Navigating the New Labour Code: Are Sales and Contract Workers in Shops Covered?

The Occupational Safety, Health and Working Conditions Code 2020 covers sectors like factories, mines, docks, plantations, and activities like construction, beedi and cigar manufacturing, cine production, and conditions of service of sales personnel, interstate migrant workers, and employment practices of contract work. However, establishments that are not factories, mines, or plantations but are covered under the respective state's Shops and Commercial Establishments Act will continue to be governed by that Act. If that is correct, I need one clarification:

Coverage of Sales Personnel and Contract Labour

1. Will the sales personnel employed in such shops/commercial establishments be covered by the Occupational Safety, Health and Working Conditions Code?
2. Will the contract labour and interstate migrant labour in the commercial establishments be under the said Code?

Scope of the Sale Promotion Employees Act

Currently, the Sale Promotion Employees (Condition of Service) Act, 1976, covers only sales personnel of certain industries. Initially, it was meant to cover sales personnel of the pharma industry, but later on, some 10 or 11 industries were added. Obviously, there are a number of industries yet to be covered. The Code does not specify which sector they should represent, and it is naturally understood that they will be covered irrespective of industry, thereby widening the scope of sales promotion employees. But is it possible that sales promotion employees of a trading organization covered under the Shops and Commercial Establishments Act, which is out of the purview of the Code, become part of the Code? If sales promotion workers are covered, the clerks and others working in the shops and establishments will be left out.

Interstate Migrant Labour and Contract Labour Under the Code

Under the Code, interstate migrant labourers include those recruited directly by the employer. However, under the existing Act, those who are recruited and paid directly by the employer are not considered interstate migrant labour. Similarly, there is different treatment with regard to contract labour under the Code. My question is, if a shop is not covered by the Code, is it possible to cover certain employees, like sales personnel, migrant workers, or contract workers, only under the Code? If yes, how can the shop/commercial establishment obtain registration?

It may also be noted that the definition of a motor transport worker excludes workers working in the office of the transport company, which is under the Shops and Commercial Establishments Act.

Regards, Madhu T K

Dear Mr. Madhu,

At the outset, it is my personal opinion that the two main questions in your post deserve appreciation, and the other questions interspersed with your arguments require a detailed analysis of the very codification of the existing 29 Central labor laws into 4 major Labor Codes.

As you are well aware, labor is a subject matter falling under the concurrent list of the Seventh Schedule of the Constitution of India. As such, we have hundreds of labor laws both Central and State in force, and this multiplicity of laws reduces the effectiveness of compliance, enforcement, and the measures of industrial dispute resolution. Hence, the second National Labor Commission specifically recommended in its report the grouping of the existing labor laws into four or five groups: (i) Industrial Relations, (ii) Wages, (iii) Social Security, (iv) Safety, (v) Welfare, and Working Conditions, among others. The necessity to consolidate all the existing Central and State Labor Laws into a single Labor Management Relations Law is emphasized. State Labor Laws relating to shops and other establishments, national and festival holidays, conferment of permanent status to workmen, etc., are legislated by the respective States based on the regional concentration of industries and local customs. It is essential to ensure uniformity of provisions even among such different State Laws post the advent of LPG, as suggested by the 2nd National Labor Commission. Notwithstanding the possible criticism of the usurpation of State Govt powers by the Central Govt, the introduction of the Model Shops and Other Commercial Establishments Rules, 2016 by the Central Government is seen as the first step in this direction by giving a choice to the States to adopt them.

The Code on Wages, 2019, covers all the essential elements of payments under the contracts of employment such as determination of wage periods, mode of payments, authorized deductions and their extent including loans and advances to employees, fixation of minimum wages, their periodical revision, equal remuneration, payment of bonus, and the mode of disposal of claims arising thereof. Analyzing the definitions of the terms 'establishment' (Sec. 2(m)), 'employer' (2(l)), 'employee' (2(k), and 'worker' (2(z)), the Code would apply to all establishments subject to the conditions for non-applicability provision given under each Chapter.

We can draw an analogous position of law in respect of the other Codes by examining the respective terms defined under each.

In this backdrop, first, let me try to answer your first two queries as follows:

(1) This is a valid question in view of the void created by the OSHWC Code, 2020, with the conspicuous omission of the definition of the term 'establishment' concerning the specific activity of promotion of sales, commonly understood as an operation under the realm of marketing rather than mere selling of goods directly to customers. When the Code specifically defines other establishments like factory, plantation, newspaper establishment, motor transport undertaking, etc., with reference to their predominant activity, the generic definition of establishment u/s 2(1)(v)(i) with a threshold number of workmen certainly justifies the question you have raised. As you rightly pointed out, the definition of the term 'establishment' u/s 2(a) of the SPE Act, 1976, is specific to the point and expandable by virtue of the enabling provision u/s 3 of the Act. I think a suitable amendment is required to dispel the ambiguity. However, I am of the view that by virtue of the repealing provision under the Code, the provisions of the Code simply substitute only the working conditions provided under the repealed SPE Act, 1976, and as such, it may not be apt to bring them on par with the employees of shops and other establishments whose predominant activity is selling or rendering services to customers directly while their working conditions, etc., are already covered by the establishment-specific State Act.

(2) The State Shops and other Establishments Acts have specific provisions regarding working conditions, health, and safety befitting the environmental conditions and nature of the activities performed therein. Therefore, I would prefer only to say "NO" to this query.

Coming to your other queries, I would like to ask you to focus on the uniformity of the meanings assigned to the definitions of various terms like 'establishment,' 'industry,' 'employer,' 'employee,' 'worker,' 'wages,' 'industrial disputes,' frequently being used in one part or the other of the four Codes. In my opinion, all industrial establishments whether within or outside would come under the purview of the Codes concerning the subject-matters dealt with therein. For instance, a claim for a bonus can be raised under the Industrial Relations Code, 2020, by an employee of a shop wherein 20 or more employees are employed. The minimum rate of wages fixed by the appropriate Government under the Code on Wages, 2019, has to be paid by the employer of a shop. The same applies to the engagement of contract labor (it is not possible considering the definition of "core activity" in the concerned Code) and Interstate migrant labor in shops and establishments. The new definition of interstate migrant workman under the Code expands the scope of the term as put forth in the Statement of Objects and Reasons. One can easily justify the exclusion in view of the patent difference in the nature of duty of the running crew in a motor transport undertaking and the clerical/administrative staffers in its office.

I would reiterate that your queries are genuine and appreciable. There may arise other practical problems when the Codes are actually enforced. Like any other law, subsequent amendments would be in place.