Workers suffer in limbo as Centre shifts burden of labour reforms to states

Many, especially industries operating across state borders, are apprehensive that this will create an even more complex web of jurisdictions and laws

Narendra Kumar, 41, has been making food deliveries for an online food aggregator since afternoon in the scorching summer sun. As evening falls, he starts to wrap up and get ready for his next job: a night shift as a security guard in a nearby milk factory.

 

“I usually work 13-14 hours in a day. If I was to fall sick even for a single day, I won't get anything from any of my jobs. Or if I meet with an accident as I did last month, none of my employers would give me anything, as they don't recognize me as their employee. There should be some regulation by the government of our working conditions,” he laments.

 

Kumar, who is employed through a contractor in both jobs for platform-based businesses, is part of India’s rapidly growing gig workforce, starkly representative of the informal nature of work that is the mainstay of millions in India.

 

During 2019-20, as part of the labour law reforms to facilitate ease of doing business and advance workers’ rights, the Parliament consolidated as many as 29 existing labour laws into four codes: Code on Wages, Code on Social Security, Occupational Safety, Health and Working Conditions Code, and Industrial Relations Code. Among other things, they defined gig and platform work for the first time in India. Additionally, they also aimed at undertaking reforms in wages, overtime work, social security benefits, and occupational safety among other things.

 

However, these codes are yet to be implemented as they have not yet been notified by the central government because of stiff opposition from several quarters, including workers’ groups.

 

Suchita Dutta, executive director at the manpower industry body Indian Staffing Federation (ISF), says that the labour codes represent a significant reform aimed at promoting industrial and job growth as they offer simplified compliance, greater workforce flexibility, and alignment with global standards, fostering an environment conducive to investment and productivity.

 

“By aligning with these codes, industries can achieve a balance between operational efficiency and worker protections, contributing to job creation and global competitiveness in Indian firms,” she added.

 

Rishi Agrawal, co-founder, TeamLease Regtech, says that the protracted delay in implementation of the codes is a matter of concern as the industry is deprived of their benefits and that the government should expedite its implementation. 

 

Nudging states to reform

 

The Centre, though, has found a workaround: it is pushing states to share the burden of implementation.

 

In the absence of a clear timeline for notifying the four new labour codes, the Centre has signalled a change in its strategy as it has asked all states and union territories (UTs) to make “necessary” amendments in their existing labour laws to align them with the “spirit and provisions” of the new codes.

 

Several states have over the past couple of years amended their labour laws to align with industry demands as part of a broader strategy to position themselves as investment-friendly destinations.

 

“The nudge by the centre to have states amend their existing laws is part of the government’s efforts to keep the labour reforms rolling so that ease of doing business could be achieved and new jobs created, without getting entangled with the labour unions, which have adopted an obstinate and adamant stance while dealing with the question of labour reforms,” a senior central government official told Business Standard.

 

Earlier this month, the Joint Platform of Central Trade Unions — comprising 10 central unions, excluding the Rashtriya Swayamsevak Sangh (RSS)-affiliated Bharatiya Mazdoor Sangh (BMS) — rescheduled its planned nationwide general strike against the implementation of the new labour codes to July 9.

 

“During the past couple of years, we have deliberated extensively with states and tried to convince them to take the lead in undertaking these reforms. It’s not that the amendments in labour laws are limited only to the National Democratic Alliance (NDA)-governed states. Many Opposition-ruled states have also gone ahead and made these changes, which indicates these states also value the importance of investments, especially in the manufacturing sector,” the official added.

 

At least 20 states and UTs have increased the threshold for retrenchment without government approval from 100 to 300 workers — a longstanding demand of industry. Similarly, 19 states and UTs have doubled the threshold under the Factories Act to 20 workers (for units with power) and 40 (for those without). An equal number of jurisdictions have raised the threshold for the applicability of the Contract Labour Act to 50 workers, up from 20 at present.

 

Among other changes, 31 states and UTs have allowed women to work night shifts, while all states and UTs have notified reforms related to compliance notices before prosecution.

 

Arvind Goel, co-chairman, national committee on industrial relations and labour for Confederation of Indian Industry (CII), says that they have been actively engaging with state governments to drive labour reforms that enhance business competitiveness and support the creation of inclusive, human-centric workplaces.

 

“We are also working with other stakeholders to build consensus and ensure smooth implementation," he added. 

 

The Pitfalls

 

However, experts point out that asking states to take on the mantle of labour reforms has limited potential in terms of achieving the intended goals as they end up creating fragmented jurisdictions which exacerbate complexity in implementation, thus making the exercise undertaken by the Centre over the past decade redundant.

 

Labour lawyer BC Prabhakar says that a large number of establishments have their operations in multiple states, thus making it cumbersome for them to comply with each one's rules and regulations. Also, the establishments that operate in the space overseen by the union government will have to keep following the Centre's old laws, thus putting them at a disadvantage with regard to other establishments in states until such time as the new codes come into effect.

 

“The new labour codes were passed with the intent of creating some sort of uniformity in labour jurisprudence. States going ahead and making changes in their own laws will end up complicating the whole implementation apparatus,” he added.  

 

Labour economist KR Shyam Sundar goes a step further, saying that the government's labour reform process has been a non-starter from the outset.

 

“The strategy to shift the onus on the states to undertake labour reforms is not new. It's been in practice for nearly two decades now, with Chandrababu Naidu led government amending the contract labour act in erstwhile Andhra Pradesh, way back in 2003," he points out. "Hence the government might be thinking that once a few states make these changes, it will serendipitously implement the new laws and then it won't have to face the opposition."

 

Harbhajan Sidhu, general secretary, Hind Mazdoor Sabha (HMS) says that the nudge by the Centre to have states amend their existing laws is part of the government’s efforts to divert and divide the opposition that they are facing from the trade unions.

 

“Rather than alleging that trade unions have been adamant in their opposition to these laws, the government should openly come out with its intent, strategy and roadmap to implement these laws," he added.

 

However, BMS president Hiranmay Panda says that their opposition to the new codes is not political at all and in fact, they are in favour of implementing the codes on wages and social security at the earliest.

 

“While states are free to undertake reforms, it only serves limited purposes and does not necessarily advance what the new codes have sought to achieve. They also covered certain things which existing laws don't cover. For example, they also covered gig and platform work. Now state laws are yet to take cognisance of this new form of work. This workforce can only be covered once the central laws are implemented,” he says.

 

Until the states and the Centre sync their acts, workers like Kumar will continue to fall through the cracks — working long hours with no safety net and little hope for change.