Industrial Relations: The Realm of Change

Industrial Relations: The Realm of Change

Industrial Relations as a concept has a very wide meaning and a far-reaching connotation. In the narrow sense, it means that the bond that the employer shares with the employee is confined to the relationship emerging out of the day-to-day association between the management and the workforce. In a wider sense, industrial relations encapsulate the relationship between an employee and an employer in the course of running an industry and may project it to spheres, that possibly transgress to the areas of quality control, marketing, price fixation and disposition of profits among others. It also covers industrial relations with its stakeholders, trade union negotiations, and settlement of industrial disputes.


Labour Law in India


In India, the relation between the employer and the employee began with the advent of Industrialization. During the initial stages, all employees were on the permanent rolls of the company/organisation- temporary during the first few years of employment and permanent thereafter. But, the focus in India today has transcended beyond the Employer-Employee to Employer-contractor (Contract Labour) to mainly avert union related issues. Most companies are now outsourcing the manpower to a third-party agency to overcome complications that arise owing to Labour/Union related issues. It is noteworthy that the number of disputes filed in the Industrial and Labour Courts and the Labour office has seen a gradual drop since the 90s. This, however, does not mean that there is no workforce exploitation.


In Quotes “Most companies outsourcing manpower to a third-party agency to overcome complications owing to Labour/Union related issues. It is noteworthy that the number of disputes filed in the Industrial and Labour Courts has seen a gradual drop since the 90s.


The recent upsurge in industrial action in the manufacturing sector is a reminder that the composition of employees in a manufacturing industry is diverse, requires sensitivity in approach, skillful handling and equal, pre-emptive focus on IR, which if not enforced, can simply destroy shareholder value. Industry-labour relations have improved dramatically in the first quarter of 2018, as compared to that of 2017. There were only eleven strikes across industrial units during the period from January-March in 2018, while the same stood at twenty six in 2016 and thirty six in 2017. Likewise, there were nine lockouts until March in 2018, while the same figure was nineteen in 2016 and seventeen in 2017. The total man-days lost during the first quarters from 2016 to 2018 were 10,34,005, 11,72,274 and 96,770 respectively.



Consolidation of Labour Laws


As part of its election manifesto, the incumbent Government had promised to review the Indian employment laws to reduce the multiplicity of employment legislations to keep the legislations in sync with the requirements of the evolving labour market. In furtherance of the same, the Government has sought to consolidate 44 central employment laws into 4 labour codes:


1. Labour Code on Wages: Consolidating the Minimum Wages Act, 1949, the Payment of Wages Act, 1936, Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976

2. Labour Code on Industrial Relations: Consolidating the Industrial Disputes Act, 1947, the Industrial Employment (Standing Orders) Act, 1946 and the Trade Unions Act, 1926;

3. Labour Code on Social Security and Welfare: Consolidating social security laws such as the Employees Provident Funds and Miscellaneous Provisions Act, 1952, the Employees State Insurance Act, 1948, Maternity Benefit Act, 1961, the Employees Compensation Act, 1923

4. Labour Code on Occupational Safety, Health & Working Conditions


Labour Code on Wages


The law will enable the Central Government to set benchmark minimum wages for different regions across the country. The bill's provision provides that states cannot set minimum wages below the benchmark set by the Centre. The Code stipulates that the minimum wages will be determined by skill, arduousness at the workplace, and geographical peculiarities. Employers have been calling for fixing minimum wages on the basis of paying capacity of the industry and productivity of workers.

The Code is both good and bad. But the main problem with the code is that endorsing principles inherent in law is different from realizing them. It has removed the existing concept of “scheduled employments” — which are occupations or industries added by the Centre or the State governments from time to time for payment of minimum wages under the law — and made it universal. Simply put, workers in both the organised and the unorganised sectors will have to be paid the stipulated minimum wage. Secondly, it is mandatory to revise minimum wages every five years, thus standardizing the revision tenure. Further, it has powers to direct employers to make “formal” wage payments to workers. These are admirable and welcome clauses. However, these are easier proclaimed than done.


Labour Code on Industrial Relations


It is not the constitution of the establishment; be it a public limited company, private limited company, cooperative society, partnership or proprietary firm that decides the working hours, leaves, and other service conditions of the employees, but the labour laws applicable to the kind of business being transacted that rides over these matters. The proposed amendment to the labour laws on industrial relations stipulates new rules of handling disputes between employers and employees.


Registration of Trade Union: The proposed code provides that in order to apply for registering the trade union, a minimum of 10% or 100 workers, whichever is less, must be enrolled as members of the union, and the union must comprise of at least seven members who are employees of the given organisation.


Retrenchment and Shutdown: Presently, all units with up to 100 workers can retrench, lay off or close down without the government's permission. The government is most likely to keep this provision in the new code, though the unions have objected the proposed amendment in the bill to allow units with up to 300 workers to retrench, lay off or close down without the permission of the government. It is proposed to increase the severance pay to 45 days’ salary for each completed year of service from the existing 15 days.


Strikes and Lockouts: The provisions for strikes have been made very strict to avoid the occurrence of strikes. Six weeks prior notice is being made necessary for a strike. There can be no strike from the workers in whatsoever form if the matter is sub judice. Demonstration of any form/kind at the residence of any manager or promoter is deemed to be absolutely prohibited by the new code. If the appropriate manner and protocol of initiating and managing a strike is not followed, it would lead to a fine of 20,000-50,000 rupees along with imprisonment.


Labour Code on Social Security and Welfare


The code has proposed to merge retirement fund body Employees' Provident Fund Organization (EPFO) and state health insurer Employees' State Insurance Corporation (ESIC). In a letter to the labour secretary, the All India Trade Union Congress (AITUC) had opposed the merger proposal of Employees Provident & Miscellaneous Provisions Act and Employees State Insurance Corporation Act as EPF and EPS schemes and the ESI scheme that have been functioning under these two Acts have been rendering satisfactory service to its respective members since the last sixty years.


However, the biggest lacuna in the present day social security system is that it leaves almost 90 percent of the workforce out of the realm of any social security. And, workers in the unorganised sector workers remain largely excluded. The schemes have very limited outreach. The other issue is large-scale fragmentation; there are multiple laws, policies, schemes and agencies. The existing wage and the number thresholds create perverse incentives for the employers to shy away from joining the system, thus resulting in artificial exclusions and distortions in the labour market.


In Quotes “The biggest lacuna in the present day social security system is that it leaves almost 90 percent of the workforce out of the realm of any social security. And, workers in the unorganised sector workers remain largely excluded.


To begin with, the Labour Code on Social Security aims to simplify, rationalize and consolidate the hitherto fragmented laws into a law that is unified and consolidated will be easier in terms of comprehension, implementation and enforcement. However, the proposal being contemplated by the Government goes much beyond mere amalgamation, since it is aiming to provide universal social security. The code follows a rights-based approach, much aligned to the spirit of the Constitution - Social security is every worker's right.


This code has drawn inspiration from UN SDGs of the 2030 Sustainable Development Goals Agenda. Expert technical assistance was also obtained from the International Labour Organisation to guide the policy framework in the right direction. The Code aims at universalisation of Social Security, and as such, the definition of employee covers all kinds of employment including a part time worker, casual worker, fixed term worker, piece-rate/commission rated worker, informal worker, home-based worker, domestic worker and seasonal worker. The Universalisation however does not mean that all the workers proposed for coverage under the code would be covered from day 1, as the code provides the flexibility of progressive extension of coverage. Those categories of workers who are initially not covered would be included in Schedule- I. Exclusions and this schedule would be gradually pruned to expand the coverage.


Labour Code on Occupational Safety, Health & Working Conditions


Periodic medical inspections, mandatory registration of workplaces and surprise checks on employee safety by facilitators appointed by the government are some of the provisions that the labour ministry has proposed in the new draft policy to ensure safety and health of workers at their workplaces.


The draft, titled Labour Code on Occupational Safety, Health and Working Conditions, has provisions for which the ministry has taken cues from 13 Acts regarding working conditions. The draft classifies workers from different sectors and has laid out guidelines separately for each sector. Some of the categories which factory workers, miners, dock workers, building and construction workers, plantation labour, contractual labour, working journalists, motor transport workers, beedi and cigar workers and cine and cinema theatre workers.


A bill to amend Contract Labour Act will also be pushed for passage during the forthcoming session in the Parliament. The bill seeks to distinguish between contract labour and work labour. The contract labour is that workforce that works for the organisations provided by contractors, whereas the work labour, works on the basis of task completion such as one-time repair of factory or office buildings. Besides, the law would also provide for registration of labour contractors with the states as well as central governments. This will also help centre and state governments to monitor these contractors and would be able to blacklist defaulters and offenders. The draft also specifies duties for an employer to ensure that employees do not face hazards and remain healthy at their respective workplaces. "Every employer shall ensure the periodical medical examination and prescribed tests of the employee employed in his establishment. Every employer shall provide and maintain, as far as is reasonably practicable, a working environment that is safe and without risk to the health of the employees.”


The draft also mandates all types of companies to constitute a safety committee and notify about the spread of diseases, if any, and, also about hazardous conditions at the workplace. The committee will have members who will be designated as safety officers. The ministry has proposed the setting up of a National Occupational Safety and Health Advisory Board to advise the government on matters relating to the code. The board will comprise of a secretary of the labour ministry as the chairman with representatives of all stakeholders as its members.


The board will also be tasked with conducting regular health and occupational hazard surveys at workplaces. The draft proposes the appointment of facilitators to ensure that the code is being adhered to at workplaces. "A facilitator may enter a work place, make examination of the premises, plant, machinery, article, or any other relevant material.”


Every industry sector has endeavored to develop its own system of industrial relations. Often, one gets the feeling that industrial relations are determined by the exigencies and the need of the hour. Industrial relations in Indian industries has undergone a sea change owing to the internal and external factors within and outside the industries. The maximum number of bills/acts presented in Parliament including the maternity Benefit Act, Bonus Act, Gratuity Act, employee compensation act and payment of wages act have all been proposed by the ministry of industrial relations showing the governments proactive approach and commitment towards bringing reforms in labour laws at the earliest.


In Quotes “Every industry sector has endeavored to develop its own system of industrial relations. Often, one gets the feeling that industrial relations are determined by the exigencies and the need of the hour.”


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