Savera

In perhaps the most profound restructuring of laws that mediate class relations in India, the Modi government has finally notified the implementation of four new Labour Codes that subsume within them 29 existing labour laws. This is not just a reorganization for the sake of clarity or simplicity. It decisively shifts the weight of law away from the working class and strengthens the hands of owners/employers of industry by giving them a free hand to hire and fire, give arbitrary wages, increase working hours while providing even less for social security and welfare than now. Importantly, the new Codes also make it difficult to form and maintain trade unions, restrict the right to strike and impose heavy punishments for ‘illegal’ strikes even as they reduce penalties for violations of workers’ rights by employers. Far from expanding the protective cover for workers the new Codes further exclude various sections and limit the protections available. The Codes are a blow to Constitutional provisions of right to livelihood and a life of dignity, and also right to association and collective bargaining.

The Modi government has unleashed a propaganda blitz to paint these Codes as favourable to workers, taking recourse to all manner of lies. Hence, it is necessary to look at some of the salient features of the four Codes (Code on Wages, the Code on Industrial Relations, the Code on Social Security and the Code on Occupational Safety, Health and Working Conditions). But before that, let us look at the way the Modi government has spent the past five years in trying to get these Codes implemented through the backdoor after they were passed by Parliament in 2019 and 2020.

Resistance to Codes and Pressure of Big Business

A phalanx of classes and their hangers-on had been calling for so-called labour reforms’ for decades. The BJP had promised to do this and after the 2019 Lok Sabha victory it opened this process by getting the Code on Wages passed July 2019. The Code on Occupational Safety, Health and Working Conditions (OSH Code) was also introduced but sent to a Select Committee, then withdrawn and finally reintroduced with changes in 2020 during the pandemic along with the remaining other two Codes. The three Bills were tabled and passed on September 22, 2020 in the Lok Sabha without any debate when the entire Opposition was boycotting the Parliament on the question of the infamous Farm Laws. The next day, Rajya Sabha too passed them. It was typical of Modi government’s deviousness that such a major change was rammed through Parliament in this cowardly manner. Perhaps this was the price to be paid for the solid backing received from the corporate sector during the elections?

But then, why has it taken five years to come to the stage of implementing the four Codes. Partly the reason lies in the fact that various labour and trade union related matters are in the Concurrent List of the Constitution and States need to be on board with the changes. This meant that Rules needed to e framed by each state government in alignment with the Central laws and its own rules. Curiously, there were no Central Rules earlier; the states had rules according to their own conditions. But Modi’s government wants everything homogenized and centralized – as does big business which wants ‘ease of doing business’ above all.

Here, the governments – Centre and States – ran into multiple obstructions, the chief among them being the opposition to Codes by the working class. Led by the Joint Platform of Central Trade Unions, a spirited and extensive campaign unmasking the real intent of the Codes was in progress throughout the country, and it even got the support of the farmers’ organisations. Remember that the farmers had forced the government to withdraw the three farm laws in 2021. This wall of opposition affected various state governments too, many of which were led by non-BJP parties. In short, the rules could not be framed by the states.

However, various BJP governments in states along with several other state governments led by opposition parties that are keen to please the corporate sector have passed ordinances and laws giving effect to some of the key provisions of these Codes. According to media reports from earlier this year, 19 states and UTs had increased the retrenchment threshold without government permission from 100 to 300 and also doubled the number of workers for applicability of Factories Act from 20 (with power) and 40 (without power). Similarly, applicability threshold for Contract Labour Act was raised from 20 to 50 workers. Fixed term employment has become law in 25 states as has compounding of offences. It was reported that nearly two dozen states were considering mandating strike notices in all establishments as opposed to the current provisions that mandate such notices only in public utility services. Clearly, the dismantling process of labour laws has gone much ahead in states than at the central level. However, big business houses with multiple industrial units spread across states, as also public sector units, would need central laws to change the extant labour laws. That’s why the continued push for central Labour Codes.

The central government has been holding regional workshops where central labour ministry bureaucrats meet with state labour departments, ministers, and industrialists to push them to align the respective state laws and rules with the central ones. According to the last Monthly Progress Report of the Labour Ministry available on its website (for September 2024), out of 36 states and Union Territories, four haven’t yet pre-published draft rules for Code on Wages; six haven’t done so for Industrial Relations Code; five haven’t done so for Code on Social Security; and five haven’t pre-published rules for Occupational Safety, Health & Working Conditions Code. About seven states/UTs are still not on board but most other states have been pressurised to fall in line.

What is in the Codes?

Some of the key features of the four Codes that limit or dismantle protective and welfare measures in the now repealed 29 labour laws are summarized below.

Exclusion: The 6th Economic Census (2013-14) had shown that nearly 95 per cent of non-agricultural establishments in India employ five or less workers and that makes up about 90 per cent of the workforce. Existing labour laws did not cover them. Any ‘reform’ should have started with extending the coverage to include the unreached. However, the new Codes further restrict the coverage through several devious means. A large number of workers are currently employed as contract workers, getting a fraction of benefits that regular workers get. These will be excluded from coverage under the new Codes. Those designated as apprentices or trainees will also be excluded, as also those called supervisors, executives, etc. The wage threshold for this category is just Rs.18,000 per month – those getting above this will be excluded. Earlier, provisions of the Factories Act were applicable to units with 10 workers if power was being used and 20 workers if no power was being used. This limit has been changed to 20 and 40 respectively for application of OSH Code. Similarly, Contract Act was applicable where more than 20 workers were employed but the new Code raises this to 50 workers. All these measures will push out thousands of more workers beyond the protection of laws.

Social Security: The Modi government has perpetrated a big hoax by claiming that vast numbers of unorganized, gig and platform workers will be brought under social security coverage. The new Codes provide for 1-2 per cent contribution towards social security benefits by the aggregator company (capped at 5 percent of workers’ pay). It is impossible to provide provident fund (PF), pension and healthcare (ESI) coverage through this meagre provision. In any case, the continuing statutory monthly wage ceiling of Rs.15,000 for PF and Rs. 21,000 for ESI coverage will prevent coverage for a large number of workers. Similarly, the continuing provision of at least 20 workers for PF and 10 workers for ESI excludes many workers. There is even provision for reduction of PF/ESI contributions which will further deplete social security funds.

Trade Union Rights: In order to prevent workers from organizing and launching any protest actions against exploitation or repression, the IR Code provides for unjustly stringent conditions for registering trade unions and maintaining them. It lays down that at least 10 percent of workers or 100 workers whichever is less working in “the industrial establishment or the industry with which it is connected” are necessary to register a trade union and the same proportion should be members at all times. The registrar of trade unions and the appropriate government will have arbitrary powers to grant or refuse or even cancel registration of a trade union. There are restrictions placed on the number of full-time organisers that can be office bearers of any trade union. Historically, such organisers have always played an important role because they cannot be victimized or threatened like workers and they infuse experience and solidarity of other unions. Very harsh conditions are imposed on strikes under the new Code. In the previous law, 14-day advance notice of strike was needed only for units in public utility services, but the new Code makes it compulsory for all establishments. Strikes are prohibited during conciliation (and seven days thereafter) and tribunal proceedings (and 60 days thereafter) for all establishments whereas earlier similar stipulations in earlier laws applied only to public utility services. Harsh punishments like huge fines and imprisonment provided for on workers going on so-called ‘illegal strike’ and those who ‘instigate’ or support them. Even mass casual leave will be treated as illegal strike.

Implementation Machinery: The already weakened system of inspectors and their mandate to ensure implementation of labour laws is practically dismantled in the new Codes. Inspectors will now be known as ‘inspector cum facilitator’. They will conduct ‘inspection including web-based inspection in such a manner as may be prescribed by the appropriate government’. Self-certifying compliance with labour Codes by employers will be accepted, thus giving a free rein to violations.

Minimum Wages: The Codes fail to codify the accepted formula of fixation of minimum wages as decided upon at the 1957 Indian Labour Conference and further amplified by the Supreme Court judgement in Reptakos Brett in 1991. Instead, it leaves the matter to the appropriate governments and the Advisory Boards in states. On the other hand the Code creates a power vested with the Central government to declare a National Floor Wage, thus encroaching upon the rights of states to fix wages. The extreme dismantling of the enforcement mechanism coupled with this ambiguity in fixing wages implies that the intention is to allow the present large scale violation of minimum wages payment to workers to continue.

Retrenchment, Closure, Lockout: The Code has raised the threshold for getting government permission for retrenchment and closure from 100 to 300 workers. This means that a very large number of factories will now become prey to arbitrary retrenchment and closure by hostile managements, with no recourse to legal relief for the workers. A similar fate awaits workers going on so called ‘illegal strikes’ – the concerned management can declare a lockout without any permission.

Its Class War

The new Labour Codes are an open attack on the working class directed towards increasing exploitation, depressing wages, giving the freedom of hire-and-fire to industrialists, make jobs insecure and hence crush workers, and disarm any attempt to organize and protest. It fits in well with the Modi government’s larger policy of giving concessions to corporate sector through tax cuts and direct incentives, loosening compliance laws, etc. These Codes, unsurprisingly, have been welcomed heartily by domestic as well as foreign capital. However, as the massive countrywide protests and strikes of the past few years have shown, the working class, and all working people in general including farmers, are ready to rebuff this attack.