The Industrial Relations Code of 2019: A Malheur in making?

by Akshat Sharma & Ravi Sharma

Introduction

“Without labor nothing prospers.” – Sophocles

The Central government has taken several steps to improve the ease of doing business rankings in India by simplifying various procedures and amending the existing laws or by legislating new laws.^[1] The Labour Ministry was given a task to consolidate and amend the various laws relating to labour in India.^[2] The Ministry decided to merge 44 different laws into four different codes to ease down the laws in this field.^[3]

In the Constitution of India, labour and industrial disputes fall under the third list (concurrent list) of the seventh schedule which means both the state and central government can make laws on the subject.^[4] The Second Labour commission in 2002 recommended that these multiple legislations should be merged into more simple and compliance-friendly laws.^[5] It recommended that the law on industrial relation which applies to establishment having more than 20 employees should be consolidated into one.

On November 28, 2019, the Minister of Labour and Employment introduced The Industrial Relations Code, 2019 [the Code]. It will merge the three existing Acts into one, these three Acts being: (i) “the Trade Unions Act, 1926,” (ii) “the Industrial Disputes Act, 1947,” and (iii) “the Industrial Employment (Standing Orders) Act, 1946”.^[6]

After it was introduced in the Lok Sabha, the Code was sent for recommendation to a parliamentary standing committee on December 23, 2019, with a mandate to submit the report within three months to the Lok Sabha.

The important provisions of the Code are as follows:

Delegated legislation

In the Code, retrenchment has been defined as the termination of a permanent employee with a certain exception like the retirement of a worker.^[7] The Code does not alter the upper limit of the retrenchment of the workers it remains the same as it is in The Industrial Disputes Act, 1947.

However, the limit which earlier can be changed only through an amendment in the Act by the central or state government by amending

the Act has now been delegated to the government.^[8] The government can change the threshold on its own which will affect the rights of retrenched workers in an establishment.

Fixed-term employment

The Code has introduced the provisions relating to the fixed-term employment of a worker.^[9] This type of employment will help employers to employ certain types of workers for a particular duration to do a specific amount of work. This gives the flexibility to employ only the workers who are required to do a particular task and to complete certain skilled work which is required during the peak time. This also helps the workers to negotiate better working conditions and wages for their work.

This will also decrease the role of middlemen or contractor who used to cut wages as a commission from the workers’ wages. They will also be eligible for the same social benefits provided to the permanent employees as mentioned under the new code. All this will improve the working conditions of the fixed-term employees as compare to the other workers who are employed for a short-term basis.

However, the unequal bargaining power between employer and worker can harm the interests of the workers in the long run. The employer will have the power to renew or terminate the contract of the fixed term of the worker. This will force the worker not to raise the issues relating to his work or other problems like non-payment of wages, extended working hours or difficult working environment. Further, there is no elaborative explanation about the type of work in which workers can be employed for a fixed term.^[10]

This type of employment can be used by the employer to replace the existing permanent employees and hire the fixed-term workers to do the work. The Contract Labour (Regulation and Abolition) Act of 1970 provides that the government can restrain the employer from employing casual contract workers in certain cases. The Second National Labour Commission, 2002 has also suggested not employing a worker on a temporary or contractual basis for more than two years.^[11]

Modify or Reject Tribunal Awards

The provision which empowers the government to establish the Industrial Tribunals and National Tribunal in certain cases are also very controversial. Awards passed by the tribunal can be enforced after 30 days of passing the judgment.^[12] Although, it allows the government to delay the award in certain cases on public grounds when it affects “national economy” or “social justice”.^[13]

The government has been given power in the Code to either modify or reject the award by the tribunal. Some points need deliberation, one is that modifying an order in which government is a party will amount to a conflict of interest, and the other is that it will violate the principle of separation of powers. Similar kind of provisions that existed in The Industrial Dispute Act of 1947 was held to ultra vires by the Madras High Court in 2011, when it approved with the reasoning of an earlier judgment of Andhra Pradesh High Court which held the provisions invalid as they violate the principle of separation of powers which is also included in the basic structure doctrine.^[14]

Therefore, this section in the Code can also be struck down by courts.^[15]

Strikes

The Code lays down the provision in section 62(a) & section 62(b) which make the strike and lock-out for the workers impractical as “prior notice of 2 weeks” have to be provided. The period of strike availed through this notice is 60 days.^[16]

It also lays down a fine of rupees 10,000 or imprisonment of one month who do not abide by the procedure as mentioned in the code while organizing a strike. It also considers mass left as a strike if the percentage is about 50% or above.^[17] The casual leave taken by the workers will be penalized if due to coincidence these conditions are fulfilled. This shows how the edge has been provided to the industrialists in the garb of reforms.

It states that the conciliation officer has to be provided with the information about the strike two days in advance.^[18] The conciliation process will begin immediately and during this period strike and lockout is not allowed. If the issues are not resolved during conciliation and are taken before the tribunal by either of the parties, then the period of the prohibition on strike and lockout will be extended. The prohibition period can be extended beyond the days mentioned in the notice or the limit of sixty days.

Thus, it makes strikes impossible on the scheduled date as given in the notice. In the Industrial Disputes Act of 1947, similar provisions for public utility services exist. The provisions stand on the sound reasoning as public utility services have an impact on the majority of people and this has also been stated in the report of National Labor Commission (2002). However, the application of these provisions in other establishment is not a good step for the workers.

Conclusion

The Code in its present form has a lot of issues because of which it is essential that certain amendments have to be made to make it more workers friendly. All the major trade unions in the country have given their suggestions and recommendations in front of the standing committee. The standing committee has also consulted the government and all other stakeholders on the code. The report of the committee is released in the month of March-2020, covering all the major provisions of the code and the suggestion made thereupon. It is essential for this Code that all such recommendations are incorporated and a new draft code should be released by the government.

(Akshat Sharma and Ravi Sharma are first and fourth-year students respectively of MNLU, Nagpur)

^[1] ‘Doing Business 2020: Reforms Boost India’s Business Climate Rankings; Among Top Ten Improvers for Third Straight Year’ (World Bank, 24 October 2019) <https://www.worldbank.org/en/news/press-release/2019/10/24/doing-business-india-top-10-improver-business-climate-ranking> accessed 20 June 2020.

^[2] Sawant Singh and Vaishnavi Eshwar, ‘Industrial Relations Code - Bouquets And Brickbats’ (Mondaq, 7 February 2020) <https://www.mondaq.com/India/Employee-Rights-Labour-Relations/891230/Industrial-Relations-Code--Bouquets-And-Brickbats> accessed 26 June 2020.

^[3] ibid.

^[4] Seventh Schedule <https://www.mea.gov.in/Images/Pdf1/S7.Pdf> accessed 26 June 2020

^[5] G Shivaji Rao, ‘The Report Of The Second Indian National Labour Commission-2002: - - An Overview’ (Mondaq, 5 March 2003)<https://www.mondaq.com/India/Employee-Rights-Labour-Relations/20167/The-Report-Of-The-Second-Indian-National-Labour-Commission-2002--An-Overview> accessed 22 June 2020.

^[6] Legislative Brief The Industrial Relations Code, 2019 <https://www.prsindia.org/node/845216/chapters-at-a-glance> accessed 26 June 2020.

^[7] The Industrial Relations Code LS Bill (2019) 364, cl 2(zc).

^[8] ibid cl 77.

^[9] ibid cl 2(l).

^[10] Legislative Brief the Industrial Relations Code, 2019 <https://www.prsindia.org/node/845216/chapters-at-a-glance> accessed 26 June 2020.

^[11] ibid.

^[12] The Industrial Relations Code LS Bill (2019) 364, cl 55.

^[13] ibid cl 56.

^[14] Legislative Brief the Industrial Relations Code, 2019 <https://www.prsindia.org/node/845216/chapters-at-a-glance> accessed 26 June 2020.

^[15] Union of India v. Textile Technical Tradesmen Association 2014 (6) CTC 427. Telugunadu Work Employees State Federation v. GOI, 1997 (3) ALT 492.

^[16] The Industrial Relations Code LS Bill (2019) 364, cl 62.

^[17] ibid cl 2(Zf).

^[18] ibid cl 58.