New Labour Code (Law), 2020

Daniel Albuquerque has chosen for the year 2022 the recently legislated and promulgated Labour Code consisting of four laws, which comprehensively include a plethora of laws of independent India in a systematic manner. The purpose is to enable and solve the problems of wages, industrial relations, social security and industrial safety. In this very first submission the author highlights, with a labour case of 1978, a fitting background for an insightful perspective

The inevitability of codes, laws, rules laws – social, economic, political – is the mark of human civilisation. India
is one of the oldest civilisations of the world that underwent innumerable systems and numerous rulers. For our purpose we will begin with the modern legacy of Common Law, also known as British Common Wealth laws which were directed at the British Colonies across the British Empire. For India, it is meant as under the British Crown or
direct rule from 1858 to 1947. The post-independence era marked laws legislated by the Indian Parliament under the
newly formulated Constitution. The Constitution of India came into full force on 26 January 1950. However, the
legislation from 1947 remains a landmark law and is able to spell out the difficulties in the seven and a half decades of labour law legislation.

Section 33C(2) in The Industrial Disputes Act, 1947
‘(2) Where any workman is entitled to receive from the employer any money or any benefit which is capable of being
computed in terms of money and if any question arises as to the amount of money due or as to the amount at which
such benefit should be computed, then the question may, subject to any rules that may be made under this Act, be decided by such Labour Court as may be specified in this behalf by the appropriate Government.’

The Defining Case
Bangalore Water Supply Sewerage Board versus Rajappa and Others (21.02.1978 SC; AIR 548) brought out the definition of industry in case law. A seven bench court of the Supreme Court of India showed the seriousness with which the judiciary viewed this case, for the credibility of the law depended upon it. The facts of the case that brought up the dispute are as follows:
The Case: A certain number of employees working at the Bangalore Water Supply and Sewerage Board were dismissed. These laid off employees filed claims under Section 33 C (2) of the Industrial Disputes Act, 1947.

They alleged that the retrenchment was in violation of the principles of natural justice. The Bangalore Water Supply and Sewerage Board raised objections before the Labour Court. It said that it is a statutory body providing the basic amenities to the citizens. It further stated that it is not an industry as per Section 2 (j) of the Industrial Disputes Act, 1947. Therefore the employees were not workmen and hence it followed that the Labour Court could not exercise its
jurisdiction over them.

The above claims by the Board were overruled. It filed two writ petitions in the Karnataka High Court, Bangalore.
This Court, too, dismissed the petitions and upheld the adjudication set by the Labour Court as valid and that the
Board was indeed running an industry in accordance with Section 2 (i) of the Industrial Disputes Act, 1947.

As the petitioner, the Board challenged the verdict and filed a special leave petition in the Apex Court, it took a very serious stand to define industry in order to settle the universal confusion in its understanding. Points of clarification
or criteria for defining industry are as follows:

1. Industry means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes.

2. There is capital investment for the activity undertaken

3. There is the motive to gain or making profit

4. There is activity of sales promotion

5. Industrial dispute means any dispute between employer and the employee, whether called so or workman.

All those establishments which fulfil the above criteria are ‘industry’ in meaning and application. Apart from agriculture, a philanthropic and religious activity wherever there is an employer-employee relationship and computation of the value of service in terms of monetary value, industry is established definitively. The Apex Court also confirmed the authority of the parliament to make laws and other agencies of the government to make rules and regulation as per law prescribed.

The Two Important Definitions
The Industrial Disputes Act, 1947 defines industry under Section 2 (j) as any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.

Section 2 (k) defines industrial dispute as any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any persons. The significance of what is said above lies in the fact that the understanding of the simple common terms before the law is the corner stone of claiming and delivering justice.

Labour Code
In a highly ambitious move in 2019 the Government of India began to legislate the 40 major labour laws and scores
of state laws and the multiplicities of amendments into a Labour Code consisting of only four laws. They were
categorised as Wage Code, Industrial Relations, Social Security and Industrial Safety and Welfare. By 2021, the laws were passed by the parliament, secured the President of India’s assent; and the Government is seeking to implement the same by 2023. Towards this end it is negotiating with the State Governments.

India has a burgeoning population of 1.3 billion and counting. By rough estimates around 600 million is the workforce of India, very little percentage of it is in the organised sector, or insured; negligible percentage belong to the trade unions. Millions come under skilled or semiskilled and unskilled class. Added to it the daily wagers, child labour, bonded labour all of who are beyond the graph of the researchers.

The cited case above from 1978 reveals the core problems. The dream of the new Labour Code is to do away with the multiplicity of definitions and authorities, ensure payment of wages on time, incentives to set up national enterprise through more opportunities and less government interference, more facilitation of workers and entrepreneurs.

The enormity of the task for these columns during 2022 is daunting. Apart from the issues which these laws may create, we need to consider other important aspects such as compliance with the International Labour Organisation (ILO), International Conventions, Pacts, Treaties, multinational workforce, international arbitration institutions, et al.
“Labour is priceless”, said Mahatma Gandhi, the Father of the Nation. Amidst all the schemes big and small, government and governance, laws and implementation let us not forget the people who collectively build India.

The columnist is a writer with Oxford University Press and a published author.


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