Labour codes introduced by Government of India are significant steps towards the much-needed labour reforms in the country. The four labour codes subsume 29 existing labour laws with an intent to simplify and rationalise the relevant provisions of the subsumed laws.

The new codes cover gig and platform workers through social security schemes for the first time. With an aim to improve ease of doing business and provide universal social security to all 500 million workforces of India, the codes will significantly impact workers and employers.

What are the four new codes

  • The Code on Wages, 2019
    The Code on Wages, 2019
    Amends and consolidates the laws relating to wages and bonus and matters connected therewith or incidental thereto
  • The Social Security Code, 2020
    The Social Security Code, 2020
    Seeks to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and workers either in the organised or unorganised or any other sectors and for other incidental or related matters
  • Industrial Relations Code, 2020
    Industrial Relations Code, 2020
    Consolidates and amends the laws relating to trade unions, conditions of employment in industrial establishments, investigation and settlement of industrial disputes and for all other incidental or related matters
  • Occupational Safety, Health & Working Conditions Code, 2020
    Occupational Safety, Health & Working Conditions Code, 2020
    Focussed on consolidating and amending the laws regulating the occupational safety, health and working conditions of the persons employed in an establishment and for all other incidental or related matters
How the codes impact businesses
The Code on Wages, 2019

Widened coverage: No wage threshold for employees, definition of employer includes ‘contractor’ and ‘legal representative of deceased employer’, etc.

New definition of ‘wages’: Applicable to all employees; specified exclusions and conditional inclusions specified, cap on benefits in kind

Timeline for full and final settlement: Two days from the date of removal/resignation/retrenchment/dismissal

Stringent penal implications: Introduced for non-maintenance of registers and records under the Code of Wages, 2019 5 Payment of wages and deductions: Payment vide cheque, online mode; no unauthorised deductions allowed from the wages

The Social Security Code, 2020

Voluntary coverage: Opt in/opt out of social security schemes

Introduction of new category of beneficiaries:

Platform workers, gig workers, fixed-term employees, etc.

Introduction of the concept of holding the ‘officer in charge’: Who will be held responsible for any default in relation to payment of gratuity and contribution towards ESI

Increase in quantum of gratuity payment:

  • New category of employees introduced i.e.‘Fixed term workers’ rendering services forless than 5 years;
  • Working period of 3 years for journalists introduced;
  • Gratuity payable to the contract labourers as well, in line with eligibility criteria are set out in the Code
Industrial Relations Code, 2020

Concept of fixed-term employment: Introduced with benefits not be less than of a permanent worker

Conditions for strikes and lockouts prescribed: No strikes and lock outs without giving proper notice in compliance with the norms laid down in the code

Standing orders: Required in establishments where 300 or more workers are employed

Retrenchment, lay-off and closure provisions: Not to be applicable if workers are

Occupational Safety, Health and Working Conditions Code, 2020

Concept of core and non-core workers: Employment of contract labour in core activities of any establishment is prohibited (with certain exceptions)

Canteen and crèche facility: Mandated for specified establishments

Special provisions for women: Consent of female employees required for working before 6 am and after 7pm along with other safety measures

Concept of leave rules and leave encashments introduced

Free annual health check-ups: Mandated for specified employees of specified establishments

Why Grant Thornton Bharat

Transitioning to a new legislative framework is a journey. At Grant Thornton Bharat, we are well equipped to assist you navigate through this change in legislation impacting employers across industries.

We help organisations divide their strategy in three phases, gauge preparedness and ensure a smooth transition.

 

Detailed assessment, i.e., comparing existing with new provisions

  • Review compensation structure and benefits
  • Review existing HR processes and policies
  • Review employment and other contracts
  • Map/compare the prescribed guidelines under the codes as applicable
  • Presentation before the management and stakeholders

Value Proposition

Transition

  • Assist in revising compensation structure, policies, contracts, etc.
  • Assist in putting plan in place for transition to new codes
  • Assist in creating the process ownership structure and align internal department, management and other stakeholders

Implementation and compliance

  • Assist in compliances under new codes
  • Provide handholding support over a fixed period
  • Assist with implementing any change in provisions, clarifications, notified after the effective date
Survey
Industry outlook

50% companies are prepared to implement new labour codes, says a Grant Thornton Bharat and CII survey on the industry preparedness.

Webinar Recording
Impact and analysis

Grant Thornton Bharat and IACC organised a webinar to discuss challenges arising from provisions under the law and the impact areas