IMPLEMENTATION OF INDUSTRIAL RELATION CODE,2019 BILL
IS IT A BOON OR A BANE?
Author: N Priyadarshini,
3rd year BBA,LLB(hons).
ABSTRACT
Nature of employment in India has changed manifolds in recent and past years due to increased foreign investments, global trade, technological advancements and also the increasing need to streamline the industrial laws surfaced as most important at this point in time. Keeping this need in mind, the Industrial Relation Code Bill 2019 was introduced which aims to smoothen the industrial relations while helping India promote the ease of doing business. This Bill essentially combines important elements from three laws namely, The Industrial Dispute Act, 1947; The Industrial Employment Act, 1946 and The Trade Unions Act 1926. The Bill aims to consolidate and amend the laws relating to trade unions, conditions of employment in industrial establishment or undertaking, investigation and settlement of industrial disputes. In this article, we shall understand the salient features of Industrial Relation Code Bill, and why worker groups are opposing the same. India has seen vast unemployment in recent years due to huge supply of work-force and it has now touched all-time high unemployment rate in 45 years. This is a step taken in favour of employees who become prey to unfair tactics and unjust practices prevalent in the organizations today. Many companies view these trade unions as threats and negotiating with them becomes too problematic. This bill aims to solve such problem for the organizations as well. Through this paper, the author aims to analyse, the compatibility between both the employers and the employees and focus on their requirements. And further analyses whether the ease of compliance of labour laws as proposed by the government will promote setting up of more enterprises, thus catalysing the creation of employment opportunities in the country. Trying to answer the ultimate question, whether the new code has the scope to solve all the existential issues and maintain industrial relations between the employers and employees?
Key words: Industrial Relations, Employer, Employee, IRC Bill, Industrial dispute, Trade Union, Employment, Retrenchment, Strike, Wage.
Introduction
In order to run any type of organization smoothly, it is necessary to maintain the cordial and effective relationship between the employer and the employee, i.e., the industrial relations. According to the Indian Institute of Personnel Management, “Industrial relations includes, securing effective and willing cooperation from employees and reducing conflict between employers and workers and their representatives, trade unions.”[1] The concept of Industrial relation revolves around its participants such as the employer, employee or worker of any type of organization and the regulatory authority, i.e., the government. The main object of Industrial relations is to create and maintain a healthy and cordial relationship between the employer and their employees. In order do the same, it keeps a check on the industrial disputes and tries to resolve it, if any. The rights of the workers and their working conditions are recognised and protected, so that their productivity increases, which enhances the organizations growth and profit.[2]
The enactments of the Indian labour legislations are closely connected to the Indian independence movement, and the campaigns of passive resistance leading up to independence. While India was under the colonial rule by the British Raj, labour rights, trade unions and freedom of associations were all regulated. The government has enacted various legislations concerning the protection of employee and employers. Now, the government has proposed the codification and amendment of these enactments. Wherein, the various legislations were classified into four major codes. And this paper only focuses on the Industrial relations code.
The Minister of labour and Employment, Mr Santosh Kumar Gangwar, on November 28, 2019 had introduced the Industrial Relations Code, 2019 in Lok Sabha. The code was introduced to replace and compile the major labour legislations with regard to industrial relations namely, i) the Industrial Disputes Act, 1947, ii) the Trade Union Act, 1926, and iii) the Industrial Employment (Standing Orders) Act.[3]
The government’s aim is to simplify and harmonise several differences in definitions and application of labour laws across industry, states and companies.[4]
Research Question
1. Is there a need for codification of the labour laws?
2. Whether the implementation of the Industrial Relations Code is a boon or a bane to the employers and employees in the long run?
Research Problem
The Industrial Relations Code’s bill, which is introduced is similar to the bill that was proposed in the year 2017. And the same as held to strong protests and oppositions from the trade unions cutting across the ideological line and disapproval of economists for undermining labour rights and welfare. Therefore, an analysis of the code is necessary in order to keep a check on its objectives.
Methodology
Non-doctrinal research- based on the knowledge and information collected on the matter in concern.
Scope
The government has introduced four new bills codifying the various labour legislations. This paper focus on one of those legislation concerning the Industrial Relations in India. The Industrial Relations Code,2019 Bill was passed in Lok Sabha, but is yet to undergo the test of credibility through such codification is beneficial to both the employers and the employees of the industr
ies, companies or any organization. So, the author tries to review the amendments of this code and analyse, whether it is a boon or a bane to the whole labour community and the business sector within the organization and in relation to the economic growth.
ies, companies or any organization. So, the author tries to review the amendments of this code and analyse, whether it is a boon or a bane to the whole labour community and the business sector within the organization and in relation to the economic growth.
Limitation
The code introduced is at a nascent stage and yet to be enacted. Therefore, the availability of material sources with regard to the concerned matter in hand is minimal. The author has tried to answer the question pertaining to the research issue comparing and analysing the existing legislations and the proposed code. And to detect whether the government’s’ promise is maintainable on implementation of this code.
Sources
The author has used the primary sources like the Industrial Relations code,2019 Bill, statutes like the Industrial Dispute Act, the Industrial Employments Act and the Trade Unions Act. The secondary sources like the Newspaper, articles, journals, blogs.
Analysis
Firstly, we need to understand, how difficult it is to reconcile forty-four labour laws, and the cause of hardship to employers, and when given an opportunity, they try to avoid employing labour. With Various labour-related definitions that are getting standardised it is expected that there shall be less disputes. This might ensure that the process of registration and filing of returns shall get standardised and streamlined. It also shall facilitate compliance with the laws and help improve the ease of doing business, so that employment can be increased. But the perception is that these laws multiply disputes, make labour aggressive, and therefore, are a hinderance to expanding private and foreign investment. So, what the government intends to bring is maximum governance with minimum laws by amalgamating all labour laws into four codes. Labour being a concurrent subject, the states have enacted laws which might be poor and discriminatory at certain matters which are violating the rights of the employees. It is also viewed that the current labour laws are hardly implemented and state governments provide very little mechanism to monitor or penalise the defaulting employers.[5]
Therefore, statement of object and reasoning provided for such an amalgamation made was on the claim that, to “facilitate implementation and also remove the multiplicity of definitions and authorities without compromising on the basic concepts of welfare and benefits to workers”.[6]
It is necessary to analyse the salient features of the code and the background for it being drafted in order to identify the issues lying within, which might be non-beneficial to both the employers and the employees. This very code is prepared after amalgamating the three central labour acts- the Trade Unions Act, The Industrial Disputes Act and The Industrial Employments Act. Earlier, the government approved an amendment to the trade Union Act, 1926 to make provisions with regard to the recognition of the trade unions. Only on recognising the trade unions of an industry or establishment, it gets the bargaining or negotiating rights with the employer. Under the code, seven or more members of a trade union can apply to register it. Trade unions that have a membership of at least 10 percent of the workers or whichever is less, will be registered. Further, a registered trade union shall have at least seven workers who are employed in the establishment or the connected industry, as its members. The central or state government may recognize a trade union or a federation of trade unions as central or state trade unions respectively.[7]
The code provides for a negation union too in the establishment for negotiating with the employer. If there is only one trade union, then the employers of that establishment are required to recognise such trade union as the sole negotiating union of workers. While, in cases of multiple trade unions, only the union with the support of at least 75 percent of the workers will be recognised as the negotiating union by the central or the state government.
In case of unfair labour practices, the code prohibits employers, workers and the trade unions from committing any unfair labour practices listed under the schedule of the code, which include; i) restricting workers from forming trade unions, ii) establishing employer sponsored trade union of workers and iii) coercing workers to join trade union.
While the code also allows companies to hire workers on fixed-term contract of any duration. The code defines “fixed-term employment” to mean engagement of a worker on the basis of a written contract for a fixed period with all statutory benefits doing similar work, thereby extending it to the entire industry (until now, it is restricted to the textile and garments sector).The purpose of defining this term is that it would not lead to any notice period and payment of compensation on retrenchment excluded.[8]
One of the most unpopular proposals of the Bill, 2017 was that the government permission for lay-offs, retrenchment or closure, which are required only in establishments employing 300 or more employees. But the new code has anyways retained the threshold on the worker count at hundred for retrenchment and a prior approval from the “appropriate government” i.e. central and the state government, only through the provision for changing ‘such number of employees’ through notification.[9] It also states that, the prior approval from the parliament is not needed and the threshold can be changed by the executive order. [10]
The code defines “strike”, which includes mass casual leave and also defines “worker” to include persons in supervisory capacity getting Rs 15,000 a month -up from Rs 10,000. Where it prohibits strikes and lockouts i) without giving a prior notice of 14 days and going for it “within 60 days” ii) also during any pendency of conciliation proceedings before the conciliation officer and continuous throughout the proceeding period in the tribunal, iii) “during” the pendency of arbitration or settlement or award is operating etc., besides providing stiff punishments for violations( fine up to Rs. 10,000 and a month’s imprisonment). It also provides for “sole negotiating union” for negotiations with 75% or more representations of workers in a trade union, in absence of which the negotiating council will be constituted for the same purpose. The central or state governments may appoint conciliation officers to mediate and promote settlement of industrial disputes. These officers will investigate the dispute and hold conciliation proceedings to arrive at a fair and amicable settlement of the dispute. If no settlement is arrived at, then any party to the dispute can make an application to the Industrial Tribunal. The Code allows for industrial disputes to be voluntarily referred to arbitration by the employer and workers. The parties to the dispute must sign a written agreement referring the dispute to an arbitrator. After investigating the dispute, the arbitrator shall submit the arbitration award to the government. An industrial tribunal is introduced as an adjudicating body to replace court inquiry, board of conciliation and the labour courts in order to decide appeals against the decision of conciliating officer.[11] It provides setting up of a two-member tribunal (in place of only one member) i) a Judicial Member, who is a high court judge or has served as a district Judge and an additional dist. Judg
e for a minimum of three years; and ii) an administrative member, who has over 20 years of experience in the fields of economics, business, laws and labour relations. Wherein, important cases will be adjudicated jointly and the rest by the single member, which shall result in speedier disposal of cases. Besides, it has vested powers with the government office for adjudication of the disputes involving penalty as fines, thereby lessening the burden on the tribunal. While reference of disputes by the government will not be dealt by the Industrial Tribunal, except the National Industrial Tribunal, as in any one can approach the Industrial Tribunal. The central government may also constitute National Industrial Tribunals for settlement of industrial disputes which: (i) involve questions of national importance, or (ii) could impact industrial establishments situated in more than one state. Members of the National Industrial Tribunal will include: (i) a Judicial Member, who has been a High Court Judge, and (ii) an Administrative Member, who has been a Secretary in the central government. It also suggests the re-skilling fund is to be utilised for crediting to workers in a manner to be prescribed.[12]
e for a minimum of three years; and ii) an administrative member, who has over 20 years of experience in the fields of economics, business, laws and labour relations. Wherein, important cases will be adjudicated jointly and the rest by the single member, which shall result in speedier disposal of cases. Besides, it has vested powers with the government office for adjudication of the disputes involving penalty as fines, thereby lessening the burden on the tribunal. While reference of disputes by the government will not be dealt by the Industrial Tribunal, except the National Industrial Tribunal, as in any one can approach the Industrial Tribunal. The central government may also constitute National Industrial Tribunals for settlement of industrial disputes which: (i) involve questions of national importance, or (ii) could impact industrial establishments situated in more than one state. Members of the National Industrial Tribunal will include: (i) a Judicial Member, who has been a High Court Judge, and (ii) an Administrative Member, who has been a Secretary in the central government. It also suggests the re-skilling fund is to be utilised for crediting to workers in a manner to be prescribed.[12]
All industrial establishments with at least 100 workers must prepare standing orders on matters listed in the schedule to the code. The central government will prepare model standing orders on such matters, based on which industrial establishments are required to prepare their standing orders. These matters are in relation to i) classification of workers, ii) manner of informing workers about hours of work, holidays, paydays, and wage rates, iii) termination of employment, iv) suspension for misconduct and v) grievance redressal mechanisms for workers. These are some of the salient features of the Industrial Relations Code,2019.
Various analysts claim that the new code benefits the employer more than the employees. But the regulation was intended not just to simplify the existing rules on the type of employment but also to give an equal footing to both, permanent and contractual workers. And to improve the working conditions of the contractual staff and bring them on par with regular employees. From an HR’s perspective, this means that a company need not have multiple employment policies for contractual and regular staff. In areas like maternity leave and extended leave for mothers, a similar policy is be followed which would make the management process easier. In the past, leaves were bone of connection between companies and labourers. [13]
The Code provides recognises the trade union(s) for collective bargaining purposes. From last seven decades this reform has been pending. But the good work is undone by unrealistic and unimaginative legislating by the government. In the case of multiple unions, a union having 75% membership are designated as the sole bargaining agent, failing which a negotiating council will be formed with constituent unions having at least 10 percent membership in the bargaining unit. By setting a rigid threshold of 75 percent membership for sole bargaining agent status, the law defeats its very objective of providing for it; either the lawmakers have no grip on the empirical realities or they are insincere about their noble purposes. Then, the law in fact enables multiple unions and crowded (theoretically 10 unions in any firm) negotiating council. It fails to recognise the probability of a larger union with 33-49 % membership being treated on par with those having 10% membership. These will make union sector in a firm a battle ground, which would ultimately lead to inefficient bargaining.[14]
The Code wrongly claims that it has removed several adjudicating bodies like the Court of Inquiry, Board of Conciliation and Labour Courts, and provides for a single body, the Industrial Tribunal. Firstly, the Court of Inquiry and the Conciliation Boards do not have any adjudicatory powers in the ID Act. Secondly, providing for one forum, the Tribunal is not the solution that will address the concerns of the workers or the employers. Currently, the adjudication process suffers from two serious shortcomings, viz. absence of quick and efficient system of industrial justice delivery (which means time-based dispute resolution processes) and inadequate number of adjudicatory tribunals and officials proportionate to the workforce. Maybe it is time to revive the Labour Appellate Tribunal as the higher courts, the High Courts and the Supreme Court occupied with all sorts of litigations have unmanageable workload. Judicial reform in th
e wide sense is the remedy and not just meaningless changes in nomenclatures. Apart from the aforementioned weaknesses, the tougher conditions for legal strikes (which include accidental mass casual leave), the lower status for collectively bargaining agreement as opposed to conciliated settlements and judicial awards in terms of their differential coverage weaken bi-partism.
e wide sense is the remedy and not just meaningless changes in nomenclatures. Apart from the aforementioned weaknesses, the tougher conditions for legal strikes (which include accidental mass casual leave), the lower status for collectively bargaining agreement as opposed to conciliated settlements and judicial awards in terms of their differential coverage weaken bi-partism.
While the Code is being met with criticism for giving legislative nod to fixed-term contracts as opposed to job security, there is no denying that the Indian economy is growing at 5%, a six-year low, while the country’s factory output shrank for the second straight month at 4.3%, and a deceleration in core industries is seen. The ease of compliance of labour laws through consolidation of acts such as the Industrial Relations Code Bill 2019 is likely to promote the setting up of more enterprises, thus catalysing the creation of employment opportunities with in the country and boosting possibilities on inward investment.[15]
Conclusion
Despite the unanimous opposition of the trade unions and the strong opposition from the working class of the society voiced through innumerable protests through demonstrations and various strikes, the government is ignoring the voice of the workers and going ahead. The current need for this situation is to evaluate the struggle to combative level both at the national and work place levels. What needs to be criticized is the unclear provision with regard to retrenchment that lead to uncertainty, and discretionary behaviour during implementation by the central or state government. There is chance that the clause may be misused the moment the law will provide flexibility for the applicability, where the matter is left at the discretion to the appropriate government (state or centre).If there is any discretion in law, it shall lead to uncertainty, lack of clarity, discriminatory implementation, and provides scope for unnecessary usage. The consequences should be solely faced by the government, and clearly state whether it wants to increase the threshold or retain it. In case of fixed-term employment, it needs to be introduced with adequate safeguard, otherwise it runs the risk of encouraging conversion of permanent employment into fixed-term employment. These workers would be treated on a par with regular workers during the tenure of the contract. The move shall be included in the central law, that would help in wider reach and states are expected to follows similar applicability. And the code helps in the flow of social security benefits to all workers along with making it easier for companies to hire and fire. The rigidity of the labour has often cited by industry as the main reason limiting scalability and the employment generation. Good industrial relations should aim to minimize or eradicate the occurrence of strikes, go-slows, lockouts and grievances which hamper industrial activity. And should help in increased and continuous production by minimizing wastage of labour and material resources. When every business/employee relationship are balanced optimally, it would have good consequences for the society in general. Though it is essential for the legal framework to impose legal limitations on an employer/ employee relationship. Thus the new code is both a boon and a bane to the employers and the employees fostering industrial peace and promoting industrial democracy.
References
1. http://www.yourarticlelibrary.com/industries/industrial-relations/industrial-relations-meaning -objectives-and-participants/90556
[1] Minakshi Jain, Industrial Relations: Meaning, Objectives and Participants Your Article Library (2016), http://www.yourarticlelibrary.com/industries/industrial-relations/industrial-relations-meaning-objectives-and-participants/90556 (last visited Feb 22, 2020).
[2] Id.
[3] The Industrial Relations Code, 2019, PRSIndia (2020), https://prsindia.org/billtrack/industrial-relations-code-2019 (last visited Feb 23, 2020).
[4] Sonal Khetarpal, Good, bad and ugly of industrial relations code Business Today (2019), https://www.businesstoday.in/current/economy-politics/good-bad-and-ugly-of-industrial-relations-code/story/391272.html#vuukle-emote (last visited Feb 23, 2020).
[5] All About Industrial Relations Code, Jatin Verma (2019), https://www.jatinverma.org/industrial-relations-codes (last visited Feb 25, 2020).
[6] Prasanna Mohanty, Industrial Relations Code 2019: Balance tilts in favour of industry; makes trade unions jittery Business Today (2019), https://www.businesstoday.in/current/economy-politics/industrial-relations-code-2019-unorganised-sector-workers-bill-favours-industry-makes-trade-unions-jittery-ir-code-layoffs-employee-unions/story/391256.html (last visited Feb 25, 2020).
[7] The Industrial Relations Code, 2019, PRSIndia (2020), https://prsindia.org/billtrack/industrial-relations-code-2019 (last visited Feb 23, 2020).
[8] Id.
[9] All About Industrial Relations Code, Jatin Verma (2019), https://www.jatinverma.org/industrial-relations-codes (last visited Feb 25, 2020).
[10] Mohanty, supra note 6.
[11] Mohanty supra note 6
[12] Sonal Khetarpal, Good, bad and ugly of industrial relations code Business Today (2019), https://www.businesstoday.in/current/economy-politics/good-bad-and-ugly-of-industrial-relations-code/story/391272.html#vuukle-emote (last visited Feb 23, 2020).
[13] K R Shyam Sunder, Industrial relations code: A poor balancing act The Financial Express (2019), https://www.financialexpress.com/opinion/industrial-relations-code-a-poor-balancing-act/1793548/ (last visited Feb 28, 2020).
[14] Id
[15] Avani Mishra, Industrial Relations Code Bill 2019 – Assessing need for labour law reforms Vakilsearch (2019), https://vakilsearch.com/advice/industrial-relations-code-bill-2019-assessing-need-for-labour-law-reforms/ (last visited Feb 28, 2020).