On course to rationalise the country’s labour laws for ensuring the ease of doing business as also welfare for workers, the government is considering pruning the codes in this regard from four proposed earlier to one, a move that experts feel would help eliminate inspector raj, reduce documentation hassles and improve industrial productivity.
Immediately after assuming office, the present dispensation took up the long-pending labour reform initiative proposing to amalgamate 44 existing labour Acts into four codes with the aim of simplifying them and ensuring a conducive and harmonious environment for doing business. A couple of codes — on wages and on industrial relations — have been sent for the approval of the Cabinet and the codes on social security and safety and working conditions are being drafted.
Admitting there has been a directive from “higher-ups” to downsize the number of proposed codes to just one, a senior labour ministry official told FE that the labour and employment department, however, was still working on four codes, but is open to the idea of a single unified code.
Under the proposed code on industrial relations, which amalgamates the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947, the government intends to enhance the severance compensation from 15 days of wages for every completed years of service to 45 days before going for retrenchment, closer and transfer of an undertaking.
It also plans to relax the requirement of government’s permission for retrenchment, lay-offs, closure and transfer by restricting it to units with 300 workers or more, while units with 100 or more workers currently need to take the permit. Under the code, outsiders will be barred from being office bearers of trade unions in the organised sector and strikes can be resorted to only after 14 days’ notice.
“If (the merger of codes) is done, it would essentially mean further rationalisation of the provisions of the labour laws, though the broad contours of the proposed four codes would remain same,” the official said requesting anonymity.
Rituparna Chakraborty, co-founder and senior vice-president, TeamLease, said, “A unified code signals accountability, uniformity, simplicity and ease of compliance and supervision. It is a forward-looking, progressive move, far from the erstwhile complex and regressive approach in our labour laws.”
RP Yadav, chairman and managing director, Genius Consultants, said, “Attempting to bring down 44 labour laws from to four codes and further to just one, the government is taking a major step in labour law reforms. This will also help to convert formalisation of the informal employment which will help job seekers.”
Under the draft code on wages, which amalgamates the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976, the government intends to bring all employees under a minimum wage and vest the the power to fix it exclusively with the states, fix the wage ceiling for the purpose of eligibility for bonus and substitute the term “inspector” with “facilitator”.