LABOUR CODES: A COMPARATIVE ANALYSIS

A collaboration by TeamLease RegTech and TeamLease HRtech

Jul 08, 2022
12 min read

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The enactment of the four Labour Codes has been hailed as a defining moment in reforming the outdated and archaic labour law regime in India.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. NO	ACT	EXISTING PROVISIONS	CODE	PROPOSED CHANGES
1	Minimum 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
2	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.
7	(i) Minimum Wages Act, 1948; (ii) Payment of Wages Act, 1936; (iii) Payment of Bonus Act, 1965; (iv) Equal Remuneration Act, 1976	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

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.

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.

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.

Employee's

State

Insurance Act,

1948

ESIC not applicable to

Mines.

Code on Social

Security, 2020

ESIC applicable to

Mines now.

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.

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 license have also been introduced to reduce compliance Burden. The important changes introduced under the Code are summarized in the comparative chart below:

S.NO	ACT	EXISTING PROVISIONS	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, 2020	Common License across all the states.
3	Factories 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
4	Factories Act, 1948	Threshold in Number of Workers for Appointment of: (i) Safety Officers - 1000 (ii) Welfare Officers - 500 (iii) Canteen - 250	Code on Occupational Safety, Health and Working Conditions, 2020	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

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.

Industrial

Disputes Act,

1947

Grievance Redressal

Committee Threshold - 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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LABOUR CODES: A COMPARATIVE ANALYSIS

A collaboration by TeamLease RegTech and TeamLease HRtech

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