India is moving a step closer to the implementation of the four new labor codes passed by the Parliament in 2020. Nine more states are finalizing the draft notifications of the rules. The Indian industry is also gearing up for their adoption even as some concerns remain about the ramifications and definitions of some of their provisions.
As such the BCP Associates, a Banglore-based Labor Law firm, conducted a wide-ranging survey across 133 companies in various sectors in India. It found that 80% of the companies surveyed acknowledged the benefits the Labor Codes will bring but only 40% of the respondents indicated that they have taken adequate steps to prepare for the implementation of the same.
Given the potentially serious consequences of any failure to adhere to the provisions of the codes, this implies that almost 60% of the surveyed companies would be vulnerable if the codes are brought into force anytime soon. That’s also the reason why a vast majority of the companies would like them to be rolled out in phases, which given the Codes’ interconnectedness isn’t probable.
Pooja Prabhakar, BCP Associates, CEO and Managing Partner, said all legal reforms start with some uncertainties and that is the case with the new Labor Codes as well. “It is undoubtedly a step in the right direction and by working closely with the government, Indian companies can hope to resolve any contentious issues. Eventually, since implementation isn’t a choice, companies will have to align with their provisions.
While wage restructuring emerges as the biggest challenge from an organizational point of view, the survey states that there is some confusion on issues related to engaging Contract Labor in core activities since the definition of core varies for various industries and companies. Similarly, nearly 85% of the respondents in the survey believe that the drop in maternity benefit that the Codes have wrought, will negatively impact employment of women
That’s not to deflect from the enthusiasm for the new labor regime which is expected to bring in greater simplification leading to ease of compliance and digitization and a more harmonious relationship between companies and their employees. Over the last two years, 29 central labor laws have been rationalized and folded into four Codes – the Industrial Relations Code, 2020; the Code on Social Security; the Occupational Safety, Health and Working Conditions Code; and the Code on Wages.
The objective is to streamline and simplify India’s decade’s old labor laws that were often confusing and overlapping.