In 2019, the Central Government introduced four bills on labour codes ostensibly to consolidate 29 central laws. These are:

1. Code on Wages

2. Industrial Relations Code

3. Social Security Code

4. Occupational Safety, Health and Working Conditions Code

While the Wages Code was passed in 2019, the other three bills were passed in the September 2020. While consolidation appears to be an innocuous idea, what it actually does goes much beyond the mandate and goes to fundamentally restructure labour relations in the country and consolidate the role of the Central Government in industrial relations.

The labour movement of most of the 20th century focussed on ensuring the right of collective bargaining for the workers, at the shop floor level, industry or city level and even across a nation state. The idea was not only to ensure that the workers had better wages, working and living conditions and a degree of control over the production process but also help to build consciousness and organisations which promote class solidarity and power. These rights were given legislative guarantee, in the sense that the executive could not arbitrarily abrogate or tamper with them. In other words any change in them would have to be legislated by the parliament through due process of debate, consultation and deliberation and vote division. Among the most important rights are the rights to organise into trade unions and negotiate collectively and the right to strike as a legitimate form of struggle.

In many ways such a regime in which labour’s rights were fortified, went with large scale factory based production which employed bulk of the working class. It also went with a capitalist system which was located in nation states, some of them being imperialist, others being colonial or semi colonial or simply national capitalist. This system of capital, state, working class and labour rights regime have changed in significant ways during the last few decades. Transnational capital still rooted in nation states but transcending national interests for the sake of capital accumulation; a system of production which is not only dispersed across countries in small ephemeral establishments, but also employing relatively a very small number of workers on automated machines; bulk of the working people turned into a peculiar status of self-employment (employing themselves on their own meagre capital equipment) or ‘gig’ workers who are treated as ‘local partners’ of transnational companies without even the status of being employees; or engaged as contract labourers by small labour contractors… Official data on factories tells us that more than 47% of the enterprises employ less than 20 workers and only 0.3% of enterprises employ more than 5000 workers. The vast peasantry, precariously hold on to their lands producing for agri-businesses and banks using increasingly harmful inputs and methods of farming. This transformation of industrial proletarian working class into ‘self employed’, ‘contract’, ‘putting out’ and ‘gig’ workers is a marked feature of contemporary social system. What is noteworthy is that as the process of primitive accumulation proceeds with unprecedented speed, dispossessing and divorcing the traditional peasants, forest people, artisans and women, from traditional control over resources and work, more and more people are being proletarianized and thrown into the labour market.

As capital gets footloose and moves across continents with unprecedented swiftness, nation states have taken upon themselves the role of providing easy access to cheap natural resources, cheap and pliant labour and market. Laws relating to commons, forests, mineral and water resources of all people, and even privately held agricultural land are being reworked in order to allow easy and irresponsible access to capital. Laws relating to social security and health and education, normally within the purview of the nation state too are being reworked. The current reworking of labour laws into four labour codes, also need to be seen in this context.

The ostensible purpose of the codes was to consolidate and rationalise dozens of laws pertaining to labour relations and thousands of judicial pronouncements and address the issues of workers in the burgeoning ‘unorganised’ sector. There can be no denying that the labour laws were in a mess and needed rationalisation. Likewise it is equally true that the existing laws did not serve the interests of the vast majority of workers who did not come under the category of factory workers. Ideally this should have been done in consultation with labour unions and through detailed consideration by the Parliament. As a matter of fact, most of the ‘codes’ were passed without any discussion in the Parliament.

Some of the ideas that pervade the codes are important to note. Firstly it is to replace legally sanctioned social security benefits for workers by whimsical charitable doles by the state which are not justiciable. Ostensibly they are meant to cover the unorganised workers too. However, a vast number of agricultural workers, workers in shops, domestic workers, have been left outside the purview of these codes. Gender related issues like sexual harassment of women and discrimination in work are not covered by the act. Likewise, child labour too has been kept outside the purview of these codes. The list of categories of work excluded from the codes is really long: it includes gig workers, workers under government employment guarantee schemes (MNREGA), employees of government projects like health and early childhood care workers, workers on putting out arrangements (like bidi workers who produce from home), sex workers etc. Thus, comprehensiveness of the act is not so comprehensive. Secondly, they assign to executive notification what was earlier legislatively ordained. In other words, defining a factory, who is a worker, their rights etc are now to be done by executive notification by government of the day. Even here, the earlier regime of decentralisation in which each state government was free to determine the minimum wages for the state etc. is now changed and concentrated in the hands of the central government. Thirdly, they virtually criminalise militant trade union activities like going on strike and make it impossible for a trade union to gain formal recognition for collective negotiation. On the other hand it decriminalises non payment of minimum wages which is tantamount to forced labour.

The Centre for Worker’s Management, Delhi associated with the New Trade Union Initiative (NTUI), has come out with an elaborate critique of the new Labour Codes, comparing them with the older laws they seek to replace. Those who are interested may refer to this study.

We will be summarising the main arguments of this study here.

The Code on Wages: This replaces four earlier laws pertaining to payment of wages, minimum wages, bonus and equal pay for equal work.

Its main departure is to move away from the limited coverage provided by the Minimum wages act, and extend its reach to all categories of employment as decided by the central government from time to time through executive decision. The earlier act gave these powers to the state government, which now has been taken over by the central government. Nevertheless a large number of categories of workers have been left outside its purview: agricultural workers, domestic workers, MNREGA workers, government scheme workers, gig workers, putting out workers producing from homes, sex workers etc. These workers having been excluded from the list will not be entitled to the protection of laws pertaining to minimum wages, etc.

The basis for calculating minimum wages has been so tweaked as to enable the government of the day to peg it much lower than the requirement of a healthy family life. In the process the code gives legal validity to a new concept called ‘Floor Wage’ as opposed to minimum wage, below which no government can fix the minimum wages. Under the previous laws minimum wages were mandatory for all employment including MNREGA. Thus there was no question of fixing anything below the minimum wages under the earlier regime. The purpose of introducing a ‘floor wage’ is to ensure that workers working under informal arrangements can be paid just the floor wage which is far below the minimum wage levels. thus the ostensible purpose of extending the coverage of the act to all categories of workers is a mere cover for permitting dual standards of employment, those under minimum wages and those under ‘floor wages’. In the long run this will act as a depressant for the minimum wage levels too.

The code tampers with one of the oldest gains of the working class pertaining to 8 hour working day and opens the ground for the central government to define what a working day will be through an executive order.

The provision regarding equal pay for equal work too has been tampered with in so far as the new code stipulates that the same employer should not pay unequally for similar work- in other words in the same factory establishment, a male worker employed by the company directly can be paid more than a female worker hired through a contractor for the same work.

The new code also tweaks the law relating to payment of bonus (share of profits earned by the company) but stipulating that the categories of workers entitled to bonus will be decided not by law but by the central government by an executive order. Similarly the method of calculation of profit earned by a company (which determines the bonus) is not defined by law but left to the government of the day.

Previously, non-payment of minimum wages and other violations of the wages act implied some fine and also jail sentence for the employer. Under the new Code while the fine amount has been substantially increased, the jailing component has been removed for the first instance, effectively decriminalising such acts. Even in the case of subsequent defaults the jail sentence has been considerably reduced (like from five years imprisonment to three months imprisonment for non-payment of minimum wages.

Code on Occupational Health, safety and working conditions: This code replaces about 13 previous acts. Some of the salient changes include recognising a labour contractor as an employer with ultimate safety of the worker in the place of final owner of the factory establishment. This will open up the possibility of increasing the employment of contract labour without any responsibility for the actual owner of the enterprise. At the same time the act covers factories which employ only more than 20 workers (as against 10 workers in the previous laws), thus effectively leaving out nearly half of the enterprises from its purview. The earlier laws while fixing hours of work had stipulated an 8 hour working day and put a limit on overtime work in a week. The new code while retaining the 8 hour norm removes the weekly or quarterly limit on over time thus opening the possibility of indefinitely increasing the actual working hours. While earlier fixation of hours of work, rest etc were defined in the law, now they have been left to the government to decide them. While rules relating to weekly off days and compensatory leave for work done on off days have been revised to give greater flexibility to the employer, the codes have changed the rules relating to annual leave in favour of the workers. Thus while under the earlier laws one had to have put in 240 days of work to be eligible for one day of leave for every 20 days of work, under the Code a worker will be eligible for leave after putting in 180 days of work.

The new Code allows the employment of women in night shift without legally guaranteeing their safety. It also provides for a factory to designate a nearby creche (Anganwadi) run by the government as the creche for its worker’s young children, and avoid setting up creches within the factory premises to enable working mothers or fathers to take care of their children while at work.

As noted earlier, contract labour is emerging as a major method of denying workers the right to decent employment (with security of tenure, family wages, social security, etc) and absolving the principal employer of any responsibility towards the worker. It makes labour conditions flexible for the employer and make the worker pay for the vicissitudes of the market. It also creates cleavages among the workers of a concern between those directly employed by the concern and those employed through contractors. The struggles of the two get separated and one segment of the workers are used against the other. The very prevalence of contract labour enhances the bargaining power of the employers. By and large the precarity of the conditions of contract workers had made their unionisation extremely difficult. Long and persistent struggles of the Indian working class had forced the then governments to legislate to regulate and limit the use of contract labour. These laws define the kind of work in which contract labour cannot be employed and the conditions under which they could be employed. Of course these laws usually protected the interests of the employers, they also acted as restraints on them. Over the decades litigation had also resulted in court judgements which often safeguarded the interests of the workers and became case laws. The Code seeks to consolidate all this and at the same time dilute its provisions and arrogate to the government the powers to define some key matters. For example the threshold limit for the applicability of provisions relating to contract labour has been increased from the employment of 20 workers to 50. Thus a firm can now employ upto 50 workers and not invite the provisions of this act. Further earlier contractors could employ workers only under license which stipulated the hours of work, wages, etc of the contract workers. This has now been replaced by an amorphous ‘work specific license’.  The Code also provides for several openings for the employment of contract workers in what was considered ‘core’ areas of work in which a concern had to employ only regular workers. Further a large number of categories of work (sanitation, security services, canteen, loading unloading, hospitals, educational institutions, guest houses, courier, construction work, gardening housekeeping, transport, etc.) have been permitted to employ contract workers if the main concern is not meant for these purposes.

As for occupational safety, the Code by a single stroke removes details regarding industry wise safety standards from the law and consigns them to executive notification. This deprives workers of legal and justiciable protection at work place and also deprives the legislature of the right to deliberate and make laws regarding occupational health and safety and shifts them to the executive. It also stipulates that the state governments need prior permission of the central government if they want to amend any such notification for their own states. The Code also removes inspection of compliance of safety regulations from the government departments and hands it over to private certifying and auditing agencies to be hired by the factories.

Code on Social Security: The new code which replaces a host of laws related to social security of workers now takes cognisance of the existence of a vast majority of workers who are outside the organised sector. The unorganised sector includes workers working under ‘unorganised’ conditions within the organised sector (as contract or casual workers or as apprentices), workers of ‘outsourced’ work, putting out workers like Bidi roller workers, gig workers etc. These actually work for definite enterprises even though they may be on their rolls. Such workers for long have been demanding recognition as workers of the principal enterprise and working conditions and social security eligible to regular workers. In many instances legal battles have ended in favour of such workers. In addition to these there are vast numbers of ‘sefl-employed’ workers who do odd jobs, vending, loading and unloading, and provide a variety of services to a large number of consumers. The new Code puts together both these kinds of unorganised workers in one category of ‘unorganised workers’ and gives them coverage under government sponsored social security schemes. This is tantamount to legal rejection of the claims of workers indirectly employed by larger enterprises to be their employees entitled to legally sanctioned status and social security.

The workers of the so called unorganised sector have now to register with the government to avail of social security schemes. These schemes are really doles from the government with not legally mandated but left to the discretion of the government dependent upon its financial situation. The registration for these benefits will be ‘online’ and given the limitations of digital literacy and availability of digital devices it may be very difficult for the millions of workers to register themselves with the required documentation.

Some of these social security schemes are driven by commercial insurance companies as in health insurance. Understandably these are profit driven companies which seek to minimise the claims and involve a number of conditions. Unlike free medical care for all ailments provided by Central Government to army, railway and government employees, or the Employee State Insurance which is available to organised sector workers, the insurance schemes cover only a part of the medical needs of the insured persons and getting the claims settled involves long procedures. The insurance premium is to be financed the central government, but it is quite evident that the government allocations are far below the actual budgetary requirements to cover all unorganised workers (who constitute over 95% of the workforce).

The Code also allows an employer to opt out of ESI scheme with the consent of majority of the workers, which in effect means offer of higher pay or private health insurance to workers and privatising health care.

The earlier law on provident fund mandated all employers to deduct 12% of the wages of the workers and contribute an equal amount as forced savings for the workers. This would constitute the retirement fund for the workers and also an emergency fund. Under the new code the contribution amount has been reduced to 10% of the wages for both the worker and the employer, ostensibly to enable the workers to take home a higher wage. But this in effect jeopardises the future of the workers when they are no longer able to work.

As for maternity benefits, the Code makes an important change in favour of women: whereas under the previous law a woman workers should have worked for at least 160 days during the previous 12 months to avail maternity benefits, under the Code this period has been reduced to 80 days. However, while under the previous law, the maternity leave had nothing to do with the number of children, under the new Code while a woman was entitled to 26 weeks leave for the first two children, for the subsequent children it has been reduced to 12 weeks.

Code On Industrial Relations: The new Code replaces at least three previous laws relating to industrial disputes, trade unions and standing order on industrial employment. To begin with, the Code raises the threshold for enterprises required to comply with the Model Standing Orders (MSO) relating to disclosure and approval by a labour officer of different aspects of employment conditions in it. (The MSO area set of pre-defined rules that govern the terms of employment and conduct within industrial establishments. These orders aim to clearly define conditions of employment and make them known to the workers. They cover various aspects like worker classification, working hours, leave, termination, and disciplinary action. Enterprise specific Standing Orders or SO are prepared as per this model, duly certified and displayed) While the earlier law required enterprises employing more than 100 workers, now this bar has been raised to 300 workers. In an era in which the factories are automation and reduction of workforce, this will mean that nearly 90% of enterprises will not be covered. Thus almost the entire workforce will be vulnerable to arbitrary work.

As in many other instances the Code also severely limits the powers of state governments to formulate MSOs and allows the central government to notify certain common norms across the country. It has been pointed out that this common norm would be determined as per the conditions of states with limited industrialisation and trade union activity and states with powerful unions will not be able to amend the MSOs to suit the conditions of the state.

One of the important changes to the Standing Orders for each enterprise is that it no longer applies to probationers and apprentices. It has become a trend in recent years to employ a large number of workers on these conditions and by excluding them from the SO, the Code not only puts them in vulnerable position but also encourages the enterprises to employ more of them.

When it comes to defining a worker, the earlier acts and court decisions sought to define in terms of the nature of control over one’s own labour process, whether it is supervised or not. Under this definition the courts have even treated a software engineer to be a workman. Now the Code wipes out all these considerations and defines a workman as one who doing any kind of work but drawing a salary of less than Rs. 18000/ per month. (Of course both earlier and now the police, armed forces etc are kept out of this definition.) Given the fairly low threshold most regular workers who earn more than this amount will be excluded from the protection of the act. Similarly, the Code makes significant changes to the definition of the term ‘Industry’. While earlier it was based primarily upon the relation between employer and employee in producing goods and services to satisfy material wants, the Code makes profit motive as the prime criterion thus excluding those ostensibly doing charitable work and domestic service. It also provides for the central government to notify any activity to be outside the purview of this definition. In recent times most of the large banking and industrial corporations have set up extensive activities ostensibly for rendering social service (corporate social responsibility) and most of them are paid paltry salaries well under the stipulated Rs 18000/. The Code appears to exclude such workers from its coverage. By also reserving the right to exclude more categories of work from the cover, it gives enormous power to the executive.

When it comes to registration of trade unions the Code follows the amendment to the law carried out a few years ago, which requires 10% (or 100 workers) of the workforce to apply and verification of membership by the management which gives the management a lever to intimidate and manipulate. It also requires the trade union to continue to have similar number of workers indicating that the management can initiate a verification process at its wish at any time in future too.

While making it difficult to register a trade union, a registered union stands in danger of deregistration in case it violates any provision of the Code. Thus if a trade union action like strike is declared illegal etc, the registrar can initiate proceedings for deregistration of the union. In contrast any violation of the codes by the employer firm does not invite deregistration or even criminal action but only a modest fine for the first time.

One of the principal methods of struggle workers have is to go on strike. The Code virtually makes it impossible to go on a strike legally by placing a large number of situations in which workers cannot go on strike. Such blanket provisions earlier applied only to public utilities and civil administration. Now under the new Code they cover virtually all industrial establishments. Violation of this can invite not only legal action but also procedures to derecognise a union.

The broad trend in the changes introduced under the new Labour Codes discussed above would indicate that the central government has sought to arrogate to itself vast powers in regulating the employer-employee relation. While this is ostensibly for enabling greater investment by transnational capital and generating employment in the country, it actually does not make industrial relations any simpler but only increases the arbitrary powers of the executive arm of the state. This is likely to be used in favour of crony capitalist coterie which controls the government and also provide opportunities for the ruling party cliques to negotiate with investors for illegal favours. At the same time by centralising these possibilities it deprives similar opportunities for regional parties and parties in power in the states.

An argument usually peddled in the context of these Codes is that they cover all workers, especially the workers in the unorganised sector. The actual ‘coverage’ applies to government sponsored social security doles and commercialised insurance services rather than regulation of working conditions or right to association and collective bargaining of such workers. In fact it specifically excludes such workers when it comes to application of such regulator mechanisms or unionisation. The government sponsored doles are handed out not as entitlements or rights of the workers, but as magnanimous gift from the head of the government and is used as electoral enticement. This is thus used to bolster personality cults of the rulers rather than promote the interest, identity and organisation of workers.

The question that remains to be answered is that, how could the central government manage to pass these laws in the parliament without even a modicum of consultation or discussion? How could the state take the entire working class of the country for granted in this way? This suggests that working class movement and organisations in the country have been so weakened in the last few decades that the state could get away with such blatant abrogation of rights. The working class movement thus has to reflect seriously on the long term implication of this and revision itself.

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