Reformed labour bills to facilitate economic rejuvenation

Aiming to provide greater flexibility and a more straightforward system to employers while ensuring social security for workers, the India Parliament passed three pivotal labour reform bills.

September 22, 2020

Labour reform bills shall provide greater transparency and flexibility to employers.

Improve welfare for around 500 million organised and unorganised workers.

Provisions of a social security fund for 400 million unorganised sector workers.

These will facilitate economic recovery and ease of doing business amidst COVID-19 .

The Parliament recently passed three bills- the Code on Occupational Safety, Health and Working Conditions, Industrial Relations Code and Social Security Code, the purpose of which is to provide a transparent system to tailor to the evolving business ecosystem. These shall prove to be a game changer in the labour welfare covering more than 500 million organised and unorganised workers in the country. The employment threshold being lower than 100 discourages employment generation. An increase in employment threshold would result in job creation and encourage employers to hire. These bills would safeguard the interest of workers and provide universal social security to workers by expanding the scope of Employees’ Provident Fund Organisation and Employees’ State Corporation of India. It would also provide a social security fund to cover around 400 million unorganised sector workers. 

The Occupational Safety, Health and Working Conditions Code, 2020, seeks to strengthen and improve the laws regulating the occupational safety, health and working conditions of employees. Another change under this bill is the sanction given to employment of women in operations which may prove to be perilous to their health and safety. The Industrial Relations Code, 2020, seeks to consolidate and amend laws relating to trade unions, conditions of employment or undertaking, investigation and settlement of any industrial dispute. The third reform on the Code on Social Security, 2020, will rectify laws relating to social security, with the goal to extend social security to all employees and workers, be it in the organised sector or the unorganised sector. Last year, the Code on Wages bill was passed. The passage of these remaining codes completes the governments’ efforts to reform labour laws in the country.

While preserving their original structure, these changes in the labour laws have brought incremental modifications which affects their scope and application. These changes are reflections of the State amendments brought in during COVID-19 to promote economic recovery and to facilitate ease of doing business in the country.