Company secy to replace inspector

Written by Vikas Dhoot | New Delhi | Updated: Aug 5 2009, 07:07am hrs
Sudha Pillai
While the Manmohan Singh governments Left-free second innings is expected to usher in changes to Indias archaic labour laws, the labour ministry is working on a quick-fix solution to help drop the countrys notorious inspector raj tag.

If all goes to plan, India Inc would no longer have to deal with labour inspectors turning up at their premises to check compliance with 43 central and myriad state labour legislations. Instead, firms can submit a certificate from a company secretary that validates their compliance with the numerous employment laws.

Currently, inspectors go on-site to verify compliance with labour laws. We are talking to the Institute of Companies Secretaries of India (ICSI) to permit company secretaries to file compliance reports for labour laws, just like they give compliance reports for other laws. Officials can then selectively pick up firms for inspections. So, the inspector raj per se will go down dramatically, Union labour secretary Sudha Pillai told FE.

To entrust the responsibility of submitting labour law compliance reports to companies secretaries, the ministry is working out the amendments required to the relevant laws. We have discussed the idea with the Cabinet Secretariat and the government is enthusiastic about it. A Cabinet note to this effect will be submitted very quickly and we hope to get it cleared soon, she said.

Company secretaries are now responsible for certifying a firms compliance with various statutes, including the Companies Act, 1956 and the listing agreement with stock exchanges. Recently, the Reserve Bank of India has mandated firms with multiple bankers and credit limits of over Rs 5 crore to get due diligence done by company secretaries.

While ICSIs governing council refused to comment, a senior official at the body said the proposed change is a win-win for industry, employers and regulators. If we find gaps in compliance with labour laws, we will bring it to the notice of the management and the board of directors for action. So workers will be protected and authorities can focus on bigger labour issues, a senior ICSI member said.

The new regime is expected to boost Indias global perception too. At most international fora, the pathetic compliance levels of Indian labour laws, especially in small and medium enterprises and the services sector. Our labour laws were made purely for industry, but services now contribute over 55% of GDP and operate under a vague Shops & Establishments Act. Many countries are using labour issues to put up non-tariff barriers against Indian imports, the member stressed.