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Implications of the Labour Code on Industrial Relations Bill, 2015 for Labour

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As part of the Government of India’s efforts to increase the ‘ease of doing business’, it has proposed several amendments to the current labour laws. This article deals with the implications of the Labour Code on Industrial Relations Bill, 2015 for labour and is part of a set of three. The other two articles deal with the Factories Act (Draft Amendment Proposals), 2015 (http://www.slideshare.net/WinnuDas/implications-of-the-factories-act-draft-amendment-proposals-2015-for-labour) and the Labour Code on Wages Bill, 2015(http://www.slideshare.net/WinnuDas/implications-of-the-labour-code-on-wages-bill-2015-for-labour).
The Factories Act (Draft Amendment Proposals), 2015 (uploaded on the Ministry of Labour and Employment website on 16th September, 2015) seeks to amend the Factories Act, 1948. As of 2nd November, 2015, it has not been introduced as a bill in parliament and is available as a draft on the Ministry of Labour and Employment website till 31st December, 2015.
The Labour Code on Wages Bill, 2015 (as modified on 19 March, 2015) has been proposed to amend and consolidate the Acts that relate to wages, namely the Minimum Wages Act, 1948, Payment of Wages Act, 1936, Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976.
The Labour Code on Industrial Relations Bill, 2015 proposes to amend and consolidate the existing Trade Unions Act, 1926, Industrial Employment (Standing Orders) Act, 1946 and Industrial Disputes Act, 1947. These Acts govern the regulation of trade unions and their activities, standing orders and dispute resolution in industries respectively.
These articles were put together in November, 2015. The purpose of these articles is to provide information about the proposed changes in labour law and briefly describe their impact from a labour perspective. They are intended to be used as material to base other arguments on and detailed contextual analysis or alternate recommendations fall outside their scope.
I would like to thank D. Thankappan (NTUI), Openspace (http://openspace.org.in/), Garment Labour Union (http://glu.org.in/), Jonne Bosselaar (https://nl.linkedin.com/in/jonne-bosselaar-750a61a2) and Cividep-India (http://cividep.org/) for their comments and input on previous versions of these notes. However, any opinions expressed and errors in these notes are mine alone.

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Implications of the Labour Code on Industrial Relations Bill, 2015 for Labour

  1. 1. Implications of the Labour Code on Industrial Relations Bill, 2015 for Labour Winnu Das, 3rd Year, BA LLB (Hons.), WBNUJS, https://in.linkedin.com/in/winnu-das-89528797, winnudas@gmail.com, 2 December, 2015 Pg [1] IMPLICATIONS OF THE LABOUR CODE ON INDUSTRIAL RELATIONS BILL, 2015 FOR LABOUR 1 The Labour Code on Industrial Relations Bill, 20152 proposes to amend and consolidate the existing Trade Unions Act, 1926 (TU),3 Industrial Employment (Standing Orders) Act, 19464 and Industrial Disputes Act, 1947 (ID).5 These Acts govern the regulation of trade unions and their activities, standing orders and dispute resolution in industries respectively. This note discusses the key areas of change under (1) liability and monitoring, (2) trade unions, (3) standing orders, (4) dispute resolution and (5) beneficial changes. This note is to provide information about the proposed changes in the labour law. Detailed contextual analysis or alternate recommendations fall outside its scope. 1.LIABILITY AND MONITORING 1.1. Coverage:6 Currently, retrenchment and lay-offs, for any reason, in establishments employing over 100 workers have to be notified and approved by the government. The threshold for the applicability of these provisions will be raised to 300. This will allow greater arbitrary power to the factories to terminate workers without State regulation and exclude the majority of the workforce. 1.2. Compounding: 7 An option for compounding of offences will be introduced under the Bill. ‘Compounding’ is an out of court settlement where the offender pays the victim a sum of money not to prosecute or to have the offender acquitted. The option does not exist in any of the Acts to be consolidated. An offender cannot compound an offence for which he has previously been convicted. This safeguard is completely pointless as the term ‘conviction’ implies that the person has been taken to court, tried and declared guilty. If they keep compounding offences, they will never be convicted, and most often not even taken to court. 2.TRADE UNIONS 2.1. Office Bearers:8 One-half of the office bearers of an unorganised sector union and one-third or five, whichever is less, of the office bearers for all other sectors can be persons not engaged or employed in the industry. The Bill will permit a maximum of two outsiders in an unorganised sector union and places a complete bar on outsiders in unions in all other sectors. Even in the unorganised sector, not more than one of the president and secretary can be from outside the industry. A worker who has retired or has been retrenched from the industry is not an outsider. There will be no restriction on former workers holding offices. This restriction will isolate the workers. Workers in several industries, particularly those in the unorganised sector, are largely dependent on external assistance for leadership, negotiating skills and mobilisation. 2.2. Cancellation of Registration: Currently, registration of a union can be cancelled on an application by the union, non-compliance with the Bill after notice from the Registrar, having rules or provisions in their constitution that contravene the Bill or fraud or misrepresentation during the registration proceedings. The Bill adds that a union's registration can be cancelled on failure to maintain accounts, contravention of its constitution or rules or not holding elections.9 1 Special thanks to D. Thankkappan, NTUI, Openspace (http://openspace.org.in/), Garment Labour Union (http://glu.org.in/), Jonne Bosselaar (https://nl.linkedin.com/in/jonne-bosselaar-750a61a2) and Cividep-India (http://cividep.org/) for comments on a previous version of this note. However, any opinions expressed are mine alone. 2 Labour Code on Industrial Relations Bill, 2015 available at, http://www.prsindia.org/uploads/media//draft/Labour%20Code%20on%20Industrial%20Relations%20Bill%202015. pdf 3 Trade Unions Act, 1926, available at http://www.ilo.org/dyn/natlex/docs/WEBTEXT/32075/64876/E26IND01.htm.s 4 Industrial Employment (Standing Orders) Act. 1946, available at, http://labour.bih.nic.in/Acts/industrial_employment_standing_orders_act_1946.pdf. 5 Industrial Disputes Act, 1947, available at, http://pblabour.gov.in/pdf/acts_rules/inustrial_disputes_act_1947.pdf. 6 Section 25K, ID and 85, Bill. 7 Section104, Bill. 8 Section 22, TU and 27, Bill. 9 Section 10, TU and 12, Bill.
  2. 2. Implications of the Labour Code on Industrial Relations Bill, 2015 for Labour Winnu Das, 3rd Year, BA LLB (Hons.), WBNUJS, https://in.linkedin.com/in/winnu-das-89528797, winnudas@gmail.com, 2 December, 2015 Pg [2] 2.3Strikes:10 The Bill will prohibit any strike during the pendency of arbitration proceedings, while a settlement or award is in operation or in breach of contract. During conciliation proceedings, staging, encouraging or instigating 'go-slow', squatting on work premises after working hours or 'gherao' of any member of the managerial or other staff will be prohibited. Demonstrations at the residence of employersor managerial staff will be prohibited during conciliation proceedings or adjudication before a Tribunal. Collective bargaining power is a core aspect of industrial relations. These amendments will significantly curtail workers’ ability to represent their interests by reducing the avenues of protest and imposing penalties for the same. 3.STANDING ORDERS Standing orders are the rules relating to work or the terms and conditions of employment. They are drafted by the employer and approved by a Certifying Officer. Standing orders generally cover the rules regarding holidays, grievance redressal, holidays, working hours, consequences of late-coming, etc. 3.1. Negotiating Agent: Unions and workers are given the opportunity to object to the standing order framed by the employer and their views are taken into account by the Certifying Officer. The term ‘negotiating agent’ will replace ‘trade unions’ and ‘worker’ in the Bill. Though the term has been defined by the Report of the Second National Labour Commission, there is no clear definition under this Bill. The employer may have the power to arbitrarily select which trade union to negotiate with, in case there are more than one in an establishment. 4.DISPUTE RESOLUTION 4.1 Forums for Dispute Resolution: The Board of Conciliation, Courts of Inquiry and Labour Courts will no longer exist.11 The Conciliation Officers, Tribunals and National Tribunals will continue. Conciliation Officers will have the same powers that the Conciliation Board currently has, i.e. to act as a Civil Court can to compel the attendance of persons, production of evidence, issue of commissions for the examination of witnesses and other prescribed matters. This may mitigate the loss of the Conciliation Boards to some extent as it strengthens the ability of the Conciliation Officer to reach effective solutions. 4.2 Conditions for cognisance: Some offences under the Trade Union Act need the sanction of the Registrar. The Bill requires that all complaints must be made by or under the authority of the appropriate government.12 This is the same requirement that already exists under the other two Acts. 5.BENEFICIAL CHANGES 5.1 Compensation for Retrenchment: The compensation for retrenchment will be increased from 15 days wages for every year of employment to 45 days wages for every year of employment.13 5.2 Registration of Trade Unions: The Bill introduces a limit of 60 days within which the Registrar has to approve or reject the application for registration. In case there is no communication, the union will be deemed to have been registered.14 5.3 Standing Orders: The number of subjects that are required to be covered by standing orders have increased. Sexual harassment is one of the matters that has been introduced. This will provide more clarity and consistency in the procedures followed. 10 Section 71, Bill. 11 Section 5, 6 and 7, ID will be omitted. 12 Section 33(2), TU and 106, Bill. 13 Section 25N, ID and 88(8), Bill. 14 Section 10 and 11, Bill.

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