Article (January-2021)


Are the Codes panacea for Industries?

Deepanjan Dey

Designation : -   General Manager-HRM

Organization : -  Tata Steel BSL Ltd., Angul, Odisha


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Irrespective of various fallacies and intricacies the present existing Labour Laws might have but as HR, IR or HR Legal professionals we have lived with these laws for decades. Consequently, we became thoroughly adept with these laws and were at ease to solve the complexities and criticalities that arose out of these laws which now appears will be brusquely lost. A bare perusal of codes will entail that the twenty-nine laws subsumed in these codes has been retained with few changes and therefore it will not be an understatement to proclaim that the codes are old wine in new bottle. Nevertheless, it gives a saudade feeling as HR and IR professionals as we must now unlearn and relearn the laws once again from scratch. Furthermore, over the years after independence the judiciary has plugged the loopholes and lacunae existing in the present laws and the interpretations and the ratios set forth by the judiciary has settled various controversies and conundrum which was subsisting in the field. In may be pertinent to mention that the plethora of cases including various constitutional bench judgments have settled various controversies from the meaning of wages in Provident Fund & Misc Provision Act to abolition and absorption of Contract Labour. Now the question that arises will these judgments lose its relevance? The answer to this is both affirmative and negative. Henceforth while we refer to a judgment, we will have to appreciate the law as it existed in juxtaposition with the law as laid down in the code in order to understand its import and applicability to the present law. If the particular provision has been retained from the pre-existing law, the judgment will not lose its relevance or else the judgment may not be relevant to the context.

There is no doubt reform of the various outdated archaic Labour laws have been a long overdue and despite lip service no government over the years has shown the political will to introduce the reforms. The Second National Commission on Labour recommended consolidation of central labour laws into broader groups such as: (i) industrial relations, (ii) wages, (iii) social security, (iv) safety, and (v) welfare and working conditions. Is then the Codes the ultimate answer to the long pending reform? The second question that arises is the time ripe for these reforms to be taken forward in view of the challenges inflicted by the pandemic? It may be apposite to mention that whether right or wrong which is still being debated by the economists but after demonetization we have seen the unabated decline in the growth rate. Hence, at this moment of crisis faced by the industries owing to the pandemic, the debate that is going on in various industry circles is the time ripe for implementation of these codes. Last but not the least the question that arises how the reform roadmap for Labour laws should look like and whether the Codes meet that expectations? In gist, ideally, the reform roadmap should ideally consider the following for instilling confidence to investors especially during this pandemic.

1.    Abrogating all useless and multiple registers and forms under various enactments.

2.    One consolidated return for all labour enactments. The good thing is that various State Governments have implemented consolidated return for various labour legislations.

3.    Keeping Chapter VB of Industrial Disputes Act which deals with lay off, retrenchment and closure of Industrial establishment under suspension for at least two years if the government cannot show the political will to abrogate it.

4.    Digitalized and simplified approval process without the bureaucratic hassle for setting up an establishment or business.

5.    Decriminalization of offences.

The multiplicities of laws were never an issue. It is the multiplicities of compliance that is an issue. Despite the liberalization of economy, the dominance of inspector raj remained palpable imbedded in the system under the existing laws. Now have the codes addressed these issues faced by the industry? As regard to the compliance it will be inappropriate to comment now till the rules are finally notified. However, there is nothing in the four codes for industry to cheer. On the contrary it appears the codes may increase liabilities and payout on wage bill for the industries on following counts :

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