February 16, 2023
The Occupational Safety, Health, and Working Conditions Code, 2020 (“Code”) a legislation framed to regulate the safety, health and working conditions of the workers employed in various establishments. The Code simplifies, subsumes, and transforms the provisions of the provisions of 13 existing central labour legislations, including, inter alia, the (i) Factories Act, 1948 (“Factories Act”), (ii) The Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”) (iii) The Motor Transport Workers Act, 1961 etc. (collectively, "Current Laws").
This article provides a comparative analysis of the key changes introduced under the Code with the Current Laws framework and its impact on the employment ecosystem of India.
Additional Resource: The Code on Wages
Additional Resource: The Code on Industrial Relations
The Code also provides for setting-up of a social security fund for the welfare of unorganized workers, which will be credited with the amount received from composition of certain offences committed under the Code.
If there is any contravention of the provisions of the Code or Rules, or bye-laws or any of standards, made thereunder by the establishment, the employer or the principal employer of the establishment, shall be liable to a penalty which shall not be less than INR 2,00,000 but which may extend up to INR 3,00,000, and if the contravention continues after the conviction, then, with a further penalty which may extend to INR 2,000 for each day till such contravention continues.
The Code appears to be a positive step towards ensuring occupational safety and health and better working conditions of workers. The employment of women in night shifts is a positive step towards ensuring gender equality. From the perspective of the employers, while most of the provisions remain intact. Most importantly, the provision relating to deemed registration of establishments may take care of prolonged delays in administrative process.
Further, the issuance of the appointment letter by the employers is indeed a very progressive step especially for the un-organized workforce who are unaware of their rights which are embedded in the Current Laws framework, and it is very common in the industry vis-à-vis un-organized workforce.
The Code has also given much impetus to the Inspector-cum-facilitator who has been entrusted with the responsibility of ensuring compliance as well as facilitating business to meet the compliance framework. The facilitator is a new element and there is a likelihood that this role could clash with the traditional responsibilities of an inspector.
Undoubtedly with the reduction in period for the annual leave entitlements significantly reflects the aim of the Code which will be beneficial to the workers while availing the annual leaves. Further, principal employer needs to apply a cautious and pragmatic approach for sourcing the contract labours from unregistered contractors. Therefore, adequate due diligence checks should be implemented in such arrangements.
Certainly, the Code marks a progressive step to streamline and reform India’s archaic labour laws and bring them in sync with modern business requirements. Likewise, the impetus given to the recognition of rights of the contract labour is also a welcoming.
Lastly, the enactment of the Code coupled with other labour codes will certainly a remarkable move by the Government of India and this will give the employer and the industry a much-needed push to calibrate with the revised framework wherein it not only updating employment ecosystem to match modern-day employee welfare practices, but also easing compliance burden on businesses and boosting ease of doing business in the country.
Nevertheless, for an efficient and timely execution, the State and Central Governments (as applicable) would need to frame and notify standards, rules and regulations, post notification of the Code, to prevent further delay and uncertainty for businesses. Employers will also need to keep in mind mandatory registration requirements and stronger obligations with respect to the contract labor. It is imperative for the business houses to take appropriate steps well in advance to align with the Code.
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