However, the tripartite committee that finalized the draft has cautiously avoided the term ´hire and fire´ and used in place ´retrenchment provision´ adding a condition that it will come into effect in special circumstances.  

 

"And special circumstances has been defined as a situation wherein the company cannot continue further operations or is facing serious financial crisis or substantial drop in production orders, among others," said a member of the drafting committee. 

 

The committee believes that it will serve the interest of all industries, including exporting firms as the provision will allow employers to recruit or lay off workforce depending on orders they receive in different seasons.

 

The consent from trade unions on the provisions came mainly after employers´ representatives agreed to cite enactment of Social Security Fund (SSF) Act in the draft. As the enactment of SSF Act is envisaged to pledge unemployment benefits, trade unions believe clear citation of enactment of the Act in the new labor law will address their concerns about financial insecurity of workers for the period they remain jobless.

 

In case of lay offs under retrenchment provision, the draft law seeks employers to issue notice to staff a day in advance for those employed for four weeks or less, one week in advance for staff employed for less than a year and a month in advance for workers employed for one or more than a year."However, the concerned employer will need to pay a compensation equivalent to a month´s basic remuneration for every year served," reads the draft. 

 

The draft, which was submitted to the government a couple of days ago, allows lawful strike by workers and lock-out by employers in response to workers´ strike. However, the act clearly says that workers involved in an unlawful strike shall not be entitled to receive remuneration for the period of strike. "Fundamentally, this provision has been put in place on employers demand and trade unions have agreed to it. It ensures ´no-work, no-pay´ in case of illegal strikes," said the source.

 

Workers will be entitled to full remuneration if it is found that employers resorted to unlawful lock out.

Recognizing the health related concerns of trade union, the draft Act makes it mandatory for employers to provide medical insurance of no less than Rs 100,000 and accident insurance of no less than Rs 500,000. For the medical coverage, workers will need to bear 50 percent of the total insurance cost. For accident insurance, workers will need to bear 25 percent of the total insurance premium.

 

The draft Act seeks employers hiring 20 or more workers to form Safety and Health Committee to ensure and monitor safety measures and manage claims in case of accidents. "In case the workers lost life or suffered permanent disability due to absence of safety measures, the employer can face up to two years of jail term or a fine of Rs 500,000, or both," said the source, referring to a new provision in the draft Act.

The new law also asks firms employing 20 or more workers to set up Labor Relations Committee to ensure smooth industrial relations.

 

"We will begin consultations with different stakeholders soon to finalize the new law," said the source.