Govt gives digitisation push to labour codes, makes draft rules public

Workers will get money equivalent to 15 days of their last drawn salary, as part of a ‘re-skilling fund'.
The government has made public the first set of draft rules under the labour codes approved by Parliament recently, which is aimed at ensuring time-bound permission for companies to retrench, lay-off or shut its businesses.

The Union labour and employment ministry has proposed to rationalise the number of forms from 30 under the present laws to 12, according to the draft Industrial Relation (Central) Rules, 2020, which have been made public for comments for a period of 30 days.

The government has proposed to facilitate both trade unions and employers to submit information or seek permission under the labour codes through email or by uploading it on a designated portal.

“Digitisation will ensure that all processes, whether it’s a notice for strike or complaints by workers and lockdown by factories or permission to retrench, lay-off or shut down by companies, are time-bound as there will be a visible time-stamp at every step,” a senior labour ministry official said, requesting anonymity.

For manufacturing firms, with at least 300 workers, the permission for lay-off has to be sought at least 15 days in advance, for retrenchment 60 days and closure 90 days from the Central government. The government will have to respond to such application from employers within 60 days, failing which it will be considered as approved. Firms below 300 workers do not require any permission but they will have to still intimate the government in case of retrenchment or closure at least 30 days and 60 days in advance, respectively. 

The government has reduced information sought from employers at the time of retrenchment or lay-off. For instance, it will no longer seek information such as the residential address of all workers, along with the nature of duties performed, instead it will ask for the universal account number of workers’ provident fund accounts. However, companies will have to specify the wage and skill category of all affected workers.

Workers will get money equivalent to 15 days of their last drawn salary, as a part of a ‘re-skilling fund’, in less than two months of being retrenched, according to the draft rules. Every employer who has retrenched a worker will have to transfer the money towards the re-skilling fund within 10 days of the retrenchment. The re-skilling fund will be managed by the Central government which will then transfer the money to all such retrenched workers within 45 days of receiving it from employers.

“The worker shall utilise such amount for his re-skilling. The employer shall also submit the list containing the name of each worker retrenched, the amount equivalent to fifteen days of wages last drawn in respect of each worker along with their bank account details to enable the Central Government to transfer the amount in their respective account,” the draft rules stated.

Experts pointed out that the rules rely heavily on electronic applications, which can be problematic for workers at times.

“The rules assume three aspects viz the parties are all tech-savvy, have access to electronic devices and there will be in place a robust and sturdy nature of electronic systems or websites. It will be prudent to provide for a non-electronic system of communication as an alternative and graduate progressively to e-system,” XLRI professor and labour economist KR Shyam Sundar said. He made a point that since signatures are required at the end of each document, it would require availability of electronic signature or scanning machines.

The government has chosen not to frame rules related to trade unions and has left it for the States to do so. “This will promote inconsistency and lead to diverging rules across the country, especially related to method for determining the negotiating agent and negotiating council,” Sundar said.

In a major step towards improving harmony between workers and employers, the Union government has proposed to empower trade unions with bargaining powers to negotiate with companies in case of an industrial dispute in the Industrial Relations Code 2020, which will likely be made effective from April 1, 2021.

A trade union, which has the formal support of 51 per cent workers in an establishment, will act as the ‘negotiating unit’ within the establishment to resolve disputes. In case unions fail to get 51 per cent workers as their members, a negotiating council will be formed, which will have a member representing all trade unions. However, the manner of determining the membership, whether it will be through verification, secret ballot or check-off, has not been put forth in the draft rules.

According to the draft rules, employers can adopt the model standing order framed by the Central government but it will have to intimate the “certifying officer” about the date from which it will be applicable in its unit. If, within 30 days, the certifying officer observes deviance from the model standing order, it will ask the employer to make the change in the next 30 days.

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 300 workers, under the Industrial Relations Code, 2020. 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.
- Number of rules will come down from over 80 to 42 for labour laws relating to industrial relations

- Number of forms rationalised to 12 from 30

- Number of registers to be maintained will remain 3 but it will be made electronic

- All applications relating to notice for strike, lockout, permission for retrenchment, lay-off or closure of unit, conciliation, tribunal application to be submitted electronically

- Workers to get money for re-skilling within two months of being retrenched

- Government has reduced information sought from employers at the time of retrenchment or lay-off

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel