Industrial relations code bill 2019

Why in news?

The Union Cabinet chaired by the Prime Minister has given its approval for introduction of the Industrial Relations Code, 2019 in the Parliament.

Benefits?

• Setting up of two-member tribunal (in place of one member) introducing a concept that some of the important cases will be adjudicated jointly and the rest by a single member resulting speedier disposal of cases.
• To impart flexibility to the exit provisions (relating to retrenchment etc.), for which, the threshold for prior approval of appropriate Government has been kept unchanged at 100 employees, but added a provision for changing ‘such number of employees’ through notification.
• The re-skilling fund is to be utilised for crediting to workers in the manner to be prescribed.
• Definition of Fixed Term Employment and that it would not lead to any notice period and payment of compensation on retrenchment excluded.
• Vesting of powers with the government officers for adjudication of disputes involving penalty as fines thereby lessening the burden on the tribunal.

Background:

The draft code on Industrial Relations has been prepared after amalgamating, simplifying and rationalizing the relevant provisions of following three Central Labour Acts:

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

Significance:

• Codification of labour laws will remove the multiplicity of definitions and authorities, leading to ease of compliance without compromising wage security and social security to workers.
• Uniformity of coverage:-
  • The new Code on Wages will ensure minimum wages to all and timely payment to employees irrespective of the sector without any wage ceiling.
  • It is expected to treat contract labour on par with a regular employee to have a dignified life.
• It is expected to provide for an appellate authority between the claimed authority and the judicial forum which will lead to speedy, cheaper and efficient redressal of grievances and settlement of claims as that of earlier.
• Reduction of unemployment:-
  • For instance, “Seattle’s Minimum Wage Experience 2015-16”, a 2017 study by researchers at the University of California Berkeley, found that since the city raised its minimum wage in 2015, unemployment dropped from 4.3% to 3.3%
• The bill is expected to benefit over 50 crores employees across the country.
• The bill is expected to go for digital mode/cheques as the mode of payment of wages. This would promote digitization and extend wage and social security to the worker.
• It also provides for rationalisation of penalties for different types of violations
• Will ensure decent Minimum wage for all which will result into increase in disposable incomes in turn help in eradicating Poverty, hunger to achieve SDGs.
• The multiplicity of definitions will be removed through this change.
• The wage conditions of unskilled workers will improve.
• It will ensure humane working conditions through minimum working hours, overtime etc. and prevent exploitation of labour.
• Can lead to the formalisation of the economy.
• The Code prohibits gender discrimination on wage-related matters.
• Also, help in reduce regionalism by reducing wage disparity across different regions.

Read Also Anti Defection Law in India

Key Issues and Analysis:

1. The central government may set a national minimum wage. Further, it may set separate national minimum wages for different states or regions.  In this context, two questions arise: (i) the rationale for a national minimum wage, and (ii) whether the central government should set one or multiple national minimum wages. 
2. States have to ensure that minimum wages set by them are not lower than the national minimum wage. If existing minimum wages set by states are higher than the national minimum wage, they cannot reduce the minimum wages.  This may affect the ability of states to reduce their minimum wages if the national minimum wage is lowered.
3. The time period for revising minimum wages will be set at five years. Currently, state governments have flexibility in revising minimum wages, as long as it is not more than five years.  It is unclear why this flexibility has been removed, and five years has been set for revision. 
4. The Equal Remuneration Act, 1976, prohibits employers from discriminating in wage payments as well as recruitment of employees based on gender. While the Code prohibits gender discrimination on wage-related matters, it does not include provisions regarding discrimination during recruitment.

Conclusion

If some of the issues like what would the states which already provide higher minimum wage than the proposed national minimum wage do, Time period for revising minimum wage is fixed at 5 years so there is no flexibility. If these are resolved the code would change the face of Indian economy.