Article (July-2021)


Labour Codes : More confusion less clarity

H.L. Kumar

Designation : -   Advocate, Supreme Court

Organization : -  New Delhi


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Four Labour Codes were being lauded to usher the country to a new era of revolution in the field of industrial relations, but they proved to be damp squib even before coming into operation. It was expected that the employers and employees will be happy since new opportunities for employment be created. Besides that comfortable and conducive working conditions will be introduced. The Ministry of Labour & Employment termed the new Codes as Labour Reforms but, they have created more confusions mainly due to and copy-paste work. Merely by abolishing the Labour Courts, it could not be construed that there will be lesser disputes for adjudication. It is also not understandable why an Industrial Tribunal should consist of two members instead of one? Even High Courts assign cases and appeals for disposal by a single judge. The Code says that no person shall be qualified for appointment as the presiding officer of a Tribunal unless-

(a)    he is, or has been, a Judge of a High Court; or 

(aa) he has, for a period of not less than three years, been a District Judge or an Additional District Judge.

(b)    he is or has been a Deputy Chief Labour Commissioner (Central) or Joint Commissioner of the State Labour Department, having a degree in law and at least seven years' experience in the labour department including three years of experience as Conciliation Officer:

Provided that no such Deputy Chief Labour Commissioner or Joint Labour Commissioner shall be appointed unless he resigns from the service of the Central Government or State Government, as the case may be, before being appointed as the presiding officer; or

(c)    he is an officer of Indian Legal Service in Grade III with three years' experience in the grade.

Tall claims have been made by the government that the labour reforms will make the ease of doing business. Hence emphasis was laid on the appointment of 'fixed term employee' who will not have job security like an employee who happened to be a 'workman' under the Industrial Disputes Act, 1947.

There has also been a rider i.e., such employee will not only get the salary and other benefits like his counterpart, but he will get gratuity even when he has worked for one year. The members for drafting the Codes skipped similar provision in the definition of 'retrenchment' excluding a workman from retrenchment whose contract of service was not renewed. Such worker as engaged for the fixed period will not be entitled to the wages or other perks like that employee who has been working on a similar job.  Only an employer ignorant of law engages 'fixed-term employee' as provided under section 2(34) of Code on Social Security, 2020 by bearing additional financial liability which is otherwise avoidable.

On strikes & lockouts

Strict restrictions have been imposed on the workers and the unions in the expectation that there will be no strike or lockout. However, this can only happen when the workers are represented not by enlightened unions because they rarely resort to strike but they advise the workers to adopt 'go slow' and 'work to rule' tactics which exert much higher pressure upon the employers than that of a strike. They know that a strike could be prohibited by the Court and also by the labour authorities but not the 'go slow' or 'work to rule' tactics.

Employees’ Provident Fund

Two major changes are proposed -

a) The determination of money payable by an employer could be made for a maximum period of 5 years which could otherwise have been done by an amendment as was done in 2010 in the Employees' State Insurance Act providing limit of 5 years for the production of records.

b) For admission of appeal before the EPF Appellate Tribunal the determined amount was to be deposited up to 75% which have now been reduced to 25% withdrawing the power of the Tribunal to reduce or even waive the condition for pre-deposit when there are justifiable reasons or the impugned orders for which appeal is legally defective.

Employees’ State Insurance

a) Only change for covering all establishments which could be otherwise done by exercising the powers as vested in the appropriate government as it has been under section 1(5) of the Employees' State Insurance Act.

b) Allowing voluntary coverage which could otherwise be implemented without any hassle.


Allowed for fixed-term employees without any condition for 5 years qualifying service defeats the very objective of gratuity. In Express Newspapers Pvt. Ltd. vs. UOI, AIR 1958 SC 578: 1959 SCR 12, it has been held that the term 'gratuity' imports an idea of gift or a present generally in return for the favour of services. The Supreme Court has observed that gratuity is regard for good, efficient, and faithful service rendered by an employee for a considerable period.

Gig and platform workers

Even now it not been covered and could be separately covered by another enactment.

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H.L. Kumar - Advocate, Supreme Court, New Delhi