While 50% firms are ready to roll out the new labour codes when these are finalised, 14% said they are partially ready and rest 36% are not yet in a position to implement these
New Delhi: At least 64% firms are optimistic about the long-term impact of labour reforms, while 43% have started internal review to implement the new labour codes, according to a survey by consulting firm Grant Thornton Bharat.
The survey said, while 50% firms are ready to roll out the new labour codes when these are finalised, 14% said they are partially ready and rest 36% are not yet in a position to implement these. About 54% of the surveyed firms said compliance burden will come down under the four new brad laws.
Around 64% companies said they were positive about the long-term impact of these codes, given the current state of the Indian economy, while 21% said they were negative and the rest were unsure.
“Our survey shows that 64% respondents are optimistic about the long-term impact of the implementation of new labour codes. Overall sentiment on the resulting changes is positive and businesses have their work cut out. At Grant Thornton Bharat, we understand the importance of this subject for stakeholders across industry and with this webinar, our endeavour is to share insights on these codes so that new legislations can be adopted and implemented in a seamless manner," said Vikas Vasal, national managing partner (tax) at Grant Thornton Bharat.
India has consolidated 29 labour laws into four broad codes on wages, social security, occupational safety and industrial relation. While Parliament has passed the laws, the final rules are being framed before being rolled out. While the initial target was to implement the four codes in April 2021, delay in rule making at state level and assembly election in five states and union territories could delay implementation.
Once implemented, the four codes are expected to cheer industries and allow them flexibility in hiring and retrenchment, reduce compliance burden, make industrial strikes difficult, besides, facilitating ease of doing business. The norms promise to expand social security net for informal and gig workers and put in place a national floor wage. Employers in the states will need to pay same or more to employees. It also talks about increasing basic wage to 50% of the gross pay of an employee and statutory deductions like EPF and fixed benefits including gratuity need to be calculated on at least 50% of the monthly wage.
Akhil Chandna, associate partner, Grant Thornton Bharat said it was encouraging to see that a large section of the respondents were aware of upcoming labour codes and hastarted preparing for the transition. “As the survey result shows, the overall employee compensation costs are expected to rise and it is important for organisations to evaluate the financial impact areas such as ‘gratuity’, ‘leave encashment’, ‘statutory bonus’, etc. for better planning."
The survey said while 43% organisations have started internal reviews, 13% are waiting for the final announcement on implementation date. While 20% firms have onboarded external consultants for better preparedness, 20% have not decided their implementation strategies yet.