Labour Codes for educational institutions
What the four Labour Codes mean for teaching and non teaching staff, contract workers and the trusts, societies and companies that employ them, and how to be ready.
The institution is the employer, and the contractor does not change that.
Two kinds of staff
Teaching and non teaching staff are covered differently, and both are on the payroll of the same institution.
Outsourced workforce
Security, housekeeping, transport, canteen and hostel staff often work through contractors.
Fixed term and visiting faculty
Short contracts raise questions of gratuity, notice and continuity of service.
Trusts, societies and companies
The form of the employer decides who signs, who is liable and who answers to the inspector.
Where the Codes stand.
All four Labour Codes come into force and the older central labour laws they replace are repealed.
Draft Central Rules published for comment under the Codes.
Central and State Rules are being notified. Rules differ from State to State, so the position for your campus must be checked.
days have passed since the Codes came into force.
What each Code covers, in plain words.
Code on Wages, 2019
Minimum wages, timely payment, bonus, equal pay and the common definition of wages. Total deductions are capped at half of the wages in a wage period, and overtime is paid at twice the rate.
Industrial Relations Code, 2020
Trade unions, standing orders, grievance redressal, layoff, retrenchment and closure, and fixed term employment. Gratuity becomes available to a fixed term employee after one year of service.
Code on Social Security, 2020
Provident fund, ESI, gratuity, maternity benefit and employee compensation. Penalties are harsher than under the older laws, and the transferee of an institution takes on pre transfer liability up to the assets received.
Occupational Safety, Health and Working Conditions Code, 2020
Appointment letters, working hours, leave, safety and welfare, and the regulation of contract labour. It covers establishments with 10 or more workers.
Which older laws each Code replaces.
| Code | Older laws replaced |
|---|---|
| Code on Wages, 2019 | Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965; Equal Remuneration Act, 1976 |
| Industrial Relations Code, 2020 | Trade Unions Act, 1926; Industrial Employment (Standing Orders) Act, 1946; Industrial Disputes Act, 1947 |
| Code on Social Security, 2020 | Employees' Compensation Act, 1923; ESI Act, 1948; Maternity Benefit Act, 1961; Payment of Gratuity Act, 1972 and others. The EPF Act, 1952 moves separately, so confirm its current status |
| OSH Code, 2020 | Factories Act, 1948; Contract Labour (Regulation and Abolition) Act, 1970; Inter State Migrant Workmen Act, 1979 and others |
Eight areas every institution should be able to show.
Appointment letters
Every new appointment should carry a written letter in the prescribed form, stating wages, designation, hours and terms of service.
Wages and deductions
Review how wages are defined in the payroll. Total deductions, including fines and accommodation charges, must not exceed half of the wages in a wage period.
Fixed term teachers
A fixed term appointment of one year or more can lead to gratuity. Review renewal patterns, gaps between contracts and notice terms.
Hours and overtime
Fix the working day and the spread over for non teaching staff. Overtime needs the consent of the worker and is paid at twice the rate.
Leave and encashment
Staff with 180 days of service in a calendar year earn paid leave. Align the leave policy, carry forward and encashment rules.
Contractors and outsourced staff
Check which contractor staff the institution engages, whether the 50 worker threshold applies, and whether the contractor pays wages, PF and ESI on time.
Grievance and standing orders
A grievance redressal committee is needed at 20 workers and standing orders at 300 workers. Align the same with the institution's service rules.
Discipline, exit and dues
Follow a fair inquiry before any penalty. Settle wages, gratuity and leave encashment on exit within the time the Codes allow, and keep POSH compliance in step.
Thresholds that decide which provisions apply.
| Provision | Threshold |
|---|---|
| Establishments covered by the OSH Code | 10 or more workers |
| Grievance redressal committee | 20 or more workers |
| Standing orders and prior permission for layoff, retrenchment or closure | 300 or more workers |
| Contract labour provisions | 50 or more contract workers |
| Gratuity for a fixed term employee | 1 year of service |
| Paid leave eligibility | 180 days in a calendar year |
Enforcement is also different. The inspector gives a written direction to rectify before prosecution, and compounding of offences is available at 50% or 75% of the maximum fine, depending on the offence.
Map, document, operationalise.
Map
- List every category of staff and every contractor
- Check headcount against each threshold
- Collect all appointment letters and service rules
- Identify the State rules that apply
Document
- Fresh appointment letter formats
- Revised wage structure and deduction policy
- Leave, overtime and service rules
- Contractor agreements with compliance clauses
Operationalise
- Brief HR, accounts and heads of departments
- Constitute the grievance committee
- Set up registers and a compliance calendar
- Report to the governing body
This page is general information and not legal advice. Thresholds and procedures should be checked against the Gazette text and the Rules of your State before action.