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#Labour Reforms

Labour codes approval by parliament draw applaud from employers and resentment from unions



BM Editorial Team


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These reforms will reduce labour cost, may provide job opportunities but of bad quality and workforce will be more deprived according to experts.

With approval of parliament of three labour code bills on Industrial relations, Social Security and Occupational safety, Health and working conditions, these are set to become the law of the con try once signed by the President of the country and notified by the Govt, though a lot of work remains to be done. Rules relating to all the codes are to drafted and approved.

Where employers bodies term approval of labour code bills as an opportunity of creating more employment, workers unions term these changes in labour regulations as pro employer and making workers’ job more insecure  which will provide open platform to employers to exploit the workforce.

 There are many unanswered questions in the minds of people about the undue haste demonstrated and the way adopted by the Govt. in getting all these three codes passed from Lok Sabha and Rajya Sabha.

Prof. K.R. Shyam Sunder, HRM, XLRI, Jamshedpur says, “It was unfortunate that the government had chosen to effect these changes at a time when the country is ridden with a pandemic and unemployment rates are alarmingly high. In a civilised and progressive Society, the ambit of labour laws must be widened as economic development takes place. However, given the neo-liberal form of globalisation that has been witnessed in India, a reverse is taking place.

Firstly, the three labour codes seen together fails to achieve even reasonable balance between enabling of ease of doing business, and protecting & strengthening labour welfare and their rights.

Secondly, the liberalization of regulations concerning standing orders and prior permission regulations of lay-off, retrenchment and closure from 100 to 300 means around 90% of the working factories and a little over than 40% of workers employed therein will be outside their purview. This together liberalization of thresholds of regulations concerning conditions of work in factories and contract labour employment mean further deprivations. Further, the IR Code has given powers to the state governments to exempt establishments or class of establishments from any or all provisions which unlike its predecessor ID Act does not specify the conditions.  Taken together these provide too much flexibility to the employers and too little protection to employees and the absence of provisions relating to unemployment allowance/insurance in the Social Security Code means workers would have fend for themselves. Too much flexibility is as bad as too little, the pendulum of labour law in India swings to either extremes. That is from strong to soft regulations

Thirdly, the labour codes bills may promote jobs but bad quality ones, casual, contract and temporary etc. Regular work category of employment will be a thing of the past.

Fourthly, wage workers in the agricultural sector, domestic workers, bidi workers and even street vendors do not seem to figure in the social security code which means deprivation of this vital Code. Further, this Code unlike its predecessor, the Unorganised Workers’ Social Security Act, 2008 does not provide portable smart identity card though it provides for registration. Thus, it is an incomplete code and reflects poor drafting.

Finally, the hidden objective of the codes, the IR code especially is to reduce the substantially the labour cost in small enterprises which are parts of the domestic and global supply chain which in turn will benefits not the small enterprises but the big players like the OEMs.”

Lohit Bhatia, President- Workforce Management, Quess Corp. says,“While the move to consolidate existing labour laws is definitely welcome at a time when business continuity and job creation are critical priorities for the government, it has been a long awaited reform and finally in place. It  will definitely likely to ease multiples of compliance processes that have been bottlenecks for contract staffing firms and also the employers to secure the services of contract staffing companies. Though erstwhile regulatory bottlenecks which have constrained contractual hiring has now been eased, companies will still need assistance from intermediaries like staffing companies to ensure compliance, particularly when the requirement is large and/or  spread across the country. This will benefit not just employers who now have the agility and flexibility to hire as per their business requirement but also help intermediaries who play a key role in helping formalise the workforce. For example, the one of the Codes (Occupational Safety Health and Working Conditions Code) proposes a national licensing regime for staffing companies (“Contractors”). This eliminates the current regulatory regime in place as per contract labour regulation and Abolition Act (CLRA) which is cumbersome, and requires licenses for every premises of the client. Also in the CLRA regime, the client (principal employer) also has to get a registration, which is dispensed with in the OSH code. This will significantly ease the process.

For the workers, this could mean further job opportunities and access to social security, as now it will be  more easier for employers to seek contract staffing rather than manage the regulatory complications through unorganised contractors, the lack of which until now has been seriously felt during the pandemic initiated income shock and unemployment.