Before the reimagined labour laws, there were 44 labour-related statutes in existence in India. Of these, 29 legislations are being combined into four new labour codes:

These codes are focused on minimum wages for workers, accidental and social security benefits, occupational safety and health, disciplinary actions, conditions of employment, among other things. Despite the government releasing multiple documents to clarify the new changes, several questions have come to light about the new labour laws. In this article, we aim to answer some of the most frequently asked questions.

1.There are roles where a person is an individual contributor as per their designation but their scope of work is different. How will such roles be considered under the new Labour Code?

While categorizing the workforce as worker and non-worker, the nature of job is taken into consideration and not the designation. Hence, irrespective of the designation that an employee holds, the categorization shall be based on the nature of job. 

2. Without having facilities like medical in the company will Employee State Insurance Scheme of India be applicable to all states?

At present, the ESI scheme is fully implemented in 443 districts and partially implemented in 153 districts. There are 148 districts not covered under ESI scheme. The government has directed the Employees’ State Insurance Corporation (ESIC) to extend its social security schemes in all 744 districts of the country by December this year. The expansion programme will take into consideration the increased beneficiary base, post implementation of the new legislation on social security. 

3. Was the standing order applicable to IT/ITES industries under the “Standing Order Act?”

The Industrial Order (Standing Orders) Act 1946 requires employers in industrial establishments to formally define conditions of employment under them and submit draft standing orders to certifying Authority for its Certification. This was partially applicable. In few states where the Payment of Wages Act, 1936 or the respective State Shops and Establishment Act, has linkage or covered the Standing Orders, they had the applicability. 

4. What is the definition of a “Contractor”?

As per Sec. 2(n)(ii) of OSH Code 2020:-  “contractor”, in relation to an establishment, means a person, who—

(i) undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment, through contract labour; or

(ii) supplies contract labour for any work of the establishment as mere human resource, and includes a subcontractor. 

5. Has the government imposed the new regime?

No, the government hasn’t imposed the new Labour Codes yet. The government is awaiting all the States and Union Territories to frame their rules under all the four Labour Codes for easy administration. Once all the States and UT’s are ready with their rules, the central government is expected to notify the appointment date for implementation. 

6. For external consultants, we issue service level agreement. Will that be impacted by the new Labour Codes?

External consultants rendering expertise services may not fall under the concept of employer and employee subject to certain conditions. For such engagements, the Labour Codes may not have an impact until these sort of engagements are not construed to be camouflaged in nature. 

7. Do we still need to avail exemption for female employees working in the night shift for IT sector?

For factory, there is no exemption under the new Labour Codes as the prohibiting provision is not there anymore. But the safety norms must be adhered to as per the States Rules. For shops and commercial establishments which cover the IT Sector, the governance is under the respective State Shops and Establishment Act. If the State mandates exemption to be availed, then it has to be availed. 

8. Will the ESIC judgment on conveyance allowance be replaced once Labour Codes are implemented?

The new definition of “Wages” under the Labour Codes is universal for all four codes and has already taken care of the ESIC verdict pertaining to the treatment of Conveyance and Leave Travel Allowance. It has considered the same under the exclusion portion under the new definition of wages. 

Final Word

While the implementation of the Labour Codes seem to have been delayed, the government is working towards putting it in place at the earliest. Now is the best time to look at your existing policies, practices and structures to identify areas affected by the labour codes, and prepare to make any necessary changes. Also, watch out for the part 2 of the article for more FAQs.

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