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Labour Law and it`s evolution in India

Labour Law:

Code that governs the specific contractual relationships growing out of the old-style employment status quo, labour law deals with the legal requirements and collective relationships that are more and more important in mass-production the social order, the legal relationships sandwiched between organized economic interests and the state, and the various rights and obligations related to some sorts of social services, also consist of social security and disability insurance as well. Liberation from forced labour, equality of treatment in employment and occupation, and unemployment reimbursements may, in a broad sense, be regarded as part of the same general issue.

Indian scholars have identified the rules for labour-management relations in the Hindu Laws of Manu (Manu-smriti; 100 CE) and similarly, other scholars have identified labour standards as far back as the Babylonian Code of Hammurabi (18th century BC) and the Laws of the Indies promulgated by Spain in the 17th century for its New World territories.

Though these can be viewed as merely having only limited influence on subsequent developments. Labour Code or Laws backgrounds can be traced back to its roots in the most varied parts of the world, from various revolutions such as the French Revolution, and the political forces that, set in motion creating the elements of the modern social conscience. Enlightenment, that took place in the world during the 19th century with the many activist coming forward such as Karl Marx, who developed the theory of exploitation in Das Capital.

He suggested a systematic correlation between labour-values and money prices and stated under capitalism the source of profits is the value added by workers and that value is not paid out in wages as the workers generate value during a short time of the working day to pay their wages for that day, yet they continue to work for numerous more hours and continue to create value.

The first breakthrough of contemporary labour law was the British Health and Morals of Apprentices Act of 1802, backed by Sir Robert Peel. Similar law for the protection was approved in Z�rich in 1815 and France in 1841. By 1848 the first legal framework of the working hours of adults was approved by the Lands Gemeinde (citizens� assembly) of the Swiss canton of Glarus. Sickness insurance and workers� compensation were established by Germany in 1883 and 1884, and obligatory arbitration in industrial disputes was announced in New Zealand in the 1890s.

The United States began to enact such regulations toward the end of the 19th century. In Japan, elementary regulations on work in mines were announced in 1890. Labour law in Latin America started in Argentina in the early years of the 20th century and acknowledged an influential impetus from the Mexican Revolution, which ended in 1917. In Africa, the noteworthy evolution of labour law begins in the 1940s.

Throughout the 20th century, the standards evolved by the International Labour Organisation, created in 1919 as an independent partner of the League of Nations, and since 1946 a dedicated agency linked with the United Nations developed into a principal external influencer upon the labour laws of many countries.

Conventions when approved becomes obligatory upon the member nations approving them; recommendations are designed as standards for legislation, collective agreements, administrative courses, which shield, in varying degrees of detail and at varying stages of development, virtually all of the more significant branches of labour law, that is continuously amplified and reviewed at the annual sessions of the International Labour Conference and achieve present importance, relative maturity, and international acceptance. LABOUR LAW IN INDIA

Generally, there has been a relative drought of serious focusing on the evolution of Indian labour laws in their economic, social, and political contexts. Mahatma Gandhi believed that workers had as much of a right to partake in the management of firms or companies as shareholders, stakeholders, or the owners. Labour laws in India, brands a distinction between individuals who work in organised and unorganised sectors.

Conventionally, the Indian government at the center and state level have sought to ensure a great degree of protection for workers, but in practice, it differs due to the form of government as labour laws are a subject in the concurrent list of the Indian Constitution. While from Pre-1920s to 1947 in India, under colonial rule by the British, labour rights, trade unions, and freedom of association were all controlled by the Labour law, the wide-ranging body of law functional to such matters as employment, remuneration, conditions of work, trade unions, and industrial relations.

Labour Code or laws in India since 1947 or post-independence period, Indian Constitution 1950 contains specific goals relating to labour, including the �right to work,� �just and humane conditions of work,� �living wage,� and a �decent standard of life,� in addition to the right to form �trade unions.� The 42nd Amendment of the Constitution of India in 1976 inserted the Article 43A, established a right by demanding the state to legislate to protect the involvement of workers in the management of the company.

The 45 national laws and another 200 state laws control the relationships between the worker and the company and most of the labour laws of this time was an extension of the factory-style directive of the pre-war, dealing with hours of work, rest intervals, female and child protection, health, and safety, and mandate all aspects of employer-employee interaction, such as companies must keep 6 attendance logs, 10 different accounts for overtime wages, report 5 types of annual returns and also covers standardise the height of urinals in workers' lavatories to how frequently a workspace must be lime-washed, scrutinization of the working space anytime and the imposition of fines by examiners for violation of any labour regulations.

The 2 nd National Commission on Labour (NCL) stressed the need to simplify and consolidate labour laws for the sake of transparency, and uniformity. Most of the Labour laws in India are archaic, dating to pre-independence � even though subsequent amendments were carried out from time to time but reform was needed in India concerning labour Laws and therefore, generating an urgent need for a revamp of the laws to acclimate them to present realities.

A high growth in the economy necessitates a resourceful workforce and many experts would argue that Indian labour laws need to be simple. Labour laws transpiring part and parcel of the concurrent list therefore laws can be created by both the central and the state government, resulting in an overlapping jurisdiction. At present, there are 44 laws and 160 laws at center and state level respectively on the subject. Multiple laws are governing a single area, for instance, 19 laws overriding each other on the conditions of work and industrial relations, 14 laws overriding each other on social security and labour welfare. A consequence of the unwieldy labour law structure is that the organized sector has continued to remain small and forming barely 16% of the total employment and the rest employed in the unorganized sectors.

India ranks 99th in labour market effectiveness among 148 countries. The manufacturing sector in India only accounts for 12.9% of GDP in India as per the 2013 report against 31.8% and 23.7% in China and Indonesia respectively. The constricted labour market regulations have dissuaded foreign companies from establishing and investing in large manufacturing plants in India. India�s progress in creating jobs in non-farm sectors has been slow with agriculture still employing 49% of the labour force, which has slowed urbanization.

With the changing time, it is becoming more and more difficult to attain economic stability and to catch up with the developed countries with rigid and clutches of ancient time laws that are somewhat has become redundant such as:
  1. Industrial Disputes Act:
    It necessitates companies employing more than 100 workers must get government authorisation to fire a worker or wind-up a plant or factory. Workers can interfere in company decisions and could get into litigation for years. The strictness is a key motive and the reason for the failure of manufacturing to take off in India.
  2. The Contract Labour Act:
    The Contract Labour (Regulation and Abolition) Act 1970, bans the practice of contract labour for core functions in a company to safeguard the interests of permanent employees. However, recently, companies have employed contract labour as it offers flexibility to companies. In the organized sector the segment of informal or contract employees has amplified from 37.9% in F2000 to 57.8% in F2010.'
    The contract workers are paid less than permanent employees. If the majority of the workforce is on contract, the entire purpose is overpowered.
  3. Trade Union Act:
    provide unions with a right to recognition, and some subsequent legislation made the refusal to bargain on the part of an employer an unfair labour practice,more or less making the duty to bargain legally obligatory. However, for instance, one large factory may have multiple unions sponsored by different political parties. The law necessitates at least 7 workers to create a trade union. In numerous countries, the prerequisite to form a trade union in a factory is considerably higher, thereby the scope of forming unions with different agendas is diminished.

The key challenge in labour laws restructurings is to facilitate employment growth along with shielding workers� rights including of small firms, deciding thresholds for erstwhile authorisation for retrenchment, solidification labour enforcement, allowing flexible systems of labour, and encouraging collective bargaining.

However, in 2019, following the recommendations of NCL, the Ministry of Labour and Employment proposed 4 Bills on wages, industrial relations, social security, and occupational safety to consolidate 29 central laws in Parliament. The objective is to simplify and modernise labour regulation and give some freedom from overlapping restrictions.

The 4 new Codes:

  1. Wages

    The minimum wage is an inalienable right of every worker in the country. Prospective wage rules will, inter alia, have the following implications on the salary structure of workers and companies:
    1. Respective governments will fix floor wage to establish a minimum wage for workers.
    2. The new code that allows capping allowances at 50% of total compensation is a game-changer as it will modify the ratio of salary components, basic pay should be above 50% of the total compensation offered to each worker. This will scale up Provident Fund contribution in proportion to variance in basic pay and enhancement in post-retirement fund due to higher Provident Fund contribution and gratuity. However, cut down on take-home salary could affect the economic dynamics of workers as they need to adjust their spending in proportion to their reduced earnings.
    3. The establishment of the Central Advisory Board and to regulate the functionality of the said board by starting to fix a national floor-level minimum wage to implement with effect from April 01, 2021, and revise them (as and when needed).
    4. The Central Labour Minister will lead the team of the Central Advisory Board. The board shall comprise 12 representatives of employers and employees; 5 representatives of state governments as nominated by the central government and independent members not exceeding 1/3rd of the board.
    5. Independent persons of the Board will comprise of a Labour Secretary, two members of parliament, four members which shall include a professional with expertise in labour matters, Industrial Tribunal presiding officer, and advisory board chairman of two states on a sequence basis.
    6. The dynamics are going to be changed following the implementation of the national floor-level minimum wage as State governments cannot fix minimum wage less than national floor minimum wage.
    7. The Central Advisory Board will also regulate the women employment prospects such as employment generation for women and establish eligibility parameters and working rules for women to work in different establishments. 8) The central advisory board will come up with an appropriate national minimum floor wage for benefit of the workers� segment.
  2. Industrial Relations

    1. This Code increases the hire-and-fire policy and winding-up of the company to 300 employees and allows the government to further increase this limit by notification.
    2. This Code creates provisions for the acknowledgment of trade unions where there are several registered trade unions and provides criteria to recognise unions that can formally negotiate with employers.
    3. This code introduces a new form of short-term labour or fixed-term employment.
    4. This Code creates provisions that allow web-based inspections, which may be accompanied by randomized inspections according to the different cases and also the third-party certification, for notified classes or categories of establishments and creates provisions for maintaining the common registers and returns.
    5. This Codes intensified the quantum of fines and imprisonment in several cases and allows for the compounding of offenses in certain cases.
    6. This Code removes the obligation for publication of award in the gazette and replaces industrial courts/tribunals with two-member labour tribunals comprising one judicial and one administrative member.
    7. This code allows the government to exempt any new establishment from its provisions in the public interest.
  3. Social Security

    1. The Code applies to establishments oversize of above 10 or 20 workers. 2) The Code facilitates the government to formulate schemes for the benefit of platform workers, unorganised workers, and gig workers.
    2. This code necessities to notify a separate social security fund for unorganised workers.
    3. The code allows compliance reporting on different aspects, such as provident fund and insurance may continue to be required to be made to different authorities.
  4. Occupational Safety, Health, And Working Conditions

    1. This code applies to establishments that oversize above 10 or 20 workers and declares the non-applicability in those establishments in which hazardous activities are being carried out.
    2. This code enhances the thresholds for factories from 10 to 20 with power and 20 to 40 without power.
    3. This code on occupational safety allows the government to exempt any new establishment from its provisions in the public interest. Importance of Judiciary: For �no work no pay� The Supreme Court of India, in Chief Regional Manager, United India Insurance Company Limited v. Siraj Uddin Khan and Airports Authority of India and Others v. Shambhu Nath Das, held setting aside of the termination order, does not automatically warrant the salary for the period and that no person can claim wages for the period that he/she continued to be absent from work without leave or justification.

      Similarly, in Shobha Ram Raturi v. Haryana Vidyut Prasaran Nigam Limited and Others held the employer cannot claim the benefit of �no work no pay� where an employer has restricted the employee from working:
      1. Pankaj Prakash v. United India Insurance Company Limited
      2. Dev Dutt v. Union of India and
      3. Sukhdev Singh v. Union of India
Held that all public servants are eligible to know their grades in an annual performance appraisal report (APAR). Each and every submission or entry in the record in the annual performance appraisal report (APAR) of a public servant must be communicated to him or her within a reasonable period.

The division bench of High Court of Bombay in:
  1. Dr. Mrs. Hema Vijay Menon v. the State of Maharashtra and
  2. Dr. Pooja Jignesh Doshi v. The State of Maharashtra and Another,
Maternity Benefit (Amendment) Act, 2017 and effective from 1 April 2017, dealt with matter arising before 1 April 2017, that even in case of the birth of a child by surrogacy, the parents who have lent the ova and sperm, would be entitled to maternity leave and paternity leave, respectively. As of date, paternity leave is not statutorily provided in India and is discretionary.

In the initial phases of the progress of Labour Laws governing a specific legal relationship, the scope of labour law is often limited to the most developed and important industries, to undertakings above a certain size, and wage earners. Gradually these limitations are eliminated and the scope of the law stretched to embrace handicrafts, rural industries, agriculture and farming, small undertakings, office workers, and, in some nations, public employees as well.

The official labour code in India is firmly based on Western values and concepts, as much of it derived from International Labour Organization standards. However, labour law system has evolved up to the present time, can be seen to have fulfilled its two fundamental purposes: the protection of labour and the maintenance of industrial peace to some extent but has taken a long time and implementation of it, still requires more effort from the government as well as the legal system of India.

Labour law has gained recognition as a distinctive and classifiable branch of the law within the legal community, nonetheless, the extent to which it is recognized as a separate branch of legal practice varies extensively and depends firstly on the extent to which there is a labour code or other distinctive body of labour law in each state concerned, secondly on to which extent there are separate labour courts or tribunals, and thirdly to which extend an influential group within the legal profession, a practice specifically in labour laws.

Key Issues in Labour Reforms:
While the NCL recommended that all 40 central labour laws should be subsumed but only 29 codes were incorporated by four Codes, therefore even though they amalgamate and reduce to bare bones existing laws to some extent, they fall short in some regards.

As illustrated:
the Codes on occupational safety and social security continue to retain distinct provisions of each of the laws that these Codes subsume and as such contains provisions on leaves for all employees, it continues to retain additional leave entitlements for sales promotion employees and earned medical leave for 1/18th of time on duty.

Recently in the Labour Law 2021, the government has approved an overtime payment to the employees working more than 15 minutes of scheduled shift. It is applicable from 1st April 2021.

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