Doing business at ease in India has been an issue for a long time. It was cumbersome on the part of an employer to follow huge number of laws, some of them were practically difficult to comply with. So, most of the establishments were not following many laws by “managing” with enforcement authorities. Thus, many laws were on papers only, workers were not getting the benefits. The bitter truth was, you cannot do business in India without telling lie. So, there was a long standing demand from industries and investors for a reform in the labour laws.
Although, the Second National Commission on Labour had recommended consolidation of more than 40 labour laws in 2002 itself, as it found these laws were complex to implement, the Modi Government took initiative to work on it in 2014. It decided to bring in four codes by converting 44 Central Labour Laws. These are Wage Code, Industrial Relations Code, OSH (Occupational, Safety & Health) Code and Social Security Code. The Wage Code was passed in August’19 and the remaining three Codes are passed now amidst controversies.
Leaving aside the controversies, let us see what the major changes are.
The companies with up to 300 workers have been allowed to have its own set of rules for service conditions. Earlier the service conditions were governed by Standing Orders, now it is not required for this category of Companies. Moreover, these Companies don’t have to take permission from Government for retrenching workers and shutting down plants. But, this will not go down well with workers as it will restrict their job security.
Unions will now have to give 60 days’ strike notice. Earlier it was 14 days, that too for public utility services. Moreover, if proceedings are pending before a labour tribunal or the National Industrial Tribunal, workers cannot go on a strike for 60 days after they are concluded. Flash strikes are also outlawed. This will be beneficial for employers, because, politically driven labour unions were often seen coming in the way of smooth business operations. But, since labour union’s rights are curbed this too will be objected to.
The new Labour Codes fixes the maximum daily work limit at eight hours, which was twiddled with by some State Governments during this pandemic.
Women will be entitled to be employed in all establishments for all types of work and in case they are required to work in hazardous or dangerous operations, the government may require the employer to have adequate safeguards in place prior to employment.
The Codes promises universal social security for both organised and informal workers as well as gig and platform workers. The government shall formulate and notify, from time to time, suitable welfare schemes. It can use corporate social responsibility funds or any other such source as may be specified in the scheme. It lays down the provision of setting up of a National Social Security Board to recommend to the central government suitable schemes for unorganised workers.
These are guidelines only, much to be done by Central and State Governments to introduce various schemes. It remains to be seen whether or not these schemes will really touch the most vulnerable section of workers, i.e., migrant workers.
Moreover, tapping of CSR fund for this welfare schemes will defeat the very purpose of CSR fund under Companies Act, which is meant for development of nearby community of the actual business operations of a Company.
These Codes further provide for one labour return, one licence and one registration to make compliances simple. As per the existing system, a Company has to maintain eight registrations and four licences to run a business under the existing labour laws. Besides, they have to file eight labour returns, including to the EPFO, ESIC and Chief Labour Commissioner.
These changes will really ease out doing business, so far as compliances are concerned, and workers will not be affected.
A Contractor will have to take one license only to supply labour which is a change in positive direction. At present a Contractor has to take multiple licenses for multiple establishments.
Another positive change is, a Contractor does not have to take a license if he engages up to 50 labourers, earlier the threshold was 20.
As per the new Codes, provisions will be made for employees working in establishments employing less than 20 for Provident Fund contributions. Earlier the eligibility was minimum 20 employees for covering an employee under PF.
Most of the above changes are going to help in doing business at ease which will eventually attract investors, including FDI. Only concern is, elimination of Standing Orders and elimination of labour unions’ interference for establishments employing up to 300 workers will not go down well with people as it will hinder job security of the workers. This is a debatable point, because, business ethics of most of the employers are questionable and there is every likelihood that these employers will misuse this provision.
On the other hand, it is also important to take the people into confidence while going for this massive overhauling of labour laws, although it was long pending. People in India do not want to go for private jobs as it’s not having job security, it’s not appealing. So, people spend time, money and energy to get a government job. This pandemic has made lakhs of people jobless, all of them from private sector only. People are keeping their fingers crossed worrying about their future. Adding fuel to the fire we are giving free hand to Companies to fire employees. People cannot take it easily, because their mental condition is not conducive for this at this moment, when negativity is all around. The Government could have waited for a few months or a year to announce these changes to take all the stakeholder into confidence. Probably they have missed our age old decision making mantra, Sthaan – Kaal – Patra, where Kaal was not right.
