In labor codes, the definition of ‘worker’ is one of the key concepts. This is because the definition of ‘worker’ defines who will be covered under the new labor codes when offered for specific benefits such as overtime and leave encashment. The new labor codes have gone a step further and provided a separate definition of an ’employee’ and a ‘worker’.
This is likely to create a gap among employee populations in all organisations, given that there are specific benefits under the Labor Code that apply only to such workers and not to all employees.
Who is a worker under the new labor code?
According to the Labor Code, the definition of worker includes any person who is employed to perform any manual, unskilled, skilled, technical, operational, clerical or supervisory work.
However, there are some exceptions to the definition of ‘worker’. A person can be excluded from the definition of worker if any of the following conditions are satisfied:
- the person is primarily employed in a managerial or administrative capacity; either
- The person is employed in a supervisory capacity drawing a salary in excess of Rs. 18,000 per month or such amount as may be notified by the Central Government from time to time;
Also, any person who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957 or is employed in the police service or as an officer or other employee of a prison specially excluded . Definition of worker.
A data analyst is an example of a worker if he or she is an individual contributor without a managerial/supervisory role.
Note that wages here refer to the definition of ‘wages’ as defined under the Labor Code. Thus, if a person’s ‘wages’ which includes basic, special allowances and other allowances exceeds Rs 18,000 per month and that person is in a supervisory role, he will not come under the definition of ‘worker’.
Why a new definition of ‘worker’ is needed
While a similar definition of ‘worker’ exists under the current Industrial Disputes Act, it is applicable for limited purposes such as retrenchment or in cases of disputes with the employer. From an employer’s point of view, identifying workers who are covered under existing laws can be quite challenging. This is because the definition given at present lacks clarity and has been subject to extensive litigation in the past. Terminology such as managerial or supervisory role is not defined and may have a very different meaning in today’s digital world than has been interpreted by courts in the past.
On 8 June 2022, the Chennai Labor Court in the case of Tirumalai Selvan Shanmugam Vs.
It was held that whether a person qualifies as a worker would depend on the roles and responsibilities documented in the letter of appointment or promotion letter and on the performance of that person on a day-to-day basis.
Benefits to ‘workers’
There are specific benefits under the Labor Code that apply only to ‘workers’. Thus, it becomes very important for organizations to conduct a detailed assessment of job descriptions, roles and responsibilities of individuals to identify the ‘workers’ in the organisation.
Given below are some of the major benefits under the Labor Code that will be applicable only to ‘workers’:
A. Under the Occupational Safety, Health and Working Conditions Code, 2020 (OSHWC Code) – Several provisions under the OSHWC Code apply only to ‘workers’, such as:
employee benefits
One. extra wages for overtime work
b. Annual leave and leave encashment
working time
One. daily and weekly working hours
b. scheduling of overtime hours
C. overtime hours limit
D. The need to obtain consent from the worker to work overtime
contract labor – An employer employing persons through contractors/third parties may qualify as the principal employer in respect of ‘workers’ who qualify as contract labour. An employer has various additional obligations under labor codes in respect of such contract workers. Thus, if a person is hired as a ‘contract worker’, the employer (the firm where the person is hired by a manpower supply firm or a contractor to do the work) will have certain obligations towards you. This includes liability towards Provident Fund, Employees’ State Insurance, Statutory Bonus etc.
safety Committee – Need to set up a safety committee consisting of representatives of employers and workers
B. Under the Industrial Relations Code, 2020 – Most of the provisions under the Industrial Relations Code apply only to ‘workers’, such as:
truncation
One. Compensation to be paid to retrenchment workers
b. Workers entitled to one month’s notice and wages in lieu of such notice on retrenchment
C. Re-employment of retrenched workers – Where the employer proposes to appoint a person to the post within 1 year, the retrenched worker shall be given preference over other candidates.
committees
One. Grievance Redressal Committee – to be constituted for redressal of individual grievances of workers
b. Works Committee – to be set up by certain establishments to promote measures to secure and preserve harmony and good relations between employers and workers
standing orders Establishments employing 300 or more workers are required to prepare standing orders governing the conditions of service for workers as prescribed under the Code.
notice of change – Employers are required to give workers at least 21 days’ notice before making any changes to any terms of service (including wages, working hours, vacation holidays, etc.).
It is clear from the above that the various provisions of the Labor Code have been framed with the intention of protecting and enhancing the interests of workers – excluding persons in managerial or supervisory roles. Thus, one can say that labor codes are more beneficial to a ‘labour’ than a ‘manager’.
(The author is a partner, EY. The views expressed are personal.)