Centre nudges states to implement new labour codes, shifts reform goalpost

During 2019-20, Parliament consolidated 29 labour laws into four codes - Code on Wages; Code on Social Security; Occupational Safety, Health and Working Conditions Code; and Industrial Relations Code

Narendra Kumar, 41, has been working as a delivery person for an online food aggregator during the day. Evening onwards, he’s a security guard in a nearby milk factory. 

 

“I usually work 13-14 hours in a day. If I fall sick even for a single day, I don't get anything from any of my jobs. Or if I meet with an accident, as I did last month, my employers would not give me anything, as they don't recognise me as their employee,’’ Kumar pointed out. His ask: The government must step in to improve the working conditions. 

 

Kumar, who is employed through a contractor in both his jobs for platform-based businesses, is one among millions in India’s rapidly growing gig workforce and represents the informal nature of work that is the mainstay for a large number of people. 

 

During 2019-20, as part of the labour law reforms to facilitate ease of doing business and advance workers’ rights, Parliament consolidated as many as 29 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 the gig and platform work for the first time in India. Along with this, they also aimed at undertaking reforms in wages, overtime work, social security benefits, and occupational safety. 

 

However, these codes are still awaiting implementation. They have not been notified by the central government owing to stiff opposition from various quarters including workers’ groups. 

 

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

 

“By aligning with these codes, industry 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, said the protracted delay in implementation of these new codes is a matter of concern as industry is deprived of their benefits. The government should expedite their enforcement, Agrawal stressed.  

 

Nudging states to reform 

 

Meanwhile, the Centre has found a workaround to implement the labour codes.

 

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

 

“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 official told Business Standard. 

 

Last month, the Joint Platform of Central Trade Unions — comprising 10 central unions, excluding the Rashtriya Swayamsevak Sangh (RSS)-affiliated Bharatiya Mazdoor Sangh —rescheduled the 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. 

 

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

 

At least 20 states and union territories have increased the threshold for retrenchment without government approval from 100 to 300 workers — a longstanding demand of industry. Similarly, 19 states and union territories 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 union territories have allowed women to work night shifts, while all states and union territories 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), said they were actively engaged with state governments to push 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 believe that asking states to take the mantle of labour reforms have only limited potential in terms of achieving ease of doing business, streamlining regulation, improving working conditions, and supporting industry growth. Bringing states in would create fragmented jurisdictions and complicate the implementation, thus making the Centre’s labour reform exercise redundant, according to experts.

 

Labour lawyer BC Prabhakar said a large number of establishments have their operations in multiple states, making it cumbersome for them to comply with numerous rules and regulations. Also, the establishments working in the central sphere would have to keep following the Centre’s old laws, thereby putting them at a disadvantage with regards to other establishments in the state, till the time 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 called the government's labour reform process a non-starter. “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 said. ‘’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 opposition,” he added. 

 

According to Harbhajan Sidhu, general secretary, Hind Mazdoor Sabha (HMS), 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 road map to implement these laws," he added. 

 

However, Hiranmay Panda, president, Rashtriya Swayamsevak Sangh (RSS) affiliated Bharatiya Mazdoor Sangh (BMS), maintained that their opposition to the new codes was not political at all and in fact, they were 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 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 added. 

 

Until then, people like Narendra Kumar will continue to work long hours with no safety net.