The Indian Parliament’s recent approval of three labour codes – the Industrial Relations (IR) Code, 2020; the Code on Occupational Safety, Health and Working Conditions (OSHWC), 2020; and the Code on Social Security (SS), 2020 – is expected to simplify the complex maze of existing labour laws, enable a more conducive business environment, and boost employment and economic activity. With the passage of these three codes (now bills), the government has demonstrated its seriousness to dispense with multiple and outdated laws which are not only incompatible with modern business environments but also give rise to inconsistencies and ambiguity.
On the one hand, the new labour codes are expected to bring about a higher level of regulatory compliance, give industries/businesses greater flexibility and simultaneously protect workers’ rights and benefits. On the other, they are also being seen as enablers to boost India’s ranking in the Ease of Doing Business index and attract higher inflows of foreign direct investment (FDI). The three new codes, along with the Code on Wages, 2019 (passed in August 2019), are the culmination of years of effort to streamline and consolidate over 100 state and 40 central labour laws regulating various aspects of labour.
In 2002, the second National Commission on Labour (NCL) [set up in 1999 by then Prime Minister Atal Bihari Vajpayee] recommended the consolidation of multiple central and state labour laws into four or five codes since existing legislations were “complex, with archaic provisions and inconsistent definitions.” For the next decade or so, the recommendations remained on paper. In 2014, the threads were picked up again and steps were taken to consolidate multiple central labour laws into four codes. In 2019, after being introduced in Parliament, the codes were referred to the Standing Committee on Labour which suggested 100 changes, of which 74 were accepted in the final draft.
The OSHWC code subsumes and replaces 13 central labour laws – relating to safety and health standards, working conditions, employee welfare provisions and other associated matters – into a single code.
The OSHWC code applies to establishments employing at least 10 workers, and to all mines, docks and establishments undertaking any hazardous or life-threatening activities (to be notified by the central government). Under the code, the government has allowed the use of a single licence by firms to hire contract workers across different locations instead of the previous requirement of multiple licences. Some of the other key provisions of the OSHWC code include the following: