etc.

Under the Factories Act, 1948 every hazardous factory must constitute a Bi-partite Safety Committee (SC). Now, the OSHWCC leaves the matter to the discretion of the government which “may by a special or a general order” require the establishments to constitute it. It prescribes thresholds for safety officer for non-hazardous factories (1,000 to 500), hazardous factories (250+), construction (500 to 250). It is inexplicable why laws concerning safety should have thresholds at all. Is workplace safety and size of establishment positively correlated to erect thresholds only for larger establishments, that is, at least 100+? The “demarcation mindset” pervades even now.

It is doubtful whether the SSC covers agricultural workers, domestic workers, street vendors, bidi workers, et al., as these categories are missing in the definition section.

The Sixth Economic Census data show that 98 per cent of the establishments in the non-agricultural sector employ less than ten workers. It is inconceivable that the government should continue to ignore the vast majority of establishments and the workers employed therein on the grounds of the impracticality of governance of micro establishments and stunting their growth. As the Second National Commission on Labour in 2002 recommended, the government could have conceived separate legislation for smaller establishments.

Even though the Codes have in some respects widened the coverage of laws and included newer categories of workers like the gig. But the overall impression one gets is that the business and administrative considerations have dominated the mapping of the coverage of laws and important clauses. The question here is not of strangling business but to provide a roadmap for universal coverage. It is a golden opportunity lost and the game of thresholds continues to haunt workers and perhaps even employers.

The writer is Professor in the HRM Area in XLRI, Jamshedpur

Published on October 20, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like