A collaboration by TeamLease RegTech and TeamLease HRtech

  • Share On :

Jul 08, 2022
12 min read

Loading audio.....

The enactment of the four Labour Codes has been hailed as a defining moment in reforming the outdated and archaic labour law regime in India.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

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


 
 

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;

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

 

 

 S.NOACT 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. 
 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 

 

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 

 

 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  

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.

  • Share This Blog: