❈ ❈ ❈

Tracing the Evolution of India’s Labour Laws

Shilpa Elizabeth

Karnataka recently saw two major developments which are significant milestones for the labour movement in the state. On May Day, services of more than 12,000 pourakarmikas were regularised. In another significant development, the Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill, 2024, was cleared by the cabinet in April which is now expected to be introduced as an ordinance. Once passed, the Act is expected to bring a certain level of social security to the 20-lakh odd platform-based gig workers of the state.

The nature of India’s labour force has been changing, so has been the country’s economy. There have been allegations of dilution of labour rights with the spotlight moving to ‘growth’ and ‘ease of doing business’ post liberalisation. The labour codes introduced in 2019 and 2020 have faced opposition from trade unions including the BMS.

“How do we see the labour force as well as the idea of gig workers and platform workers along with the idea of ease of doing business? How does it attract capital? How do we ensure there is more employment and look at protection of labour rights?”

These were some of the questions posed by Poornima Hatti, Senior Partner at Samvad Partners, who moderated a session on Evolution of Labour Laws in India on May Day.

A clamour for change

It was in 1990 that the India adopted the new economic policy which embraced liberalisation, globalisation and privatisation. Simultaneously rose a demand for changes in the labour laws.

“The argument put forth by the World Bank, the economic think tanks and others who are pro-industrial was that India’s labour laws were framed in colonial times, and are antiquated,” said Ramapriya Gopalakrishnan, advocate, Madras High Court.

Some of these laws included The Industrial Disputes Act 1947, The Trade Unions Act of 1926, and The Workmen’s Compensation Act 1923.

It was also argued that the labour laws hindered ease of doing business and encouraged ‘inspector-Raj.’ The laws were termed restrictive, rigid, and an impediment to rapid growth.

The informal route

While no reforms were introduced immediately through legislative acts, Gopalakrishnan points out that the pattern of employment in establishments drastically changed, giving rise to a large informal workforce.

“A large chunk of workers are in disguised employment. Workers in informal work arrangements are employed in big industries such as automobiles, manufacturing and so on, in the organised sector,” noted Gopalakrishnan who added that the same was true of the public sector as well.

“In public sector also, you see that since the 1990s, there is significant drop in the number of permanent workers, while there is a drastic increase in the number of workers in informal work arrangements.”

Gopalakrishnan recounted coming across workers who have been working as ‘probationers’, ‘apprentices’ or ‘trainees’ for almost 15 years, during her field work.

“These are not apprentices under the Apprentices Act. Many are called contract labourers and are engaged through a third-party contract to shift responsibilities. Sometimes people are given fancy labels such as ‘food delivery manager. These kinds of managerial designations are given at times with the intention of bringing them outside the scope of the labour laws.”

What does the increase in such informal work arrangements mean for workers’ rights?

“It means they can be hired and fired at will. It is very difficult for them to get organised, to raise their voice, and to engage in collective bargaining,” she explained.

Role of judiciary

Since 2000s, a discernible shift in judicial approach towards the issue also started becoming palpable, Gopalakrishnan said.

In the SAIL judgement 2001, the constitution bench of Supreme Court ruled that The Contract Labour (Regulation and Abolition) Act, 1970 did not mandate the automatic absorption of contract labour into the regular establishment of the principal employer when contract labour is prohibited.

The Secretary, State of Karnataka v. Umadevi (2006) judgement said that the employees appointed on a temporary basis do not have a fundamental right to claim permanent employment or equal pay with regular employees. While the judgment was aimed at preventing backdoor entries, the ruling has since then been misused widely.

In the T.K. Rangarajan vs. Government of Tamil Nadu case, it was ruled that government employees do not have the legal, fundamental, moral or equitable right to strike.

“This is against the ILO principles which India is expected to follow. There are a number of similar judgements on issues relating to back wages, reinstatement and so on. Each of these judgements contributed to diluting workers’ rights,” Gopalakrishnan said.

New labour codes

“Finally, acceding to the demands of the pro-reform lobby, in 2019 and 2020 the goverment introduced the four labour codes – the code of wages 2019, the code on occupational safety and health and working conditions of 2020, the code on social security and the industrial regulations code.”

All the 29 existing labour laws were consolidated under the four new codes. While they have been passed by both houses of the parliament and notified by the president, they have not yet come into force.

According to Gopalakrishnan, the new labour codes introduce significant changes in the labour laws most of which are ‘employer-friendly’ and tilt the balance towards ease of doing business over labour rights.

“The industrial relations code, for example, imposes the requirement of framing standing orders only in industrial establishments with 300 or more workers employees. Right now, it’s 100. That leaves workers at the mercy of the employers,” she argued.

Gig and platform workers

The Karnataka Platform-based Gig Workers (Social Security and Welfare) Bill, 2024, was hailed as a major milestone in ensuring social security of platform-based gig workers and is expected to set a precedent now for other states to follow. While it is a welcome move, Babu Mathew, Founder Member of Centre for Labour Studies, NLS, criticised that the bill is far too inadequate in ensuring minimum rights of the workers.

Talking about the working conditions of platform-based gig workers, he pointed out that on an average a worker is required to work for not less than 12 hours a day in order to earn minimum wage.

“The minimum wage in India is grossly underestimated including in a place like Karnataka because the yardstick that must be followed for calculating the minimum wage or quantifying the minimum wage is rarely observed. In Bangalore, it is now around Rs 15,000 rupees whereas if you actually follow the norms that are laid down, it will be nothing less than double that,” he said.

Platform-based gig workers are not full-time employees and fall outside the traditional employer-employee relationship, many a time leading to instances of instances of worker neglect and exploitation in the absence of the protection of labour laws.

Social Security Code

The Social Security Code 2020 defines a gig worker as a person who performs work or participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship. Mathew terms this ‘a definitional trap’ which deprives a whole category of workers from the application of labour law. He pointed out that this is now being disputed in different parts of the world including in European Union and has come to the attention of ILO too.

“The ILO also has been taking note of the fact that there is disguised employment. They are now doing a research in order to find out what is the existing condition of gig and platform workers and what is it that it ought to be done. They are doing this gap analysis in order to prepare for an ILO convention which is to come into force in 2025,” he said.

With respect to the Karnataka Gig Workers Bill, he criticised how the bill failed to invoke other legislations for the protection of platform-based gig workers.

“The welfare board is presided over by a large number of government nominees. Even civil society people are government nominees and as a result you can be sure the majority of the members on that welfare board will be those who are not sympathetic to the people that we are talking about.”

He further pointed out that not only do the workers have to work for 12 hours to earn minimum wage, but the indefinite wait time after logging in is discounted.

“Internationally this has been recognized as a bad practice and more and more opinion is emerging that you must not only cover direct work but also the waiting time. Considering all of that the type of wages being paid now is very inadequate.”

“So, on the one hand this first attempt towards income protection is welcome, but it is far too inadequate and there is need to make sure that there should be a floor level of minimum rights and that should be available not only to platform workers but to all informal workers.”

(Courtesy: The Hindu.)

❈ ❈ ❈

Why the New Labour Codes Do Little for Indian Workers

Kingshuk Sarkar and Santosh Mehrotra

Four new labour codes were enacted through parliament in 2019 and 2020 by the Union Ministry of Labour and Employment. These codes – which merged 29 existing laws – relate to wages, industrial relations, social security and occupational safety and healthy working conditions.

However, over five years later, the codes are yet to be implemented. Meanwhile, all central trade unions, including the Bharatiya Majdoor Sangh (BMS) which opposed certain provisions, have registered their opposition to the codes.

While employers’ organisations have mostly remained silent on the codes, they have expressed their disappointment in private. They say that the new codes will not have the desired liberating effect on the market.

Ministry officials have not provided specific reasons for the delay in the codes’ implementation except that states are still drafting rules. During the last such update a few months ago, an official statement noted that all the major states, except a few, have completed the rule-making exercise.

The three new farm laws came into being around the same time as the labour codes. After severe and vociferous opposition to the farm laws and a long farmers’ protest, the laws were withdrawn by the government. However, despite opposition from major trade unions, the labour codes did not ignite popular protests among the grass-root working class. Protests by the trade unions remained limited to usual activities like sit-in demonstrations, few general strikes and scattered agitations.

Matters concerning labour are generally deliberated upon in a tripartite manner. Formulation of the four new codes is an important legal activity which has huge socioeconomic implications touching all of us.

The trade unions alleged that they were consulted but their views were not taken into the consideration while finalising the codes. They maintained that the entire exercise of formulation of the four labour codes was driven by the principle of ‘ease of doing business’, which makes the burden of compliance easier for the employer.

The largest and the most important forum of tripartite consultation in the country is the Indian Labour Conference (ILC). The ILC was convened every alternative year until 2015 – when it stopped happening entirely. It is quite surprising that ILC has not been convened since 2015 to discuss or endorse important formulations like the labour codes. Moreover, the codes were not sufficiently discussed in either House of the parliament. The trade unions too failed to unite the working class against the labour codes and in compelling the government to convene the ILC on the matter.

Working class’s indifference to the labour codes

But why has the working class not identified with the ongoing opposition to the labour codes so far?

The answer might lie in the fact that four codes, or for that matter the existing labour laws, hardly make any difference to the life of ordinary Indian workers. This is because the Indian labour market is largely informal. The majority of the labour laws, with exceptions like the Minimum Wages Act, do not apply to informal labour.

In the Indian context, formality is defined in terms of access to provident fund and employees state insurance benefits. If a worker has access to EPF and ESI, that worker is considered a formal worker. The rest are informal. This is consistent with the internationally recognised definition of informal workers as those working without social security.

It must be noted that the formal sector also engages several informal workers. This is done through increasing contractualisation and casualisation of the workforce. For example, all construction entities are formal but the workers they employ are almost entirely informal.

According to official data, 52% of all workers are self-employed, including a portion engaged as unpaid family labour (UFL). In recent years, there has been a sharp increase in the number of gig and platform workers. Within the gig and platform economy, the concept of an employment relationship is deliberately kept ambiguous, effectively placing these workers outside the protective framework of labour laws.

What does this mean in terms of actual numbers?

According to the National Sample Survey (NSS) and the Periodic Labour Force Survey (PLFS), the Indian labour force stood at 610 million in 2024. If 93% of them are informal workers, then the size of informal labour in India is 567 million.

Out of these 567 million, 58% are self-employed, which means they are entirely outside the purview of protective labour laws as the employer-employee relationship is absent. In absolute terms, this is 354 million. The remaining 266 million informal workers are wage employed and come under the purview of the Minimum Wages Act, 1948.

Among the new labour codes, only the code on wages and parts of the code on social security extend to informal workers. The remaining codes primarily apply to the formal sector, which comprises fewer than 50 million workers out of a total workforce of approximately 610 million. In essence, the new labour codes consolidate 29 existing laws, most of which were already limited to the formal sector. This means that, since independence, the vast majority of workers have remained outside the scope of labour laws. As a result, a large segment of informal workers remains unaffected by the implementation of the new labour codes.

[Kinkshuk Sarkar is Associate Prof of Economics, Goa Institute of Management. Santosh Mehrotra was Prof of Economics at Jawaharlal Nehru University, New Delhi. Courtesy: The Wire, an Indian nonprofit news and opinion website. It was founded in 2015 by Siddharth Varadarajan, Sidharth Bhatia, and M. K. Venu.]