PROFESSIONAL AND CONTINUING EDUCATION, NLSIU

MASTER OF BUSINESS LAWS

INDUSTRIAL RELATIONS LAW

Session 1

 Introduction to the Learning-Teaching Methodology to be used during the course

 Interrogating the Purpose of Labour Law

 Reflecting on the Formal and Informal Sector Divide

 Overview of Industrial and Labour Law in India

Overview of the course

LIST OF MODULES IN THE COURSE

I. Introduction to Labour and Industrial Relations Law (4 hours)

II. Building Blocks of Labour Law: Workplaces and Workers covered by Labour Laws (6 hours)
III. Introduction to Law of Trade Unions and Collective Bargaining (4 hours)
IV. Dispute Resolution Machinery in Industrial Law and State Intervention (2 hour)
V. Protection from Lay-Off, Retrenchment and Closure (4 hours)
VI. Regulation of Conditions of Service and Managerial Prerogatives (2 hours)
VII. Regulation of Conditions of Work and Occupational Health: Contract Labour and Migrant Labour (2 hours)
 VIII. Law of Wages (4 hours)
IX. Law of Social Security Employment Injury Compensation and Insurance (4 hours)

Module I: Introduction to Labour and Industrial Relations Law and Contract of Employment (4 hours)

 Unit 1 - The Origin and Purpose of Labour Law

 Unit 2 - Overview of the Labour Economy and Laws Governing Industrial Relations in India
 Unit 3 - Constitutional Scheme Relating to Labour Regulation in India
 Unit 4 - Interface between General Principles of Contract and Employment Law
 Unit 5 - Core Labour Standards in International Labour Law

Learning-Teaching Methodology to be used during the course

 Emphasis on prior readings

 Use of the LMS Forum: Use of the Doubt Query Sessions
 Use of MS Word – as a substitute for black-board and power-point
 Comparison with the New Labour Codes
Interrogating the Purpose of Labour Law

 If employment is mediated through contract, then why is contract law not sufficient?

Employment is different from other forms of contractual relationships?

o Inequality of bargaining power – undercuts the assumption of ‘free consent’ - consensus ad idem – both parties have freely
consented to a contract
o Impact of work on Livelihood
o Work as a source of meaning and identity
o Subordination

“Workers are people, not things. As such, they deserve to be treated with respect. By agreeing to work for another, employees do not consent
to be treated like chattels or slaves. Pay serves as the major mechanism for the distribution of wealth in a market society. Work has to
produce enough income to support an employee and his or her dependants, not only on a daily basis, but also for a lifetime. Beyond
determining their material standard of living, work also provides people with a principal source of meaning in their lives. A job usually
occupies a large proportion of the day. Through their work people seek personal fulfilment, and through participation in a workplace they
obtain entry into a social community. Work can be exhausting, boring, and dangerous, but without it many people become socially excluded
and lose any sense of personal worth... Workers are compelled by economic necessity to comply with a system of production that tends to
treat them like commodities, yet within that system they seek and often find recognition for their dignity and humanity.[...]

Employment law addresses the paradox encapsulated in the slogan ‘labour is not a commodity’. It regulates employment relations for two
principal purposes: to ensure that they function successfully as market transactions, and, at the same time, to protect workers against the
economic logic of the commodification of labour. Its aim is not principally or exclusively to protect workers like the matchmakers against
poor conditions and exploitation. Rather the problem addressed by employment law is the more complex dual one of promoting the
production of wealth through the division of labour, while also channelling the relations of production to prevent the excesses of the logic of
the market system from destroying human dignity and causing social injustice. It has to facilitate the intensive division of labour of the factory
or office, yet curb the tendencies of the market system to treat workers as merely articles of commerce, without respect for their humanity.
 From Hugh Collins, Employment Law [Oxford 2010], pp. 3-5

 What are the particular features that make employment contracts unique?
o Standard forms of contract
o They are kept incomplete by design by flexibility – gaps in the contract
o Long-term relationship – necessitates non-adversarial modes of dispute resolution

New functions that labour law serves? - New Narrative of Labour Law

 Traditional narrative – see labour laws as intrusion into market freedom necessitated by imperatives of human dignity and is at odds
with efficiency
 New narrative: Labour laws can also facilitate efficient operation of the labour market
o Labour laws need not always be antithetical to efficiency

o Labour Laws can remedy market failure

 Trade Unions and collective bargaining can minimise transaction costs
 They can minimise information asymmetry
 Minimum wages and occupational safety and health laws in bolstering productivity

Broad Thrust Areas of Labour and Employment Law

  Collective bargaining laws – Trade Unions Act 1926
 Statutory Mandates – lay down baseline norms – Minimum Wages Act, Payment of Gratuity Act,
 Laws provide for dispute resolution framework – Works Committee, Grievance Redressal Committees, Conciliation, Labour Court,
Industrial Tribunal

Inequality of bargaining power – remedy that inequality by collectively leveraging the bargaining power of large number of workers together

Overview of the Labour Economy in India and Labour Laws

Limited Coverage of Labour Laws in India

Close to 90% of workers in India are not covered by prominent labour laws at all

Recognising the Overwhelming dominance of Informal Work

 Reflecting on the Formal and Informal Sector Divide

Dominance of the Informal/Unorganised Sector in India

National Commission for Enterprises in the  86.32 % in the informal sector

Unorganised Sector [based on NSSO 61st
round -2004-2005]
  92.4 % were informal workers

 Between 1999-2000 and 2004-2005, the growth of formal work was -

0.10% and informal work was 3.16%

“More than 90 per cent of the workforce and about 50 per cent of the national
Fourth Employment - Unemployment Survey. product are accounted for by the informal economy.”
(Labour Bureau, GoI) – 2013-2014

Unravelling the Varying Terminology

First National Commission on Unorganised Sector those workers who have not been able to organize themselves in pursuit of
Labour (1966- 69) their common interest due to certain constraints like casual nature of
employment, ignorance and illiteracy, small and scattered size of
establishments

NCEUS - National Commission Informal Sector/Unorganised

for Enterprises in the Sector The unorganized sector consists of all unincorporated private enterprises owned
Unorganised sector by individuals or households engaged in the sale and production of goods and
services operated on a proprietary or partnership basis and with less than ten total workers

Informal Worker/Unorganised
Unorganized workers consist of those working in the unorganized sector or households
Worker
 and

the workers in the formal sector without any employment and social security benefits
provided by the employers”

Informal Economy
The informal sector and its workers plus the informal workers in the formal sector constitute
the informal economy

International Conference of Informal Sector refers to the production and employment that takes place in
Labour Statisticians unincorporated small or unregistered enterprises

Informal Employment employment without legal and social protection—both inside and outside
the informal sector

Informal Economy all units, activities in the informal sector and workers so defined and the
output from them.

Sliding Slope of formalisation – different degree of formalisation or informalisation and not a divide

Even in formal sector establishments, we find informal workers without the benefit of any labour laws

Factors explaining the continued dominance of informal labour outside Labour laws

 Structural Factors
o Footloose migrant labour/undocumented cheap labour
o Engagement of workers on informal basis – without formal written contract
o Temporary engagements
 o Technological changes – dispersed work
o Patterns of work engagement – contracting and subcontracting [outsourcing]

 Exclusionary elements in Legal Design

o Most of labour laws are not universal
o There are exclusions for various categories - workmen under industrial disputes acts- managerial, supervisory, administrative
workers
o Some laws have salary-based ceilings – Employees Social Insurance Act1948 - 21000
o Focus on Employment excludes self-employed workers and excluded atypical workers
o Many of the laws have numerical threshold – most laws apply only to establishments which have a minimum number of workers
 Factories Act – 10/20(for establishments which do not use power)
 ESI – 10
 CLRA - 20
 Sixth Economic Census – 2013-14 – 94 % of workplaces/establishments have less than 5 workers

Challenges in Regulation of Informal Sector

 Design of existing labour laws have been built around formal sector worker – Fordist Model of Production is not suitable to informal
worker
 Regulatory infrastructure
 Heterogeneity of informal work
 Unionisation and Collective bargaining are relatively more difficult for informal workers
 Precarity of work
 Dispersed nature of work
 Lack of security of tenure
 Lack of awareness
  Barriers of other identities

Four Major Areas of Labour Laws in India

 Laws on Trade unions and industrial relations – Industrial Relations Code

 Laws on Wages and other Wage –related Claims – Code on Wages
 Occupational Safety and Health – OSH Code
 Laws on Social Security – SS Code