BackLabour laws should change with the times: Shankar Agarwal
The labour laws were framed keeping employees' interests in mind and must change to encourage entrepreneurship, says the Union labour secretary
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New Delhi: Union labour secretary Shankar Agarwal says the country’s labour laws were framed keeping only employees’ interests in mind and must change with time to encourage entrepreneurship as well. In the name of protection of employees, indiscipline cannot go unpunished, he says, and supports a proposal for retrenchment of up to 300 employees without prior approval of the government. “But I stress that all this must be done while ensuring the safety, security, health and hygiene of workers. Employers should not exploit workers," Agarwal says in an interview. Edited excerpts:
The labour ministry has become active in the past few months. Give us an overview of the big reforms that you are pursuing.
There are two parts to reforms: processes and the legal framework. On processes, the idea is to make things simpler for people. Take the example of employees’ provident fund (EPF)—earlier it was very difficult to transfer money from one account to another. It used to take months, if not years. Many workers who did not have the wherewithal or knowledge used to find it very difficult to withdraw the money. They had no idea whether the money being deducted from their salary every month was being deposited in their EPF account by the employer.
Today everything is on an IT platform. If an employee is migrating, he need not bother—his money will get transferred to his new account electronically. When an employer deducts and deposits the money in his or her account, it is reflected online. An employees now also gets an SMS about a deposit. The Employees State Insurance Corp., labour commissions and inspection systems have all improved services.
The second is the legal framework. Many of our laws were created a long time ago based on requirements then. Things have changed today. So we have to move with the times. And we have to ensure that none of these Acts should be impediments to growth and job creation.
People should be able to set up enterprises with ease. We also have to ensure that each and every worker is protected in terms of safety, health, hygiene and social security. For this we need to correct the legal framework wherever essential.
Are you trying to reduce the number of labour laws?
Instead of a plethora of laws, the idea is to have four or five laws. We are creating five codes—a code on wages, on safety and working conditions, on social security and welfare, on industrial relations and on employment, training and miscellaneous issues. The multiple laws will get subsumed in these codes.
When there are too many laws, it leads to overlapping and confusion.
At some point in time, these laws were created with the intention of giving employees protection in terms of jobs and social security. While there is no doubt that we must give them security and safety, it should not become a system of shielding undisciplined workers. There should be a mechanism that enables action to be initiated against an employee who is undisciplined or not working in accordance with the rules and regulations.
For example, we should allow women to work night shifts. But, as per existing laws, it’s not possible. So, we have to change. A whole lot of rules and regulations have to be looked into to make them simpler, and easy to comply with.
But I stress that all this must be done while ensuring the safety, security, health and hygiene of workers. Employers should not exploit workers.
In the name of reform, are you not removing the basic protections that workers enjoy?
Give me an example of a provision that allows organized or unorganized workers to be exploited. We will not give that kind of leeway to employers. We are only easing compliance. The idea is to keep a lot of information in the public domain. We are not giving employers any power to exploit workers.
But you are planning to allow retrenchment of upto 300 employees without prior government approval.
I was told that this number was once 1,000. Then it came down to 100, and now we are talking about 300. The current threshold is 100. Why not 50 or 10? So tell me, what is the rationale behind 100?
If I am an employer and can employ 200 workers, I will think twice before going beyond 100. Because the moment I cross 100, I will be forced to go to the competent authority to get permission to retrench workers when there is a requirement. So this is working against the interest of employment.
If there is no work, how can a company survive with 200, 300 or 500 employees? So, we are going slowly. But if somebody asks what the rationale behind the number 300 is, the answer is that there is none, it is just an arbitrary number. Our intention is to create an environment where a large number of employment opportunities can be created.
Is it not an incentive to sack workers?
No, it’s not sacking. We are talking about retrenchment. If you get a large order, you engage many people. Tomorrow that order is not there, what will you do with the employees? If we implement a restriction that says an employer must carry these employees come what may, then he will never set up a business.
So if a company has 290 employees, and the employer wants to retrench all, he can effectively close down the unit without prior approval?
Yes, he doesn't need permission. That is what is being proposed.
You are also curbing trade unions and thus reducing protection to workers.
No way. There is no provision by which we are curbing the freedom of workers or encouraging exploitation of workers. In fact, we are increasing protection. Under the proposed amendment to the EPF Act, we are bringing more people into its ambit.
You did not ask about child labour. People are saying we are diluting the law. Earlier, children upto 14 years of age were engaged in an employee-employer relationship. After the amendment, no child will be able to work in an employee-employer regime. What we are saying is a child will not work but help his or her parents after school hours.
The word is help. Show me any society where kids are not helping parents. We have an enforcement agency and if we find anybody exploiting a child, he can be punished.
When will we see the impact of these reforms on job creation?
In next two-three years you will see results.
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