Analysis of the Three Labour Bills

Analysis of the Three Labour Bills

Shivanjali Mane_JudicateMe


This Blog is written by Shivanjali Mane from K.L.E. Society Law College, ChikodiEdited by Uroosa Naireen.



On June 2020, the Ministry of Labor and Employment decided to consolidate 44 Central labor laws into four codes relating to wages, social security, industrial relations, and occupational safety and health based on the recommendations of the 2nd National Commission on Labor. [1] The Union Cabinet approved the amendment to the Labor Bills on 8th September 2020. It then moved to the Parliament in the monsoon session which started from September 14th, 2020. There are so many changes and benefits to these bills. Also, these bills replace so many existing Acts related to labor. The codes include code on wages that involves statutory protection for minimum wages and timely payment of wages; code on social security that involves provident fund, insurance, maternity benefits; code on industrial relations that combines laws on the industrial dispute, trade unions, and others; and code on occupational health and safety that involves industrial safety and welfare laws.  Parliament on 23rd September approved the three labor codes.


On September 23rd, 2020 Parliament approved three labor codes which seem to be a historical game-changer in labor sector. These bills were passed for very long. They were presented in 2019. Then it went to the committee on labor in Parliament. This committee suggested around 100 changes in existing laws.  Out of these, 74 are now implemented. There are almost 40 Central laws and more than 100 state legislations designed for the welfare of labor sector. In 1999 Atal Bihar Vajpayee’s government set up the second national labor commission, headed by Ravindra Varma, a former Congress leader. This commission recommended that labor laws must be combined into four codes. [2] After a very long time, the labor committee drafted the bills. While passing the bill in Parliament, the debate took place on these labor reform bills. Labor Minister Santosh Gangwar said, “The purpose of the labor reforms is to provide a transparent system to suit the changes business environment.” [3] Finally, the bill was sent for the consent of the president. The three of bills are as follows:

1. The Occupational Safety, Health and Working Conditions Code, 2020

This amendment regulates the occupational safety, health and working conditions of persons employed in an establishment.  It provides safe and secure working environment to workers especially women.

2. Industrial Relations Code, 2020

It amends law relating to trade unions’, conditions of employment in industrial establishments or undertaking, investigation and settlement of industrial disputes. It also provides for a time bound dispute resolution system in every institution.

3. The Code on Social Security, 2020

It amends law relating to social security with the goal to extend special security to all the employments and workers either in the organization sector or unorganized sector. It gives a framework to organized and unorganized sector of workers in relation of industry for social security.

The Occupational Safety, Health and Working Conditions Code, 2020

The Second National Commission on Labor, which submitted its report in June 2002 had recommended that the existing set of labor laws should be broadly amalgamated into the following groups namely-

• Industrial relations,

• Wages’

• Social security

• Safety

• Welfare and working conditions

In accordance with such recommendations of the commissions and the deliberations made in the tripartite meetings comprising of the government, employer, employee, industrial representatives, it has been decided to bring this act.

It includes 633 provisions of 13 major labor laws into one single code with 143 provisions. They summed up thirteen central labor enactments relating to safety, health and working conditions. Those thirteen acts are as follows:

  • The Factories Act,1948
  • The Plantations Labor Act,1951
  • The Mines Act,1952
  • The Working Journalists and other Newspaper Employees (conditions of service and miscellaneous provisions) Act,1955
  • The Working Journalists (fixation of rates of wages) Act,1958
  • The Motor Transport Workers Act, 1961
  • The Beedi and Cigar Workers (condition of employment) Act,1966
  • The Contract Labor (Regulation and abolition) Act, 1970
  • The Sales Promotion Employees (condition of service) Act, 1976
  • The Inter-State Workers and Cinema Theaters Workers (regulation of employment) Act,1986
  • The Dock Workers (safety, health and welfare) Act,1956
  • The Building and Other Construction Workers 9regulation of employment and conditions of service) Act,1996

Key Features:

Coverage This will apply to the industry where there are at least 10 workers. It will cover to all mines, docks and establishments carrying out any hazardous or life threaten activity. Health and working conditions the provision will apply to the entire employer in the mill. Employees include workers and all other persons earning wages for any work, including administrative and other supervisory work.

Registration and license Any establishment under this act need to register themselves under the period of 60 days. They need to register in the registering office appointed by the central or state government. The factory needs to carry a license to run them. The act also requires those persons who hiring workers such as beedi, cigar workers, and contract labor to obtain a license.

Exemptions In any case of public emergency, the appropriate government means either state or the central government exempt any workplace or the activity of a particular establishment. This will be done if any case there will be a disaster, emergency r the situation like a pandemic. The state government can exempt new factories from the code for the period for creating more economic activity and employment.

Duties of employers– There are the following duties of the employers:

1. Providing a workplace that is free from hazards

2. Informing relevant authorities in case any accident at the workplace leads to death or serious injury to any worker.

3. Providing free annual health examinations in notifies the establishment

4. In addition to this other duty prescribed for employers in factories mines, docks, industry, building, plantations, construction works, provision of a risk-free work environment, and instructing employees on safety protocol.

Safety committees The government may say to a particular factory to establish a safety committee for a certain class of workers. The committee will be formed by representatives of employers and workers and will function as a liaison between them. The only thing is the number of committee members in any case not are less than that of the number of employers in that particular establishment.

Inspectors The appropriate government can appoint inspector-cum-facilitators to conduct inspections and inquire into accidents. They have some power allotted by this code as follows:

1. Reducing the number of employees working in the sector of the establishment

2. Prohibiting work in a dangerous situations.

Advisory boards The appropriate government means either state or the central government will set up occupational safety and health advisory boards at the national and state level. This board wills advice the government standards, rules, regulations framed under the act.

Working conditions Central government can notify the working conditions. These include the hygiene, environment work, clean drinking water, safety, ventilation, lightening etc.

Welfare facilities The welfare facilities are before amending this act given under the factories act. The welfare facilities include the first aid kit, canteens, rest room etc. as notifies by central government. Any factory, docks, industry, building can specifies any additional facilities for their workers. This Act includes three schedules of list includes:

1. 29 diseases that the employer is required to notify the authorities of, in case a worker’s contract them

2. 73 safety matters that the government may regulate and

3. 40 industries involving hazardous process.

This list may be amended by the central government from time to time.

Leave Workers are no need to work for more than 6 days in week. They must receive one days leave for every 20 days of work per year.

Work hours No worker will be need or allow to work for more than eight hours per day. If they wish to work overtime, then they must be paid at twice the rate of daily wages. Consent must be takes to give some workers an overtime work. Women can work past 7 pm and before 6 pm subject to safety related majors taken as prescribed by the government.

Rights and duties of the employee The first duty of the employee is to take care of his worker, there heath conditions, health standards. Follow the norms prescribed by the appropriate government. They have certain rights to obtain the information on safety and health standards room the employer.

Offences and penalties The code specifies various types of offences. An offence that leads to the death of the worker will be punishable with imprisonment of up to two years and fine up to 5 lakh rupee or both. Again court may direct to give 50% of compensation to victims. For any offences under this act where the clear penalty was not specifying the employer will punishable with the fine between two and three lakh rupees. If they at any such situation violate the provision of the act he will fine up to 10,000 rupees.


Certain workers not covered under this act. It applies with the establishment of more than 10 workers but in case less than 10 workers not cover under this act.  It has been argued that application of labor laws based on the number of employee is desirable to reduce the compliance burden on industries and to promote their economic growth.[4] Civil courts are barred from hearing matters under this code. The term wages are not defined under this code. Several matters are as it left for notification by the government.

Industrial Relations Code, 2020

The statement objects and reasons of the Industrial Relation Code states that amalgamation of the three enactments would ‘facilitate the implementation and also remove the multiplicity of definitions and authorities without compromising on the basic concepts of welfare and benefits to workers, the industrial Relations Code consolidates the following central enactment and repeals them,

1) Trade Unions Act,1926

2) Industrial Employment (Standing Orders) Act, 1946

3) Industrial Disputes Act, 1947

Key features

Raised Threshold The act has given more conditions restricting the rights of workers to strike. Alongside, the threshold relating to layoff and retrenchment also increases. Earlier of the act sacking were next to impossible in industries employing 100 or more workers, now that threshold is 300. Thy also introduce more flexible way to hiring and firing the workers without the permission of the government.

Right to strike The act requires to parties to give 14 days’ prior notice before declaring strike or the lock-down. The notice is valid till the period of 60 days only. They prohibit strikes and lock-outs:

A. During and up to seven days after a conciliation proceedings and

B. During and up to 60 days after proceedings before the tribunal.

This will definitely be going to impact the ability of the workers. The notice of strike and lock-outs need to be share conciliation officers within the five days. During the period of conciliation, the strike is prohibited. If the conciliation proceedings are not satisfied to both the parties, then the strike and lockouts period may further extended.

Migrants Workers The act ads that any person who moves on his own to another state and obtains employment and interstate migrant workers, they also specify that if the workers earn maximum 18,000 per month considered as interstate migrants.

Work statutes The rules regulating working hours’ classification and the period of retrenchment have also been divided as:

a. Classification of workers

b. Manner of informing workers about work hours, holiday, paydays, and wages rates

c. Termination of employment

d. Grievances, mechanism for workers.

Privacy concern The act mandates the workers both organized and unorganized sector to provide his Aadhar number to receive the social security benefits or to even avail service.

Coverage- Prior to this enactment the coverage concept of fixed term employment limited to central sphere establishment and now can be applied to industries on a case to case basis.

Equality of treatment On each field like railways, mines, on fields etc., workers need to treat equally.

Provision relating to tribunals The act provides establishment of two person tribunals in place of the one-person tribunal, for the purpose of speedier disposal of cases.

Negotiating Unions The act provides for negotiating union is an industrial establishment for negotiating with the employer. If there is only one trade union, then that can be known as sole negotiating union of the workers. In case multiple trade unions, they need support of at least 75% of workers to recognize as negotiating union.

Resolution of Industrial Dispute The appropriate government either central or state government may appoint conciliation officer to settle the dispute. If the dispute not resolves in conciliation proceedings, then they can settle through the tribunal established under this act.


The uncertainty of the provisions relating to retrenchment lead to distress in the management of the company. The provision of the retrenchment is contrary to the interest of workers. Some unclear provisions lead to the problems to implement the act. Due to uncertainty, lack of proper authorizes to implement may chances to misuse this act. The concept of fixed term employment may chance to misuse by the party of the contract.

The Code on Social Security, 2020

The respective act introduces several new aspects for the welfare of workers in organized as well as unorganized sector. It aims to introduce some new aspects which are missing in existing acts. They like replace the labor legislation to the welfare legislation. Once the act was implemented it definitely causes and improves the social, economic standing to the sector of the workers. The code amalgamates, amend, replace following nine central legislations:

• The Employees Compensation Act, 1923

• The Unorganized Workers Social Security Act, 2008

• The Payment of Gratitude Act, 1972

• The Employees State Insurance Act, 1948

• The Cine Workers Welfare Fund Act, 1981

• The Employees Provident Fund Act, 1981

• The Employees Provident Fund and Miscellaneous Provision Act, 1952

• The Employment Exchange (compulsory notification of vacancies) Act, 1959

• The Maternity Benefit Act, 1961

• The Building and Other Construction Workers Act, 1996

Key features

Widened the scope of the definition of wages- The act has specifically given the definition of wages and divided into three parts as follows:

1) Inclusive definition- all remuneration expressed in monetary terms is wages and includes basic pay, dearness allowance and retaining allowance.

2) Specific exclusion- provided fund, pension and gratuity, house rent and conveyance allowance etc. are not included in the term wages as long as it does not exceed the 50% of the total remuneration being paid.

3) Benefits in kind- these will be includes to the extent of 15% total wages.

Coverage and registration The act specifies different applicability threshold for the scheme. Like the EPF I applied to only establishment who have 20 or more employees. All establishments under this act need to register themselves.

Social security scheme- The government may notify the various social security schemes for the benefits of the workers. The scheme may include the Employees provident fund, Employees’ pension scheme, Employees deposit linked insurance scheme etc. in addition the central government or the state government gives a special scheme for gig workers, platform workers, unorganized workers.

Contribution The EPF, EPS, EDLI, ECS will be given by the contribution from the employers and the employees. For the gig and platform workers the code specifies list of aggregators including the ride sharing services and food delivery services.

Social security organization The act gives various bodies for implement this social security schemes those are:

1. A central board of trustee, headed by Central Provident Fund Commissioner

2. An Employees State Insurance Corporation headed by Chairperson appointed by the central government to administer the ESI scheme.

3. National and State Social Security boards headed by central and state minister for labor and employment res.

4. State Level Building Workers Welfare boards which headed chairperson was nominated by the State Government to administer scheme building works.

Inspections and Appeals- The government may appoint the inspector cum facilitators to inspect the industry or the establishment covered by this act. Administrative authorizes may be implement the various appeals arises out of this all schemes. The act also gives the power of judicial bodies which hear appeal from the orders of the authorities.

Offences and penalties The social security code provides various penalties for the offences fall under this act. For e.g. failure to pay gratuity – punishment with the imprisonment of one year some offences under this code may fall in the category of compoundable offences.


The manner where the act allows basic notion of social welfare for workers may inconsistent with the object of labor laws. There are some drawback coming fourth is that Beedi Workers Welfare Cess Act is still payable thus the logic employed to exclude the above enactment is questionable. The implementation of the above legislation is possible in labor market facilities institutions; the same has not achieved the social security bearing. Some of the provisions of this code causing the duplicity and ambiguity in the view of implementations.


India is country where the industrial area based on the labors and not on the machines. Because of this reason may be the subject of labors fall into concurrent list of Indian constitution where the both state and central makes the laws. Before passing this acts there was so many central and state legislation to regulate the labor and industry sector. Three of the major amendment surely proves good piece of work in some future days. Taking into consideration now a day’s situation of Covid-19 pandemic and how each sector changing to his mode to active maximum benefits. The labor sector is not more exception to this. Hope this amendment gives more strength to our following economy and helps to stand in international market. The acts have more merits and good things than drawbacks. Still the date when this code will be going to enforce is not specified by the government but seeing all the aspects surely it will be going to help to achieve the welfare of the labors. And being a responsible citizen every one need to appreciate the step taken by the government by supporting these codes.






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