Before the amendment, the Second National Commission on Labour (NCL) recommended
consolidation of central labour laws. It was observed that there are numerous labour laws that are
similar both in the centre and in the states. Further, labour laws have been added in a piecemeal
manner, which has resulted in these laws being ad-hoc, complicated, mutually inconsistent and
also contains completely outdated and irrelevant clauses.
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.
While the Code on Wages, 2019 has been passed by Parliament, bills on the other three areas
were referred to the Standing Committee on Labour. The Standing Committee submitted its
reports on all three bills. The government has replaced them with new bills in September
2020.
Once in effect the labour law amendments can prove to be fruitful towards the workers in the
manner below:
- Full and Final settlement within 2 days of resignation
As per the new code, If an employee has been removed, dismissed or retrenched/resigned
from service, the wages payable to him shall be paid within two working days of his
removal, dismissal, retrenchment or as the case may be. - Changes in Working Schedule
The Government has made it clear that 48 hours is the maximum limit for one-week work
capacity and the employers are flexible to choose this work time and make it available in
4 or 5 days week structure. - Higher PF after Implementation of the Code
The employees are bound to get a higher PF Contribution and increase in gratuity.
However, this can result in a reduction of the in hand salary of the employees. The new
wages code entails that the basic salary of the employee will be atleast 50 percent of
his/her net monthly CTC. - Changes in Earned Leave Policy
The quantum or number of leaves in a year will remain the same under the code. There is
a change however, that employees now will earn a leave for every 20 days of work
instead of 45 days, which is good news. Even new employees have the benefit to be
eligible to earn leaves after 180 days of employment rather than the current 240 days
