Strategic Human Resource Management

• Welcome to – Module 3 –
Labor Laws and HR
Compliance

– Industrial Relations Scenario

in Contemporary India

– New Age Regulatory

Frameworks

Girish Balasubramanian IIM_Nagpur_SHRM IR &

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 Session Objectives

– Connecting commitment and Industrial Relations

– Trace the development of economy and workforce in India

– Illustrate the embeddedness of IR issues with larger socio political

issues

– Labor as a subject of governance

– Lexicon of a legislation

– A Primer on the New Labor Codes

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 Some (un)popular opinions about HR

• They hardly work • Bureaucratic  averse to change

• They are visible only during • Nonsensical rules  for instance

festivals organizing Rangoli dress codes
competitions or parties
• Unfair appraisals
• Send Birthday mails and new year
mails and in some cases arrange • In some unfortunate cases HR’s
for distribution of shoulders are used to get rid of
savouries/coupons excess workforce

• Team outings/team building • Looks like ‘HR’ is from an

exercises alternate universe!!!

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 Linkage of Strategy and HRM

Corporate HR Policies Attitudes

objective

BU Strategies HR Strategies
Competitive
Adv

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 The Employee Life-Cycle approach

Source of picture - SearchHRsoftware.com

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 Business vis-à-vis HR vis-à-vis employees

• Behaviour of individuals

• Recruitment of individuals Wages

• Assessing the performance of
individuals

• Training the individuals

• And since we are in the market

based economy if at all Profit
individuals want to leave the firm
 manage exit of the individuals

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 Have we missed something?

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 The question is?

• Should workplace be democratic?

• Why does the collective rise at all?

• Is economics failing us – is the free hand of the market not working?

• Why this specific subject on ‘Industrial Relations’ while there is no specific

subject on Capital Relations or Land Relations?

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 Contemporary Trends affecting employees

• Technology

• Globalization and economic

challenges

• Indebtedness and deregulation

• Nature of work

• Demographic and workforce

trends

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 Some of the deviations of assumptions of economics

• Equal bargaining power of both employers/employees

• The fairness/justice aspect inbuilt into the labour supply  Persistent

levels of unemployment

• The myth of perfect markets  information asymmetery and its roles in

business

• The gist/take away is that markets are not self regulating, though the
dominant rhetoric is the opposite of the same

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 The ethical side

• Labour not a commodity

• Philosophical assumptions of a

Work ‘civilized’ society

• Need for self development/self

actualization

Life
• Aspects of morality/justice/fairness

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 Perspectives

Unitary
• Only one source of authority
• Conflict is unnecessary
• Paternalistic approach
• Trade unions/any form of collectives
are an aberration
• The dominant perspective in the
current work setting
Pluralist
• More than one source of loyalty
• Individual also belongs to a particular
group which has its own interests and
hence tension/conflict is inherent
• Manage conflict – importance of
dialogue
• Consequent importance to the
mechanisms which encourage
dialogue such as collective bargaining

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 Perspectives

Radical Trusteeship
• Marxist perspective • Utopian approach
• Class conflict is necessary for social • Application of fairness aspect
change • Company and in turn the
• Industrial conflicts are similar to management and workers are in
political/class conflicts and hence a reality serving the larger community
revolution is needed • Business is responsible to its
• A worker is an important cog in the consumers, shareholders, workers
wheel of not only the industry but and community
the also the larger political
establishment

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 3 Logics of Action

• Logic of Industrial Peace

– Reduction of tension/conflict
– Peaceful environment being the premise for economic development
– India followed the logic of industrial peace post independence
• Logic of employment-income protection
– Employer wants to maximize profit and labour would like to limit the action such that it does
not adversely impact their earning potential
– Specifically committed workers and hence look towards the state and employer for provision
of essentials
• Logic of Competition
– Unbridled discretion by employers in allocation of resources and directing labour
– Enterprise efficiency promoted
– Hallmark if Indian IR post liberalization

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 Changing dynamics of industrial relations in India

Preliberalization Post liberalization

Consumer

People People
Produc Produc
t t,cost,
quality

Structure Technology Structure Technology

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 Who is more aggressive

Year wise Number of strikes and lock outs

1400

1200

1000

800

600

400

200

0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
*

Strikes Lock out

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 History of trade unionism in India

• Indian goods and products had a • Outcome of the Factories

huge value in the international commission 1875
market – Time of working was regulated

• Thriving trade of spices, cloth, – Hours of break were fixed

muslin and other such things with
the European countries  The – Formal consent for a day of rest
Portuguese, French, Dutch, and was also given
British actually came in search of
this place – In the mean time the first
organized strike was carried out
in Express Mills Nagpur in 1877
• East India Company destroyed
the local cottage industries
– In 1881 Factories Act was
enacted
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 Legal framework in India

Preamble

• More than 200

Part 1
labour legislations
 1000s of cases
and sometimes Part 2
conflicting
Constitution
judgements of India
Part 3
• The present
government is Part 4….. Seventh
trying to simplify Schedule –
labour legislations Part 22 Concurrent list
by enacting 4 – Both state
codes Schedules
and center
responsible

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 Recap - The governance framework (LEJ)

Legislature

Executive Judiciary

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 Legal framework – Indian constitution – Article 19

• Does the individual have the right to associate/form/be part

of trade unions
– 19 (c) specifically guarantees the right of association

– Right to belong to a union (voluntary)

– The law however is silent on trade union registration as well as

recognition

– India has not ratified the convention 87 of ILO

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 Navigation of any legislation

Applicability

Appropriate
Government

Master/Servant
(Employer/Employee)

Other aspects – Section

2 is the dictionary

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Related to resolution of
Related to wages
The New Wage Code 2019
10/25/2023
Labour Laws in India
Labour Laws
Governing conditions of
work at factories/service Social security benefits
disputes
places
Industrial Disputes and
Standing orders, and Trade Factories act, Shop and
Pension, provident fund,
Union Act (Likely to come as Commercial establishments
gratuity, ESIC
the code on Industrial act and some bit of CLRA
Disputes)
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 Labour Laws in India

Labour Laws

Governing conditions
Related to resolution of work at
Related to wages Social security benefits
of disputes factories/service
places

Code of Industrial Factories act, Shop

The New Wage Code Relations (Industrial and Commercial Pension, provident
2019 Disputes and Standing establishments act and fund, gratuity, ESIC
orders) some bit of CLRA

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 The new Wage Code, 2019

• It is an amalgam of the • Essentially the code contains

following earlier legislations – When and how to pay –
– Payment of Wages Act, 1936 Payment of Wages Act

– Minimum Wages Act, 1948 – How much minimum to be

paid  Minimum wages Act

– Payment of Bonus Act, 1965

– No discrimination in pay 
Equal Remuneration Act
– Equal remuneration Act,
1976
– Employees also should get the
benefit of firm performances
Payment of Bonus Act

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 Significant Provisions
• Wages – broad definition
• Concept of Floor Wage being
talked about in addition to
minimum wages
• Minimum wages necessarily has
to be greater than or equal to
floor wage rates
• Review period of 5 years
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• Mines, railways, oil field –
ordinarily CG is appropriate
government
• For others SG is appropriate
Government
• Bonus rates betwee 8.33 – 20%
• Composition of advisory boards –
atleast 1/3 women
• Enhanced penalties provision
IIM_Nagpur_SHRM I 25

Related to resolution of
Related to wages
The New Wage Code 2019
10/25/2023
Labour Laws in India
Labour Laws
Governing conditions of
work at factories/service Social security benefits
disputes
places
Industrial Disputes and
Standing orders, and Trade Factories act, Shop and
Pension, provident fund,
Union Act (Likely to come as Commercial establishments
gratuity, ESIC
the code on Industrial act and some bit of CLRA
Disputes)
Girish Balasubramanian IIM_Nagpur_SHRM I 26
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 Health and safety of workers

• This code replaces the following legislations

Legislation
Factories Act, 1948
Mines Act, 1952
Dock Workers (HSA), 1986
Building and Construction
workers, 1996
Plantation Labour Act, 1951
CLRA 1970
Cine Workers and Cine-
Theatre Workers, 1981
Legislation
Interstate Migrant workmen,
1979
Working Journalist and Other
NP, 1955
Working Journalist, 1958
Motor Transport Workers,
1961
Sales Promotion Employees,
1976
Beedi and Cigar Workers, 1966

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 Significant Provisions
• Different categories of employer
– occupier/owner
• Working time of 8 hours/6 days a
week and a new concept of
spreadover time – 48 hour week
• Wages – broad definition given
• Special focus on women and
transgender employment
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• Core/peripheral distinction is
given but not clarified difference,
contract worker can be employed
for core work also – some
conditions
• Creation of a social security fund
– specifically for unorganized
workers
• Employment of women possible
even during night shifts (subject
to proper procedures and
security)
IIM_Nagpur_SHRM I 28

Related to resolution of
Related to wages
The New Wage Code 2019
10/25/2023
Labour Laws in India
Labour Laws
Governing conditions of
work at factories/service Social security benefits
disputes
places
Industrial Disputes and
Standing orders, and Trade Factories act, Shop and
Pension, provident fund,
Union Act (Likely to come as Commercial establishments
gratuity, ESIC
the code on Industrial act and some bit of CLRA
Disputes)
Girish Balasubramanian IIM_Nagpur_SHRM I 29
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 Significant Provisions

• Negotiating Union – 51% • Retrenchment – 15 days wages

representation amongst workers
(earlier – 75 %)
• Negotiating Council – in case no
majority trade union available –
then a negotiating council formed
having atleast 20% of workers as
members (increased from 10%)
• Provisions of exemption by AG
citing public interest
for reskilling to be provided
• Provision of unemployment
insurance – Atal Bimit Vyakti
Kalyan Yojana – organized sector
workers
• Dispute resolution to happen
within a year – enhanced capacity
of the tribunal members

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 Rubric to evaluate strike & dispute resolution

• Workers cannot strike

– Without 14 days notice period
– During conciliation proceedings
Not legal Legal – 7 days after conclusion of conciliation
and and proceedings
– 3 months after conclusion of
justified justified adjudication processes
• Thus total 150 days no possibility
of strike
Not legal Legal
and not and not • Strike definition also includes
justified justified concerted casual leave by 50% or
more employees
• Disciplinary proceedings 90 days

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Related to resolution of
Related to wages
The New Wage Code 2019
10/25/2023
Labour Laws in India
Labour Laws
Governing conditions of
work at factories/service Social security benefits
disputes
places
Industrial Disputes and
Standing orders, and Trade Factories act, Shop and
Pension, provident fund,
Union Act (Likely to come as Commercial establishments
gratuity, ESIC
the code on Industrial act and some bit of CLRA
Disputes)
Girish Balasubramanian IIM_Nagpur_SHRM I 32
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 Social Security Benefits

• The laws combined are:

– EPF, 1952
– Employee Compensation Act, 1923
– Maternity Benefit Act, 1961
– ESIC, 1948
– Workers Cess Act, 1996
– Cine Workers Welfare Fund, 1981
– Building and other construction workers and unorganized workers’
Social Security Act, 2008
– Employment Exchange Act, 1959
– Payment of Gratuity Act, 1972

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 Significant Provisions

• Social Security Fund – set up by • Gratuity capped at 20

CG – will cover unorganized lakhs/beyond which it has tax
workers, gig workers, implications

• Registration of the unorganized • Minimum service requirement

workers, gig workers, platform removed in case a fixed term
workers employement

• National Social Security Board – • ESIC benefit to be extended to all

(aggregators, gig workers and rep 740 districts of the country
of governments)
• UAN for ESIC, EPFO

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 Some other concepts

• Disciplinary proceedings • To employ contract workers  as

a firm you need a registration
• Ensure that principles of natural certificate
justice are followed
• The contractor who is going to
• As far as possible do not engage in engage contract labour needs to
hire and fire type of activities  obtain a valid license
bare minimum go for suspension
pending enquiry
• Principal Employer is liable for the
contract worker as well  this is
• Firing because of lack of one area where you have to be
performance is not acceptable as very careful  many litigations are
per judiciary  as a firm you have to there asking to convert contract
show evidence that you have given employment to permanent
enough chance for improvement

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 To Summarize

√ Connecting commitment and Industrial Relations

√ Trace the development of economy and workforce in India

√ Illustrate the embeddedness of IR issues with larger political issues

√ Labor as a subject of governance

√ Lexicon of a legislation

√ A Primer on the New Labor Codes

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