The Indian labor law regime has undergone significant changes in recent years with the codification of multiple labor legislations into four broad labor codes. This blog presents a comprehensive comparison between the old framework and the new reforms under the Code on Wages, 2019, Industrial Relations Code, 2020, and the Industrial Employment (Standing Orders) Act, 1946 (as amended in 2016).

Code on Wages, 2019: Towards Uniformity and Fair Compensation

The Code on Wages, 2019 consolidates and replaces four major labor laws:

• The Payment of Wages Act, 1936
• The Minimum Wages Act, 1948
• The Payment of Bonus Act, 1965
• The Equal Remuneration Act, 1976

Universal Minimum Wage

Old Law:

• Minimum wages were sector-specific and applicable only to scheduled employments under the Minimum Wages Act, 1948.

New Law:

• Establishes a universal minimum wage applicable to all employees across all sectors.
• Introduces the concept of a floor wage set by the Central Government, which states cannot go below.
• Promotes fair and uniform compensation throughout the country.

Timely Payment of Wages

Old Law:

• The Payment of Wages Act, 1936, applied only to employees earning below a wage ceiling, and payment timelines varied by establishment type.

New Law:

• Removes wage ceiling, making provisions applicable to all employees.
• Mandates timely and regular payment of wages, typically before the 7th or 10th of each month depending on the establishment.

Equal Remuneration

Old Law:

• The Equal Remuneration Act, 1976, ensured equal pay for men and women performing similar work but was often undermined due to sectoral inconsistencies.

New Law:

• Integrates the principle of "equal pay for equal work" irrespective of gender directly into the Code.
• Strengthens the gender equality mandate across industries and removes previous ambiguities.

Industrial Relations Code, 2020: Reforming Employment Relations

The Industrial Relations Code, 2020 consolidates:

• The Industrial Disputes Act, 1947
• The Trade Unions Act, 1926
• The Industrial Employment (Standing Orders) Act, 1946

Recognition of Trade Unions

Old Law:

• No statutory recognition mechanism; multiple trade unions created complexities in negotiations.

New Law:

• Provides for recognition of a sole negotiating union or a negotiating council.
• A trade union with 51% or more membership gets exclusive negotiating rights.
• Encourages streamlined collective bargaining and reduced inter-union rivalry.

Strikes and Lockouts

Old Law:

• Unions could strike with minimal notice, leading to frequent disruptions.

New Law:

• Requires 60-day prior notice before a legal strike or lockout.
• Prohibits strikes/lockouts during conciliation proceedings and for seven days thereafter.
• Aims to curb abrupt industrial actions and maintain continuity.

Dispute Resolution

Old Law:

• Multiple forums like Labour Courts and Industrial Tribunals with overlapping jurisdictions.

New Law:

• Establishes Industrial Tribunals with a fixed timeline for resolving disputes.
• Introduces conciliation officers and grievance redressal committees within establishments.
• Enhances speed and efficiency in handling industrial disputes.

Industrial Employment (Standing Orders) Act, 1946 and Amendment of 2016

The Standing Orders Act mandates employers to define and publish uniform service conditions. The 2016 amendment and the Industrial Relations Code, 2020 have modernized its application.

Classification of Workmen

Old Law:

• Defined workers as Permanent, Temporary, Badli, Casual, Apprentice, and Probationer.

New Developments:

• Continues with these categories.
• Aims to clarify the status, entitlements, and rights of each type of workman.
• Helps in determining benefits such as leave, provident fund, and termination rules.

Conditions of Employment

Old Law:

• Prescribed general norms on work hours, shifts, and leave with no uniform format.

New Law and Amendments:

• Requires explicit mention of work hours, shift timings, and leave policies.
• Employers must provide prior notice before changing these conditions.
• Enhances transparency and predictability in employment terms.

Conduct and Misconduct

Old Law:

• Included basic definitions of misconduct but lacked standardized disciplinary procedures.

New Law and Amendments:

• Provides clear definitions of misconduct (e.g., insubordination, theft, absenteeism).
• Mandates fair inquiry and opportunity for defense before disciplinary action.
• Promotes natural justice and uniform disciplinary processes.

Termination and Disciplinary Action

Old Law:

• No standardized procedure; often arbitrary dismissals.

New Law and Amendments:

• Rules for suspension, termination, and dismissal are codified.
• Ensures notice periods, retrenchment procedures, and grievance redressal mechanisms.
• Introduces appeal procedures against unjust termination.

Model Standing Orders and Certification

Old Law:

• Required certification by Certifying Officers but was restricted to specific sectors.

New Developments:

• Makes it mandatory to draft and certify Standing Orders for units with 300+ workers.
• Orders must be displayed in local language and English.
• Promotes standardization and awareness of service conditions.

2016 Amendments: Key Highlights

• Fixed-Term Employment: Legal recognition to fixed-term contracts with equal pay and benefits as permanent employees. Encourages flexibility for employers while protecting worker rights.
• Extension to IT & Service Sectors: Brought BPOs, software companies, startups, and other service sectors under the Standing Orders framework. Modernized labor laws to include the growing non-manufacturing workforce.
• Model Standing Orders for Services: Introduced tailored guidelines for service industries. Ensures that employment norms are relevant to the nature of the work and sector.

Conclusion
The new labor codes, especially the Code on Wages, 2019 and Industrial Relations Code, 2020, along with amendments to the Standing Orders Act, mark a significant shift towards a more transparent, inclusive, and organized labor law regime. These reforms aim to balance the rights of workers with the flexibility needs of employers, thereby fostering a more robust and fair industrial environment in India.