Reforms in labour laws have been long due, but now it seems the wait is finally over. The union labour and employment ministry plans the implementation of the four labour codes this year. In addition, the ministry is also planning to bring a social security welfare scheme for platform workers and those who are a part of the gig economy.
Preparations for Implementation
The government is working with all the states and union territories to understand their concerns before rolling out these new labour codes. Many states have already shared their agreement with the labour codes and prepared draft rules. The government’s responsibility is to ensure that not even one state or union territory is defied, becoming a part of and benefitting from such a far-sighted program. The government is also trying to integrate the already present social security scheme for the informal sector with the existing database for the industry.
Modernization of Labour Laws
Experts see the implementation of the four labour codes as the Indian government’s modern-day approach to overhauling traditional labour laws that are no longer relevant. It is a measure to bring them in line with the business and investment needs of the 21st century. The new regime will separate all the 44 existing labour laws into 4 codes – Health and working conditions & Occupational Safety Code, Industrial Relations Code, Social Security Code, and Wage Code.
Approval and Structure of the Codes
As far as the approval and acceptance of these codes go, both the President and the Parliament have already shared their consent. The government intends to implement these new codes as soon as possible. Here are the 4 labour codes in some detail:
Industrial Relations Code (2020): This code brings together all three existing labour laws – The Trade Unions Act (1926), The Industrial Employment Act (1946), and The Industrial Disputes Act (1947). With this code, the government aims to make the business environment better for everyone involved by saving industries from the usual labour compliance challenges.
Health and Working Conditions & Occupational Safety Code (2020): This code will help the government regulate the working conditions of the workers employed in companies with 10 or more workers and docks and mines. This code aims to drastically improve the working conditions for workers, irrespective of their industry.
Social Security Code (2020): This code brings together all the maternity and social security benefits laws. It intends to maximize the benefits mentioned under these laws for workers.
Wage Code (2019): This code is applicable to every employee, whether from the organized or unorganized sector. It will help control how wage and bonus payments are determined and made to respective workers, regardless of their type of employment. This code also ensures that workers doing similar jobs are paid equal remuneration.
Impact on Organizations
Every organization and business needs to understand the changes in the labour codes. This will help them re-align and restructure their processes according to the new labour codes.
It would be an understatement to say that employment and labour regulations are essential to organizations, irrespective of their type and industry. These regulations play a critical role in building and maintaining mutually harmonious relationships between employees and employers. If there is not a good relationship between employees and employers, it will likely hamper the business’s overall productivity. The new labour codes will also have a significant impact on the structure of the employee and labour costs of an organization. Also, the new labour regime will require organizations to revisit, reconsider, and revise their existing labour compliances, employment contracts, registrations, and compensation structures, amongst other things. It will be a big transition that every organization should prepare itself for.
Benefits of the Four Labour Codes in India
The new labour codes are expected to bring consistency in the understanding of the term “wages” across the business world. The existing labour laws define wages in many different ways, which has been creating a lot of confusion and legal issues for organizations all this while. The new regime is expected to bring a stop to these concerns.
The new labour codes will also help organizations make more sense of the exclusions and inclusions in wages. The new Wage Code makes this part very clear for organizations to understand. There is no blurring of the line or confusion. To comply with these regulations, organizations must review their employee remuneration components and employment letters and make amendments wherever necessary.
The new labour codes will also considerably impact the take-home salary and social security benefits. The changes in different social security components and the definition of wages will impact the payouts released in the name of retirement and social security benefits. The take-home salary of employees is another area that will likely be affected by the new labour codes.
The new labour codes will provide much more comprehensive coverage to all employees than the existing regulations, regardless of their work and the remuneration they draw. The new rules also consider new work models that have emerged over the last few years. They cover platform workers, contract labour, gig workers, fixed-term employees, and other working models. These codes are inclusive and built keeping the future of work in mind.
References:
- Four labour codes will be implemented in 2022; welfare scheme for gig workers on the anvil: MoS Labor Rameswar Teli | Money Control | PRASHANT K NANDA | FEBRUARY 18, 2022
- New Labor Codes: How will they impact social security, take-home salary | Financial Express | Priyadarshini Maji | March 26, 2021
