These Companies Can Now Fire Employees Without Govt Notice; Labor Rights Destroyed?

Industrial establishments with a workforce of 300 workers and above can hire or fire without the government’s permission. Earlier the threshold was 100 workers. 

Will this restrict workers’ rights to strike, let us find out…

The Back Story!

In its report submitted in April, the Standing Committee on Labor had also suggested increasing the threshold to 300 workers as the current threshold of 100 workers had caused “an increase in employment and decrease in retrenchment”. The report stated that some state governments like Rajasthan had already increased the threshold. 

It also stated, “The Committee desire that the threshold be increased accordingly in the Code itself and the words ‘as may be notified by the Appropriate Government’ be removed because reform of labor laws through the executive route is undesirable and should be avoided to the extent possible.”

On September 19, in Lok Sabha, these changes were proposed to be incorporated in The Industrial Relations Code Bill, 2020.

Labour and Employment Minister Santosh Kumar Gangwar introduced two other labor code Bills: The Code on Social Security, 2020, and The Occupational Safety, Health and Working Conditions Code, 2020. These codes propose changes like expanding social security and inclusion of inter-state migrant workers in the definition of workers.

The Industrial Relations Code states that the provision for standing order will be applicable to “every industrial establishment wherein three hundred or more than three hundred workers, are employed or were employed on any day of the preceding twelve months”.

What Does The IR Code Propose?

No person employed in any industrial establishment shall go on strike unless he/she gives a 60-day notice or within fourteen days of giving such notice. 

This also applies during the pendency of proceedings before a Tribunal or a National Industrial Tribunal, and 60-days after the conclusion of such proceedings. The latter is the new condition being introduced in the latest version of the Code.

A worker re-skilling fund is also proposed wherein the contributions for the fund will be detailed by the employer of an industrial establishment. These contributions will likely amount to 15-days wages last drawn by the worker immediately before the 35 retrenchments along with the contribution from such other sources. The details of this proposal are still unclear and not in place. 

What Do These Changes Mean?

This development is likely to give more flexibility to the employers but restrains workers’ rights to strike with no protection of trade unions, labor laws. In other words, a strike for the demands of the workers seems impossible. It might also lead to uncertain working conditions for the workers. 

XLRI professor and labor economist KR Shyam Sundar said: “The increase in the threshold for standing orders from the existing 100 to 300 is uncalled for and shows the government is very keen to give tremendous amount of flexibility to employers in terms of hiring and firing… dismissal for alleged misconduct and retrenchment for economic reasons will be completely possible for all industrial establishments employing less than 300 workers. This is complete demolition of employment security.”

Sundar also said, “In European countries, retraining and other labour market policies should be put in place by the employer in consultation with the trade unions for the retrenched workers. The Code lacks clarity on the substantive and procedural aspects of this Fund which will fizzle out like the National Renewal Fund in the 1990s unless the government has a clear picture in mind.”