industries-cannot-be-forced-to-pay-wages-during-lockdown-panel-summary

Context: In it’s report submitted recently on the Industrial Relations Code, 2019, the Parliamentary Committee has recommended that in case of natural calamities, payment of wages to the workers until the re-establishment of the industry may be unjustifiable. 

Recommendations of Parliamentary Committee:

  • Committee Chairman Bhartruhari Mahtab added that the ongoing lockdown to check the spread of COVID-19 can be counted as one such calamity.
  • The Committee has suggested that clarity be brought in so that employers not responsible for closure or lay off, are not disadvantaged in case of such natural calamity of high intent.
  • The basic idea about recommendations is that the industry should also not be forced when the situation is beyond their control. 
  • The law has to be reasonable and it is for the government to step in and extend a helping hand for the industries.
  • The committee supported the idea of allowing companies with up to 300 workers to fire people or close down units without prior approval of the government, a threefold increase from the current threshold.

About the Industrial Relations Code 2019:

  • The Code provides for the recognition of trade unions, notice periods for strikes and lock-outs, standing orders, and resolution of industrial disputes.   
  • It subsumes and replaces three labour laws: the Industrial Disputes Act, 1947; the Trade Unions Act, 1926; and the Industrial Employment (Standing Orders) Act, 1946.  
  • The Bill applies to all establishments except those engaged in charitable and philanthropic work, domestic work, sovereign functions of the state and any notified activity.  Trade Unions

Background

  • In India, labour falls under the Concurrent List of the Constitution.  Therefore, both Parliament and state legislatures can make laws regulating labour.   
  • Currently, there are over 100 state and 40 central laws regulating various aspects of labour such as resolution of industrial disputes, working conditions, social security and wages.
  • The Second National Commission on Labour (2002) found existing legislation to be complex, with archaic provisions and inconsistent definitions. 
  • To improve ease of compliance and ensure uniformity in labour laws, the National Commission recommended that existing labour laws should be consolidated into broader groups such as 
  1. industrial relations, 
  2. wages, 
  3. social security, 
  4. safety, and 
  5. welfare and working conditions.

The Key features of the bill:

  1. Trade union:
    1. Registration:  
      1. Seven or more members of a trade union can apply to register it.  
      2. Trade unions that have a membership of at least 10% of the workers or 100 workers, whichever is less, will be registered. 
      3. The overall membership cannot go below seven workers.    
    2. Recognition: The central or state government may recognise a trade union or a federation of trade unions as Central or State Trade Unions respectively. 
    3. Negotiating union and council: 
      1. The trade union with at least 75% of the workers as members will be considered the sole negotiating union, for the purpose of negotiating with the employer of the establishment.  
      2. In case no union has at least 75% of the workers as members, a negotiating council shall be formed consisting of representatives of unions.  
  2. Strikes and lock-outs: In all industrial establishments, an employee cannot go on strike:  
    1. unless he gives notice for a strike within 60 days before striking, and 
    2. within 14 days of giving such notice.  

Similar notice provisions exist for lock-out of workers. 

Lock-out refers to the following actions by an employer: (i) temporary closure of an establishment, (ii) suspension of work, or (iii) refusal to continue employing workers. 

  1. Lay-off and retrenchment: Establishments in which at least 50 workers are employed, are required to give to every worker who has completed at least one year of continuous service: 
    1. 50% of basic wages and dearness allowance if he is laid off, and 
    2. one month’s notice (or equivalent wages) and 15 days’ wages for every year of continuous service for such period to a worker who has been retrenched. 

Further, if the establishment has at least 100 workers, prior permission of the central or state government must be obtained before lay-off or retrenchment. 

  1. Dispute Resolution 
    1. Bi-partite Fora: The appropriate government may require employers in establishments with 100 or more workers to constitute a Works Committee. The Committee will help resolve conflicts between workers and employers. 
    2. Arbitration: The Code allows for industrial disputes to be referred to arbitration by the employer and workers if both parties agree to do so.  
    3. an employer and worker on discharge, dismissal, or retrenchment of the worker. 
      Industrial Tribunals: Industrial Tribunals may be set up for settling industrial disputes. An Industrial Tribunal will consist of two members: (i) a Judicial Member; and (ii) an Administrative Member. The award of the Tribunal will be enforceable within 30 days, which can be deferred, rejected and modified by the central government in public interest. 
  2. Offences and Penalties: The Code specifies various offences.  
    1. If an employer employing 100 or more workers does not take prior permission from the appropriate government for lay-off, retrenchment and closure, he may be punished with a fine between one lakh rupees and ten lakh rupees. 
       

The Code defines lay-off as the inability of an employer, due to shortage of coal, or power, or breakdown of machinery, from giving employment to a worker.  

Retrenchment refers to the termination of service of a workman for any reason other than disciplinary action.  It does not include retirement, non-renewal of contract, or completion of tenure of fixed term employment.

Industrial disputes refer to disputes between: (i) employers and employers, (ii) employers and workers, or (iii) workers and workers, on the employment or non-employment, terms of employment, conditions of labour, or disputes between 

Key Issues:

  • The Code prohibits strikes or lock-outs in any establishment unless a prior notice of 14 days is provided.  
    • Similar provisions existed in the Industrial Disputes Act, 1947 for public utility services (such as, railways and airlines).  
    • The Code expands these provisions to apply to all industrial establishments.  

This may impact the ability of workers to strike and employers to lock-out. 

  • The Code permits the government to defer, reject or modify awards passed by Industrial Tribunals and the National Industrial Tribunal.  
    • A similar provision in the Industrial Disputes Act, 1947 was struck down by the Madras High Court in 2011, as it violated the principle of separation of powers by allowing the government to change the decision of a Tribunal through executive action.
  • Prior approval for retrenchment: 
    • The Code requires the employer of establishments with at least 100 workers to obtain permission from the appropriate government prior to the retrenchment of a worker.  
    • The government may increase or decrease this threshold through a notification.  
    • The question is whether the power to determine such a threshold should be specified by Parliament or whether it should be delegated to the government.
  • Provisions on fixed term employment:
    • The Code introduces provisions on fixed term employment. Provisions for fixed term employment were introduced for central sphere establishments in 2018.
    • Fixed term employment may allow employers the flexibility to hire workers for a fixed duration and for work that may not be permanent in nature.  
    • Further, fixed term contracts are negotiated directly between the employer and employee and reduce the role of a middleman such as an agency or contractor.   
    • They may also benefit the worker since the Code entitles fixed term employees to the same benefits (such as medical insurance and pension) and conditions of work as are available to permanent employees.  

However, unequal bargaining powers between the worker and employer could affect the rights of such workers since the power to renew such contracts lies with the employer. 

This may result in job insecurity for the employee and may deter him from raising issues about unfair work practices, such as extended work hours, or denial of wages or leaves.

Image Source: Economic Times