A trade and industry body has lauded the government’s latest move to improve India’s Labour Code and said that this will especially benefit MSMEs.
A trade and industry body has lauded the government’s latest move to improve India’s Labour Code and said that this will especially benefit MSMEs. “The codification will be highly beneficial for the MSMEs as they are constrained by a complicated regulatory environment and labour market rigidities, especially with no-fixed term employment clause to deploy workers as and when required,” DK Aggarwal, President, PHD Chamber of Commerce and Industry said in a statement. He added that the move will also help in enhancing the ease of doing business for MSMEs as the earlier laws limited their potential for employment generation.
The Union Cabinet has approved the Labour Code on Industrial Relations 2019 which will allow employers to employ workers on fixed-term duration of any period like three months or six months. While the cabinet has retained the provision that a company has to seek government approval in a case it decides to retrench or lay off 100 workers, the company can change ‘’such number of employees’’ through notification. The government measures are expected to improve India’s ranking on the ease of doing business of the World Bank.
“Fixed term employment would be highly beneficial for companies, particularly those involved in seasonal businesses as it will provide opportunities for industry in desired deployment of workforce in their respective factories,” DK Aggarwal said.
While the government had already allowed fixed-term employment across all sectors last year, with Wednesday’s move, it has codified the law, making it mandatory to be abided by all once the Parliament approves it.
The government also looks to amalgamate 44 labour laws into 4 codes including the codification of fixed term employment and has been taking steps in the same direction.
For labourers, the law means that the contract workers can now enjoy the same social security benefits as regular workers, Finance Minister Nirmala Sitharaman said. “All workers, under a fixed-term contract, will be taken up on depending upon seasonality of industry but will be treated on a par with regular workers. This is the biggest feature (of this labour law amendment),” she said.