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Labour codes implementation may further be delayed

Four labour Codes passed by parliament in 2019 and 2020 Implementation may further be delayed beyond the earlier expected  October 1 date. Originally  it were intended to be implemented by 1st april 2021.It has been so reported in Financial Express.

The Government might not immediately give any new date, not even a tentative one, forfor makinf codes effective, according to sources. This will prolong the wait for increased labour flexibility for the industry and welfare for unorganized and gig workers segment.

 According to sources, a conflict between the  representatives of employers and employees over some provisions in the draft central rules is being cited as the reason for the latest delay.

“Neither the employers nor the employees want faster implementation of the rules. Neither side is willing to move an inch from their demands,” an official said.

One of the contentious provisions is the definition of wages, which proposes to cap allowances at 50% of the wages. This means if allowances exceed 50%, the employer will have to pay social security, including gratuity, on the excess amount. This will lead to an increased social security burden and hence, the financial burden on employers through an increase in the salary cost.

Employees’ representatives are insisting on keeping the definition unchanged even if the take-home salary comes down.

Currently, employers enjoy flexibility in calculating the compensation package by reducing the components liable for social security and increase the allowances. Employers’ bodies were arguing that the 50% threshold for basic pay plus dearness allowance should be brought down to 20-30% of the total package.

There is also a demand from trade unions to implement the labour codes on wages and social security at the earliest, but industry bodies want sufficient preparation time for adhering to the new rules.