Govt proposes liberal hire-and-fire rules for firms with under 300 workers

Labour economist and XLRI professor K R Shyam Sundar said the standing order deters firms from dismissing workers arbitrarily
The government’s proposed labour law changes will facilitate easier dismissal of workers as companies employing up to 300 workers will not be required to frame standing orders for its workforce.

In The Industrial Relations Code Bill, 2020 introduced by Labour and Employment Minister Santosh Kumar Gangwar in the Lok Sabha on Saturday, the Centre has tightened norms for labour unions to go on a strike, which some trade union leaders said will make it “impossible” to take the protest route. It has, however, proposed giving recognition to trade unions for raising industrial disputes with employers.

A standing order is a legally binding collective employment contract and holds significance as it contains key work-related terms and conditions and is meant to prevent arbitrary dismissal of employees. Such orders are compulsory for every firm hiring at least 100 workers at present and the government has proposed increasing the threshold for the first time to 300 workers. Firms frame such standing order after consulting with workers’ representatives and these orders are certified by either the state or the Centre, depending on the industry.

The government has sought to follow the model adopted by the Maharashtra government to propose that standing orders will not require certification from the government, in case firms decide to follow the model standing order, which will be notified by the Centre. This will ease compliance burden for companies and will do away with the ‘inspector raj’ that the industries complain about, a senior labour and employment ministry official said, requesting anonymity.

The standing order states the rights and liabilities of employers and workers in case of closure of a unit, conditions for terminating employment or suspending workers for misconduct, apart from informing employees about their work hours, holidays, wage rates, etc. It explicitly mentions the means of redressing unfair treatment by the employer.

Standing orders become ever more important in India where two-thirds of the workforce employed on regular salary do not have a written contract as it is not mandatory under any labour law.

Though the government has proposed appointment letters for all workers under a separate labour law known as the Occupational Safety, Health and Working Conditions Code, 2020 (to be introduced in the Lok Sabha, too), it is only stated as a “duty” of employers and there is no penal provision for companies if they don’t follow this norm.

Labour economist and XLRI professor K R Shyam Sundar said the standing order deters firms from dismissing workers arbitrarily, as it acts like a collective rights document stating the most important terms and conditions in a standardised manner for workers, and there are instances where the courts have reinstated workers who have moved court basis the standing order.

To avert flash strikes, the government has proposed that workers in all factories will have to give employers a strike notice of at least 14 days. At present, only workers engaged in public utility services are bound to do so.

After the first meeting related to conciliation proceeding has taken place following a strike notice, workers will not be allowed to go on a strike, according to the Bill. “This will stifle the rights of workers to go on a strike. This move combined with the decision to do away with the need of standing order will allow companies to treat workers on their whims and fancies,” All India Trade Union Congress general secretary Amarjeet Kaur said.

But in a major step towards improving harmony between workers and employers, the Bill has proposed to empower trade unions with bargaining powers to negotiate with companies in case of an industrial dispute.

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