Draft Labour Code on Industrial Relation Bill 2015

Draft Labour Code on Industrial Relation Bill 2015 received from Ministry of Labour to be placed before mansoon session of the parliament after tripartite discussions with  stake holders and approval from the cabinet before parliament– Creating a new Industrial relations law
The move follows the ministry’s recent proposal to merge four wage-related laws—the Minimum Wages Act, the Payment of Wages Act, the Payment of Bonus Act and the Equal Remuneration Act—into one.
Proposed Draft  Code on Industrial Relations Bill, 2015 is one of the initiative of the government to subsume 44 labour laws into five broad codes, dealing with industrial relation, wages, social security, industrial safety and welfare.
The initiative assumes significance in the backdrop of the government’s bid to consolidate and reduce the number of central laws. “Fewer laws mean better monitoring,easycompliance and benefit to both industries and workers,”
The bill intends to replace Trade Unions Act, Industrial Disputes Act and Industrial Employment (Standing Orders) Act.The said  draft will have far reaching effects on Industries.
Allow easier retrenchment and closing down norms for firms with less than 300 workers.The Labour Code on Industrial Relations Bill, 2015, proposes to combine Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946. The ministry has written to all stakeholders, including trade unions and industry, seeking their response before finalizing the bill.
According to the proposal, 

The Ministry of Labour and Employment, Government of India has drafted Labour Code on Industrial Relations Bill 2015. 

The Bill proposes to consolidate and amend certain Provisions in the law relating to registration of Trade Unions, Conditions of Employment, Investigation and Settlement of disputes and the matters related therewith or incidental thereto by amalgamating the following three existing labour laws: 
(i) The Trade Unions Act, 1926.
(ii) The Industrial Employment (Standing Orders) Act, 1946. 
(iii) The Industrial Disputes Act, 1947. 

Trade Union:

Chapter 3 of the Labour Code deals with registration of trade unions. 

The major change is that in case of a Trade Union of workers, a minimum of 10% of workers employed in an establishment, undertaking or industry with which a Trade Union is connected shall be required to be the members of the Trade Union for making an application for registration: Provided that where 10% of workers exceed 100 it shall be sufficient if the application is made by 100 workers: Provided further that where 10% of workers of an establishment or undertaking or an industry is less than seven workers a minimum of seven workers shall be required to make an application for registration.

The Labour Code specifies that only employees will be allowed to form trade unions, except in the unorganized sector where two officials from outside can become members of a union. The Labour Code also provides for existing registered unions to be covered by the Labour Code. 

There is a provision for membership subscription of a trade union being deducted from the wages. A new provision  is that, where any worker is not a member of any trade union, the worker shall be liable to pay subscription to the welfare fund established by the State Government for securing welfare of workers in general at a rate equal to the membership fee of the sole negotiating agent or the highest subscription of any union included in the negotiating college. Workers were free to join or not join a trade union: subjecting non members of a trade union to pay subscription to the welfare fund established by the State Government is violation of the principles of ‘Freedom of Association”.

The code deals only with registration of trade unions and is totally silent on any methodology to be followed for recognition of trade unions which is a major need of the industry, because presently there is no national legislation on recognition of the bargaining agent in case of multiplicity of unions in an establishment. 

Standing Orders :

Chapter 4 of the Labour Code deals with standing orders.

The Chapter states that the Central Government shall make rules and Model Standing Orders to provide for the various matters. The items listed in the first schedule of the Code are identical to the schedule under Section (2-A) of the existing Industrial Employment (Standing Orders) Act, 1946.

Notice of Change :

Chapter 5 of the Labour Code deals with Notice of Change.

The items considered under “Conditions of Service for Change of which notice is to be given” in the second schedule of the Code are identical to the fourth schedule of The Industrial Disputes Act, 1947. There was need to relook at the schedule as businesses have to go through technological changes and quite often the items listed in the schedule are used as delay tactics by trade unions. Also consider item 11 in the schedule which is “Any increase or reduction (other than casual) in the number of persons employed or to be employed in any occupation or process or department or shift, not occasioned by circumstances over which the employer has no control”. Hence, if an employer desires to increase the workforce, it will attract notice of change. The Second National Commission of Labour had recommended that the word “increase “ be dropped, because if a company decides to increase its workforce which generates employment then also notice of change is attracted. This is because item11 in the schedule is taken from the Bombay Industrial Relations Act, 1946 where workers were paid on piece rate and if the team strength of a group went up then an individual workers wages could reduce. 

Procedure, Powers & Duties of Authorities:

Chapter 7 of the Labour Code deals with Procedures, Powers & Duties of Authorities. 

In the proposed Bill, there is a provision for Industrial Tribunal and National Tribunal. The Labour Court and Board of Arbitration would cease to exist, though there is provision for voluntary reference of disputes to arbitration.

Strikes and Lockouts:

Chapter 8 of the Labour Code deals with Strikes and Lockouts. 

An addition under the code is “No worker shall stage, encourage or instigate such forms of coercive actions as wilful “go-slow”, squatting on the work premises after working hours or “gherao” of any of the members of the managerial or other staff during conciliation proceedings and no worker shall stage demonstrations at the residence of the employers or the managerial staff members during conciliation proceedings and adjudication proceedings before the Tribunal and National Tribunal. Also the workers cannot resort to strike without giving six weeks’ notice and this clause is applicable only to the workers engaged in public utility services. 

Also mass casual leave will be considered as strike. The proposal says if more than half the workers are on casual leave, it will be treated as strike.

Layoff, Retrenchment and Closure:

Chapter 9 of the Labour Code deals with Layoff, Retrenchment and Closure 

The major change is that industrial establishments employing more than 300 workers will have to obtain permission from the appropriate Government before Lay-off, Retrenchment and Closure, compared to the earlier figure of 100 which was introduced in the legislation during the emergency period (June 1975 to March 1977) when both strikes and lockouts were banned. The number of 100 was not restored back to 300, though the emergency was lifted on 21 March 1977. It is good that the figure of 300 has been restored in the labour code. 

The other change is that notice period for establishments to retrench or close down a unit is proposed to be increased from one month to three months and retrenchment compensation is to be enhanced from 15 days’ wages to 45 days’ wages per year of service, which is good. 

The present National Democratic Alliance (NDA) Government has come forward with the Labour Code by clubbing three laws. The Labour Code has made an effort to bring commonality in definitions under the three Acts with certain changes as cited above. 

The code needs to specify the methodology to be followed for recognition of trade unions which is a major need of the industry, because presently there is no national legislation on recognition of the bargaining agent in case of multiplicity of trade unions in an establishment. 

Section 33 (4) of the Industrial Disputes Act, 1947, had specified the number of workmen to be recognised as protected workmen, this provision is missing in the code and the same needs to be brought in. 

Since majority of the small and medium enterprises operate with less than 300 workmen, the code will benefit these enterprises, as they will not require obtaining the appropriate labour department’s permission for Layoff, Retrenchment and Closure. This will help these enterprises to be restructured easily. 

At present, firms employing 100 or more workers are required to seek government’s permission for retrenchment under the Industrial Dispute Act which is going to be raised as 300
Lay off, retrenchment and closure shall apply to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than three hundred workers were employed on an, average per working day for the preceding twelve months. In turn, workers would now have to be given compensation for an average compensation for 45 days worked in a year as against the current practice of 15 days in case a factory is closing down.
Three months of notice in case there is a plan for retrenchment, but it shall not apply to an “undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work”.
Firms will also have to give a notice of three months to lay off workers or shut down a unit as against the prevailing one month period.
The proposed bill also seeks to keep strikes and lock outs under control and has added new conditions when a strike or lock out cannot take place.
Further proposed provision in draft code provides that 10 per cent of workers shall apply (be applicant) for registering a trade union.  At  present, any seven or more members of a trade union can apply for registration of the Trade Union.In cases where 10 per cent of workers is less    than 7, at least seven workers are required (to apply) for the purpose and where the 10 per cent of workers exceed 100, hundred workers shall be sufficient for registering the trade union. This  new provisions which would discourage formation of trade unions in India.


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