The landscape of labor and employment regulations in India has long been characterized by a complex tapestry of laws at both the Central and State levels. Traditionally, employers and employees alike have had to navigate a myriad of legislations to ensure compliance and understand applicable provisions. In a significant move towards simplification, the Indian government consolidated numerous labor statutes into four comprehensive Labour Codes during 2019 and 2020. While the Central government has enacted these Labour Codes and accompanying Central Rules, many states are yet to finalize their respective State Rules for each Code.
One of the most significant among these is the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code), which aims to streamline regulations surrounding employment conditions, including working hours and leave policies. On paper, the OSH Code promises a unified compliance framework, simplifying processes for employers and clarifying entitlements for employees. However, the actual implementation has revealed complexities, primarily due to the coexistence of state-specific laws that govern shops and commercial establishments.
Most Indian states have independent legislation, such as the Karnataka Shops and Commercial Establishments Act, 1961, and the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017. These laws regulate aspects like registration, working hours, leave, and termination processes. Employers now face the challenge of reconciling the OSH Code with these state statutes, reverting to a pre-Labour Code scenario where multiple laws must be interpreted in tandem.
Working Hours Discrepancy
The OSH Code mandates an eight-hour workday, whereas the Karnataka and Maharashtra S&E Acts allow for nine-hour workdays. This discrepancy leaves businesses in cities like Bengaluru and Mumbai grappling with conflicting regulations. Although the OSH Code’s repeal provision suggests its precedence, neither Karnataka nor Maharashtra has amended their respective S&E Acts to align with the OSH Code’s stricter limit. This inconsistency extends to overtime pay, creating further uncertainty for employers.
Leave Entitlement Ambiguities
The OSH Code provides for annual earned leave but remains silent on other leave categories such as sick or casual leave. In contrast, state laws like those in Karnataka and Maharashtra explicitly outline these entitlements. The absence of guidance in the OSH Code raises questions about the legislative intent and whether states have discretion over these leave categories.
Annual Leave and Encashment
The criteria for annual earned leave under the OSH Code require a minimum number of workdays, a condition mirrored with different thresholds in Maharashtra but absent in Karnataka. Furthermore, the OSH Code’s provisions on leave carryforward and encashment diverge from state practices, introducing annual encashment alongside traditional end-of-employment encashment.
This divergence poses the question of which benefit is more favorable for employees and who should make that determination: the employer or the employee.
These examples underscore the challenges of aligning the OSH Code with existing state laws. The question remains whether states like Karnataka and Maharashtra will amend, repeal, or continue with these laws alongside the OSH Code. For instance, Maharashtra’s clarification on registration requirements under both the OSH Code and the S&E Act reflects an effort to eliminate ambiguities, but the S&E Act remains in effect.
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Authors Janini Somiah and Anvita C Harish from Dua Associates highlight these complexities in the evolving landscape of Indian labor law. As the interplay between Central and State statutes continues to unfold, stakeholders must remain vigilant to ensure compliance and optimize benefits for all parties involved.
