India’s New Labour Codes: A Complete Guide

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The Evolution of India's Trade Union Movement: A Detailed Overview

The history of trade unions in India is closely intertwined with the country's independence movement and its economic development. Scholars divide its evolution into several stages: the colonial period, post-First World War, post-independence (up to 1991), and the post-globalization period (1991 to date).

1. The Colonial Period (Pre-First World War)

The British came to India primarily for trade, later becoming rulers and viewing India as a source of raw materials. They established industries, particularly textile mills, in cities like Bombay (now Mumbai), Nagpur, and Madras (now Chennai), to process India's abundant cotton for manufacturing fine products in England. The initial labor agitations and organized resistance emerged in these organized industrial sectors, specifically in the textile mills of Bombay, Calcutta (where jute mills were prevalent), and Madras, starting around 1860.

The British policy during this period was characterized by exploitation of natural resources and workers, including extended working hours, poor working conditions, low wages, and a "hire and fire" policy. Organized protests were often suppressed.

Key developments in this period include:

• Early Agitations: Significant strikes, such as the one at Empress Mill in Nagpur in 1877 due to wage reductions, highlighted the growing discontent.

• First Factory Commission: Appointed in 1875 due to widespread resistance in mills across Bombay, Calcutta, and Madras. This commission led to the enactment of the Factories Act of 1881, which was the first legislation for worker welfare, addressing wages, working hours, and holidays.

• Bombay Mill Hands Association: Formed in 1884 by Narayen Meghji Lokhande. This is considered the first organized labor union in India, established without an office or official recognition, but formalized in 1890.

• Further Legislations and Commissions: A second factory commission was set up in 1885, leading to the Factories Act of 1891. The Royal Commission on Labour in 1892 also imposed limitations on working hours and proposed labor-friendly policies, though practically, working conditions did not significantly improve. Despite a memorandum signed by all workers in 1885 for basic minimum conditions, their bargaining power remained very low.

2. Post-First World War to Independence (1914-1947)

The First World War marked a significant turning point. Indian laborers realized that the war, which diverted resources, provided a crucial opportunity for bargaining, as employers became more dependent on them. This period saw an increase in their bargaining position.

• Formation of Key Unions:

◦ Madras Labour Union (1918): Formed under the leadership of B.P. Wadia. This union faced legal challenges, with civil and criminal responsibilities imposed on Wadia for strikes.

◦ All India Trade Union Congress (AITUC) (1920): Founded under the leadership of Lala Lajpat Rai and N.M. Joshi, it is the oldest union federation in India and completely changed the landscape of trade unionism.

• Buckingham Mill Case (1920): This landmark agitation occurred when workers went on strike, leading to conspiracy charges and civil cases for damages against union leaders, including B.P. Wadia. Employers argued that strikes were illegal "in restraint of trade" under the Indian Contract Act, and provisions of the Indian Penal Code on criminal conspiracy were used. The Madras High Court granted an injunction against the strike, finding a valid cause of action for employers. This case highlighted the lack of specific legislation recognizing trade union activities at the time.

• Trade Unions Act of 1926: Directly resulted from the Buckingham Mill case, this act legalized trade union activities by providing for their registration and defining laws related to their formation and operation. This made trade union activities legal in the post-First World War period.

• Strengthening of the Movement: The trade union movement became strongly connected with the independence struggle, with agitations across India. Further legislations like the Industrial Employment Act of 1946 and the Bombay Industrial Relations Act of 1946 further strengthened the movement, granting recognition to organized trade unions. Leaders like V.V. Giri and N.M. Joshi emerged in the mainstream of Indian trade unionism. However, internal divisions also occurred, such as the split of AITUC into the National Trade Union Federation and the All India Trade Union Congress.

3. Post-Independence (1947-1991)

After independence, several nationalized trade unions were formed:

• Indian National Trade Union Congress (INTUC) (1947): Formed under the leadership of Sardar Vallabhbhai Patel.

• Hind Mazdoor Sabha (1948): Formed in 1948.

• Bhartiya Mazdoor Sangh (1955): Founded in 1955.

This period also saw significant challenges:

• Emergency Period (1975-1977): During the nationwide emergency declared by Prime Minister Indira Gandhi, fundamental rights, including the right to form associations and strike, were suspended. This led to restrictions on trade union activities.

• Resurgence Post-Emergency: Immediately after the emergency, there was a resurgence of trade unionism and strong opposition to bills that attempted to ban strikes and lockouts. This allowed trade unions to achieve significant bargaining power in the 1970s and 1980s.

4. Post-Globalization Period (1991 to Date)

The year 1991 marked a major shift in India's economic policy, as the economy opened up due to conditionalities imposed by an IMF loan. This New Economic Policy forced the government to amend many labor legislations to make them "investor friendly," often recommending massive workforce reductions and introducing concepts like Voluntary Retirement Schemes (VRS) and flexibilities in working time, wages, and other labor laws.

• Impact on Trade Unionism: While some scholars argue these policies benefited employees and contributed to consistent economic growth, others argue that trade unionism diminished significantly after liberalization.

• Challenges for Trade Unions:

◦ Multiplicity: A large number of trade unions decreased bargaining power.

◦ Low Membership: Led to reduced bargaining power.

◦ Weak Financial Positions: Unions often depend on insufficient employee subscriptions.

◦ Absence of Visionary Leaders: A lack of charismatic leadership, unlike figures such as Sardar Vallabhbhai Patel or B.P. Wadia, has been noted.

◦ Inter-Union Rivalry: Further diminished trade union strength.

◦ Problem of Recognition: The Second Labour Commissioner specifically recommended for recognition, which in its absence, diminished bargaining power.

◦ Diversification from Organized to Unorganized Sector: With over 50 crore workers in the unorganized sector compared to only 10 crore in the organized sector, the lack of trade unions in the unorganized sector weakened the overall movement.

◦ Lack of Public Support: Contributed to the diminishing of trade union movements.

• Government Focus: The government is now emphasizing economic indexes like "ease of doing business" and aiming to improve India's global ranking. New labor codes are being enacted by repealing archaic labor laws, with the goal of improving India's position to below 50 in World Bank rankings. The impact of these new codes on the labor movement and worker welfare remains to be seen.

Overall, India's labor movement has significantly contributed to collective bargaining, labor welfare legislation, and social welfare in the country.

The concept of "workman" or "worker" is fundamental in Indian labour law, particularly for raising an industrial dispute. Only a person categorized as a workman or worker can initiate such a dispute. The Industrial Disputes Act of 1947 (ID Act) defines "workman" under Section 2(s), while the new Industrial Relations Code, 2020 (IR Code) uses the term "worker" under Section 2(zr). Although the terminology differs, the definitions are largely similar or identical, with the IR Code aiming to include more categories of people.

Here's a detailed explanation of key concepts related to workman status and dispute resolution:

1. Defining "Workman" and "Worker"

• IR Code Definition of "Worker": A worker is defined as any person (other than an apprentice) employed in an industry to perform manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward. This includes:

◦ Working journalists.

◦ Sales promotion employees.

◦ Individuals whose employment is in writing, express, or implied.

◦ Persons who have been dismissed, discharged, retrenched, or whose work is otherwise terminated as a result of a dispute.

• Key Inclusions and Exclusions:

◦ Supervisory Capacity: Unlike the old ID Act where supervisory personnel were often excluded, the IR Code includes those in a supervisory capacity, subject to a salary cap of less than 18,000 rupees per month.

◦ Exclusions: The definition generally excludes members of the Army, Navy, Air Force, Police forces, Prison services, and those in managerial or administrative services.

• The "Nature of Work" Test: The determination of workman status primarily depends on the nature of the work performed, rather than the person's designation.

◦ For example, a person with a managerial designation might still be considered if their primary function is supervisory within the salary cap.

◦ Courts have consistently held that if the nature of work is managerial, the individual will not fall under the Act's purview.

• Judicial Pronouncements:

◦ The 2015 Delta Jute and Industries Limited case and the Burma Shell cases illustrate that purely managerial or certain specialized supervisory roles (e.g., Transport engineer, District engineer, Foreman chemical, Sales engineering representative) were historically not considered workmen under the ID Act.

◦ The Gobind versus Presiding Officer, Labour Court (2012) judgment clarified that the number of working hours is not a parameter for qualifying as a workman.

◦ A master-servant relationship between the employee and employer, where the employer can control the employee, is essential. An independent contractor cannot be termed a workman.

◦ In the Muir Mills Unit of NTC limited versus Swayam Prakash Srivastava (2007) case, a legal assistant whose job involved creativity and specific knowledge, rather than manual work, was held not to be a workman. The court noted that the source of employment, recruitment method, terms, wages, or mode of payment are irrelevant; the test is employment for hire or reward for a specific type of work.

◦ A 'mistry' doing manual or skilled work for a salary can be considered an ordinary workman, distinct from an independent contractor.

2. Contract of Service vs. Contract for Service

This distinction is crucial for determining workman status and the applicability of labour laws.

• Contract of Service (Contract of Employment):

◦ This refers to a person who is in employment.

◦ It is an agreement where one person (employer) agrees to employ another (employee), and the employee agrees to be employed and do the work.

◦ The agreement can be in writing (e.g., appointment letter), verbal, express, or implied.

◦ A master-servant relationship exists, where the employer has control over the employee, and the employee is bound by the company's discipline, standing orders, and employer's instructions.

◦ Implication: Only individuals under a contract of service are considered employees/workmen and are entitled to invoke the jurisdiction of industrial courts/tribunals and benefit from labour laws and social security measures.

• Contract for Service (Work for Hire / Agency Agreements):

◦ This refers to a person who provides services to clients.

◦ The individual is typically an independent contractor or part of an agency, offering third-party services to the employer.

◦ There is no employer-employee relationship, and the independent contractor is generally not considered an employee or workman of the employer.

◦ Implication: Individuals under a contract for service are generally not entitled to the benefits of an employee under labour law and cannot raise an industrial dispute under the IR Code; they would typically seek remedy through Civil Courts.

• Key Distinguishing Factors (Tests):

◦ Supervisory Control: Is there supervisory control from the employer over the worker?

◦ Degree of Control: What degree of control does the employer exercise over the work and worker?

◦ Ownership of Assets: Who owns the assets used for the work?

◦ Control over Employee/Work: Who controls the day-to-day activities and details of the work?

◦ Business Operations: Is the business run for the employer or by the employer?

◦ Frequency and Core Activity: Is the service required for day-to-day, regular, core activities of the employer, or is it occasional/peripheral?

• Judicial Pronouncements:

◦ The Sushilaben Indravadan Gandhi (2020) case, where a surgeon appointed to a hospital was found to be an independent professional under a contract for service, not a regular employee. Consequently, he would not be able to claim benefits under the IR Code or ID Act.

◦ The principle of "contra proferentum" states that in cases of ambiguity or doubt, the terminology of the contract is likely to be interpreted against the company.

◦ In Chintaman Rao versus the State of MP, a contractor was defined as a person undertaking specific jobs for others in pursuit of an independent business, without submitting to their control regarding the details of the work.

• Government Service: Even if appointed on contractual terms, rights and obligations in government service are determined by statutory provisions, not solely by the consent of parties, making it a distinct category. Article 311 of the Indian Constitution, related to dismissal/removal, applies to contract of service, not contract for service.

3. Industrial Disputes and Resolution Mechanisms

The IR Code streamlines dispute resolution, aiming to reduce multiplicity of jurisdictions found in the old ID Act. It establishes a multi-tier system:

• Preventive Forums (Bipartite):

◦ Grievance Redressal Committee (GRC): Required in all industrial establishments with 20 or more non-managerial workers. It has equal representation from workers and employees, with proportional representation for women. It serves as an initial forum for dispute resolution through dialogue. If the GRC fails to reach a conclusion within 30 days, parties can escalate to conciliation.

◦ Works Committee: Mandated for establishments with more than 100 workers. Its primary duty is to promote amity and good relations, discuss matters of common interest, and maintain a healthy working environment.

• Alternate Dispute Resolution (ADR) Mechanisms:

◦ Conciliation: Conciliation officers, appointed by the government for specified areas/industries, act as third-party mediators. They have a mandatory statutory obligation to conduct conciliation proceedings for any apprehended industrial dispute. They must investigate and attempt to settle disputes amicably within 30 days. A report, whether of settlement or failure, must be sent to the appropriate government.

◦ Voluntary Arbitration: If disputes are not resolved by committees, parties can voluntarily refer them to arbitration via a written agreement. Arbitrators are appointed by mutual consent, and an umpire may be appointed if arbitrators are divided. Arbitration is expedient, easy, and usually final on questions of fact. Unlike the ID Act, the IR Code allows parties to directly refer disputes, eliminating the need for government reference. No strike or lockout is permitted once a matter is referred to arbitration.

• Adjudication (Judicial Intervention):

◦ Tribunals: If conciliation fails and the government is satisfied, the dispute can be referred to a State or National Tribunal. The IR Code abolished separate Labour Courts, consolidating them into these tribunals. Tribunals now consist of two members: a judicial member and an administrative member. They can decide on various matters like interpretation of standing orders, discharge, dismissal, reinstatement, legality of strikes/lockouts, retrenchment, and closure.

◦ National Industrial Tribunals: Constituted by the central government for disputes of national importance or those affecting industrial establishments in more than one state. These tribunals also have judicial and administrative members, but with higher qualifications (judicial member must be a High Court judge, administrative member not below the rank of Secretary to the Government of India).

◦ Powers and Reliefs: Tribunals and National Tribunals possess the same powers as a civil court under the Civil Procedure Code, 1908 (e.g., enforcing attendance, examining witnesses on oath, compelling document production). Their proceedings are considered judicial proceedings. They can set aside discharge/dismissal/termination orders, direct reinstatement, or suggest lesser punishments.

◦ Government's Power over Awards (Section 55(4)): A controversial provision in the IR Code allows the government to reject or modify the awards given by tribunals. This is viewed as a derogation of judicial finality and separation of powers, potentially subject to future judicial challenges.

◦ Binding Nature: Settlements reached through conciliation and awards from arbitration or tribunals are binding and enforceable on the parties.

4. Key Definitions and Concepts in Industrial Relations

• Industry: Defined as any systematic activity by cooperation between employer and worker (direct or through agency/contractor) for production, supply, or distribution of goods or services to satisfy human wants (excluding spiritual/religious activities). It includes activities for gain or profit but generally excludes charitable organizations, social/philanthropic services, sovereign government activities (defense, atomic energy, space), and domestic services.

◦ Landmark case Bangalore Water-Supply and Sewerage Board versus Rajappa significantly broadened the definition, overruling earlier cases like Safdarjung Hospital and Delhi University, to include hospitals and universities (though teaching staff may not be considered workmen). However, a Solicitor's Firm is not considered an industry.

• Layoff: Refers to the employer's temporary inability, refusal, or failure to continue employment due to reasons like shortage of resources (coal, power, raw materials), stock accumulation, machinery breakdown, or natural calamity. Layoff compensation is a statutory right of workmen, interpreted liberally in their favour.

• Lockout: The employer's counterpart to a strike, often used as a weapon against striking employees. It is a temporary closing of a place of employment, suspension of work, or refusal by an employer to continue employing any number of persons. It is not a discharge or dismissal but a temporary measure.

◦ Reasons for Lockout: Can stem from internal disturbances, financial crises, external influences (e.g., political interference), unjustified worker demands, or vandalism.

◦ Prohibitions: Under the IR Code, no employer can declare a lockout without giving 60 days' notice. Lockouts are also prohibited during conciliation/arbitration/tribunal proceedings and for specified periods after their conclusion.

◦ Legality: A lockout is illegal if it contravenes these notice or pendency provisions. However, a lockout initiated in response to an illegal strike by employees is not considered illegal.

◦ Penalties: Commencing or continuing an illegal lockout can lead to fines (1,000-10,000 INR) and/or imprisonment. Instigating or financing an illegal lockout carries higher penalties (10,000-50,000 INR fine and/or imprisonment).

• Retrenchment: The termination of a worker's employment by the employer for any reason, except as a punishment for disciplinary action, voluntary retirement, superannuation, completion of contract tenure, or continued ill-health. For example, a contractual worker whose term ends is not considered retrenched and is not eligible for retrenchment benefits.

• Strike: A cessation of work by a body of persons employed in an industry, acting in combination, or a concerted refusal to work. This includes concerted casual leave taken by 50% or more employees.

◦ Not a Fundamental Right: The Supreme Court has consistently held that the right to strike is neither a fundamental right nor a legal or statutory right in India. While there's a fundamental right to form associations/unions, it doesn't extend to striking.

◦ Prohibitions: Similar to lockouts, no person can go on strike without giving 60 days' notice. Strikes are prohibited during conciliation, arbitration, or tribunal proceedings, and for specified periods after their conclusion, as well as during the operation of any settlement or award.

◦ Public Utility Services: Employees in public utility services are absolutely prohibited from striking. Lightning strikes (without proper notice) are considered misconduct and can lead to summary dismissal.

◦ Legality and Wages: A strike is generally considered justified if it relates to a current labour dispute or an unfair labour practice by the employer. If a strike is deemed legal and justified, workmen are entitled to wages for the strike period; if illegal, they are not. Use of force, violence, or sabotage during a strike renders it illegal and disentitles workmen to wages.

◦ Penalties: Participating in an illegal strike can lead to fines (1,000-10,000 INR) and/or imprisonment. Instigating or financing an illegal strike carries higher penalties (10,000-50,000 INR fine and/or imprisonment).

◦ The IR Code aims to curtail illegal strikes by implementing stricter procedures and severe penalties, making it more challenging for trade unions to engage in sudden strikes.

• Wages: The IR Code's definition includes basic pay, dearness allowance, and retaining allowances. It explicitly excludes bonus, house rent allowance, value of house accommodation, electricity/water supply, medical attendance, provident fund/pension contributions, conveyance allowances, special allowances for expenses, awards, overtime, commission, gratuity, and retrenchment compensation/benefits.

The IR Code represents an effort to simplify and expedite dispute resolution processes, although some provisions, like the government's power to modify tribunal awards, may face legal challenges. The increased notice periods and stricter penalties for strikes and lockouts aim to promote industrial peace and ease of doing business.

1. Closure of Undertakings

Definition and Nature: Closure refers to the permanent closing down of a place of employment or part thereof. This distinguishes it from temporary measures like lay-off, which involves a temporary cessation of work due to specific exigencies. The definition of closure is consistent under Section 2(cc) of the Industrial Disputes Act 1947 (ID Act) and Section 2(h) of the Industrial Relations Code (IR Code).

Historical Context and Legal Evolution: Historically, the Industrial Disputes Act 1947 initially had no provision for the closure of undertakings. This was later inserted following the Supreme Court judgment in Hariprasad Shiv Shankar Shukla versus A.D. Diwelkar in 1957. Subsequent amendments, notably in 1976 and 1982, incorporated specific provisions to address closure, especially for establishments employing a larger number of workers.

Procedure for Closure: The procedure for closing down an undertaking is elaborately mentioned under the ID Act. Key aspects include:

• Notice Period: An employer intending to close an undertaking must provide a notice period, which can range from 60 to 90 days, stating the reasons for closure to the government. Earlier, Section 25FFA of the ID Act, inserted in 1972, mandated a 60-day notice for establishments employing 50 or more workers. Currently, the employer must apply for prior permission 90 days before closure.

• Government Permission: The notice must be given to the appropriate government, which can refuse permission if the reasons are inadequate, insufficient, or prejudicial to public interest.

• Application Process: An online application for permission is to be submitted to the government, accompanied by a copy given simultaneously to representative or labour unions.

• Inquiry and Hearing: The government will conduct an inquiry, providing an opportunity for all concerned parties (employer, workers, unions) to be heard. They assess the genuineness and adequacy of the stated reasons and consider public interest and other relevant factors.

• Decision and Deemed Permission: The government's order, granting or refusing permission, must be in writing and communicated to both employer and workers. If the government does not communicate a decision within 60 days of receiving the application, permission is deemed to be granted. This order is final and binding for one year, though review petitions or references to tribunals for adjudication are possible.

• Exemptions: The notice period and permission requirements are generally not applicable to establishments employing less than 50 workers or to project-based works like the construction of bridges, buildings, roads, canals, or dams, which can close down once the work is complete.

Constitutional Validity and Judicial Scrutiny: The constitutional validity of Section 25(o) has been questioned in various cases.

• Orissa Textiles and Steel Company Limited versus State of Orissa (2002): This is a significant judgment.

• Excel Wear versus Union of India (1978): The Supreme Court set parameters for closure. The state government refused closure in this case due to public interest, which the industry criticized as violating fundamental rights under Article 19(1)(g) (freedom to carry on business). However, the court upheld the provision as constitutionally valid, stating that reasonable restrictions could be imposed. Later, the Supreme Court clarified that the government must provide reasons for refusing permission to close, as simply citing "public interest" was insufficient and a violation of the constitution. The 1982 amendment was made to overcome the decision in Excel Wear.

Compensation for Workers:

• Early Lack of Provision: Initially, there was no specific provision for paying compensation in cases of closure.

• Supreme Court Intervention: In Barsi Light Railway Company versus Joglekar (1957), the Supreme Court held that severance pay equivalent to retrenchment compensation must be paid to discharged employees of a closed undertaking, even though the definition of retrenchment was not applicable to closure.

• Mandatory Compensation: The 1982 amendment incorporated provisions for compensation to workmen in case of closing down, making it mandatory irrespective of the reason, even unavoidable circumstances beyond the employer's control.

• Compensation Amount: The compensation is equivalent to 15 days' average pay for every completed year of continuous service (with more than 6 months counting as a full year). Previously, it was mentioned as 3 months' average pay in some contexts.

• Unavoidable Circumstances: Certain situations, such as financial difficulties, losses, accumulation of undisposed stocks, expiry of lease, or exhaustion of minerals in mining operations, are not deemed "unavoidable circumstances" beyond the employer's control, thus not exempting compensation.

• Alternative Employment: Workers are not entitled to notice or compensation if the employer offers them alternative employment within 20 kilometers, at the same remuneration and service terms, and without interrupting their service.

• Project Works: For project works (canals, dams, bridges) lasting beyond 2 years, workers are entitled to notice and compensation for every completed year of continuous service.

• Workers' Sole Right: In cases of permitted closure, the only right left to the workers is to obtain compensation, as held in Managing Director Karnataka Forest Development Corporation Limited versus Workmen of Karnataka Pulpawood Limited (2007).

Illegal Closure and Penalties:

• Illegal Closure: If closure occurs without governmental permission (where required) or if permission is refused, the closure is deemed illegal.

• Benefits for Workers: In cases of illegal closure, workers are entitled to all benefits, including wages, as if the undertaking had not been closed.

• Penalties: Non-compliance with prior permission procedures (Section 25O and Section 80 of the IR Code) invites heavy penalties:

◦ First offense: Fine up to ₹1 lakh to ₹10 lakh.

◦ Repeat offense: Fine not less than ₹5 lakh and up to ₹20 lakh, plus imprisonment up to 6 months, or both.

◦ Non-payment of Compensation (Section 75): Fine up to ₹50,000 to ₹2 lakh for the first offense; ₹1 lakh to ₹5 lakh or imprisonment for 6 months, or both, for repeat offenses.

Conclusion on Closure: The IR Code aims to be more comprehensive and clear on closure, filling gaps in the ID Act, with specific provisions for notice, compensation, and substantial penalties for non-compliance.

2. Disciplinary Action and Procedures in Employment

Purpose and Necessity: Disciplinary action is crucial for maintaining discipline, harmony, and a productive working environment in any establishment. It addresses instances where employees violate company rules, procedures, or exhibit inappropriate behavior. The purpose is to protect the company's and staff's interests and improve future behavior and performance.

Legal Framework and Misconduct: While the repealed Standing Orders Act of 1946 mentioned categories of misconduct, it did not detail procedures. Industrial standing orders, which contain comprehensive rules and regulations regarding disciplinary action and misconduct, are essential. The IR Code now includes instances of misconduct, aligning with earlier codes.

Examples of Misconduct (as per Industrial Employment Standing Orders Central Rules 1946 and IR Code):

• Willful insubordination or disobedience to lawful orders.

• Theft, fraud, dishonesty related to the employer's business or property.

• Willful damage to establishment property.

• Taking or giving bribes or illegal gratification.

• Habitual absence without leave (more than 10 days) or habitual late attendance.

• Habitual breach of any law applicable to the establishment.

• Riotous or disorderly behavior during working hours, towards supervisors or fellow workmen.

• Habitual negligence or neglect of work.

• Striking or inciting others to strike illegally.

• Moral turpitude, corruption, serious negligence on duty causing loss to employer, desertion of duty, refusal to carry out written orders, habitual indiscipline, smoking in prohibited areas, sleeping on duty, accepting gifts from subordinates.

Suspension and Subsistence Allowance:

• Reasons for Suspension: An employee can be suspended during an inquiry period if their presence might influence the inquiry, or if a prima facie case of misconduct leading to conviction or dismissal is established. Government servants arrested and held in custody for over 24 hours are automatically deemed suspended.

• Subsistence Allowance: During suspension, employees are entitled to subsistence allowance.

◦ First 90 days: 50% of basic wages, dearness allowance, and other compensatory allowances (i.e., 50% of salary).

◦ Beyond 90 days: 75% of wages.

◦ Workman's delay: If the inquiry prolongation beyond 90 days is attributable to the workman, the allowance can be reduced to 25%.

◦ Inquiry by outside agency: First 180 days at 50%, exceeding 180 days at 75%. If delay is due to workman, it's reduced to 25%.

• Inquiry Period: The IR Code stipulates that an inquiry or investigation into misconduct allegations must be completed within 90 days from the date of suspension.

Disciplinary Inquiry Procedure: The inquiry process, largely shaped by court jurisprudence due to the lack of specific codification in earlier acts and the IR Code, must adhere to the principles of natural justice.

• Preliminary Investigation: Before a formal charge, authorities can conduct a preliminary or fact-finding inquiry, where natural justice principles are not strictly followed.

• Charge Sheet: A formal inquiry begins with a charge sheet, which is a notice of clear, specific charges (not mere allegations) and a statement of allegations, requiring the employee to explain their conduct (a show cause notice). It must be in a language the employee understands.

• Opportunity to Respond: The employee must be given a reasonable opportunity to prepare their defense and submit a reply (admitting, denying, or pleading for mercy, or seeking more time).

• Hearing and Evidence: An inquiry officer must conduct the hearing, examine witnesses in the presence of the workman, and allow for cross-examination of management witnesses (a crucial right). The employee has the right to adduce their own evidence.

• Inquiry Officer's Role: The inquiry officer must be an independent officer, properly authorized, and should explain the process to the workman in an understandable language. They investigate, record findings with reasons, and draw conclusions based on evidence, but should refrain from recommending punishment.

• Committee Composition: A disciplinary committee should include workers' representatives (trade union members), employer representatives, and an independent inquiry officer.

• Report and Representation: After the inquiry officer submits their report, the workman should be given an opportunity to represent against the findings to the disciplinary authority before any penalty is imposed.

• Penalty Imposition: If found guilty, a penalty (dismissal, fine, increment stoppage, reduction in rank, compulsory retirement) is imposed, considering the gravity of misconduct, previous record, and aggravating circumstances. The punishment must be proportionate to the misconduct. The workman should also have a chance to respond to the proposed punishment.

• Appeal: An appeal can be filed with the appropriate appellate authority within 21 days of receiving the order. The appellate authority must hear parties and pass an order within 15 days. Further appeals can go to tribunals.

• Not Guilty Verdict: If found not guilty, the employee is deemed on duty for the suspension period and entitled to full wages and allowances.

Lacunae in IR Code: The IR Code, like earlier legislation, lacks specific provisions granting the inquiry officer powers of a civil court (e.g., compelling witness attendance or document production).

3. Industrial Standing Orders

Definition and Purpose: Industrial Standing Orders (SOs) are documents prepared by companies that outline the conditions and terms of employment, including working conditions, timings, and other rules. They provide statutory sanctity to these conditions, promoting clarity, reducing industrial friction, fostering harmony, and minimizing worker exploitation. The Supreme Court in Bagalkot Cement Company Limited versus R.K. Pathan (1963) clarified that the Act's objective is to make employment conditions precise and definite, transforming them from contractual to statutory.

Historical Background: The demand for statutory service conditions arose from poor working conditions in pre-independence India, notably by the Bombay Cotton Textile workers in the 1920s. The Bombay Industrial Disputes Act of 1938 first provided for statutory standing orders, leading to the Industrial Employment Standing Orders Act of 1946.

Scope and Applicability:

• Coverage: SOs apply to industrial establishments covered by the Payment of Wages Act, Factories Act, Railways Act, and plantations, workshops, and civil construction. They cover skilled, unskilled, manual, and clerical workers.

• Exclusions: They do not apply to managerial, administrative, or supervisory personnel whose wages exceed ₹1600 (an old limit mentioned). They also exclude personnel in the Army, Navy, Air Force, Police forces, Prison services, and those covered by Civil Service Rules or Indian Railway Establishment rules, as these have their own special legislations.

• Threshold: Presently, SOs are mandatory for establishments employing 300 or more workmen (increased from 100) who have worked for the preceding 12 months.

Matters to be Included in Standing Orders: Model standing orders typically include provisions on:

• Classification of workmen (permanent, probationers, badlis, temporary, casual, apprentices).

• Working hours, shift working, attendance, and penalties for late coming.

• Holidays, pay days, wage rates, and leave application procedures.

• Requirements for entering premises, gates, and liability to search.

• Temporary stoppage of work, and rights/liabilities arising therefrom.

• Termination of employment, notice periods.

• Suspension, dismissal, and definitions of misconduct.

• Means of redressal for grievances and grievance committees.

Certification Process:

• Drafting: Employers must prepare draft standing orders within 6 months of commencing operations, based on model standing orders, consulting trade unions (negotiating trade unions or councils).

• Submission: The draft is sent to a certifying officer (electronically or otherwise).

• Review and Certification: The certifying officer issues a notice to unions/worker representatives, seeks comments, and provides a hearing opportunity. They can ask for amendments, corrections, or accept the draft. If the officer does not reply within 60 days, the standing orders are deemed certified.

• Powers of Certifying Officer: The certifying officer has all the powers of a Civil Court for receiving and adducing evidence, enforcing witness attendance, and compelling document production.

• Filing and Access: Certified SOs are filed in a register (or uploaded electronically) and assigned a unique number. Copies must be furnished upon request.

• Modification: Certified standing orders cannot be unilaterally modified by the employer; approval from the certifying officer is required.

Binding Nature and Dispute Resolution: Certified standing orders are statutory documents, final, and binding on both employer and employees. In case of conflict between standing orders and an appointment order or contract, the standing order will prevail. Disputes regarding interpretation can be referred to appropriate tribunals.

Penalties for Non-Compliance:

• Failure to Submit/Modify Drafts: Fine of ₹50,000 to ₹2 lakh. For continuous offense, an additional fine of ₹2,000 per day.

• Contravention of Standing Orders: Fine of ₹1 lakh to ₹2 lakh.

Subsistence Allowance: The IR Code now explicitly provides for subsistence allowance during suspension periods (50% for first 90 days, 75% thereafter), which was not present in earlier legislations.

4. Lay-off

Definition and Nature: Lay-off is a temporary closure of an establishment or a temporary cessation of work, distinct from permanent termination (retrenchment) or lockout. The employer-employee relationship does not cease to exist during a lay-off. It occurs when an employer fails, refuses, or is unable to provide employment to workers on the muster rolls.

Reasons for Lay-off: The ID Act (Section 2 kkk) and IR Code (Section 2 t) specify reasons for lay-off:

• Shortage of coal, power, or raw materials.

• Accumulation of stocks.

• Breakdown of machinery.

• Natural calamity.

• Any other connected reason.

• Financial losses or increased expenditures can also be reasons, as seen in recent cases. Lay-off is not attributable to the employee's fault and cannot be imposed against a strike.

Applicability: Lay-off provisions are generally not applicable to establishments with less than 50 workers on average per working day, or to industries of a seasonal character or those working intermittently. The government determines what constitutes seasonal or intermittent work. These provisions apply to industrial establishments under the Factories Act, Mines Act, and Plantation Labour Act.

Continuous Service: Eligibility for lay-off compensation often depends on continuous service. Uninterrupted service includes periods of sickness, authorized leave, accident, legal strikes/lockouts, or maternity leave for female workers. For compensation purposes, a worker is deemed to be in continuous service if they have worked for not less than 190 days in mines or 240 days in other cases within a year.

Rights of Workers and Compensation:

• Compensation Entitlement: Laid-off workers, including badli workers (temporary replacements), are eligible for compensation equal to 50% of their total basic wages and dearness allowances.

• Duration of Compensation: If a worker is laid-off for more than 45 days, no compensation is payable for the period exceeding the first 45 days, if there's an agreement to that effect.

• Set-off: Any wages paid during lay-off can be set off against retrenchment compensation if the worker is later retrenched.

• Human Public Policy: The right to lay-off compensation is based on "human public policy," and such statutes should be liberally interpreted, as held in The Associate Cement Companies Limited versus their workmen (1960).

Circumstances When No Compensation is Paid: Compensation is not paid if:

• The laid-off employee refuses alternative employment within the same or another establishment within 8 kilometers, provided the job does not require special skill and offers the same wages.

• The worker does not present themselves for work at the establishment at the appointed time during normal working hours at least once a day during the lay-off period.

• The lay-off is due to a strike or slowdown of production by workers in another part of the establishment.

Prior Permission for Lay-off:

• Requirement: For industrial establishments employing 300 or more workers (or a higher number notified by the government), prior permission from the appropriate government is required for lay-off. The application must be submitted electronically, with a copy simultaneously served to the workers.

• Exemptions: This permission is not required for lay-off due to power shortage or natural calamity. However, the employer must apply for permission within 30 days of such lay-off. For mines, lay-off due to fire, flood, or explosion also allows for application within 30 days.

• Government Inquiry: The government will inquire into the genuineness and adequacy of reasons, considering workers' and public interest, before granting or refusing permission.

• Deemed Permission: If the government does not communicate a decision within 60 days, permission is deemed to be granted.

• Illegal Lay-off: If lay-off occurs without required permission or if permission is refused, it is considered illegal. Workers are entitled to all benefits from the date of illegal lay-off.

• Constitutional Validity: The Supreme Court in Papnasam Labour Union versus Madhura Coats Ltd upheld the constitutionality of Section 25-M (requiring prior permission for lay-off), stating it prevents hardships to employees and promotes industrial peace.

Employer's Duty: Employers are statutorily required to maintain muster rolls (attendance registers) to track employee eligibility for compensation.

Conclusion on Lay-off: Lay-off is a temporary measure reflecting the employer's inability to provide work for specified reasons. It carries a compensation obligation for the employer, often requiring prior government permission, especially for larger establishments.

5. Retrenchment

Definition and Nature: Retrenchment is the permanent termination of employment by an employer for any reason whatsoever, other than as a punishment for disciplinary action. Unlike lay-off, it leads to the cessation of the employer-employee relationship. The definition under Section 2(oo) of the ID Act is largely incorporated into Section 2(zh) of the IR Code.

Exclusions from Retrenchment: The definition specifically excludes:

• Voluntary retirement.

• Retirement upon superannuation.

• Termination resulting from the non-renewal or completion of a fixed-term employment contract. The IR Code promotes fixed-term employment, and such terminations do not make employees eligible for retrenchment benefits.

• Termination on grounds of continued ill-health.

• Termination as a consequence of disciplinary action for misconduct.

Jurisprudence and Widening Scope: Initially, the definition of retrenchment was narrowly interpreted as merely "discharge of excess labour." However, Supreme Court judgments broadened its scope to encompass almost any termination of service by the employer, aimed at protecting workers.

• State Bank of India versus N. Sundara Money: The court rejected a narrow interpretation, stating that "termination embraces not merely the act of termination by the employer, but the fact of termination howsoever produced".

• Punjab Land Development and Reclamation Corporation Limited versus Presiding Officer Labour Court (1990): The court advocated for a wider, literal, natural, and contextual interpretation of "for any reason whatsoever".

• Four Essential Ingredients: Based on these cases, retrenchment has four essential ingredients: (1) termination of a workman's service, (2) by the employer, (3) for any reason whatsoever, and (4) not as a disciplinary punishment.

Conditions Precedent for Retrenchment:

• Notice Period: A worker in continuous service for not less than one year cannot be retrenched without a one-month notice period (or three-month notice for establishments employing over 300 workers) stating the reasons. Wages in lieu of notice can also be paid.

• Retrenchment Compensation: Compensation equivalent to 15 days' average pay for every completed year of continuous service (with more than six months counting as a full year) must be paid.

• Notice to Government: A notice of retrenchment must be served on the appropriate government.

• "Last Come First Go" Rule: Unless there's a specific agreement or recorded reason (e.g., skill, suitability), the industry's thumb rule is that the last person employed in a category should be retrenched first.

Special Provisions for Larger Establishments (300+ workers):

• Prior Permission: Industrial establishments employing 300 or more workers must obtain prior permission from the appropriate government before retrenching workmen. This does not apply to seasonal or intermittent work.

• Application Process: The employer must apply for permission, stating clear reasons, and provide a copy to both the government and the concerned workers simultaneously.

• Government Inquiry: The government conducts an inquiry, providing a reasonable opportunity for all parties to be heard, and passes an order granting or refusing permission.

• Deemed Permission: If the government fails to make a decision within 60 days, permission is deemed to be granted.

• Illegal Retrenchment: Retrenchment without permission is illegal. Workers are entitled to all benefits under law, and tribunals may order full wages or even re-employment.

Re-employment of Retrenched Workers:

• Preference: The IR Code includes specific provisions for re-employment, giving preference to retrenched workers if the employer proposes to hire any person within one year of retrenchment.

• No Right to Previous Status: However, a re-employed worker cannot claim the same salary, level of service, or working conditions as their previous employment; re-employment is a preference, not a right to the exact former status.

Workers Re-Skilling Fund: The IR Code establishes a Workers Re-Skilling Fund to help retrenched workers. It mandates an additional contribution from the employer of 15 days' wages (last drawn) to be credited to the worker's account within 45 days of retrenchment. The fund may also receive contributions from "other sources," though these are not specified. This is intended to support workers during re-skilling and re-employment efforts.

Judicial Interpretations:

• Closure vs. Retrenchment: HariPrasad Shivshankar Shukla versus A. D. Divikar established that closure of an industry is fundamentally different from retrenchment, though compensation in closure cases was aligned with retrenchment compensation.

• Contractual Workers: In Managing Director, Karnataka Handloom Development Corporation versus Sri Mahadeva Laxman Raval (2005), the Supreme Court ruled that termination upon the completion of a fixed-term contract (e.g., for 200 days) is not retrenchment, and workers are not eligible for retrenchment benefits.

• Public Interest: The court may consider "public interest" as a criterion before allowing retrenchment of workmen, as seen in Workmen of Meenakshi Mills Limited versus Meenakshi Mills Limited (1994).

• Abandonment of Service: If a worker voluntarily abandons their job or refuses alternative positions, they are not considered in continuous service and thus not eligible for retrenchment compensation.

Conclusion on Retrenchment: Retrenchment signifies the permanent termination of employment, with clear preconditions for notice and compensation. The IR Code has simplified and clarified these provisions, though it has also facilitated fixed-term employment which excludes retrenchment benefits, raising concerns about the relief provided to contractual workers.

The Code on Wages, 2019: An Overview

The Code on Wages, 2019, is a significant central legislation designed to amend and consolidate laws relating to wages and bonus. It repeals four major previous Acts:

• The Payment of Wages Act, 1936.

• The Minimum Wages Act, 1948.

• The Payment of Bonus Act, 1965.

• The Equal Remuneration Act, 1976.

This new code aims to clarify provisions regarding minimum wages, ensure timely payment, regulate deductions, and consolidate bonus laws. It is applicable to all establishments, including railways, mines, oil fields, banking companies, and establishments under the central government's authority. A key objective is the Central Government's plan to fix a national floor wage to eliminate regional and state-wise disparities in minimum wages across India.

Equal Remuneration

Concept and Constitutional Basis: Equal remuneration, irrespective of gender discrimination, is considered a basic human right. This concept has been present in international covenants and law since the Universal Declaration of Human Rights (Article 23). India is also a signatory to international conventions like the International Covenant on Economic, Social and Cultural Rights 1966, which obligates the government to uphold these principles.

The Indian Constitution incorporates provisions to ensure equality based on gender, specifically through:

• Preamble: Talks about justice and equality for all.

• Article 14: Guarantees equality before the law and equal protection of the laws, prohibiting irrational classification based on gender.

• Article 15: Guarantees the right against discrimination, with Article 15(3) recognizing protective discrimination for women to bring them on par with men.

• Article 16: Ensures equality of opportunity in matters of public employment, irrespective of sex.

• Article 39(a): States that citizens, men and women equally, have the right to an adequate means of livelihood.

• Article 39(d): A Directive Principle of State Policy, which clearly states that the state shall direct its policy towards securing equal pay for equal work for both men and women.

• Article 42: Requires the state to make provisions for humane conditions of work and maternity relief, leading to legislations for maternity leave.

The doctrine of equal pay for equal work is not a fundamental right but is a constitutional right, considered a corollary of Article 14 and an integral part of the right to equality.

Legislation and Interpretation: The Equal Remuneration Act, 1976, was enacted to implement the Directive Principles of State Policy under Article 39(d). This legislation aimed to provide equal remuneration for men and women workers and prevent sex-based discrimination in employment. The Code on Wages, 2019, has now incorporated these provisions.

The Supreme Court of India has consistently upheld this principle through various judgments:

• State of Punjab vs. Surjit Singh (2009): Held that "equal pay must be for equal work of equal value".

• People's Union for Democratic Rights vs. Union of India: Stated that the principle of equality embodied in Article 14 finds expression in the Equal Remuneration Act, 1976.

• Randhir Singh vs. Union of India: Affirmed that the doctrine of equal pay for equal work is contained in the Preamble and the right to equality, forming an integral part of it.

• Bhagwan Das vs. State of Haryana: Declared that remuneration for the same work cannot be varied on the pretext of irrational classification based on gender.

• Mackinnon Mackenzie and Company vs. Audrey D Costa (1987): Ruled that agreements between management and workers' unions for reduced remuneration for the same work are invalid under the Act, and the Act's applicability does not depend on the management's financial ability.

"Same Work or Work of Similar Nature": The concept of "same work or work of similar nature" is crucial for applying equal remuneration. Section 2(h) of the repealed Act (and similar provisions in the Code on Wages 2019) defines it as work where the skill, effort, experience, and responsibility required are the same when performed under similar working conditions by employees. Differences in these factors for employees of any gender are not of practical importance if they do not affect the terms and conditions of employment. The courts emphasize an objective evaluation of all surrounding circumstances, conditions of work, and limitations of the nature of the work to conclude if two types of work are similar.

• Beyond Gender Classification: The principle extends beyond gender, applying to contractual employees who should receive the same remuneration as permanent workers doing the same work.

• Designation vs. Work: The Supreme Court has held that the designation given to an employee is of no consequence if they are doing work of similar nature, equal salary must be given.

• Daily Wage vs. Permanent Workers: Daily wage workers doing identical work to permanent employees are entitled to the same salary and allowances.

• Example: In Janta Shikshan Prasarak Mandal vs. Industrial Court (2010), a female sweeper appointed on compassionate grounds was directed to be paid the same salary as male sweepers doing similar work, despite earning a consolidated lower payment.

Enforcement and Claims: The government is mandated to appoint authorities to interpret "same or similar nature of work" and to hear and determine claims arising under the Act. These authorities possess the powers of a civil court for purposes like taking evidence and enforcing attendance of witnesses. Claims must be settled within three months of submission, and appeals must be disposed of within three months.

Minimum Wages

Constitutional Mandate and History: The concept of minimum wages in India dates back to British times, with initial efforts in the 1940s leading to the Ghosh and Nandan committee report. Post-independence, Article 43 of the Constitution became crucial, stating that the state shall endeavor to secure for all workers a "living wage" to ensure a decent standard of life and enjoyment of leisure and social and cultural opportunities. While Article 43 speaks of a living wage, existing schemes like the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) often pay wages significantly lower than state-fixed minimum wages, leading to conflict and litigation. The Supreme Court has stated that paying lower wages than minimum wages is equivalent to forced labor.

Disparities and Objectives: India faces significant disparities in minimum wages across states and regions; for example, Delhi had significantly higher minimum wages than Pondicherry in 2019. India's minimum wages are also among the lowest globally compared to many other countries.

The objectives of fixing minimum wages are clear:

• To fix minimum wages in scheduled employments for both central and state sectors.

• To empower the government to fix and revise wages every five years (though states often revise sooner).

• To prevent exploitation of workers throughout the country.

• To establish tripartite advisory committees and boards with representation from employees, workers, and governments.

Constitutional Validity: The Minimum Wages Act, 1948, faced constitutional challenges:

• In V. Unichonoy vs. State of Kerala (1962), the Supreme Court upheld the Act, stating that fixing minimum wages is for the preservation of public order and prevents arbitrariness and friction between employers and labor.

• In Shamrao vs. State of Bombay, challenges citing Article 19(1)(g) (freedom of trade) were rejected, as the court deemed minimum wage restrictions "reasonable" and in the "general interest of the public".

Fixation and Components: Minimum wages are fixed for different categories of work (time work – hourly, daily, monthly; and piece work) and for specific geographical areas. Higher rates can be prescribed for arduous nature of work, such as hazardous occupations or extreme temperatures.

The calculation of minimum wages typically includes:

• Basic rate of wages.

• Dearness allowance (DA), adjusted at intervals based on the cost of living index.

• Cash value of concessions of essential commodities.

• The Code on Wages, 2019 also explicitly includes retaining allowance in the definition of wages.

The Central Government is empowered to fix a floor wage, a national minimum wage, below which no state government can fix its minimum wages. This is intended to eliminate disparities.

Working Hours and Overtime: The appropriate governments fix normal working hours (often 8 hours per day). If an employee works more than the fixed hours, it is considered overtime, and the Act mandates double the ordinary wages for overtime work. However, if an agreement between employer and employee specifies a different rate for overtime, that agreement will apply instead of the Minimum Wages Act's provision.

Penalties for Contravention: Violations of minimum wage provisions carry significant penalties:

• Paying less than the minimum wage: Fine up to ₹50,000.

• Repeat offense within 5 years: Imprisonment up to 3 months or fine up to ₹100,000, or both.

• Other contraventions of the code/rules: Fine of ₹20,000.

• Repeat similar offenses within 5 years: Imprisonment up to 1 month and fine up to ₹40,000, or both.

• For companies, the person in ultimate control of affairs is responsible and deemed guilty.

Advisory Boards: Both Central and State Advisory Boards are constituted to advise on fixation and revision of minimum wages, and to promote women's employment opportunities. These are tripartite bodies, including representatives from employers, employees, independent persons, and mandating at least one-third women members for women's empowerment.

Payment of Wages, Deductions, and Fines

The Code on Wages, 2019, also consolidates laws related to the payment of wages, deductions, and fines.

Mode and Period of Payment: Wages can be paid by coin, currency notes, cheque, or electronic modes (NEFT, RTGS, IMPS, UPI). The wage period cannot exceed one month, meaning employees must be paid at least monthly. Special rules apply for payment if an employee is removed, dismissed, retrenched, or resigns.

Authorized Deductions from Wages: Only deductions authorized under the Code are permissible. These include:

• Fines: Imposed for specific omissions or acts after an inquiry and an opportunity for the employee to be heard. Fines cannot exceed 3% of wages in a wage period and cannot be imposed on employees under 15 years of age.

• Absence from Duty: Deductions can be made if an employee is absent from duty, particularly in cases of concerted actions like strikes. The Supreme Court has affirmed that employees are not entitled to wages for periods they have not worked, even if they are physically present but refuse to work. An inquiry must be conducted if an employee disputes their absence or non-performance.

• Damage or Loss: For damage or loss of goods entrusted to the employee, or loss of money due to their neglect or default, but only to the extent of the actual damage/loss, not as a penalty. An opportunity to show cause must be given.

• House Accommodation & Amenities: Deductions for house accommodation, water, electricity, and other amenities provided by the employer.

• Recovery of Advances: Advances given for travel or other purposes, subject to prescribed conditions and potential interest if not adjusted in time.

• Recovery of Loans: Loans granted for house building or other approved purposes, including interest.

• Statutory Levies: Income tax (TDS), professional tax, contributions to provident fund (PF), Employees' State Insurance (ESI), and other social security schemes.

• Cooperative Societies & Trade Unions: Deductions for payments to cooperative societies or subscriptions to authorized trade unions.

• Excess Payments: Recovery of excess payments mistakenly made to employees.

• Losses in Specific Industries: For railway administrations, losses due to counterfeited currency, failure to invoice, or incorrect rebates/refunds by employees.

Limitations on Deductions: The total amount of deductions from an employee's wages cannot exceed 50% of their total wages in any wage period. Other deductions not explicitly authorized require the written authorization of the employee (e.g., contributions to the Prime Minister’s National Relief Fund).

Employee Bonuses

Evolution and Statutory Right: The concept of bonus originated as a gratitude payment, with early instances of "war bonuses" in textile mills. Post-independence, the practice evolved, and the Payment of Bonus Act, 1965, made it a statutory right for employees. This Act placed a statutory liability on employers in covered establishments to pay a minimum and maximum bonus. The Code on Wages, 2019, consolidates these laws.

Constitutional Validity and Application: The constitutional validity of the Payment of Bonus Act, 1965, was upheld by the Supreme Court in Jalan Trading Company Limited vs. Mill Mazdoor Sabha, which confirmed that the requirement to pay a minimum bonus was constitutional and compliant with Articles 39 and 43.

The Act applies to establishments employing 20 or more employees during any accounting year. While certain organizations (like LIC, universities, government bodies, hospitals not for profit, RBI, and other financial institutions) are specifically exempted by law, their employees often claim bonuses through collective bargaining. The government can also grant exemptions based on financial position, relevant circumstances, and public interest.

Eligibility and Calculation:

• Eligibility: Every employee who has worked for a minimum of 30 days in an accounting year is eligible.

• Salary Ceiling: Currently, employees getting a salary of ₹21,000 or below per month are eligible for bonus.

• Seasonal Workers: Seasonal workers are also eligible if they meet the minimum 30 working days requirement.

• Minimum Bonus: The minimum annual bonus is 8.33% of the wages or ₹100, whichever is higher.

• Maximum Bonus: The maximum bonus is 20% of the wages. Demand for more than 20% is not allowed by the Act, although the Act is silent on its legality.

• Proportional Reduction: If an employee has not worked for the entire accounting year, the bonus can be proportionately reduced.

• Customary Bonuses: Bonuses paid on occasions like festivals (e.g., Pooja bonus) can be accounted for against the total bonus due under the Act.

• Allocable Surplus: Excess profits (allocable surplus) can be carried forward to the next year to pay increased bonuses. Conversely, the set-on and set-off provisions allow companies to pay the minimum bonus even if they incur losses in a particular year, especially if the loss is negligible and not attributable to employee wrongdoing.

Disqualifications and Deductions: Employees are disqualified from receiving bonus if dismissed from service due to misconduct, fraud, riotous/violent behavior, theft, misappropriation, sabotage, or conviction for sexual harassment. In cases of financial loss to the employer due to an employee's misconduct, the employer can deduct the amount of loss from the bonus payable to that employee.

Payment Timeline: Bonus must be credited to the employee's account by the employer within 8 months from the close of the accounting year, but not beyond 2 years. If a dispute is pending before an authority, the bonus must be paid within one month of the award becoming enforceable. The burden of proof for payment is on the employer.

Contracting Out: Any agreement between an employer and employee to relinquish the right to bonus is null and void. This means an employee cannot sign away their right to a statutory bonus.

Key Definitions under The Code on Wages, 2019

The Code provides clear definitions for various terms:

• Wages: All remuneration (salary, allowances) expressible in money and payable upon fulfillment of employment terms. It includes basic pay, dearness allowance, and retaining allowance.

◦ Exclusions: Bonus, HRA, electricity/water charges, medical attendance, employer contributions to pension/PF schemes, conveyance allowance, travel concessions, special expenses, overtime allowances, commission, gratuity, retrenchment compensation, and retirement benefits.

• Minimum Wage: Wages fixed under Section 6 of the Code.

• Same Work or Work of a Similar Nature: Work requiring the same skill, effort, experience, and responsibility, performed under similar working conditions, irrespective of gender.

• Employer: A person who employs directly or indirectly (through a contractor). This includes principal employers, occupiers/managers of factories, and those with ultimate control over establishments.

• Employee: A person employed on wages, skilled, semi-skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical, or clerical. Armed forces are excluded.

• Worker: Any person (other than an apprentice) employed in any industry, including working journalists and sales promotion employees. It excludes armed forces, police, and those in managerial/administrative capacity, or supervisors drawing more than ₹15,000 per month.

• Contractor: A person undertaking to produce a given result for an establishment or supplying manpower.

• Contract Labour: A worker employed in connection with the work of an establishment through a contractor, with or without the principal employer's knowledge. It can include inter-state migrant workers and part-time employees.

Inspector-cum-Facilitator

The Code introduces a new role for labor inspectors as Inspector-cum-Facilitators. These individuals are public servants who serve as a contact point for implementing the Code. Their responsibilities include:

• Advising employees and workers on compliance with the Code.

• Inspecting establishments and examining individuals found on premises.

• Requiring information, producing evidence/records, and taking copies of registers or notices.

• Reporting defects or abuses not covered by the Act to the government.

• They have powers to inspect and investigate if they believe an offense has been committed.

The new Code on Wages, 2019, aims to streamline and strengthen the legal framework for wages in India, ensuring greater clarity, uniformity, and protection for workers.

The International Labour Organization (ILO) has developed several conventions and recommendations to establish international labor standards, particularly focusing on wages, non-discrimination, and worker protection. These conventions aim to ensure fair treatment and a decent standard of living for workers globally.

I. Minimum Wage Fixing Machinery Conventions

The ILO introduced early conventions to address minimum wage fixation, primarily to protect workers, especially those in vulnerable sectors like homeworking trades where wages were exceptionally low.

• Minimum Wage Fixing Machinery Convention, 1928 (Convention No. 26):

◦ Purpose: This was one of the first conventions to establish machinery for fixing minimum wages, especially for workers in certain trades or parts of trades, particularly homeworking trades, and for manufacturing and commerce.

◦ Adoption and Ratification: Adopted in 1928, it came into force in 1930 and boasts one of the highest ratification rates among ILO conventions, with 105 countries having ratified it. India has ratified this convention, while countries like the United Kingdom and Northern Ireland have denounced it. India's ratification is attributed to its existing minimum wage fixation system.

◦ Key Provisions:

▪ Machinery: Member countries are obligated to create and maintain machinery for fixing minimum wage rates.

▪ Tripartite Consultation: Before implementation, competent authorities must consult with representatives of employers and workers. Both parties must also be associated with the operation of this machinery, with an equal number of persons involved and equal terms, in accordance with national laws.

▪ Binding Rates and Non-Abatement: Once notified by the government after consultation, the fixed minimum wage rates are binding on employers and workers. Abatement by individual or collective agreements is strictly prohibited, as international provisions are to be implemented through national legislation.

▪ Supervision and Penalties: Members must take measures for supervision and impose sanctions for non-compliance, such as non-payment or underpayment of minimum wages. Provisions for penalties and recovery mechanisms (judicial or other legalized proceedings) must be implemented.

▪ Reporting: Every member state must communicate a general statement to the ILO, including a list of trades where minimum wage fixing has been applied, methods used, results of application, approximate number of workers covered, and specific wage rates and terms.

• Minimum Wage Fixing Machinery (Agriculture) Convention, 1951 (Convention No. 99):

◦ Purpose: This convention specifically addresses minimum wage fixing in the agriculture sector and related occupations.

◦ Adoption and Ratification: It has a much lower ratification rate, with only 54 countries. India has not ratified this convention, despite being an agrarian country with minimum wages fixed for agricultural workers through its Minimum Wages Act. The UK and Northern Ireland have also denounced it.

◦ Key Provisions:

▪ Specific Machinery: Members are to make machinery for fixing minimum wages specifically for agricultural undertakings.

▪ Exclusions: Governments can exclude certain categories, such as members of a farmer's family involved in farming activities.

▪ Allowances in Kind: National laws or regulations may authorize partial payment of minimum wages in the form of allowances in kind, provided they are customary or desirable, appropriate for personal use and benefit of the worker and their family, and their value is fair and reasonable. This complexity might be a reason for India's non-ratification.

▪ Consultation and Participation: Similar to Convention No. 26, decisions require consultation with employer and worker organizations, and these groups should participate in the wage-fixing machinery.

▪ Non-Abatement with Exemptions: Fixed rates are binding, and non-abatement provisions exist. However, authorities can permit exemptions for specific classes of people (e.g., physically or mentally handicapped workers) to prevent curtailment of employment opportunities.

▪ Supervision and Reporting: Provisions for supervision, inspection, sanctions for non-compliance, administrative and judicial dispute settlement, and reporting to the ILO are similar to Convention No. 26.

• Minimum Wage Fixing Convention, 1970 (Convention No. 131):

◦ Purpose: This convention provides elaborate provisions for minimum wages, emphasizing their role in social security, equal remuneration, and economic distribution.

◦ ILO's Policy: The ILO recognizes that a uniform minimum wage globally is impractical, as the "reasonable standard of life" varies by country. The 1944 Declaration of Philadelphia, integral to the ILO constitution, links poverty to prosperity, stressing the need for a "minimum living wage" to eliminate poverty. This convention reinforces the principle that "labour is not a commodity," meaning its price cannot be determined purely by supply and demand.

◦ Definition and Objectives: A minimum wage is defined as the minimum remuneration an employer must pay, which cannot be reduced by collective or individual agreements. Its objectives are multi-fold: to protect workers against unduly low payments, ensure an equitable share of progress, provide a minimum living wage, overcome poverty, and eliminate societal and gender inequality. It particularly helps those without collective bargaining power.

◦ Implementation Methods: Many countries adopt a "hybrid mode" combining statutory minimum wages with collective bargaining, where the statutory minimum acts as a floor. It aims to benefit vulnerable sections like women, youth, and migrant workers and should be implemented in the informal economy.

◦ Adoption and Ratification: Adopted in 1970 and in force since 1972, it has only 54 ratifications. India has not ratified this convention, arguing it has sufficient domestic constitutional and statutory provisions for minimum wages and does not wish to take on the reporting obligations of an international convention.

◦ Key Provisions:

▪ Minimal Exclusions: Exclusions from minimum wage obligations should be kept to a minimum.

▪ Machinery and Adjustment: There must be machinery to fix and adjust minimum wages over time, involving full consultation with tripartite bodies, social partners, and independent experts.

▪ Factors for Determination: Minimum wage levels consider workers' and their families' needs, general wage levels, cost of living, social security benefits, relative living standards, and economic factors (development, productivity, employment levels).

▪ Policy Guidelines: The convention provides policy guidelines rather than prescribing specific national minimum wage amounts.

▪ Coverage and Reporting: It emphasizes broad coverage, either through a single minimum wage or a series for particular groups (like India's schedule employments). Members must report to the ILO on coverage, reasons for any exclusions, and the legal/practical position for those groups.

▪ Non-Abatement and Penalties: Minimum wages have the force of law and cannot be abated by mutual agreement. Penalties and sanctions apply for non-compliance.

▪ Inspection: Adequate inspection mechanisms are required for effective application.

II. The Protection of Wages Convention, 1949 (Convention No. 95)

• Purpose: This convention focuses on how wages are protected, fixed, and paid, including permissible deductions and payment methods.

• Approaches to Minimum Wages: Countries adopt various approaches: universal, sectoral, specific class/occupation, or geographical region. Sectoral wages are common, especially in developing countries, due to economic capabilities and regional differences.

• Discrimination Concerns: The convention aims to eliminate discrimination in wages, such as systematically lower wages in female-dominated sectors, for migrant workers, or for workers with disabilities. Differentiated minimum wages for young workers, while facilitating their entry into the labor market, can also be problematic.

• Adoption and Ratification: Adopted in 1949 and in force since 1952. The UK denounced it. India has not ratified this convention, even though it has a Payment of Wages Act and implements many of its provisions domestically.

• Key Provisions:

◦ Definition of Wages: Remuneration or earnings, however designated or calculated, expressed in money, fixed by agreement or law, and payable under a contract of employment for work done or services rendered.

◦ Payment Methods: Wages must be paid in legal tender. Promissory notes, vouchers, coupons, or other non-legal tender forms are prohibited. Modern methods like bank cheques, postal cheques, money orders, NEFT, or RTGS are acceptable, ideally with worker consent.

◦ Prohibited Payments in Kind: Payment in liquor of high alcoholic content or noxious drugs is strictly prohibited. Allowances in kind are only permitted if customary, desirable, for the worker's personal use, and fair and reasonable.

◦ Direct Payment and Freedom to Dispose: Wages must be paid directly to the worker, and employers cannot restrict how workers spend their wages.

◦ Work Stores: Employer-operated stores or services for workers must not be for profit but for worker benefit, selling goods and services at fair and reasonable prices. Workers must not be coerced into using these facilities.

◦ Deductions: Deductions are permitted only under conditions prescribed by national laws/regulations, collective agreements, or arbitration awards, and workers must be informed. Deductions for obtaining or retaining employment are prohibited. Wages are protected against attachment or assignment to the extent necessary for the worker and their family's maintenance.

◦ Privileged Creditor Status: In case of employer bankruptcy or liquidation, workers' wages are considered privileged debts and have the first claim on assets, paid in full before ordinary creditors.

◦ Regularity and Final Settlement: Wages must be paid at regular intervals (e.g., weekly, monthly, but not more than two months). Final settlement upon termination of employment should occur within a reasonable period.

◦ Transparency: Workers must be informed of wage rates and any changes in employment terms or payment methods in an understandable manner.

◦ Penalties and Records: National legislation must impose adequate penalties for violations, and employers must keep appropriate wage payment records.

III. Equal Remuneration and Non-Discrimination Conventions

These conventions aim to eliminate discrimination in employment and ensure equal pay and treatment.

• Equal Remuneration Convention, 1951 (Convention No. 100):

◦ Purpose: To promote and ensure the application of the principle of equal remuneration for men and women workers for work of equal value.

◦ Adoption and Ratification: Adopted in 1951, it has one of the highest ratification rates (173 countries), including India. India's ratification is due to its constitutional mandate (Article 39d) and legislation like the Equal Remuneration Act of 1976.

◦ Definition of Remuneration: Includes basic/minimum wage or salary and any additional emoluments, whether in cash or kind, paid directly or indirectly by the employer.

◦ Key Provisions:

▪ Non-Discrimination: Remuneration rates should be without discrimination based on sex.

▪ Job Appraisal: Measures must be taken for objective appraisal of jobs based on the work performed to determine if the work is of equal value. Differential rates are permissible if they are based on objective criteria (e.g., qualifications, nature of work) and not sex.

▪ Cooperation: Governments must cooperate with employer and worker organizations for implementation.

▪ Implementation Mechanisms: National laws, regulations, legally recognized wage determination machinery (e.g., Wage Boards, Advisory Committees), and collective agreements are methods for giving effect to this principle.

• Discrimination (Employment and Occupation) Convention, 1958 (Convention No. 111):

◦ Purpose: To eliminate all forms of discrimination in employment and occupation.

◦ Adoption and Ratification: Adopted in 1958, this convention has been ratified by India.

◦ Definition of Discrimination: Any distinction, exclusion, or preference based on race, color, sex, religion, political opinion, national extraction, or social origin (or other specified grounds) that nullifies or impairs equality of opportunity or treatment in employment or occupation.

◦ Key Provisions:

▪ National Policy: Each ratifying state must declare and pursue a national policy of non-discrimination to promote equality of opportunity and treatment.

▪ Measures: This policy involves cooperation with employers' and workers' organizations, repealing inconsistent domestic provisions, enacting legislation, and promoting educational programs.

▪ Scope: The policy applies to access to vocational training, employment, particular occupations, and terms/conditions of employment.

▪ Exceptions: Certain measures are not deemed discrimination: those meeting specific work requirements (e.g., fire force), those justified for state security, or measures of protection or assistance.

▪ Reporting: Members must submit annual reports to the ILO on actions taken to implement the policy.

▪ India's Context: India's constitution (Articles 14, 15, 16, 39) already includes robust non-discrimination principles, including equality before law, prohibition of discrimination based on race, religion, caste, sex, place of birth, and equal pay for equal work.

• UN Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), 1979:

◦ Purpose: A comprehensive international treaty by the UN General Assembly to eliminate discrimination against women in all areas (political, economic, social, civil, cultural).

◦ Adoption and Ratification: Adopted in 1979, it has one of the highest ratification rates (189 parties), including India.

◦ Definition of Discrimination: Any distinction, exclusion, or restriction based on sex that impairs or nullifies the recognition, enjoyment, or exercise by women of human rights and fundamental freedoms, regardless of marital status.

◦ Key Provisions (Employment Focus):

▪ Right to Work and Equal Opportunities: Ensures equal rights to work, same employment opportunities, criteria in selection, free choice of profession, promotion, job security, benefits, conditions of service, and vocational training.

▪ Equal Remuneration: Guarantees the right to equal remuneration, including benefits, and equal treatment for work of equal value, as well as equality in job evaluation.

▪ Social Security and Paid Leave: Rights to social security (retirement, unemployment, sickness, etc.), paid leave (e.g., maternity leave), and protection of health and safety, including reproductive functions.

▪ Maternity Protection: Prohibits dismissal on grounds of pregnancy or maternity, ensures maternity leave with pay (the first convention to talk about this), comparable social benefits, and necessary supporting social services like childcare facilities (leading to mandatory creche facilities in domestic laws).

▪ Protection from Harmful Work: Special protection during pregnancy and for women from harmful, dangerous, unhealthy, or arduous work.

▪ Legal Equality: Ensures women's equality with men before the law, in civil matters, legal capacity, property administration, and court procedures. Any contracts restricting women's legal capacity are null and void.

▪ Impact in India: The Supreme Court of India, in Vishakha v. State of Rajasthan (1997), drew upon CEDAW to mandate legislation against sexual harassment at the workplace, leading to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act of 2013.

• International Covenant on Economic, Social and Cultural Rights (ICESCR), 1966:

◦ Purpose: Recognizes human rights derived from inherent human dignity, ensuring equal enjoyment of all economic, social, and cultural rights for men and women.

◦ Adoption and Ratification: Adopted in 1966, it is highly ratified (171 parties), including India.

◦ Key Provisions (Employment Focus):

▪ Right to Work: Recognizes the right to work, including the opportunity to gain a living from freely chosen or accepted work. States must take steps to safeguard this right through guidance, training, and development policies.

▪ Just and Favorable Conditions: Ensures the right to just and favorable working conditions, including fair wages and equal remuneration for work of equal value without distinction, guaranteeing that women's working conditions are not inferior to men's.

▪ Other Rights: Includes safe and healthy working conditions, equal opportunities for promotion, rest, leisure, reasonable working hours, and periodic paid holidays.

• European Social Charter, 1965:

◦ Purpose: A regional convention applicable to European countries, promoting economic and social progress, human rights, and social well-being, without discrimination based on race, color, sex, religion, political opinion, national extraction, or social origin.

◦ Key Provisions (Employment Focus):

▪ Right to Work: Recognizes the right to work, aiming for high and stable employment levels, protecting workers' right to earn a living in freely chosen occupations, and providing vocational guidance, training, and rehabilitation.

▪ Just Conditions: Mandates reasonable daily and weekly working hours (progressively reduced), paid public holidays, minimum two weeks annual paid holiday, additional paid holidays or reduced hours for dangerous occupations, and weekly rest periods.

▪ Safe and Healthy Conditions: Ensures the right to safe and healthy working conditions, with health regulations, supervision, and consultation with employer/worker organizations on safety measures.

▪ Fair Remuneration: Recognizes the right to fair remuneration that provides workers and their families a decent standard of living, increased rates for overtime, and equal pay for work of equal value for men and women.

▪ Notice and Deductions: Workers have a right to a reasonable period of notice for employment termination, and wage deductions are permitted only under prescribed national laws.

▪ Protection for Employed Women: Includes paid leave with adequate social security benefits for maternity (at least 12 weeks), prohibition of dismissal during maternity leave, protection against unauthorized deductions, provision of nursing breaks, and regulation of night work and unsuitable work (e.g., underground mining, arduous/dangerous tasks) for women.

IV. Protection of Workers' Claims (Employer's Insolvency) Convention, 1992 (Convention No. 173)

• Purpose: To protect workers' claims (wages, bonus, other emoluments) in cases where an employer becomes insolvent, ensuring they are not given the least priority.

• Adoption and Ratification: Adopted in 1992 and in force since 1995, it has a very low ratification rate (only 21 countries). India has not ratified this convention, likely due to concerns about the burden on employers and international obligations during insolvency.

• Definition of Insolvency: Refers to situations where, according to national law and practices, an employer's assets are insufficient to cover collective reimbursement to creditors, or even insufficient to justify opening insolvency proceedings.

• Key Provisions:

◦ Worker Claims as Privileged Claims: The convention mandates that workers' claims should be treated as privileged claims against the employer's assets, having priority over non-privileged creditors (such as banks). This means worker claims are settled before others.

◦ Guarantee Institutions: It requires the establishment of guarantee institutions to ensure payment of workers' claims. These institutions must have sufficient funds and a disbursal system.

◦ Scope: Applies to all employees and branches of economic activity, with consultation for any exceptions (e.g., public employees).

◦ Specific Claims Protected: Claims protected include:

▪ Wages for a prescribed period (at least 3 months prior to insolvency or termination).

▪ Holiday pay for work performed during the year of insolvency or the preceding year (at least 6 months for guarantee institutions).

▪ Amounts due for other paid absences (e.g., maternity benefits) for a prescribed period (at least 8 weeks for guarantee institutions).

▪ Severance pay (retrenchment pay) upon termination of employment.

◦ Limitations: National laws may limit the privileged protection to a prescribed amount, which must not be below a "socially acceptable level," and this amount should be adjusted to maintain its value.

◦ Priority Rank: Workers' claims must have a higher rank of privilege than most other privileged claims, including those of the state and social security systems.

◦ Abuse Prevention: Appropriate measures must be adopted, in consultation with employer and worker organizations, to prevent possible abuse of these provisions.

◦ Reporting: Members must report to the ILO annually on any exceptions made and the reasons for them.

◦ India's Context: India's Insolvency and Bankruptcy Code of 2016 consolidates insolvency laws, but India has not ratified this convention, possibly due to the financial implications of prioritizing worker claims and establishing guarantee institutions.

• Objective and Legislative Background

◦ The Code's primary objective is to amend and consolidate existing labor legislations relating to social security and extend these provisions across India.

◦ It repeals nine separate labor legislations that existed in post-independent India, which addressed specific social security needs. These repealed acts include:

▪ The Employee Provident Fund and Miscellaneous Protection Act of 1952.

▪ The Employee State Insurance Act 1948.

▪ The Employee's Compensation Act 1923.

▪ The Employment Exchanges (Compulsory Notification of Vacancies) Act 1959.

▪ The Maternity Benefit Act 1961.

▪ The Payment of Gratuity Act 1972.

▪ The Cine Workers Welfare Fund Act 1981.

▪ The Building and Other Construction Workers Welfare Cess Act of 1996.

▪ The Unorganized Workers' Social Security Act of 2008.

◦ The Code aligns with the recommendations of the Second National Commission on Labour and aims to simplify, amalgamate, and rationalize these laws.

◦ It is considered a piece of social security and welfare legislation, intending to protect workmen and hold employers and insurers responsible for losses due to injuries or death during work. Courts interpret its provisions in favor of employees.

• Expanded Scope and Coverage

◦ The Code expands the definition of "employee" to include a wider ambit of workers beyond traditional workmen, encompassing supervisory, managerial, or administrative personnel.

◦ New categories of workers now covered under the Code include:

▪ Unorganized sector workers.

▪ Gig workers (those working outside traditional employer-employee relationships, e.g., independent contractors, on-call workers).

▪ Platform workers (individuals using digital platforms to access customers and provide services, e.g., online cab or food delivery drivers).

▪ Home-based workers (producing goods or services for an employer from home or another chosen premises).

▪ Migrant workers and contractual workers.

▪ Construction workers.

▪ Film industry workers.

◦ It applies to workers in both organized and unorganized sectors.

◦ The Code covers most areas of employment, including factories, mines, plantations, mechanically propelled vehicles, construction work, and all hazardous occupations. Specific establishments like those with 10 or more employees (for ESI) or 20 or more employees (for PF) are covered, though salary ceilings apply for certain benefits.

◦ Exceptions to coverage include persons employed under the Apprentice Act of 1961 and members of the armed forces of the Union. Individuals already covered by schemes like the Employee State Insurance Act may not be covered under the Employee's Compensation Act.

• Key Benefits and Provisions The Code provides various social security benefits, largely consolidating and enhancing those from the repealed acts:

◦ Employee Compensation (Employment Injury):

▪ Definition: An "employment injury" is defined as a personal injury to an employee caused by an accident or an occupational disease arising out of and in the course of employment.

▪ Eligibility: Compensation is available for death, permanent total disablement, permanent partial disablement, temporary disablement, and occupational diseases. A personal injury must result in total or partial disablement for more than three days.

▪ Employer's Liability: The employer is generally liable to pay compensation for personal injury caused by an accident or occupational disease arising out of and in the course of employment. This liability commences from the date of the accident, not the date of adjudication.

▪ Causal Nexus: A causal relationship between the accident/injury and the employment is a crucial prerequisite for compensation. The employee must prove that their work resulted in strain or aggravated the injury.

▪ "Arising Out of and In the Course of Employment": This phrase is broadly interpreted, applying to the nature, conditions, obligations, and incidents of employment. The concept of "notional extension" widens the scope, meaning the actual workplace is not always the sole factor. The new Code explicitly includes:

• Commuting from residence to place of employment for duty or vice-versa.

• Traveling as a passenger by any vehicle (including public transport) to or from work with the employer's permission.

• Accidents occurring in premises where the employee is employed for the employer's trade or business.

• Even acts in breach of law or employer instructions, if arising out of employment, can be covered.

▪ Occupational Diseases: Specific diseases listed in schedules (Part-A, Part-B, Part-C of Schedule 4), which are peculiar to a particular employment, are eligible for compensation. Some Part-B and Part-C diseases require a minimum continuous employment period (e.g., 6 months for Part-B, 3-7 years for certain Part-C diseases).

▪ Exemptions from Employer Liability: The employer is not liable if:

• The injury does not result in total or partial disablement exceeding three days.

• The injury is caused by an accident directly attributable to the workman being under the influence of drinks or drugs.

• The injury is caused by the workman's willful disobedience of express safety instructions.

• The injury is caused by the workman's willful removal or disregard of safety measures provided by the employer.

▪ Compensation Calculation: The amount depends on the nature of the injury, monthly wages, and the age of the workman, using a relevant factor published by the central government.

• Death: 50% of monthly wages multiplied by the relevant factor, or a minimum of Rs. 1,20,000, whichever is more.

• Permanent Total Disablement: 60% of monthly wages multiplied by the relevant factor, or a minimum of Rs. 1,40,000, whichever is more.

• Permanent Partial Disablement: Based on the percentage of loss of earning capacity specified in Schedule 1 Part 2 (e.g., loss of a hand and foot is 100% loss of earning capacity).

• Temporary Disablement: Half-monthly payment equal to 25% of monthly wages. Payments for disablement exceeding 28 days should be made by the 16th day from the disablement.

• The ceiling for compensation for employee's benefit was increased to Rs. 15,000 per month in 2020.

▪ Accidents Outside India: Compensation is fixed by the competent authority in accordance with the law of the country where the accident occurred.

◦ Sickness Benefit: Provided under the ESI scheme upon submission of a medical certificate.

◦ Maternity Benefit: Payment to insured women employees for confinement, miscarriage, premature birth, or sickness arising from pregnancy. Claimable under ESI Act or Maternity Benefit Act.

◦ Disablement Benefit: Payment to an insured person who sustains an employment injury resulting in disability. Can be claimed under ESI, Workman Compensation Act, or the Social Security Code.

◦ Dependants Benefit: Payment to dependants of insured persons who die due to employment injury during employment.

◦ Medical Benefit: Available in the ESI scheme for medical treatment.

◦ Funeral Expenses: Fixed at Rs. 5,000 under the ESI scheme.

◦ Provident Fund: Provides for compulsory contributions from employers and employees, offering benefits upon retirement or to legal heirs in case of early death.

◦ Gratuity: Monetary award from the employer for good service, payable upon superannuation or after a reduced service period (earlier 5 years was required, now liberalized).

• Social Security Organizations The Code establishes several social security organizations to manage and administer the benefits:

◦ Central Board of Trustees of Employees Provident Fund: An independent corporate body that manages EPF funds, with a chairperson, vice-chairperson, representatives from government, employers, and employees.

◦ Employees State Insurance Corporation (ESIC): A central organization administering medical and other benefits, running a large network of hospitals and medical colleges. Its board includes government, employer, employee, medical profession, and parliamentary representatives.

◦ National Social Security Board for Unorganized Workers: Directly under the Ministry of Labour and Employment (Minister as chairperson, Secretary as vice-chairperson), it formulates schemes and advises the central government for unorganized, gig, and platform workers. It has a large committee of 40 members, including representatives from civil society, SC/ST, minorities, and women.

◦ State Unorganized Workers Social Security Board: Mandated for every state government to constitute, with similar objectives and composition to the National Board, chaired by the State Labour Minister.

◦ State Building and Other Construction Workers Welfare Boards: Mandatory for every state, these boards provide death and disability benefits, pensions, group insurance, educational schemes for children, and medical expense coverage for major ailments for construction workers.

◦ The Central Government can also constitute any special organizations as social security organizations.

• Administrative and Technological Advancements

◦ The Code emphasizes online operations for most processes, including electronic registration and cancellation of establishments and workers.

◦ Workers will be issued identity cards based on their electronic registration, aiming for transparency and preventing concealment of information from the government.

• Challenges and Future Outlook

◦ The Code aims to overcome issues like multiplicity of definitions and authorities, and lack of transparency and accountability from earlier legislations.

◦ There's a recognized need for the central government to increase the wage ceiling (currently Rs. 21,000 for ESI, Rs. 15,000 for compensation) for many social security benefits, as minimum wages in many states now exceed these amounts.

◦ The notification of the Code was delayed due to the pandemic but is expected to be implemented soon.

◦ The concept of fixed-term employment is legalized under Section 2(34), where employees are engaged for a specific period and are eligible for benefits proportionate to their service, similar to permanent employees.

1. Employee State Insurance (ESI) Corporation and Scheme

The Employee State Insurance Corporation (ESIC) is the main body constituted under the ESI Act of 1948, responsible for administering the ESI scheme. It functions as a self-financed, comprehensive social security scheme.

• Objective and Benefits: The ESI Act's objective is to provide certain benefits to employees, including those for sickness, maternity, and employment injury. These benefits fall into two categories:

◦ Cash Benefits: Include payments during sickness, maternity, disablement (temporary, permanent, partial, or total), funeral expenses, rehabilitation expenses, medical bonus, and dependents' benefits.

◦ Non-Cash Benefits: Primarily medical care, which is provided through a network of ESI hospitals and medical colleges across the country. This includes specialized consultations, in-patient treatments, artificial limbs and aids, and physical and medical rehabilitation.

• Coverage:

◦ The ESI scheme is applicable to all factories and establishments employing 10 or more persons.

◦ It covers individuals with a monthly salary ceiling of ₹21,000.

◦ Eligible individuals include those working in factories (seasonal or otherwise), permanent, temporary, and contractual workers.

◦ A significant feature is that medical care extends not only to the insured person but also to their family members, making it a scheme with a vast number of beneficiaries. Around 12.5 crore people, including family members, are covered.

◦ The new Social Security Code includes special provisions for unorganized workers, gig workers, and platform workers to be covered under the ESI scheme.

• Specific Benefits in Detail:

◦ Sickness Benefit: Periodical payments are made for certified sickness, for a maximum of 91 days in a year, at a rate of 70% of wages. To qualify, an insured worker must contribute for a minimum of 78 days in a 6-month contribution period.

◦ Extended Sickness Benefit: Available for up to 2 years for 34 malignant or long-term diseases, at an enhanced rate of 80% of wages.

◦ Enhanced Sickness Benefit: Insured persons undergoing sterilization operations are eligible for full wages for 7 days (male) to 14 days (female).

◦ Maternity Benefit: Cash payments are provided for confinement, miscarriage, sickness arising out of pregnancy, and premature childbirth. It allows for 26 weeks of paid leave, with a maximum of 8 weeks preceding the expected delivery date. For miscarriage, the period is 6 weeks. If ESI hospital facilities are not availed, a medical bonus of ₹2,500 is paid. Claimants can claim maternity benefits under either the ESI Act or the Maternity Benefit Act, but not both.

◦ Disablement Benefit: Provided for disablement caused by employment injury.

▪ Temporary Disablement Benefit: Paid at a rate of 90% of wages for as long as the disability continues. This benefit is available from day one of employment, irrespective of contribution period.

▪ Permanent Disablement Benefit: Paid at a rate of 90% of wages monthly, depending on the extent of loss of earning capacity, which is certified by a medical board. Decisions of the medical board can be reviewed under specific circumstances.

◦ Dependents Benefit: If an insured person dies due to an employment injury or occupational hazard, their dependents are eligible to receive 90% of the wages in the form of monthly payments. The list of dependents is broad, including widow, minor children (up to 25 years), widowed mother, and other close relatives.

◦ Funeral Expenses: Increased to ₹15,000 (previously ₹10,000 in) payable to the dependents of the deceased insured person or the person who performs the last rites.

◦ Confinement Expenses: Covered by the corporation if the confinement occurs at a place where necessary ESI medical facilities are not available.

◦ Old Age Medical Care: Insured persons and their spouses can avail old age medical care after retirement or superannuation by paying ₹120.

• Contributions: Employees contribute 0.75% of their wages, while employers contribute 3.25% of wages, totaling 4%. The employer is responsible for deducting the employee's share and depositing the total contribution with the ESI Corporation within 15 days of the last payment calendar. There are provisions for enhanced and reduced contribution rates, as notified by the central government.

• Administration and Fund:

◦ The ESI Corporation's composition includes a Director General (ex officio chairman), a Vice President (both appointed by the central government), representatives from central and state governments, employers, employees, the medical profession, and members of parliament.

◦ An Employee's State Insurance Fund is constituted and administered by the corporation. This fund is used for payment of benefits, medical treatments, salaries and expenses of various boards and committees, and for establishing and maintaining hospitals and dispensaries. The corporation can also accept grants, donations, and Corporate Social Responsibility (CSR) funds.

◦ The ESI Corporation can collaborate with state governments to arrange medical treatment, potentially utilizing state government hospitals as ESI hospitals, and sharing medical expenses, with disputes resolved through arbitration.

• Dispute Resolution: Employee's Insurance Courts are designated by state governments to settle claims and disputes between the corporation and its subscribers, employers, employees, and contractors. These courts have powers similar to a civil court for summoning, document production, and recording evidence. Appeals against the orders of these courts can be made to the High Court on a substantial question of law.

2. Maternity Benefit

Maternity benefit in India is a critical social security measure for working women, designed to protect the dignity of motherhood and ensure the health of both the mother and child.

• Historical Context: The concept of maternity benefit is not new to India, with early demands and implementations in the 1920s. Pre-independence Acts like the Mines Maternity Benefit Act of 1941 and the ESI Act of 1948 provided such benefits. The Maternity Benefit Act of 1961 provided a uniform legislation, which has now largely been incorporated into the Social Security Code, 2020.

• Applicability and Coverage:

◦ The Maternity Benefit Act (MBA) applies to all women employees, whether employed directly or through contractors.

◦ It covers women in various establishments, including mines, factories, and plantations. The new code explicitly extends coverage to all sectors.

◦ The Supreme Court has clarified that maternity benefits are applicable to casual and daily wage workers, not just permanent employees.

◦ The 2017 amendment and new code explicitly cover unmarried mothers, adoptive mothers, and commissioning mothers (biological mother using her egg to create an embryo implanted in another woman).

◦ As with ESI, a woman cannot claim maternity benefits under both the ESI Act and the Maternity Benefit Act simultaneously.

• Eligibility: A woman must have worked for a minimum of 80 days in the 12 months (earlier 26 months) immediately preceding the date of her expected delivery to be eligible.

• Benefits and Duration of Leave:

◦ The maximum period of maternity benefit has been increased from 12 weeks to 26 weeks. Out of this, not more than 8 weeks can be taken before the expected date of delivery.

◦ For women with two or more surviving children, the maternity leave is reduced to 12 weeks.

◦ Adoptive mothers who adopt a child under the age of three months and commissioning mothers are also entitled to 12 weeks of leave.

◦ In cases of miscarriage or medical termination of pregnancy, a woman is entitled to 6 weeks of paid leave.

◦ An additional period of one month's leave with wages can be claimed for illness arising out of pregnancy, delivery, premature birth, or miscarriage.

◦ Women undergoing tubectomy operations are entitled to 2 weeks of paid leave.

◦ Medical Bonus: An employer is liable to pay a medical bonus of ₹3,500 (increased from ₹2,500) if free pre-natal, confinement, and post-natal care are not provided.

• Employer Responsibilities and Prohibitions:

◦ Employers are prohibited from discharging, dismissing, or changing the working conditions of a woman during her maternity leave period. The only exception is dismissal for gross misconduct, which may lead to forfeiture of the maternity benefit.

◦ Employers are also prohibited from employing a woman for 6 weeks following her delivery, miscarriage, or termination of pregnancy. They cannot provide hard work to a pregnant woman 6 weeks before her expected delivery.

◦ Establishments with 50 or more workers are mandated to provide creche facilities, and mothers are entitled to visit the creche up to 4 times a day, with 2 nursing breaks, until the child reaches 15 months of age.

◦ Employers must inform women workers about their maternity benefit rights at the time of appointment.

• Other Provisions: Delay in giving notice for claiming maternity benefit is not a reason for denial. If a woman employee dies before receiving the benefit, her legal heirs are entitled to the payment. An Inspector-cum-Facilitator can direct payments in case of non-compliance.

3. Employees' Provident Fund (EPF) Scheme

The Employees' Provident Fund (EPF) scheme is a popular and beneficial savings scheme in India, primarily designed to provide post-retirement benefits to employees.

• Objective and Structure: The scheme aims to offer a lump sum amount upon retirement, acting as a crucial long-term investment for workers. It boasts consistently high interest rates compared to other savings schemes in the country. The EPF organization's vision includes extending universal social security coverage with seamless, transparent, and technology-driven service delivery.

• Components of the Scheme: The EPF scheme is not a single entity but comprises three distinct schemes:

◦ Employees' Provident Fund Scheme (1952): Provides a lump sum payment after superannuation or retirement, or to legal heirs in case of the employee's death.

◦ Employees' Pension Scheme (1995): Offers monthly pension benefits after superannuation, retirement, or in cases of disability, and to survivors (widow/er, children). It replaced the Family Pension Scheme of 1971.

◦ Employees' Deposit Linked Insurance Scheme (1976): Provides insurance benefits to employees in case of death while in service.

• Coverage:

◦ The scheme generally applies to establishments employing 20 or more persons, though some conditions regarding the age of the establishment existed historically.

◦ Educational institutions have been included under the scheme since 1982.

◦ It is mandatory for employees earning less than ₹15,000 per month to be enrolled. Those earning more can join voluntarily with the employer's consent.

◦ Certain entities like cooperative societies employing fewer than 50 persons and central/state government employees covered by other provident fund or pension schemes are exempt.

◦ The new code aims to expand the ambit to include platform workers, gig workers, and the unorganized sector.

• Contributions: Both the employer and employee contribute to the EPF.

◦ Employee's Contribution: Typically 10% to 12% of wages. A special provision in 2018 reduced the contribution for newly recruited female employees to 8% for the first three years of employment.

◦ Employer's Contribution: Divided into various heads: 3.67% to EPF, 8.33% to the Employees' Pension Scheme, 0.50% to the Employees' Deposit Linked Insurance Scheme, 1.1% for EPF administrative charges, and 0.01% for insurance administrative charges. The total employer contribution amounts to 13.61%.

• Interest Rates and Taxation: Historically, EPF interest rates have been high (e.g., 11% per annum), though they fluctuate (e.g., 8.1% at one point). The interest is added to the capital annually. While generally providing tax-free returns, the government has imposed an income tax ceiling on withdrawals to discourage premature withdrawals and promote long-term savings.

• Withdrawals and Advances: Employees can take advances and withdrawals, but restrictions are in place. A 10% Tax Deducted at Source (TDS) is applicable on withdrawals exceeding ₹50,000 if made before completing 5 years of service. No TDS is deducted after 5 years or for transfers between accounts. The imposition of income tax on withdrawals from a social security measure for lower-income subscribers has been questioned.

• Administration and Disputes:

◦ The scheme is administered by a Central Board of Trustees, comprising members appointed by the central and state governments, employers, and employees.

◦ The Central Provident Fund Commissioner is the chief executive officer managing the fund through a hierarchy of offices across the country.

◦ Employers can manage their own private trusts for provident funds, subject to the supervision of regional fund offices.

◦ Penalties are imposed on employers for delayed payment of contributions, ranging from 17% for up to 2 months to 37% for over 6 months.

◦ Aggrieved persons can appeal to tribunals constituted by the central government. An appeal requires depositing 25% of the total amount due, and the tribunal is expected to decide within one year.

◦ Portability: PF accounts can be transferred from one employment to another anywhere in the country.

4. Gratuity Scheme

Gratuity is a lump sum payment given by an employer to an employee as a token of appreciation for long-term services, usually at the time of superannuation, retirement, or resignation. Unlike EPF, it does not require employee contributions.

• Statutory Right: The Payment of Gratuity Act of 1972 made gratuity a statutory right, making it mandatory for eligible employees. The provisions of this Act are now included in the Social Security Code.

• Applicability: It applies to various sectors including railways, ports, factories, oil fields, plantations, mines, and shops. Over time, its coverage has expanded to include educational institutions.

• Eligibility:

◦ Employees must have rendered a continuous service of 5 years to be eligible. This 5-year period includes certain types of absences like leave due to sickness, accident, lay-off, strike, or lockout, provided they are not due to the employee's fault.

◦ The 5-year continuous service requirement is waived in cases of death or disablement in service.

◦ Gratuity is payable upon superannuation, retirement, resignation, death, disablement due to accident, or termination of a contract period.

◦ Initially, there was no salary ceiling for gratuity under the old Act, and it covered managerial and administrative personnel in eligible establishments.

• Inclusion of Teachers:

◦ Historically, teachers were initially excluded from gratuity benefits, as ruled by the Supreme Court in the Ahmedabad Private Primary Teachers Association versus State of Gujarat case, because they were not considered "skilled, semi-skilled, or unskilled" workers.

◦ However, an amendment in 2009 (with retrospective effect from 1997) was made to specifically include teachers within the definition of "employee" under the Gratuity Act.

◦ The Supreme Court later recalled its earlier judgments in 2019, confirming that teachers are now covered under the Gratuity Act.

• Calculation: Gratuity is calculated as 15 days' wages for every completed year of service.

◦ The "wages" for calculation are the last drawn salary (basic + dearness allowance).

◦ A month is typically considered as 26 working days.

◦ If an employee has completed more than six months in their last year of service, that period is rounded up and considered a full year for calculation purposes.

◦ For seasonal employees, the calculation is 7 days' wages for every completed year of service.

◦ Example: For an employee with a last drawn basic salary of ₹60,000 who worked for 20 years and 7 months (counted as 21 years), the gratuity would be (15 * 60,000 * 21) / 26 = ₹7.26 lakhs.

• Gratuity Ceiling: The maximum gratuity amount has been significantly increased over time, from ₹3.5 lakhs to ₹10 lakhs (2018), then to ₹20 lakhs (2019), and is currently stated as ₹30 lakhs.

• Forfeiture: Gratuity can be forfeited under specific, exceptional circumstances:

◦ If an employee's services are terminated due to their willful omission, negligence, or act causing loss or destruction to the employer's property, the gratuity can be forfeited to the extent of the damage or loss.

◦ The full amount of gratuity can be forfeited if the termination is due to the employee's riotous or disorderly conduct, any other violent act, or committing an offense involving moral turpitude.

• Payment and Protection:

◦ Employers are required to pay gratuity within 30 days of the date it becomes payable. Electronic payment methods are available.

◦ Gratuity offers legal protection as it cannot be attached by any court of law in execution of a decree.

• Mandatory Insurance: A significant new provision in the Social Security Code is the introduction of compulsory insurance for the employer's liability to pay gratuity. Employers must collaborate with an insurance company recognized by the central government or IRDAI. This ensures that employers cannot escape their liability for paying gratuity. This provision does not apply to central or state government employees.

• Taxation: Gratuity is fully exempt from income tax for government employees. For private employees, the amount is exempt from income tax up to ₹30 lakhs (as per current ceiling mentioned), with amounts beyond this limit being taxable. The rationale for taxing social security schemes like gratuity has been questioned in the sources.

• Penalties and Enforcement: Penalties, including imprisonment and fines, are prescribed for non-compliance by employers or for making false statements. Competent authorities are appointed by the government to ensure strict implementation of the gratuity scheme.

In conclusion, these social security schemes, now largely integrated into the Social Security Code, aim to provide a comprehensive safety net for employees across India, offering financial assistance and medical care during various stages of their working lives and into retirement. The provisions ensure that benefits are available to a wide array of workers, with ongoing efforts to include those in the unorganized and emerging sectors.

Bonded Labor System

The bonded labor system is an ancient practice in India, primarily rooted in poverty. It involves a debtor pledging their or their family's labor to a creditor in lieu of an unpaid debt. This debt, along with accruing interest, often leads to a continuous cycle of debt that can be passed down through generations. In this system, the debtor works for the creditor for an unspecified period, often receiving no wages or only minimal wages, leading to an employer-employee relationship where the debtor is perpetually indentured.

Key Characteristics and Impacts:

• It is a prohibited practice globally and is recognized as a form of forced labor by international conventions, including the ILO.

• Debtors experience loss of freedom in employment, alternative livelihood, minimum wage, and movement. Their mobility is restricted by the creditor.

• Historically, this system sometimes involved slavery, where individuals and their families were sold to others.

Constitutional Provisions and Supreme Court Rulings:

• The Indian Constitution, through Article 23, prohibits trafficking in human beings and forced labor. This prohibition applies not only against the state but also against private citizens.

• The Supreme Court, in People's Union for Democratic Rights vs. Union of India (Ishod Case, 1982), expanded the ambit of Article 23. It clarified that forced labor includes any labor without remuneration ("begar") and is a violation of human dignity and basic human rights.

• While executing a bond for service is permissible, compelling someone to continue service against their wishes is forced labor and prohibited. An individual can claim damages for breaking a bond but cannot be forced to work.

• Article 24 prohibits the employment of children (below 14) in factories, mines, or hazardous occupations. Both Article 23 and 24 are directly breached when children are involved in forced labor due to socio-economic conditions.

• However, the Supreme Court, in Association of Medical Superspecialty Aspirants and Residents vs. Union of India (2019), upheld mandatory service bonds for postgraduate doctors in government hospitals, stating that such compulsory service for public good does not violate Article 23.

Bonded Labor System (Abolition) Act, 1976:

• Objective: To abolish the bonded labor system to prevent the economic and physical exploitation of weaker sections.

• Definition (Section 2(g)): Defines bonded labor as a system of forced or partly forced labor where a debtor (or their ascendants/descendants) enters an agreement with a creditor due to an advance, interest, customary/social obligation, succession, economic considerations, or birth into a particular caste/community. Various local names like Seri, Vetti, Sevakia, Padiyal, Pannayilal refer to forced labor across India.

• Abolition and Freedom: The Act completely abolished the bonded labor system, freeing all laborers from their obligations, debts, and associated agreements (whether written or oral). Any custom, tradition, or contract compelling bonded labor is void and inoperative.

• Punishments: Violations, including practicing the system, advancing bonded debt, or enforcing related customs, are punishable with imprisonment up to 3 years and/or a fine up to 2000 rupees.

• Extinguishment of Liability: All bonded debts are deemed extinguished, and no court proceedings can be initiated for their recovery. Any existing decrees for recovery are considered fully satisfied.

• Restoration of Property: Properties belonging to a bonded laborer (or their family) that were forcibly taken by a creditor must be restored to them. Executive Magistrates have a role in ensuring this restoration. However, properties sold before the Act's commencement are not affected.

• Protection from Eviction: Freed bonded laborers cannot be evicted from residential premises provided by the creditor immediately before the Act's commencement.

• Company Liability: In cases involving companies, directors, managers, secretaries, or other responsible officers can be held guilty.

• Vigilance Committees: The Act mandates the establishment of District and Sub-divisional Vigilance Committees. These committees advise on implementing the Act, facilitate economic and social rehabilitation of freed laborers, coordinate credit with banks, monitor offenses, conduct surveys, and defend freed laborers in legal suits.

• Persistent Problem: Despite the Act, bonded labor persists in some parts of the country due to socio-economic issues, with industries like brick kilning, stone quarries, bidi manufacturing, carpet weaving, and construction being particularly susceptible. Courts often presume the existence of an advance or debt in bonded labor cases, placing the burden on the creditor to provide contrary evidence. Courts also intervene when the state fails to rehabilitate freed laborers.

Child Labor

Child labor remains a significant concern in India, which is identified as a hotspot globally. While official numbers vary (ILO estimates 50-60 million, NGOs suggest over 100 million), a concerning 73 million working children are reportedly less than 10 years old.

Causes and Constitutional Provisions:

• The primary causes are poverty and a lack of primary schooling facilities (16.64% of villages lack them), leading to high dropout rates (52% between class 1 and 8).

• Article 24 of the Constitution specifically prohibits the employment of children below 14 years of age in factories, mines, or hazardous employment.

• Other relevant constitutional provisions include:

◦ Article 21A (86th Amendment, 2002): Mandates free and compulsory education for children aged 6 to 14 years.

◦ Article 45: Calls for early childhood care and education for children below 6 years.

◦ Article 51A (Fundamental Duties): Makes it a duty for parents/guardians to provide educational opportunities to their children between 6 and 14 years.

◦ Article 39 (Directive Principles): States that the health and strength of workers, men and women, and the tender age of children are not abused by economic necessity, and children are given opportunities to develop in a healthy manner.

International Conventions and Committees:

• International instruments like the UN Convention on the Rights of the Child (CRC) and various ILO conventions (e.g., Forced Labor, Minimum Wage, Worst Forms of Child Labor) explicitly prohibit child labor.

• The Gurupadswamy Committee (1979), after studying child labor, found poverty to be its basic reason. It recommended prohibiting child labor only in hazardous industries and regulating conditions in others, explaining why India has not entirely banned child labor. The committee proposed categories: child (below 14), adolescent (15-18), and adult (above 18).

Child Labour (Prohibition and Regulation) Act, 1986:

• This Act prohibits the engagement of children in certain hazardous employments (listed in Part A and B of a schedule, including carpet, bidi, cloth printing, mica, construction, matchbox, firework, cashew processing, soldering) and regulates their conditions of work in other employments.

• Exemptions: It does not apply to workshops where processes are carried out by the occupier with the aid of their family, or to government-established/assisted schools.

• Regulation in Non-Hazardous Industries:

◦ Working Hours: No child can work for more than 3 hours continuously, followed by at least a one-hour rest, with a total working period not exceeding 6 hours a day (including rest).

◦ Night Shifts/Overtime: Children are prohibited from working between 7 pm and 8 am, and no overtime or dual employment is allowed.

◦ Weekly Holidays: A compulsory whole day holiday each week must be provided.

◦ Age Determination: Any dispute regarding a child's age must be resolved by an authorized medical practitioner.

◦ Employer Duties: Employers must maintain certificates of age for child workers and keep registers detailing their work, which are subject to inspection.

• Penalties: Employing a child in contravention of the Act is punishable with imprisonment for 3 months to 1 year and a fine of 10,000 to 20,000 rupees. Repeat offenses incur higher penalties.

• Conclusion: The Act does not completely prohibit child labor but focuses on its prohibition in hazardous industries and regulation in others, acknowledging the challenge of poverty.

Plantation Labor Law

The Plantation Labor Act, originally introduced during the British period to regulate working hours and provide benefits, has been repealed and its provisions merged into the Occupational Safety, Health and Working Conditions Code 2020.

Objectives and Definitions:

• The Act's primary objectives were the welfare of labor and regulation of working conditions in plantations.

• Plantation: Defined as tea, coffee, rubber, cinchona, and cardamom plantations covering 5 hectares or more. It includes associated facilities like hospitals, dispensaries, schools, and offices but excludes factories within plantations (which are covered by the Factories Act). An "establishment" in a plantation context refers to one where 10 or more workers are employed.

• Hazardous Process: In plantations, this mainly involves the spraying of insecticides and chemicals, which can pose health hazards and cause environmental pollution.

• Worker Definitions: Follows the Child and Adolescent Labor Prohibition Regulation Act 1986, defining:

◦ Child: Below 14 years.

◦ Adolescent: 14 to 18 years.

◦ Adult: Above 18 years.

◦ "Worker" includes those doing manual, skilled, technical, clerical, or supervisory work, but generally excludes managerial/administrative staff and those earning over 18,000 rupees (under the old definition). It also excludes defense and police services.

• Employer: Includes anyone in charge, head of department, CEO, occupier, agent, manager, or even a contractor with ultimate control.

Registration and Penalties:

• Mandatory Electronic Registration: Every plantation must be registered electronically, with a certificate of registration issued. If the officer fails to register, it's deemed registered. Changes in ownership or closure must be reported within 30 days.

• Penalties for Contravention: Significant penalties are imposed, ranging from 2 to 3 lakh rupees, with an additional 2000 rupees per day for continued non-compliance after conviction. This applies to misrepresentation or fraudulent registration.

Employer's Welfare and Safety Obligations:

• Welfare Facilities: Employers must provide accommodation (for workers and their families), creches (if 50 or more workers), education facilities for children, health facilities (if no ESI), recreational facilities, and canteen facilities (if 100 or more workers). These can be provided through their own resources or in collaboration with government schemes.

• Working Hours and Leave: No worker can be made to work more than 8 hours per day or 6 days a week (ensuring a paid weekly holiday). Annual leave with wages is provided: 1 day for every 20 days worked for adults and 1 day for every 15 days worked for adolescents. Layoff periods, maternity leave, and annual leave are included in calculating the 180-day eligibility for annual leave.

• Safety Measures: Employers are responsible for the safe transport, handling, storage, and use of insecticides, pesticides, and chemicals. They must provide gloves, masks, uniforms, and conduct awareness training on hazards and safety practices. Special safeguards are needed for women and adolescents, who are generally not permitted to handle hazardous materials.

• Medical Supervision: Workers handling hazardous substances must undergo periodical medical examinations. Employers must maintain health reports, provide washing, bathing, and cloakroom facilities, and display lists of permissible chemical concentrations and precautionary notices.

• Workplace Safety: Employers must maintain safe workplaces, free from health risks, and monitor the working environment. They must provide information, instructions, and training for health and safety.

• Accident Reporting: Accidents causing death must be reported to appropriate authorities, leading to an inquiry by an inspector-cum-facilitator within two months.

• Medical and Welfare Officers: Employers must appoint medical officers and, if there are 250 or more workers, qualified welfare officers.

• Inspector-cum-Facilitator Powers: These officials (formerly "plantation inspectors") can enter premises, examine crops, and inspect employer documents like muster rolls and payment registers.

New Code Provisions (Occupational Safety, Health and Working Conditions Code 2020):

• The Employees Compensation Act is now applicable for death or injury.

• Employees' Provident Fund Act applies to plantations with 20 or more employees.

• Employees' State Insurance (ESI) Act applies to plantations with 10 or more employees.

• Plantation workers are also eligible for gratuity and maternity benefits. These comprehensive provisions are designed to significantly benefit plantation workers.

Social Security for Construction Workers

Construction workers are a vulnerable segment within the unorganized sector due to the casual, temporary, and often subcontracted nature of their work. They are highly mobile and frequently work on piece-rate wages with uncertain hours. Despite these challenges, the Indian construction industry is a significant contributor to the country's GDP (2,669.47 Billion INR in 2021). The number of construction workers has grown enormously, from 8.6 million in 1987-88 to 74 million in 2016-17, possibly reaching 100 million now.

Challenges:

• High inherent risks to life and limb at work sites.

• Lack of basic amenities and welfare facilities due to the temporary nature of employment and the ease with which contractors can escape liability.

• Bureaucratic apathy by some state governments in spending collected cess for welfare, as shown by data where states collected thousands of crores but spent only a fraction.

Legislation and Supreme Court Rulings:

• The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act 1996 (now repealed and merged into the Social Security Code 2020) aimed to regulate employment conditions and provide safety, health, and welfare measures.

• In Lanco Anpara Power Limited vs. State of Uttar Pradesh (2016), the Supreme Court clarified that workers constructing a factory are considered construction workers and are eligible for benefits under the Construction Workers Act, not the Factories Act, applying a "purposive interpretation".

Key Provisions (Social Security Code 2020):

• Definition of Building/Construction Work: Broadly covers construction, alteration, repair, maintenance, or demolition of various structures including buildings, roads, railways, irrigation works, power generation, internet towers, and more. It is comprehensive, with few exclusions.

• Exclusions for Construction Work: Construction employing less than 10 workers or constructing an individual residential house for personal use with a total cost of less than 50 lakh rupees are excluded.

• Definition of Building Worker: Includes skilled, unskilled, semi-skilled, technical personnel, or manual workers. However, those in managerial, supervisory, or administrative capacity are specifically excluded from being considered "building workers".

• State Welfare Boards: Every state is mandated to establish a State Building and Other Construction Workers Welfare Board.

• Cess Collection: A levy of 1% to 2% (not less than 1%) of the total construction cost (including land cost and compensation) is collected by local authorities and deposited into the Welfare Board fund. Non-payment incurs interest and penalties. The cess is calculated based on the construction plan submitted for approval.

• Eligibility for Registration: Workers between 18 and 60 years of age, engaged in construction work for a minimum of 90 days within a 12-month period, are eligible to register as beneficiaries. A small registration fee (not more than 50 rupees) is required.

• Welfare Fund Usage: The fund provides post-retirement pensions, education scholarships, disablement benefits, group insurance, and medical benefits. Not more than 5% of the total collection can be used for administrative expenses.

• New Code Integration: The Employees Provident Fund Act, ESI Act, Gratuity Act, and Maternity Benefit Act are now applicable to construction workers. These provisions are expected to benefit over 70-80 million construction workers.

Social Security for Unorganized Workers

The unorganized sector constitutes the largest portion of India's workforce, with over 80% (or 93% by government data) of total workers falling into this category. In contrast, only about 7% of the workforce is in the organized sector, enjoying most social security benefits. The unorganized sector significantly contributes to India's economy, accounting for 30-50% of the GDP and 40% of manufacturing activity.

Characteristics and Challenges:

• Workers are "unorganized" due to casual employment, ignorance, illiteracy, small/scattered establishments, and the dominant strength of employers.

• The informalization of the economy has led to increased contracting, "hire and fire" policies, and fewer formal jobs, further expanding the unorganized sector.

• This sector includes diverse categories such as construction workers, domestic workers, vendors, casual laborers, migrant workers, and those in small-scale industries.

• The focus for this sector is on providing social insurance, social assistance, social protection, and a social safety net.

Legislation and Government Schemes:

• The Unorganized Workers' Social Security Act, 2008 (now absorbed into the Social Security Code 2020) defined "unorganized sector" as enterprises owned by individuals/self-employed workers or employing fewer than 10 workers. It includes home-based, self-employed, and wage workers.

• Existing laws made applicable through the 2008 Act include the Employees Compensation Act, Industrial Disputes Act, ESI Act, Provident Fund Act, Maternity Benefit Act, and Gratuity Act.

• The central government has launched numerous social security schemes:

◦ National Pension Scheme (NPS): A voluntary scheme with tax benefits.

◦ Atal Pension Yojana (APY): A central government-backed project offering minimum monthly pensions with a small contribution, benefiting low-income groups. The central government contributes 50% or 1000 rupees/annum (whichever is lower) for 5 years.

◦ Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): A life insurance scheme introduced in 2015, offering a 2 lakh rupee benefit to dependents upon the policyholder's death for a premium of 330 rupees per year.

◦ Other schemes include Sukanya Samriddhi Yojana, Pradhan Mantri Jan Dhan Yojana, Public Provident Fund, National Savings Certificates, and Rashtriya Swasthya Bima Yojana.

Social Security Code 2020 (New Provisions):

• Inclusion of Gig and Platform Workers: A significant addition, extending social security benefits to these new categories of workers.

• Expanded Scheme Benefits: Includes life and disability cover, health and maternity benefits, old age protection, education, housing, skill upgradation, funeral assistance, and creche facilities.

• Diverse Funding Sources: Schemes can be funded by state/central governments, contributions from employees, and importantly, Corporate Social Responsibility (CSR) funds. The central government can also provide financial assistance to states.

• Digitalization and Accessibility: Electronic record-keeping is mandatory, and free call centers are being established to help unorganized, gig, and platform workers with registration and information.

• Reduced Eligibility Age: The minimum age for registration has been reduced from 18 to 16 years.

• National Social Security Board: A National Social Security Board will be constituted by the central government specifically for the welfare of unorganized, gig, and platform workers.

These comprehensive provisions in the new Social Security Code aim to provide social security benefits to the vast majority of India's workforce that previously lacked such protections.

The new Occupational Safety, Health and Working Conditions Code of 2020 (new code) represents a significant shift in India's labor laws, consolidating and repealing 13 central labor legislations, including the Factories Act of 1948, the Plantation Labour Act of 1951, and the Mines Act of 1952. The primary objective of this code is to regulate the occupational safety, health, and working conditions for individuals employed across various establishments. It provides a comprehensive framework of duties for both employers and employees, with a strong emphasis on enhancing safety and health standards. This legislative reform is also viewed as a crucial part of India's commitment to the ILO's Decent Work Agenda.

Here's a detailed explanation of the key provisions and concepts:

1. Employer Duties

Employers are burdened with a wide array of duties to ensure a safe and healthy working environment:

• Workplace Safety:

◦ Ensure the workplace is free from hazards that could cause injury or occupational disease.

◦ Provide a safe working environment without any risk to employee health.

◦ Maintain plants and systems in the workplace safely and without health risks.

◦ Arrange workplaces to ensure safety and take reasonable care in handling, storing, and transporting articles and substances.

◦ Provide adequate training and supervision necessary for employees' health and safety.

◦ Ensure all places of work are in safe condition and do not pose risks to health.

• Health and Welfare Provisions:

◦ Comply with occupational health and safety standards.

◦ Conduct free health examinations for employees, particularly those in hazardous industries, to detect occupational diseases. This is mandatory for workers above 45 years and those in hazardous processes. Medical reports must be shared with the Chief Inspector cum-Facilitator and with the worker's consent.

◦ Prohibit charging employees for safety equipment or apparels.

◦ Carefully dispose of hazardous and toxic waste, including e-waste, in accordance with rules.

◦ Provide mandatory appointment letters to every employee.

◦ Maintain cleanliness and hygiene throughout the factory, including regular cleaning of floors, walls, and proper drainage.

◦ Ensure adequate ventilation, temperature, and humidity control in workrooms.

◦ Provide portable drinking water and clearly marked drinking water facilities.

◦ Prevent overcrowding to avoid injury to workers' health.

◦ Ensure adequate lighting to prevent eye strain and reflections.

◦ Provide sufficient and separate latrines and urinals for male, female, and transgender employees, maintaining hygiene.

◦ Make effective arrangements for the treatment of waste and effluents.

◦ Washing facilities: Separately screened and easily accessible for male and female workers.

◦ Facilities for storing and drying clothes.

◦ Sitting facilities: For workers who are obliged to work in a standing position.

◦ First-aid appliances: At least one readily accessible first-aid box for every 150 workers.

◦ Canteens: Mandatory for factories employing more than 250 workers under the old Act, with the number potentially changed in the new code.

◦ Shelters, restrooms, and lunch rooms: Required for factories with more than 150 workers, to be clean and equipped with drinking water.

◦ Crèches: Mandatory for factories employing more than 50 women workers (increased from 30 in the old Act).

◦ Ambulance room and medical facilities: Mandated for establishments employing more than 100 workers.

• Reporting and Record Keeping:

◦ Send notice of certain accidents and dangerous occurrences to appropriate authorities (e.g., Chief Inspector cum-Facilitator).

◦ Report certain occupational diseases listed in the schedules.

◦ Maintain a written policy statement ensuring workers' health and safety, which must be published and its implementation arranged and communicated to all workers.

◦ Keep electronic or other records of worker particulars, safety, health, work performed, working hours, rest days, leave wages, attendance, dangerous incidents, and employment of adolescents.

◦ Display notices about safety, overtime, and working hours.

◦ Provide wage slips to workers electronically or in other formats, weekly or monthly.

◦ File annual electronic returns with the Inspector cum-Facilitator regarding employment.

◦ Send a written notice to the Chief Inspector at least 15 days before beginning to occupy or use a factory, providing details like its name, situation, and occupier.

◦ Notify the Inspector of a manager's appointment within seven days.

• Specialized Responsibilities:

◦ Occupier's Liability: The occupier (the person with ultimate control over factory affairs) is strictly responsible for all factory activities and cannot delegate or absolve this statutory liability by blaming others.

◦ Safety Officers: Mandatory appointment of Safety Officers where more than 1,000 workers are employed or where the manufacturing process involves significant health hazards. The new code extends this to factories with hazardous processes and >250 workers, building/construction work with >230 workers, and mines with >100 workers. Safety officers are trained personnel, departmental heads, and their directions bind other officers regarding safety.

◦ Welfare Officers: Mandatory appointment where more than 500 employees work in a factory, with qualifications and duties prescribed by state governments.

◦ For Mines: The owner and agent are jointly and severally responsible for financial provisions and code implementation due to the high risk involved. Disclosure of information about probable dangers and health hazards is compulsory. An approved emergency plan must be with the chief inspector.

◦ For Designers, Manufacturers, Importers, Suppliers: These entities have a duty to ensure articles are designed, constructed, and supplied to be safe and without risk to workers' health when used. They must carry out tests and provide sufficient information and adequate training on machine operation.

◦ For Architects and Project Engineers: They are responsible for looking into safety and health aspects at the planning stage of building construction. Their designs must not include dangerous structures, hazardous materials, or processes harmful to workers' health and safety.

2. Employee Duties and Rights

Employees also have duties and rights under the new code:

• Employee Duties:

◦ Take reasonable care for their own health and safety and that of their fellow workmen.

◦ Avoid acts or omissions in the workplace that could be harmful to themselves or others.

◦ Comply with specified safety and health requirements.

◦ Cooperate with the employer in fulfilling statutory obligations.

◦ Report unsafe and unhealthy situations immediately to the occupier, agent, Safety Officer, or (if continuous) to the Inspector cum-Facilitator.

◦ Refrain from willful interference, misuse, or neglect of any safety appliances or machinery.

◦ Not to endanger themselves or others without reasonable cause.

• Employee Rights:

◦ Obtain information from the employer relating to their health and safety at work, including health check-up reports.

◦ Represent their concerns to the employer directly or through members of the safety committee.

◦ Report imminent danger to health and safety and expect immediate action from the employer. The employer's action report must then be sent to the Inspector cum-Facilitator.

◦ Not to have their safety equipment or protective fencing intentionally or recklessly damaged.

3. Special Provisions for Women Employees

The new code introduces a significant policy shift concerning women in the workforce:

• Night Shifts: The new code permits women to work between 7 pm and 6 am, a change from previous restrictions. This is subject to conditions such as sufficient safety measures provided by the employer, appropriate holidays, and working hours. The employer must also report the working of women during night shifts to the government. This aims to facilitate women's employment in night shifts, especially in service sectors.

• Safety Measures: The government can require employers to provide adequate safeguards and equipment for women's employment in certain works and can even ban operations deemed dangerous to women's health and safety.

• Participation: The ILO agenda emphasizes the need to increase the participation of women in the workforce, noting that India's rate is currently low (20%).

4. Working Hours and Leave Provisions

The new code brings changes to working hours and clarifies leave entitlements:

• Daily Working Hours:

◦ The new code reduces the maximum daily working hours from 9 to 8 hours for most industries.

◦ For mines, while the old Act stipulated not more than 10 hours (including overtime), the new code mandates hours "as may be notified by the government" and work below ground must be in shifts not exceeding the daily maximum.

◦ Transport workers have special provisions where "running time" includes not just driving, but also loading/unloading, time at check posts, account-related work, vehicle upkeep/repair, and travel to/from the vehicle.

◦ Adolescent workers will have different working hours than adult workers.

• Weekly Working Hours:

◦ Not more than 48 hours in any week remains constant across old and new codes.

◦ No worker shall be allowed to work for more than 6 days in any one week, ensuring a weekly holiday.

• Overtime Wages: Workers are entitled to wages at twice their ordinary rate for overtime work.

• Weekly Holidays:

◦ All adult workers are entitled to a full day holiday, typically Sunday.

◦ If a worker has to work on Sunday, a substitutional holiday must be provided, and proper notice given to the Inspector. Employers cannot arbitrarily convert all Sundays into working days.

• Compensatory Holidays: Workers deprived of a weekly holiday must be granted an equal number of compensatory holidays within two months of the month they were due.

• Rest Intervals:

◦ Under the old Factories Act, workers could not work for more than 5 hours before a rest interval of at least half an hour, with a maximum of 6 hours without an interval.

◦ The new code indicates that intervals and spread-over times will be notified by state governments, aligned with the 8-hour workday.

• Spread Over: The total period of work, including rest intervals, shall not exceed 10.5 hours in a day, extendable up to 12 hours by the Chief Inspector for special reasons under the old Act. The new code will see changes to spread-over limits.

• Annual Leave with Wages:

◦ A worker is eligible for annual leave with wages if they have worked 180 days in a calendar year.

◦ The rate is 1 day of leave for every 20 days of work for general workers.

◦ For adolescent and mine workers, the rate is more generous: 1 day of leave for every 15 days of work.

◦ The calculation of the 180-day period includes periods of layoff, maternity leave, and other availed annual leaves (but not earned leave). Holidays falling within the leave period are excluded from the leave calculation.

5. ILO Decent Work Agenda and India's Context

The new code aligns with the International Labour Organization's (ILO) concept of "decent work," which encapsulates the aspirations of people for their working lives.

• Core Components of Decent Work: Productive work opportunities, fair income, workplace security, social protection for families, better personal development prospects, social integration, the ability to organize and participate in decisions affecting their lives, and equal opportunity and treatment for all.

• Four Pillars (UN Sustainable Development Agenda 2030): The UN General Assembly adopted four pillars for the decent work agenda in 2015: employment creation, social protection, rights at work, and social dialogue. This agenda is seen as crucial for achieving sustained, inclusive, and sustainable economic growth and reducing poverty.

• India's Challenges and Goals:

◦ India's work program, informed by the ILO agenda, aims to address challenges like establishing effective tripartite dialogue, creating better quality jobs and more employment, especially for youth and women (whose participation is notably low at 20%).

◦ Other goals include skilling and reskilling workers to meet future economic demands, fostering job creation in innovative enterprises, and facilitating a rapid transition from informal to formal employment.

◦ The new codes are expected to contribute to universal social security coverage, reduced inequalities, and safe working places (especially for women), while also eliminating unacceptable forms of work like bonded labor and child labor.

◦ The ultimate goal is to support India's march towards "leave no one behind" and achieve the 2030 Agenda's vision for a more sustainable and equitable future of work.