After the Industrial Relations Bill is passed, a company with more than a hundred employees can terminate its workers after the fixed-term contract or seasonal work is over. The new Industrial Relations Code has been approved by the Cabinet and the move has seen appreciation from different quarters of the industry. “Reforms in labour laws are an on-going process to update the legislative as well as governance system to address the need of the hour so as to make them more effective, flexible and in sync with emerging economic and industrial scenario,” Santosh Kumar Gangwar, MoS, Ministry of Labour and Employment, said in a reply to a question in Rajya Sabha.
The government has drafted four labour codes, which are the Code on Wages; the Code on Industrial Relations; the Code on Occupational Safety, Health & Working Conditions; & the Code on Social Security by simplifying, amalgamating and rationalising the relevant provisions of the existing Central Labour Laws.
“It is encouraging to see quick and positive movement around labour codes. It showcases the government’s action bias to create an ecosystem for growth and job creation. The reaffirmation of entitlement to wages as well as statutory and social security benefits for fixed-term employees at par with regular employees with the same job role is a just move,” said Rituparna Chakraborty, President, Indian Staffing Federation, Co-Founder & EVP, TeamLease.
She added that the amendment to the current rule wherein employers who intend to let go more than 100 employees requiring prior approval from the concerned authority is also a good move -however, the worry is it does not necessarily mean less administrative hassle or follow through for employers.
However, on the contrary, this provision in the code could also potentially instil fear of failure in future entrepreneurs which isn’t encouraging for job creation. Meanwhile, the industry bodies expect the new law to help towards the formalisation and productivity in the economy.
“In a bid to give flexibility in employment, the bill provides for businesses with more than 100 employees to offer fixed-term employment, in effect a worker can be hired for any duration, three months or six months or a year depending on the season and order book position and terminating a worker at the end of the fixed term would not be treated as retrenchment,” Rishi Agrawal, CEO & Co-Founder, Avantis Regtech.
While this is a long-awaited move by the government, the future compliance burden in the form of returns, registrations, etc is still shady.