SVKM’s Narsee Monjee College of Commerce and Economics

A.Y.:-2022-23
PROGRAM: [Link] SEMESTER -I
COURSE: International ECONOMICS
TOPIC OF THE PROJECT/ASSIGNMENT:
New Labour code implemented in India & it’s impact on the labour market

Submitted by:-
Name SAP ID ROLL No Content contributed

Table of contents:-
Particulars Page No
INTRODUCTION
Labour is one of the four factors of production and it is the only active factor of production as
land and capital alone cannot do anything without the input of labour hence they are passive
factors.
Men can consume and generate both. In addition to production, all other economic activities
also depend heavily on labour.
Ricardo and Karl Marx, two classical economists, emphasised the importance of labour as the
primary means of production.
Role of labour is as follow:-
[Link] Principles of Consumption:
The primary source of consumption and a human factor is labour. For the purpose of meeting
his requirements, utility is produced. According to Lord Keynes, rising consumption serves
as an incentive for investment. Investment growth results in rising income, which drives up
consumption. Work is the foundation of this consumption.
2. Production Method:
When consumers guarantee that their items will be eaten, producers generate the
commodities. The fundamental or necessary factor of production is labour. It is a mobile
factor that uses other production factors like land and capital.

3. Principle of Exchange:
Labor acts as a foundation for exchange in addition to serving as a base for consumption and
production. To meet his daily necessities, a guy requires a lot of different goods. He is unable
to generate them all. He must trade his extra produce with others in order to meet his
requirements. Therefore, the foundation of trading is labour.
4. Basis of Distribution: All of the production components contribute to the national revenue.
Therefore, the foundation of this allocation of national revenue among all factors becomes
labour. The marginal productivity of each element determines how much it contributes.
Labor's portion of the national income would increase if it is efficient.
5. The Foundation of Economic Growth: Technically sound, educated labour acts as the
backbone of the country. An effective labour force makes good use of the nation's limited
natural resources. A sincere, dedicated, diligent, and intelligent labour force aids in the
nation's progress toward growth.
India has a huge labour market and there is a lot of demand for unskilled labour for various
purposes such as infrastructure projects, household work like plumbing, electricity related
issues,etc.
India has the second-largest labour force after China in 2020 with a population of about 501
million people. Of this total labour force, the agriculture industry accounts for 41.19%, the
industrial sector for 26.18%, and the service sector for 32.33%. Over 94 percent of these
individuals labour in unorganised, unincorporated businesses, which range from home-based
diamond and gem polishing businesses to pushcart merchants. Workers who work for the
government, state-owned businesses, and for for-profit companies are considered to be part of
the organised sector. 17.3 million of the 27.5 million workers engaged in the organised sector
in 2008 were employed by the government or by companies that were owned by the
government. According to the Human Rights Measurement Initiative, India only fulfils
43.9% of the requirements for the right to labour given its level of income.
A labour code is a compilation of labour laws in legislative form, sometimes known as a code
of labour laws.
There is a specific law pertaining to the labour which is known as the Indian labour law.
Laws governing labour in India are referred to as Indian labour laws. However, in reality, this
varies due to the structure of government and the fact that labour is a topic on the concurrent
list of the Indian Constitution. Historically, the Indian government at the federal and state
levels has strived to ensure a high degree of protection for employees.
The Indian freedom struggle and the passive resistance movements that preceded
independence are directly related to Indian labour legislation. Worker rights, trade unions,
and freedom of association were all governed by the: while India was a British Raj colony.

i)Indian Slavery Act, 1843

ii) Societies Registration Act, 1860;
iii)Cooperative Societies Act, 1912
iv)Indian Trade Unions Act, 1926;
v)The 1929 Trade Disputes Act
People who work in "organised" sectors are distinguished from those who work in
"unorganised sectors" by Indian labour legislation. The statutes specify who is covered by
different labour rights. The standard rules of contract law are applicable to those who do not
fit within these categories.
The Industrial Disputes Act of 1947 was a significant improvement to India's labour rules.
Since then, the 1948 statute has been expanded upon or intersected by 45 new national laws,
and 200 additional state laws govern the interactions between employees and employers.
These regulations impose strict requirements on every element of employer-employee
relations, requiring businesses to maintain five distinct types of annual returns and six
separate attendance records.
There may be unique labour laws for particular situations in each state of India. In India, each
state creates its own rules for the Central Act. States may have radically different regulations.
Each state will employ different forms and procedures. These various state laws are being
condensed by the central government into four labour codes. The Code on Wages, Social
Security and Welfare, Labor Relations, Occupational Safety and Health, and Working
Conditions are among them.
Body
The new labour regulations adopted by the central government came into force on July 1st,
2022. This indicates that all sectors and industries as well as the way we currently operate
will undergo significant change.
There will be changes to everything. For instance, the regulations governing employees'
working hours, the provisional fund, the pay scale, and the provident fund.
Up until this point, there has been a formal announcement detailing this problem. The new
labour laws may have an impact on wages, social security benefits (pension or gratuities),
employee welfare, health, and working conditions (including the working conditions for
women).
According to the reports, laws have been enacted in 23 states, including Uttarakhand,
Chhattisgarh, Odisha, Uttar Pradesh, Madhya Pradesh, Haryana, Jharkhand, Himachal
Pradesh, Punjab, Manipur, Bihar, and the UT of Jammu & Kashmir.
Important Points of India's New Labor Laws and Employment in 2022
● The staff will be allowed to take three weeks off.
● They have to work for a period of no more than 48 hours.
● A person who works eight hours per day will only get one week off.
● An organisation will give employees who put in 12 hours a day three weeks off.
● Those who work 9 hours a day will also receive two weeks off.
● The comprehensive and final laws governing how to handle professionals who leave
the nation will change completely as a result of the new labour codes.
● Within two days on the date of withdrawal from the business, the final settlement is
completed.
 ● The extension of maternity leave to 26 weeks will be advantageous to female
employees. Female employees must give their consent before working the night shift,
per company policy.
● In order to guarantee the safety of the organization's female employees, security and
facilities must be in good condition.
● As a result of the adjustments, the pay structure will alter.
● The basic salary component will increase, and calculations for the provision fund that
are based on the basic salary will also increase.
● This implies that the cash wage would probably decline while the provisional
employee fund will expand.
● Following the adoption of the code, employees will be granted vacation every 180
days as opposed to the prior 244 days. In India, 45 days after an organization's
closure, the entire amount is owing.
● 1. Gratuity cost of companies to increase
The new labour law limits the maximum amount of basic pay to 50% of CTC, which
effectively increases the gratuity bonus that the employees receive.
Also, the new wage code will calculate the number of gratuities based on the salary base,
which will comprise basic pay and allowances, like a special allowance for wages. Also, it
will likely increase the cost of gratuity for businesses.
While increasing Social Security (pension) elements of wages act, the new rules will likely
reduce employees’ salaries.
2.50% of CTC will be the basic wage.
According to the new wage legislation, businesses must guarantee that at least 50% of the
employees' CTC is basic pay. In contrast, the remaining 50% covers additional employee
benefits like overtime pay, housing costs, etc.
The amount is recognised as an addition to the salary if the company pays additional
allowances or exemptions that exceed 50% of the CTC.
3. Payment for 15 minutes of overtime
Employers are required to pay their workers overtime. After the 8-hour shift is ended, any
additional time worked is subject to overtime pay for the employee.
4. Contributions that are provided to the fund
The proportion between take-home pay and the employer and employee contributions to the
Provident Fund is another significant adjustment brought about by the new labour
regulations.
50% of a worker's gross pay will serve as their base pay. Additionally, take-home income
would decrease, notably for workers in the private sector, while PF contributions from both
the employer and the employee will increase.
5. 48 hours set work time for one week
The government clarified that 48 hours are the maximum time limit for the work week, and
employers have the flexibility to select this time of work and offer it in four days, five days or
a 6-day week-long schedule.
The revision of these regulations will affect a variety of employment-related factors,
including wages, pensions, and working conditions in India. These regulations are viewed as
ground-breaking initiatives that will improve job management and work-life balance in both
organised and unorganised sectors. Following are some potential effects of the new labour
laws on our work schedules and leave policies:

Working Schedule

The new labour laws allow businesses and workplaces to set their own hours of operation
beyond the standard 7-8 each day. Now, regular working hours can extend to 12 hours every
day. If an organisation were to do this, the workweek would have to be limited to 4 days,
with 3 required days off. The overall number of working hours for the week does not change.

Qualification for leave

Previously, in order to request leave, an employee had to have worked a minimum of 240
days in a calendar year. As a result of the reduction to 180 workdays annually, employees can
now request and take a day off with a minimum work history of 180 days in a year. The rule
of one leave per 20 working days is still in place, though.

Four days in the week

The four-day workweek may soon become a reality thanks to the new labour laws, which are
causing a stir in the media. In contrast to the current working culture, which requires workers
to work a minimum of 5 days a week, stories explore how people would be entitled for 3 paid
weekly offs if they choose to work only 4 days.

Current working circumstances

The requirements regarding work hours, overtime pay, and weekly off as per the individual
state's S&CE Act would apply to businesses registered under that state's Shops and
Commercial Establishment Act (or "S&CE")

However, no adult worker may work more than nine hours on any given day and forty-eight
hours in any given week for businesses that are registered under the Factories Act and adhere
to the established guidelines.
The next step

Organizations cannot require their workers to work four days a week without paying
overtime for the extra work hours since the standard workweek is still forty-eight hours and
the amount of overtime is only one hundred and twenty-five hours.

A four-day work week is therefore not feasible under the current structure of the new labour
standards, the S&E Act, and the Factories Act. There are two options: either employers must
reduce working hours in a week (i.e., below the statutory limit) as a matter of policy, or
employees must be paid overtime when they work longer than the allotted hours for the day
(this would only be effective to a limited extent in Karnataka, where the overtime limit is one
twenty-five hours per quarter).Otherwise, the government should change the OSH Code's
provisions to implement a four-day workweek

A number of nations, including Spain, Japan, New Zealand, Ireland, Scotland, and Iceland,
have already tried out the four-day workweek. But doing so required cutting back on the
number of hours worked each week. Nothing in Indian law prohibits a company from
lowering the amount of hours worked each week and implementing a four-day workweek.
The Indian government may attempt to issue a suitable announcement to study the possibility
of a four-day workweek on a voluntary and experimental basis.

Even while a four-day work week in the business sector seems exciting, it is an idea that
needs to be carefully considered and thoroughly examined, looking closely at how it may
affect both the productivity and well-being of the workforce. If at all, it requires thorough
execution with a thought-out plan.
Comparison of existing rules and the modifications NCL has suggested for
layoffs, retrenchments, and closure

Feature ID Act 1947 NCL Recommendations

Prior Consent  Required for  Not necessary for layoffs and
closures, retrenchments.
retrenchments,  Closing is required in locations
and layoffs at with 300 or more employees.
businesses with
100 or more
employees.
Clearance of debts  No  Yes
is a prerequisite.
Notice time  One Month  Two Months
Compensation  With a 15-day  Depending on whether the
rate (for closure business is making money or
and retrenchment) losing money:
 50% of salary are  Facilities with more than 100
set aside for employees may be closed after 30
layoffs days (for ill businesses that have
incurred losses for three years
and have filed for bankruptcy or
winding-up) or 45 days (for profit
making enterprises)
 Retrenchment periods of 45 days
(for ill companies striving to
become viable by retrenchment)
and 60 days are applicable to
businesses with more than 100
employees (for profit making one
enterprises)
 For businesses with 100 or fewer
 employees, 50% of the
aforementioned is due.
 50% of the salaries for layoffs. In
organisations with 300 or more
employees, approval from the
government should be requested
if the layoff lasts more than one
month.

Several of the key labour law acts that are not covered by the codes

Additional Central Laws Description of the Act

Act of 1988 on Labour Laws Allows institutions with 19 to 40 workers to
(Simplification of Procedure for Return- submit consolidated annual reports and
Giving and Register-Keeping by Certain filings that are compliant with 16 core laws
Establishments) (covering wages, factories and contract
labour)
Apprentices Act, 1961 Enables the oversight of apprentice training.
The 1976 Bonded Labour System Outlines the instruction for apprentice
(Abolition) Act supervision.
1986 Act Prohibiting and Regulating Child Enables the administration of apprentice
and Adolescent Labour training.
The 1991 Public Liability Insurance Act To help those harmed by injuries sustained
while handling any hazardous material,
public liability insurance provisions are
provided.
Act of 1948 governing employment of dock Provides for the creation of a structure for
workers the management of dock employees' duties.
Create a board to oversee the system
management.
Act of 1997 Concerning Dock Workers The Dock Employees (Employment
(Regulation of Employment) (Not Regulation) Act, 1948 will not be applicable
Applicable to Major Ports) to dock workers in India's major ports.
 Act of 1948 establishing the Coal Mines Outlines how the bonus, pension, linked
Provident Fund and Other Provisions deposit insurance, and provident fund will
be structured for coal mine workers.
The 1925 Provident Funds Act The government, local governments,
railroads, and a few other organisations are
primarily responsible for providing pension
funds.
The 1966 Seamen's Provident Fund Act Outlines the requirements for a Seamen
Provident Fund Program.
Act of 2013 against Sexual Harassment at Creates a framework to address claims of
Work sexual misconduct in the workplace.
Boilers Act, 1923 Controls both the production and utilisation
of steam boilers.
Act of 1993 Prohibiting Manual Scavenger Prohibits employment in such manual
Employment and Dry Latrine Construction scavenger activities. Regulates the
construction and upkeep of latrines for
water seals.
2013 Act Prohibiting Employment of Prohibits the building of unhygienic latrines
Manual Scavengers and Providing for Their as well as the use of manual scavengers and
Rehabilitation cleaning septic tanks and sewers without the
use of protective gear.

CODE OF WAGES  2019

The Code on Wages aims to control wage and bonus payments in all work situations
involving any type of industry, commerce, business, or manufacturing. It combines four
pieces of legislation: the Equal Remuneration Act, the Payment of Bonus Act of 1965, the
Minimum Wage Act, and the Payment of Wages Act.
All employees are covered by the Code. The Central Government will decide on wages for
employees in industries including railroads, mining, and oil fields. All other employment-
related decisions will be made by state governments.
The following are the main features of the Code:
1. The State or Central Government shall not exceed five years to revise minimum wages
2. The term "employers" refers to anyone who directly or indirectly employs one or more
people at a business.
3. The Payment of Wages Act only applies to employees earning less than Rs. 24,000 per
month. The Wage Code has now eliminated this threshold limit. As a result, the Code will
apply to all employees, regardless of monthly wage.
4. Unlike the Payment of Wages Act of 1936, the Minimum Wage Act of 1948, and the
Payment of Bonus Act of 1965, the Code provides a standard definition of the term "Wages."
5. Depending on the circumstances, According, to the Code, the employer must pay at least
50% of total remuneration. Wages will be calculated using basic pay, dearness allowance,
and retaining allowance, excluding house rent allowance, conveyance, statutory bonus,
overtime allowance, and commissions. Basic pay and dearness allowance must account for at
least 50% of the cost-to-company.
6. It forbids employers from paying employees less than the minimum wage. The Central or
State Governments, depending on the situation, are required to announce minimum wages
based on I the time or number of pieces produced, (ii) worker skill, and (iii) work difficulty.
7. In accordance with the provisions of the Code, the Central and State Governments shall
establish Advisory Boards. Members of the Central Advisory Board will represent employers
and employees, as well as independent individuals and five state government representatives.
The State Advisory Board will be made up of representatives from employers and employees,
as well as an independent person.
8. State Advisory Boards will be made up of employers, employees, and independent
individuals. Furthermore, women will make up one-third of the total number of members on
the central and state boards. The Boards will provide advice to their respective governments
on a variety of issues, including I setting minimum wages and (ii) expanding employment
opportunities for women.
9. According to the Code, the Central Government will set the minimum wage while taking
into account workers' living conditions. It should be noted that the minimum wage will vary
depending on where you live.
10. The central or state governments' minimum wages must be higher than the floor wage. If
the minimum wage set by the Central or State Governments is higher than the floor wage, the
minimum wage cannot be reduced.
11. The employer has the right to deduct wages for reasons such as fines, absence from duty,
employer-provided housing, or an advance payment made to the employee. It should be noted
that deductions should not exceed 50% of the employee's total wage.
12. Employees whose monthly wages do not exceed a certain amount are entitled to an
annual bonus of at least 8.35% of their monthly wages or Rs. 100/-, whichever is greater.
According to the Code, an employee may receive a bonus of up to 20% of his annual salary.

CODE OF SOCIAL SECURITY, 2020

The Code on Social Security aims to amend and consolidate social security laws in order to
extend social security to all employees and workers, whether organised or unorganised, and
in any other sector.
The Employees' Compensation Act of 1923, the Employees' State Insurance Act of 1948, the
Employees' Provident Funds and Miscellaneous Provisions Act of 1952, the Employment
Exchanges (Compulsory Notification of Vacancies) Act of 1959, the Maternity Benefit Act
of 1961, the Payment of Gratuity Act of 1972, the Cine Workers Welfare Fund Act of 1981,
the Building and Other Construction Workers Welfare Cess Act of 1996, and the
Unorganized Workers' Social Security Act of 1996 are
Coverage: The Code applies to any establishment that receives notification from the Central
Government, subject to the specified2 threshold.

The following are the Code's main features:

1. Fixed-term employment, home-based worker, self-employed worker, platform worker, and
gig worker definitions have been provided.
2. The definition of 'employee' was introduced and is now applicable throughout the Code.
3. According to Section 3 of the Code, registration is not required if the industry
establishment is already registered under another Central labour law.
4. Section 4 of the Code establishes the legality and enforceability of social security
organisations and their constitutions. It is required for the administration of various types of
workers' funds.
5. According to Section 125 of the Code, a fixed limitation period of 5 years will be
established, including proceedings and inquiries to determine the money dues of.
6. Aggregators are defined in the Code as a digital intermediary or marketplace that connects
a buyer or user of a service with the seller or service provider. According to Schedule 7 of the
Code, the aggregators must contribute 1%-2% of their annual revenue to the social security
fund.
7. Fixed-term employees must be paid gratuity on a pro-rata basis by the employer. Working
journalists' gratuity period has been reduced from 5 years to 3 years.
8. The Code establishes penalties for specific offences such as:
8.1. The maximum sentence for obstructing an inspector's performance of his duties has been
reduced from one year to six months.
8.2. Unlawfully deducting the employer's contribution from the employee's wages has been
changed from imprisonment of one year or a fine of Rs 50,000 to only a fine of Rs 50,000.
9. In the event of a pandemic, endemic, or national disaster, the Central Government may
defer or reduce employer or employee contributions (under PF and ESI) for up to three
months.

INDUSTRIAL RELATIONS CODE, 2020

The Industrial Relations Code aims to simplify the compliance process and promote the ease
of doing business in a business. It is made up of three acts: the Industrial Disputes Act of
1947, the Industrial Employment (Standing Orders) Act of 1946, and the Trade Unions Act of
1926.

Coverage: The Code applies to establishments formed by committees and unions:

1. The Appropriate Government may order the formation of a Works Committee by the
employer of an industrial establishment employing or having employed 100 or more workers
on any day in the previous 12 months.

2. For the resolution of disputes arising from individual grievances, industrial establishments
with 20 or more workers must have one or more Grievance Redressal Committees.

3. Any trade union with seven or more members may register electronically or otherwise
under the Code.

4. The Standing Orders apply to any industrial establishment employing or employing 300 or
more workers on any day in the previous 12 months.

The following are the Code's main features:

1. Defines the terms 'employee' and 'fixed-term employment.'

2. In the Code, the term 'workmen' is replaced and renamed 'worker.'

3. The term "strike" is now defined as "mass casual leave" taken by more than 50% of
workers on a given day.

4. In the event of a grievance, it is now mandatory under the Code to approach the grievance
redressal committee. An inquiry and its investigation must be completed within 90 days. The
time limit begins on the date the worker was suspended.

5. According to the Industrial Establishment Standing Order Act of 1946, standing orders
only applied to companies with 100 or more employees. The standing order threshold has
been raised from 100 to 300 employees.
6. The Code requires establishments with more than one trade union to have a "sole
negotiating union." According to Section 14 of the Code, such sole negotiating union must
have 51% or more workers as members. Only a single negotiating union may negotiate terms
with the employer. If there is no eligible sole negotiating union, a negotiating council with at
least 20% of the workers as members will be formed.

7. The Code includes provisions for workers to re-enter the labour force after being laid off.
A fund will be established with contributions from the employer and the appropriate
government.

8. The Central Government shall establish a mechanism for resolving industrial disputes,
which shall include a national industrial tribunal and one or more industrial tribunals.

9. Strikes and lockouts are not permitted in breach of contract:

• without providing the employer with strike/lockout notice, as provided below, within sixty
days before striking; or

• within fourteen days of receiving such notification; or

• before the expiration of the strike/lockout date specified in any such notice; or

• while any conciliation proceedings before a conciliation officer are pending and for seven
days following the conclusion of such proceedings; or

• while proceedings are pending before a Tribunal or a National Industrial Tribunal, and for
sixty days following the conclusion of such proceedings; or

• during the pendency of arbitration proceedings before an arbitrator and sixty days after the
conclusion of such proceedings during any period in which a settlement or award is in
operation, in respect of any of the matters covered by the settlement or award.

OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS

CODE, 2020
The Occupational Safety, Health, and Working Conditions Code seeks to regulate workers'
health and safety conditions in establishments with ten or more employees, as well as all
mines and docks.

It contains thirteen pieces of legislation: Factories Act of 1948, Mines Act of 1952, Dock
Workers Act of 1986, Contract Labour Act of 1970, Inter-State Migrant Workers Act of
1979, Plantations Labour Act of 1951, Working Journalist and Other News Paper Employees
(Conditions of Service and Miscellaneous Provision) Act of 1955, Working Journalist
(Fixation of Rates of Wage) Act of 1958, Motor Transport Workers Act of 1961, Sales
Promotion Employees (Conditions of Service) Act of 1976, and The Beedi and Cigar
Workers (Conditions of Employment) Act, 1966.

Coverage: The Code covers the following:

1. Establishments with at least ten employees, regardless of the number of employees in all
mines and docks.

2. Employees and anyone else in a managerial, administrative, or supervisory role (with a

monthly salary of at least Rs 15,000/-).

3. Furthermore, specific Code provisions, such as health and safety, apply to all employees,
except apprentices.

4. Contract labour employed by a contractor in Central and State Government offices (where
the respective Government is the principal employer).

The following are the main features of the Code: 1. Special provisions specify leave
requirements and working hours for workers in transportation, journalism, and sales.

2. Encashment of leave at the time of discharge/dismissal, death, or superannuation during

employment is governed by Section 32 of the Code. Provisions for leave encashment are laid
out for use at the end of the fiscal year. Most notably, the Code allows for leave carryover if a
worker does not use all of the leave allowed to him in any calendar year. However, the total
number of leave days that can be carried forward cannot exceed 30 days, and any unpaid
leave can be carried forward indefinitely.
3. There are provisions in place for the employment of women between the hours of 7 p.m.
and 6 a.m., with conditions relating to their consent and safety, working hours, and holidays.
If women's employment is hazardous to their health and safety, the employer will provide
adequate safeguards before hiring them.

4. All businesses must provide restrooms, showers, and locker rooms for male, female, and
transgender employees.

5. A provision has been made for the employer to obtain the employee's consent for overtime
work. It will also apply to a small business with up to ten employees. Furthermore, the
workers will be paid twice as much for their overtime work.

6. Employers must organise annual health check-ups for their employees at their own
expense.

7. The employer must issue an appointment letter to the employee in order to promote
workplace formalisation.

8. The Code prohibits contract labour in core activities except where: 1. the normal
functioning of the establishment requires the activity to be done through a contractor, 2. the
activities do not require full-time workers for a significant portion of the day, and 3. there is a
sudden increase in the volume of work in the core activity that must be completed in a
specified time.

9. Anyone who moves to another state and finds work there is considered an inter-state
migrant worker. Inter-state migrants are those who earn less than Rs. 80,000 per month or a
higher amount as determined by the Central Government from time to time. Inter-state
migrant workers are entitled to certain benefits.