Labour codes – An analysis from the point of view of both the worker and the employer

Correspondence between Francesca Maria De Matteis (Sapienza Università di Roma, Erasmus student at University of Antwerp) and Anannyo Bhattacharjee (student at Xavier Institute of Social Service – Ranchi)

Dear Anannyo,

I hope that you are safe and that the current pandemic-related situation is not affecting excessively your studies. At the moment I am in the middle of my exchange period in Belgium, but I am also a last semester Italian master student. In half a year I will hopefully be graduated. It is quite easy to imagine my discomfort when I think about the struggle that the labour market is facing world-wide. Moreover, my home country has reached one of the highest rates of unemployment – the Italian National Institute of Statistics registered a 9.5% rate – it has ever recorded after World War II. From that moment on, the dichotomy of a male breadwinner and the female housekeeper started collapsing. Yet, the goal of perfect equality among genders is far from being reached.

After the health and economic COVID-19 crisis outbreak the labour market has suffered one of the biggest downturns of the recent world history. The most penalised workers have been part-timers and women. The former is also the main category relying on non-full-time employment. Inequalities in a world-wide rising trend, and their policy implications, is my main academic research field of interest and I really hope that this could match and complete yours. The labour market is probably the main field that perfectly embraces law, economics and finance, sociology, public policy, schooling and education, political sciences, and diplomacy.

According to the empirical research about inequalities, the trend of poverty is due to residuals. This fact made me think about how crucial the role of legislation is, to guarantee a level playing field to both workers and employers. Indeed, what our societies must achieve is a fair balance between the bargaining power of capital and labour. Worldwide, the latter is concentrated in very small percentages at the very top of the income distribution; the former permeates the whole population. The activity of labour coders must be fostered by incentives, government spending and investments, but also by the spreading among all the level societies of higher concern and awareness.

Italy is a Democratic Republic, founded on work. This is Article 1.1 of the Constitution of my country. As you can see the very first sentence of our national most important piece of legislation highlights the centrality of the working activity. Our Constitution entered into force in 1948, after having been written in the aftermaths of World War II, and since then the Italian legislator has strengthen the provision on labour codes, manly throughout ordinary legislation. The Italian Civil Code dedicates the whole Libro Quinto to labour. Yet, quite surprisingly, Italy does not have a unified Labour Code. Yet Italy do have some ad hoc labour institutes protecting workers, retired, and unemployed.   

Italy is one of the six countries to have founded the European Union. Title IV of the Charter of Fundamental Rights of the European Union, along with Title IV of the Treaty on the Functioning of the European Union (TFEU), aims at protecting and facilitating the working activity of all the European Citizens from the very first steps, such as the meaning itself of the word worker. Nevertheless, the definition of worker is under the hermeneutic monopoly of the Court of Justice of the European Union, that helps national courts to better understand and, hence, protect both workers and employers. Despite their difference and complementary roles in the labour market might very well be understood by everybody, it is quite controversial when it comes to attribute each of them the fair guarantees, rights, and duties.

When I started thinking about the dualism between workers and employers, many arguments and counter arguments started rising in my mind, and immediately I started realising how difficult the role of the labour legislator is. Workers have families, social lives, and ambitions. Some of them might be working for passion and personal interest, some others just for earning their wage. Employers seem to be laying on the other face of the same medal: profits, production, and productivity. But are not they workers, too, after all? Moreover, it is not very much surprising how such arguments are mostly related to the sociological and social aspects of the labour market and the counterarguments mainly come from the economic-specific way of thinking.

The Agency of the United Nations called International Labour Organization (ILO) is what India and Italy have in common when it comes to labour law. Yet, I well understand how many differences there might be within and between countries. I would really like to dive deeper into this matter with you, but sadly the word counter runs fast.

Before to conclude, I want to stress my concern about the struggle for a decent work that so many countries of the world were already facing yet before the COVID-19 pandemic. Now the list is even longer and the number of workers who ended up unemployed or performing much more marginal tasks in their working environment is every month higher. The current challenge is to give people back dignity by guaranteeing them employment and social protection, both through labour-specific legislation and public policy activity.

I am really looking forward to reading your opinion and to learning something new from your experience and your studies on labour codes.

Take care,Francesca
1-APRIL-2021, Antwerp

Dear Francesca,

Thank you for the letter, I am doing well here and I hope even you are doing fine during these tough times. It was indeed a pleasure to read your Point of View on the labour scenario in Italy, as well as in general. Some of the points raised – especially the ones equivocating equal pay for equal work sans gender stereotyping have hit the nail right on the head, also it was great to know that your research field is also hovering around a similar space and even you look into the labour market as a possible bridge to reach the ultimate goal.

I am currently pursuing my Post Graduate Diploma in Human Resource Management from Xavier Institute of Social Service, Ranchi. It is one of the premier institutions in the country when it comes to labour law/Industrial relations, as it has been operating in this direction for the last 65 Years. Prior to this, I had completed my Under Graduation from Jadavpur University, Calcutta with a degree in business management and had also worked for a brief while with the Human Resource Department of an Indian IT giant.

The reason for actually selecting this topic was something very close to my heart. India is currently going through a labour law renaissance. It would derive great interest for you to know that Labour falls under the Concurrent List of the Indian Constitution.  Therefore, both Parliament and state legislatures can make laws regulating labour. So prior to these codes (which have yet not been implemented) we are still running over 100 state and 40 central laws regulating various aspects of labour such as resolution of industrial disputes, working conditions, social security and wages.

In regards to solving this problem the Central Government had constituted the second National Commision on Labour (NCL) headed by Mr. Ravindra Varma, which presented its report in 2002 and recommended that all the central labour laws must be combined into four or five codes so as to improve ease of compliance and ensure uniformity in labour laws, the NCL recommended the consolidation of central labour laws into broader groups such as (i) industrial relations, (ii) wages, (iii) social security, (iv) safety, and (v) welfare and working conditions.

In 2019, the Ministry of Labour and Employment introduced four Bills on labour codes to consolidate 29 central laws.  These Codes regulate: (i) Wages, (ii) Industrial Relations, (iii) Social Security, and (iv) Occupational Safety, Health and Working Conditions. The Code on Wages was passed by the Parliament and received the President’s assent in August 2019 and the draft rules thereof have been circulated by the Ministry of Labour and Employment for feedback, and the three remaining labour codes i.e. the SS Code, the OSH Code and the IR Code were passed by the Parliament on September 23, 2020 and thereafter received the President’s assent on September 28, 2020. All the above codes were supposed to be implemented from April 01, 2021 but then the government has pushed the deadline for some-time as the country is railing through a lot of other issues pertaining to both the second wave of Covid 19 and also related to these laws.

So has the codification of these laws been a good move or a bad one? This has been a constant point of debate in a labour intensive country like India. At this point, I would provide you with a very basic understanding of the four codes, and in the coming weeks would throw some in-depth understanding of each code and how it is shaping up for both the employers and the employees.

1: So starting with the Code on Wages, 2019 –

The Code appears to be a well-intentioned piece of legislation which aims to balance the interests of the employer and the employee. Though the Code contains substantial portions of the repealed legislations, it makes a decent attempt to replace their obsolete provisions. The provisions of the Code should inspire confidence in the business community.

2: Code on Industrial Relations –

The IR Code appears to be a step in the right direction in terms of providing a more simplified mechanism for dispute resolution. The introduction of a negotiating union/council shall also assist in reaching amicable settlements between employers and workers more rapidly. By increasing the threshold for industries requiring prior permissions under the IR Code, more businesses will have freedom in relation to retrenchment of workers and closure of establishments. However, what remains to be seen is the effect of the IR Code on the workers’ right to strike.

3: Code on Social Security –

The SS Code will subsume various existing labour laws in India. The SS Code has widened the coverage by including the unorganised sector, fixed term employees and gig workers, platform workers etc., in addition to contract employees. It will be therefore very important for establishments to assess the implications and revisit the compliance requirements under the SS Code, once it is brought into effect.

4: The Occupational Safety, Health and Working Conditions Code, 2020 –

The enactment of the OSH Code comes at a crucial juncture wherein the rights of the workers have been debated heatedly on every fora and their plight has captured the spotlight during the pandemic. There is a clear impetus in the OSH Code to address the issues that have come to the fore, including that of the inter-state migrant workers. Furthermore, there is an obvious shift towards the simplification of the compliance regime by the introduction of the single license. Therefore, while the OSH Code has all the ingredients of a well-rounded legislation, it is prudent to await its passage into the implementation stage before declaring it an overall success.

It is during this pandemic that the life of an Indian Labour was exposed to the outside world, in terms of the mass exodus that they had to undertake to survive this phase. One of my core areas of concern has been the life of the Inter State Migrant worker who moves around all over the country just to survive and thrive. In the coming few weeks I will share a closer glimpse of how the existing legislation failed to protect them at large and how the current codes can at-least try to protect them, if certain rising concerns can be addressed.

I hope to hear back from you soon, also I hope this has helped you get some understanding of the current labour phenomenon that India is running through.

Take care,

Anannyo

5-APRIL-2021, Ranchi

Dear Anannyo,

Thank you very much for your inspiring and informative letter. Your detailed explanation of the main issues currently at stake about labour codes in your country is helping me to find a connection between what I have been reading in books and news and watching in movies about India, so far, and what reality is. Despite the difficulties imposed by the pandemic, I am sure that one day it will be possible to travel freely again, and indeed India is on my bucket list.

From your last letter I can understand that one of the goals that the labour legislator is aiming at is to ease and facilitate the comprehension of the provisions that regulate the labour market in India. When I look in astonishment at the extremely low take up rate of government benefits from both Italian and European citizens, I start wondering whether something is being missed in this process. The formality required by the law-making process is fundamental as far as the people involved in the debate are insiders, but what about common workers?

One further question rises strong and eloquent: how much can labour codes and labour market related provisions help the average worker – and moreover, the worker at the very bottom of the distribution – who might not be enough educated or skilled to read, understand, and enforced by it, act for her rights? The obvious answer would eventually be that this is what the government, both at a central and especially at a local level, is there for.

We all know what an ideal and utopic society would look like, yet I am afraid this is not the case, and it is quite likely it will never be. What I personally think is that our societies deserve clarity, fairness, and attention when dealing with labour market rules and labour codes, and every worker must be put in the condition to understand the legislation that protects them, either when they are employers or employed persons. Bureaucracy in Italy can be discouraging, and it may represent a disincentive to proper behaviour by workers.

Instead of providing you with more information, in this letter I tried to explain a bit better my point of view and my concerns. Labour market requires a very articulated and precise regulation, but at the same time it needs to be accessible and understandable by everybody. Do you think that in India it is likely to be achieved soon? I am quite disillusioned by the current Italian situation. The European Union might be of help: to coordinate and to find a level-playing field for all the 27 member states could, on one hand, make the provisions easier to be understood, on the other hand, weaken the protection and the guarantees attributed to workers.

I wait for your answer with interest and impatience.

Take good care,

Francesca

9-APRIL-2021, Antwerp

Dear Francesca,

I read your letter with high enthusiasm, because I seriously enjoy the way that you articulate your text which makes me deep dive upon areas that actually people would miss out upon when it comes to the legislative stand point of any act or code, also I hope that everyone at your place is safe & sound during these uncertain times, and definitely once the World order is restored back to the ‘Original Normal’ – Please do visit India, and allow us the privilege to host you.

Now coming down to the main context of discussion, it was surprising to know that Bureaucracy in Italy is very discouraging”, given the perception that runs high in India that our counterparts from the first world countries tend to do a lot better in this regards. In terms of how the treatment of labour has been in India, it can be very well be highlighted by the fact that we are still referred to as a “Developing Country”.

In recent times, with the second wave of Covid-19 hitting India, the fallacies in both the laws and its implementation has come to the forehand again. As previously mentioned in my last letter, we are trying to rekindle our labour legislation to create something better, but it would amaze you to know that the real purpose for the same is not based on improving the lives of the Working class but mostly to create an image in the market of being an easy place to operate businesses from.

I will highlight one area (amongst many) from the Code on Wages, 2019 that would actually showcase it to you that this process has been more of a hasty composition of acts rather than a meaningful document of purpose –

The code seeks to consolidate and simplify four pieces of legislation — Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976 — into a single code. The previous four pieces of legislation had a total of 119 sections; the new Code has 69 sections -barring a few new concepts, the new Code retains almost all provisions. 

The penal provisions found hitherto in any pieces of labour legislation never had an impact on employers. In People’s Union For Democratic Rights and Others vs. Union Of India & Others, 1982 (Asiad case), the Supreme Court of India observed: “If violations of labour laws are going to be punished only by meager fines, it would be impossible to ensure observance of the labour laws and the labour laws would be reduced to nullity. They would remain merely paper tigers without any teeth or claws.”

But, curiously, a new provision (Section 52) has been introduced where an officer to the government will be notified with power to impose a penalty in the place of a judicial magistrate. An essential judicial function is now sought to be vested with the executive in contravention of Article 50 of the Indian Constitution, where the State has been mandated to separate the judiciary from the executive in public services.

The point that I am trying to raise is very similar to the point raised by you in your previous text that the labour market requires a very articulated and precise regulation which needs to be accessible and understandable by everybody, and sadly India is yet to reach a common ground in this regards, especially when the objective based on which such policies were initiated, have been completely let go off now.

Take care,

Anannyo.

14-APRIL-2021, Ranchi

References

P. Craig, G. de Bùrca, EU Law, Text, Cases and Materials, Seventh Edition, UK Version, Oxford

Official European Union webpage: https://europa.eu/

Official International Labour Organization Webpage: https://www.ilo.org/i

M. Baldini, S. Toso, Diseguaglianza, povertà e politiche pubbliche, Il Mulino, 2004

B. Conforti, Diritto Internazionale, Editoriale Scientifica, 2018

Istituto Nazionale di Statistica, ISTAT, Official Website: http://dati.istat.it/

For the latest updates about minimum income provisions in Italy: https://www.redditodicittadinanza.gov.it/

For the latest updates about minimum income – secondary – legislation in the European Union: https://www.consilium.europa.eu/en/press/press-releases/2020/10/12/strengthening-minimum-income-protection-in-the-covid-19-pandemic-and-beyond-council-adopts-conclusions/

1: https://www.indianfolk.com/india-still-developing-country/

2: https://www.news18.com/news/india/indias-2nd-covid-wave-might-last-till-end-of-may-could-get-3-lakh-daily-cases-top-virologist-3639608.html

3: https://labour.gov.in/sites/default/files/THE%20CODE%20ON%20WAGES%2C%202019%20No.%2029%20of%202019.pdf

4: https://indiankanoon.org/doc/496663/

5: https://indiankanoon.org/doc/192717/

1: https://labour.gov.in/sites/default/files/Central%20Labour%20Acts.pdf

2: https://labour.gov.in/sites/default/files/39ilcagenda_1.pdf

3: https://www.thehindu.com/business/Industry/govt-defers-labour-codes-implementation/article34206220.ece

4: https://labour.gov.in/sites/default/files/THE%20CODE%20ON%20WAGES%2C%202019%20No.%2029%20of%202019.pdf

5: http://egazette.nic.in/WriteReadData/2020/222118.pdf

6: https://labour.gov.in/sites/default/files/SS_Code_Gazette.pdf

7: https://labour.gov.in/sites/default/files/Last_Date_Extended_for_OSH_Code_0.pdf

8: https://www.ilo.org/newdelhi/info/public/fs/WCMS_746654/lang–en/index.htm

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