According to Gurnani, the logic behind this flexibility is to help industries manage workload variations without breaching the weekly limit. While the normal workday remains eight hours, she notes that employers can structure longer or shorter days as long as the total does not exceed 48 hours, and overtime kicks in beyond that threshold.
Gurnani highlighted that the introduction of a mandatory national floor wage, along with an expert committee for periodic revisions, is expected to ensure minimum living standards for workers across states.
She also addressed concerns around overtime, fixed-term contracts, higher thresholds for layoffs, and work-from-home provisions for women. According to Gurnani, the intent of the reforms is not to enable hire-and-fire policies but to encourage direct employment and formalisation, reducing the dependence on contractors and improving worker benefits.
This is the edited excerpt of the interview.
Q: How the government will go about setting the floor wage, and is this going to be revised annually?
A: This floor wage, as you said, is an important concept. Floor wage was there earlier also. However, it was not mandatory. It was an optional kind of a floor wage, which government of India used to fix at regular intervals.
Now, as per the new course, the floor wage is going to be having a statutory backing, which means it is mandatory, and no state should fix their minimum wage below the floor wage. The floor wage would look into the minimum living standards, and there would be a committee of experts that would be deciding on what should be the floor wage, and these would be periodically revised upwards.
Q: Could you give us an any indication of what kind of floor wage the government could propose initially?
A: We cannot give a figure till the committee of experts sits on it, because there is a full committee of experts, including statisticians, statisticians who examine the entire data and who look at the various components of a minimum living standard and then fix the floor wage. So it has to go through that entire process of consultation by an expert committee, and then only it would get announced.
Q: By when do you expect this flow wage to be decided?
A: As I said, the committee will be formed now that the code has been notified. The committee will deliberate and in the course of the next few months, the committee would come out with the actual floor wage.
Q: I also want to ask you about the workers covered under the new labour codes — does the eight-hour workday and 48-hour workweek apply to all professions?
A: Yes, it applies to all professions. The outer limit is the 48 hour per week and anything beyond that will attract an overtime, which is the at the rate of twice the wage that has to be paid.
Q: Could you also give us a little more sense on how the overtime will be calculated, and will this overtime wage also apply to professions like broadcast journalism for that matter?
A: As I said, this is applicable to all sectors. The application, the normal working day is eight and a week is 48, however, there is flexibility within that. There would be days where people could work for 12 hours, there would be days where it could be 9.5, there would be days where it’s eight hours. If suppose somebody is working for 12 hours, it’s a four-day work week, then three days are to be paid holidays. If they work on the fourth day, then that attracts an overtime. I hope this kind of a calculation explains this.
The logic for doing this was that sometimes in an establishment, there is a requirement for a peak kind of a demand for work and workers, which is why this flexibility is now given that with the 48-hour workweek, the appropriate authority, which is the central government or the state government in their respective domains, would be fixing the hours of work that can be done in a particular day. The normal is eight hours and 48 hours, and beyond that is the overtime. But within that 48 hours they can adjust on a daily basis.
Q: How will the government ensure that?
A: Government will give that flexibility to the establishments. Government will not decide it for each establishment. The appropriate government in the states would notify this as part of their rules. But the establishments will fix, on a daily basis, what exactly would be the days of work, they can vary it from worker to worker.
Q: Overtime payments would be mandatory?
A: Overtime payments were mandatory even in the previous acts and overtime payments are mandatory even now beyond this, these working hours.
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Q: I would also like to ask you about the increase in contribution towards gratuity and provident fund. How is it going to increase under the new labour codes?
A: Gratuity, the change here is in terms of the fixed-term employment, the codes provide for a fixed-term employment, which is for a particular period of time. Instead of a permanent employment, there can be a fixed-term employment. This will move people more towards formalisation, because currently a lot of people are taken on contract, because there is no provision for fixed-term employment for a certain period. Normally for project-based work, a lot of people are taken on contract. They can be taken directly on a fixed-term employment, and they, after completing about a year of service, would be entitled to gratuity.
In terms of social security contributions, social security contributions are linked to the definition of wage. The wage definition has basically the basic plus the dearness allowance (DA). There are companies which give a lot of allowances over and above this. If the allowances exceed 50% then the excess over 50% gets added to the basic plus DA. To that extent, the social security contribution, especially for provident fund, which are a percentage of the wage, are likely to go up to the extent that they are more than 50% over and above the basic and the DA.
Q: The threshold for government approval for layoffs has increased from 100 to 300 is this for all sectors?
A: The threshold for 100 to 300 – as per the code, it is specifically for industrial establishments, which is factories, mines and plantations. I would also like to explain the logic for increasing this 100 to 300 so what it essentially means is that earlier, if a company, which is a factory, had to close down or retrench or lay off workers, it had to take government permission if it had 100 plus workers. The result of that was that a lot of factories would have slightly less than 100 workers directly employed and rest through contractors. So that they could not come in the ambit of this condition.
Now this has been increased to 300 which means that up to 300 the companies would be now encouraged to take people on direct roles with themselves, instead of taking them through contract, because it is only above 300 that they would need to take permission for any retrenchment, layoff or closure from the government. This, in a way, this increases or encourages formalisation, and this is an aspect that needs to be understood more clearly.
Q: Some have said that this increase in threshold would make it easier for mid-size firms to hire and fire. How would you respond to that?
A: As I said, that this conceptually, this 100-300 is not as not meant to replace the regular or the permanent employees. It is positioned in such a way that when the companies were hiring people through contractors for seasonal work of a project-based work, instead of going through a contractor, they could directly hire those people for a fixed-term.
This, I would say, is a win-win situation, because for the employees, they get the benefits of a regular employee in terms of entitlement for leave, maternity benefit, as well as gratuity after completion of one year. In addition, the employees get the benefit of working directly with the company, and not through a third party or a contractor, that is I would say, a big benefit for employees, because it meets their aspirations of working directly with the company. It also increases their employability because they have directly worked with the company, and this embellishes their CV and bio-data that they have directly worked with the company. These are the benefits to the employees.
For the employers instead of going through the contractors and paying the contractors commission and fees, they could hire these workers directly for a defined period of time. So, the intent has never been that this should replace permanent employment. Intent is only to make sure that what was happening through third party or contractors could be now directly engaged for a period of time with commensurate benefits as the regular employees. And if there is any violation for this, there are legal safeguards which are there in the codes, including the tribunals, which are now going to have two members, one judicial member and one administrative member for faster disposal of cases.
Also, there are grievance redressal committees which are provided for in the court, where the workers have a proportionate representation, and also women have a representation in these grievance redressal committees. So, with all these safeguards, as I said, this is not meant to replace regular employment with fixed-term employment or to do hire and fire. It is to basically ensure that people needed for project based or limited period time get that kind of employment along with the commensurate benefits.
Q: When it comes to work from home, the code and the government’s release says that this has to be by mutual consent between the employer and employee. So how will this be decided as to when can an employee work from home, and when he has to work from office?
A: Work from home provision has been made for women after availing maternity benefit, and this is basically for the services sector, and this has to be decided based on the mutual consent between employer and employee. The specific goal of this provision is to improve women’s participation in the workforce.
Q: When it comes to pay parity between men and women, what does the labour code seek to achieve, and what are some of the guardrails you have tried to implement to ensure the right working conditions for women to rise in the workforce and have access to equal pay?
A: You raised an important point. The code on wages has some, I would say, pro-worker provisions. First of all, it universalises minimum wage, which was earlier restricted to about only 30% of workers whose employment was in the scheduled employment. Now the minimum wage is universal. There has to be no discrimination on grounds of gender, whether it is for men, women or transgender, who have also been included now.
There has to be no discrimination in terms of employment, and also there will be, as I said, grievance redressal committees in the workplaces which will have an adequate representation of women if there are any such grievances that they have in terms of terms and conditions and in terms of wage, etc.
Also, the advisory boards which are going to fix up the wages, both at the central level and at the state level, will have advisory boards which are going to fix the minimum wages. They will have one-third representation of women, so every care has been taken that women’s voice is on the table, both at the policymaking level and also at the workplace.
Q: How does the labour law reform help gig workers? How will this increase the expenses of employers when it comes to giving benefits to gig workers, especially around social security?
A: So, gig workers for the first time, have been given a definition in the code, because this is a new kind of work which has come up thanks to the digital progress that has happened in the country. The gig workers are going to get several benefits. There would be a Social Security Fund that would be set up for them. There would be a Social Security Board, which will have a tripartite representation from the gig workers themselves, from the aggregators or the companies, and from the government, which is going to overall monitor and oversee the social security efforts for the gig workers.
The aggregators are to provide 1-2% of their turnover, subject to a maximum of 5% of the payout to the workers into this fund, from which the social security benefits, including pensions, accident insurance, etc., will be provided to the gig and platform workers. In our discussions with the aggregators, there has been no specific opposition to the creation of this fund and this contribution.
In fact, most of the aggregators were keen for a national law, because in the absence of a code, there were laws being prepared by the states, and they would have had to contribute to funds set up by different states, and the platform—the aggregators—were always insisting on a national framework, a national fund, and a national contribution by them.
So in that sense, they have been consulted and they are fully on board as far as the social security provisions for the gig and platform workers are concerned, and I think it is our combined duty for this new world of work that has come up the world over, as well as in India, to make sure that we provide them the required social security.
Q: Does this code also apply to daily-wage construction, contracted labour?
A: Yes, it applies to the building and construction workers. There are provisions for their safety, for their welfare. Again, the states have the Building and Other Construction Workers Boards, into which the people who do the construction, the developers, and the agencies who construct, are supposed to give 1% cess of the entire cost of the construction towards a fund, and that fund is to be used for the welfare of the building and other construction workers—for their social security, for their welfare, for their skilling, for their children’s education.
So, there are a whole lot of such welfare measures that these state boards take up as part of the measures for the building and other construction workers.
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Q: How will this law support unorganised workers? What has the law done to support them?
A: For the very first time, the law has provided for social security for unorganised workers, and therefore for unorganised workers also, for their social security, a fund would be set up. This fund could have contributions from their employers. It can have their own contributions. It can have contributions from CSR. It can have contributions from various fines, etc., that are collected. It can have contributions from the state government, and the central government.
There is, first of all, a fund that will be created, a board will be created, and from this, schemes will be designed to provide them social security, which would again include pension, health benefit, maternity benefit, and life and disability cover. So, these would be the kind of benefits that will flow to them.
They would all have to be registered on the e-Shram portal, giving their Aadhaar, and all such benefits would be organised to be transferred to them through the DBT mode into their Aadhaar-linked accounts. Similar provisions would also be there for gig and platform workers, who would have to register on e-Shram through their Aadhaar and get the benefits through an Aadhaar-linked bank account through the DBT mode.
Q: One will now require a 60-day notice to call a strike in an industrial establishment. Will this defeat the entire exercise itself?
A: It’s a minimum 14-day notice that has to be provided. In the previous act, this provision was there, but it was only applicable to public utilities, and this has now been extended to all establishments. And the reason for this is to promote industrial peace and harmony.
When a notice is given, it prevents disruption of the processes, but at the same time, it provides an opportunity and occasion for the workers and the management to sit across and conduct conciliation and to resolve whatever grievances or demands of the workers are there. So, this is to promote industrial harmony without causing sudden disruption.
Q: Now, the labour laws have always been considered archaic. How have you decriminalised certain provisions of the law?
A: So, there have been, I would say, huge changes in terms of the way these laws have been framed. They have consolidated 29 previous acts, and the number of rules and sections has come down to one-third of what they were originally. Decriminalisation: we had earlier 87 sections in the previous acts which had criminal provisions. These have been brought down to 22, so the ones which were very technical and procedural in nature, like maintaining registers, etc., have been decriminalised.
However, offences which are grave or serious in nature, for example, those that can cause injury or disability or death, have still been continued as criminal provisions, and provisions where, say, a social security contribution has been collected from the worker but not deposited into the concerned provident fund or the agency which is providing the provident fund or the trust, then that would be a criminal provision. The rest of the procedural and technical provisions have been decriminalised.
At the same time, the entire digitisation of the compliances will also ensure that there is better oversight by the supervisory officers on the compliances and will ensure better compliance. At the same time, the web-based inspection will make sure, by using algorithms and AI, that the inspections are targeted to organisations which are likely to default, or which have defaulted in the past. So, this will all ensure that the compliance is better through digital means, but at the same time, the procedural and the technical provisions have been decriminalised.
Q: The working hours have been capped at 8 to 12 hours per day, 48 hours per week, but this cap was there earlier as well, as you’re saying, Ma’am. The clause for overtime payments was mandatory earlier as well, but that was never really followed in spirit. It is not followed in offices or industrial establishments. Will there be a mechanism now to ensure that this happens?
A: As I said, one is we have the grievance redressal committees which the workplaces will have to have, which are going to have proportionate representation from the workers. So that is a mechanism that is there. The industrial tribunals have been broad-based so that they can have faster disposal of cases. So, these are the kind of legal measures that have been put in place to ensure.
As far as the machinery is concerned, as I said, with the digitization that will happen, their time would be freed up to be able to go into these kinds of violations, because now they will be focused on actual violations, since everything will be digitised and not manual.
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