Firing of staff, winding up won't bother firms any more: Parliament passes 3 key labour reform bills

New Delhi: Parliament on Wednesday approved three key labour reform bills that will remove impediments to winding up of companies and allow firing of staff without government permission in firms with up to 300 workers from the existing 100, a move aimed at attracting more investments and job creation.

Rajya Sabha passed by voice vote the three labour codes on industrial relations, social security and occupational safety amid a boycott by opposition parties, including the Congress and the Left, over the suspension of eight MPs.

The first code on wages was approved by Parliament last year. With passage of these three bills, 29 central labour laws have been codified into four broad codes as contemplated by the government under labour reforms to improve ease of doing business and providing universal social security to workers as well.

The three codes were passed by Lok Sabha on Tuesday and these will now be sent to the president for his assent.

Replying to a debate on the three labour reforms bills, Labour Minister Santosh Gangwar said, "The purpose of labour reforms is to provide a transparent system to suit the changed business environment."

Referring to a provision in The Industrial Relations Code relating to increase in the threshold for retrenchment, closure or lay off for a firm (without government permission) to 300 workers from existing 100, Gangwar explained that labour falls in the concurrent list of the Constitution.

He told the House that as many as 16 states have already hiked the threshold to 300 workers wherein an industrial unit can go for retrenchment, closure or lay off without government permission.

He also said that the Parliamentary Standing Committee on Labour in its report on the Code too had recommended an increase the threshold to 300 workers.

He pointed that a large number of firms don't increase their strength of workers beyond 100 which results in a rise in informal employment.

He also told the House that as per the Economic Survey 2019, Rajasthan witnessed an improvement in job creation and an unprecedented decrease in the number of cases of firing of staff.

"Chairman sir, this clearly shows that the decision to change one provision can inspire investors to set up big factories and there will be greater employment opportunities for the workers of our country," he added.

He said these bills would safeguard the interest of workers and provide universal social security to them by expanding the ambit of Employees' Provident Fund Organisation and Employees' State Corporation of India.

He also said that there would a social security fund to cover around 40 crore unorganised sector workers.

Over 29 labour laws have been merged into four codes and one (Code on Wages Bill, 2019) of them has already been passed, according to the minister.

The Occupational Safety, Health and Working Conditions Code, 2020, will consolidate and amend the laws regulating the occupational safety, health and working conditions of persons employed in an establishment and related matters.

The Industrial Relations Code, 2020, seeks to consolidate and amend laws relating to trade unions, conditions of employment in industrial establishments or undertaking, investigation and settlement of industrial disputes.

The Code on Social Security, 2020, will amend and consolidate laws relating to social security with the goal to extend social security to all employees and workers either in the organised sector or the unorganised sector.

The Code on Wages 2019 was passed by Parliament last year. The passage of the remaining three codes by Parliament completes government's efforts to reform labour laws.

Participating in the debate on the three codes, Subhash Chandra Singh of BJD said there are apprehensions that this new code has diluted the provisions of the strike and has tilted the balance in favour of the employer.

However, he said that the new code has provisions for several employee welfare steps as washroom and canteen etc.

Supporting the bill, RCP Singh of JD(U) said it is a win-win for both the employer and employee.

"This would provide an effective environment and several issues such as the working conditions of an employee under hazardous conditions would be taken care of," Singh added.

K Ravindra Kumar of TDP said, "Several trade unions are apprehensive about the implementation of the code. It has restrictions and difficulty in going legally on strike."

On provisions related to strike, he said, "Under the Industrial Relation Code, workers' right to go on strike has not been taken away. It has been made mandatory to give 14 days notice for giving time to sort out differences through harmonious discussion during this period (of two weeks). Neither workers nor industry benefit from strike."

Nominated member Rakesh Sinha said this historic bill has increased the bargaining power of employees.

Moreover, it also addresses the issues of gig workers, who are independent contractors, and online platform workers, and provides them equal rights like other workers. It also addresses the issue of gender discrimination and assures of equal wages and rights for female workers, he said.

"When the bill to arrange high prices for 50 crore farmers and the bill to provide salary security and social security to 50 crore labourers has come, the opposition is absent because they are unconnected with the public," Union minister Prakash Javadekar said about the bills.