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Jul 08, 2022
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The enactment of the four Labour Codes has been hailed as a defining moment in reforming the outdated and archaic labour law regime in India. With the implementation of these Codes on the horizon, this article takes a closer look at the key changes introduced in each Labour Code in comparison to the existing provisions under various labour legislations. This comparative analysis is a ready reckoner for anyone looking to gain better insight into the nature of changes enshrined under the new Labour Codes. 

 

A) Code on Wages, 2019

 

It subsumes four key legislations on wages, namely: The Payment of Wages Act, 1936, the  Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act,  1976.  

 

It has introduced a broader applicability criterion in terms of both establishments and employees. It has also standardized definitions to bring about clarity in implementation. New provisions regarding mode, time and disqualification of payments of wages and bonuses have also been incorporated to remove ambiguities in enforcement. Given below is a comparative chart of  the changes that have been introduced.

 

 S. NOACT 

EXISTING PROVISIONS 

CODE PROPOSED CHANGES
1Minimum Wages Act,  1948

Applicability - Only to  scheduled employments and those working in such scheduled employments.

Code on Wages, 2019 

Applicability - To all the establishments and employees

Payment of Wages Act, 1936

Applicability - To all scheduled establishments and all employees drawing  less than  ₹24,000.

Code on Wages, 2019 

Applicability - To all the establishments and employees.

3 

Payment of Wages  

Act, 1936

Monthly Payment/ Salary - Payable 

(i) Upto 1000 employees -  on or before 7th of succeeding month. 

(ii) Above 1000 employees - on or before 10th of  succeeding month.

Code on Wages, 2019

Monthly Payment / Salary -Payable Irrespective of the number of  employees,payment to be made on or before 7th of succeeding month.


4

Payment of Wages  

Act, 1936

Full and final settlement shall be made in the subsequent month, basis the number of employees as cited in Point 3.

Gratuity to be payable within 30 days from the last  working day of the  employee.

Code on Wages, 2019

Full and Final Settlement - wages to be paid within 2 working days of the  separation of the  employee. No change with reference to Gratuity.

5

Payment of Bonus Act, 1965

Mode of Payment of Bonus- By cash / DD / Bank Credit only.Code on Wages, 2019

Mode of Payment of  

Bonus- By Bank  

Credit only.

6 

Payment of Bonus  

Act, 1965

Disqualification for Bonus - Gross Misconduct

Code on Wages, 2019 

Disqualification for Bonus -In addition to  Gross Misconduct, "Conviction of Sexual Harassment" is now an added provision.

 

(i) Minimum Wages  Act,1948;

(ii)  Payment of Wages Act, 1936;

(iii)  Payment of Bonus  Act, 1965;

Definition of Wages - 

Differs from Act to Act. 

Code on Wages, 2019 

Common Definition  

of Wages across all 4  

Acts.

 

B) Code on Social Security, 2020

It subsumes the following nine legislations: the Employee's Compensation Act, 1923, the  Employees' State Insurance Act, 1948, the Employees' Provident Funds and Miscellaneous  Provisions Act, 1952, 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, 1996  and the Unorganised Workers' Social Security Act, 2008.  

 

Several new provisions have been introduced under the Code for bringing uniformity in social  security coverage for workers. Schemes such as Employees’ Provident Fund and Employees’  State Insurance now have broader applicability and voluntary coverage. The key changes  introduced under the Code have been detailed in the comparative chart below:


 S.NO  ACT  EXISTING PROVISIONS  CODE  PROPOSED CHANGES 
 1 

 

Employee's Provident Fund Act, 1952

 

Applicability - Only to scheduled employments as prescribed in the portal.

Code on Social Security, 2020

Applicability - Industry -specific application removed.

 2

Employee's Provident Fund Act, 1952

Condition to Apply for Exemption- No threshold prescribed

Code on Social Security, 2020

Condition to Apply for Exemption - 100 or  

more establishments.

 3

Employee's State Insurance Act,1948

No provision on obtaining Voluntary Coverage.

Code on Social Security, 2020

Voluntary Coverage  

provision added, subject  to employer's discretion.

 4

Employee's State Insurance Act,1948

 

ESIC not applicable to Mines.

Code on Social Security, 2020

ESIC applicable to  

Mines now.

 5

Payment of Gratuity Act, 1972

Fixed Term Workers /  Employees - Not entitled to Gratuity.

Code on Social Security, 2020

Fixed Term Workers /  Employees - Brought in  under the purview of  Gratuity.

 6

 

Employment Exchanges Act, 1959

 

Applicability - 25 or more employees in an   establishment

Code on Social Security, 2020

Applicability - 20 or more employees in an  establishment

 

C) Code on Occupational Safety, Health and Working Conditions, 2020

It subsumes thirteen labour legislation namely, the Factories Act, 1948, the Plantations Labour  Act, 1951, the Mines Act, 1952, the Working Journalists and other Newspaper Employees  (Conditions of Service) and Miscellaneous Provisions Act, 1955, the Working Journalists  (Fixation of Rates of Wages) Act, 1958, the Motor Transport Workers Act, 1961, the Beedi and  Cigar Workers (Conditions of Employment) Act, 1966, the Contract Labour (Regulation and  Abolition) Act, 1970, the Sales Promotion Employees (Conditions of Service) Act, 1976, the  Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979,  the Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981, the  Dock Workers (Safety, Health and Welfare) Act, 1986 and the Building and Other Construction  Workers (Regulation of Employment and Conditions of Service) Act, 1996. 

 

Various new provisions have been incorporated to bring about standardization in the statutory norms for occupational safety, health and working conditions for workers. The applicability threshold under the Factories Act, 1948 has been increased for the benefit of smaller enterprises. New provisions on common licenses have also been introduced to reduce the compliance  Burden. The important changes introduced under the Code are summarized in the comparative chart below:


 S.NOACT EXISTING PROVISION CODE 

PROPOSED CHANGES 

 1

Contract Labour (Regulation and  Abolition) Act, 1970

Applicability - Differs,  state specific.Code on Occupational Safety, Health and Working Conditions, 2020 Applicability - To 50 or more  across all the states. 
 2

Contract Labour (Regulation and  Abolition) Act, 1970

Obtaining License - State Specific

Code on Occupational Safety, Health and Working Conditions, 2020Common License across all the states. 
 3Factories Act, 1948

Applicability – 

(i) With the aid of power -10 

(ii) Without the aid of  power - 20

Code on Occupational Safety, Health and Working Conditions, 2020

Applicability 

(i) With the aid of power - 20 (ii) Without the aid of power  - 40

 4Factories Act, 1948

Applicability – 

(i) With the aid of power -10 

(ii) Without the aid of power - 20

Code on Occupational Safety, Health and Working Conditions, 2020 

The threshold

Threshold in Number of  Workers for Appointment of: 

(i) Safety Officers - 500 

(ii) Welfare Officers – 250 (iii) Canteen - 100

 

D) Code on Industrial Relations, 2020

It subsumes three key legislations: the Industrial Disputes Act, 1947, the Trade Unions Act, 1926  and the Industrial Employment (Standing Orders) Act, 1946.

 

The applicability threshold in terms of workers has been increased under the Code. At the same  time, the provision on the grievance redressal committee has undergone changes. Given below is  a comparative chart of the changes that have been introduced:


S.NO ACT EXISTING PROVISIONS CODE 

PROPOSED CHANGES 

 1

Industrial  Employment 

(Standing Orders) Act,1946

Applicability - Provisions of  Standing Orders shall apply to industrial establishment in which 100 or more workers are employed. Code on Industrial Relations,2020 

Applicability - Provisions of  Standing Orders shall apply  to industrial establishment  in which 300 or more workers are employed.

 2

Industrial Disputes Act,1947

Grievance Redressal  CommitteeThreshold - 6 members

Code on Industrial Relations,2020 

Grievance Redressal  

Committee Threshold - 10  members 

 

CONCLUSION

The new Labour Codes have consolidated 29 legacy labour laws and brought down the number  of legal provisions by a whopping 61% (from 1,232 to 480). Based on the recommendations of  the 2nd National Commission on Labour (2002), these Codes have amalgamated, simplified and  rationalized the extant labour legislation in the country. As explained above, this two-decade  long reform exercise has resulted in much-needed removal of multiplicity of definitions,  authorities and compliances while also bringing about greater transparency and accountability  in implementation. Various changes under the Codes have also been driven by the growing  penetration of technology in the labour market. Enhanced monetary penalties, reduced  imprisonment clauses and provisions for compounding of offences will surely provide greater  thrust to labour compliance without compromising on the vision of ease of doing business.



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