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India will have four labour codes henceforth. (Photo: Mint)
India will have four labour codes henceforth. (Photo: Mint)

Rajya Sabha approves three codes subsuming 25 central labour laws

The three codes, on social security, industrial relations and occupational safety, will allow industries flexibility in doing business, hiring and firing, make industrial strikes difficult while promoting fixed term employment, reducing influence of trade unions and expanding social security net for informal sector workers

NEW DELHI: New Delhi: The Rajya Sabha on Wednesday approved three labour codes subsuming 25 central labour laws, effecting a major reform that has been on the table for at least 17 years.

The three codes on -- social security, industrial relations and occupational safety – already cleared by the Lok Sabha on Tuesday, will now offer industries flexibility in doing business, hiring and firing, make industrial strikes difficult while promoting fixed term employment, reducing influence of trade unions and expanding social security net for informal sector workers.

Along with the Wage Code, passed in August 2019, the National Democratic Alliance (NDA) government has now merged 29 central laws into four codes reducing compliance hassles, and streamlining laws - which have been the demands of industries for decades. After the assent of the President, India will have four labour codes henceforth.

Some of the existing laws date back to pre-independence. Some of central laws which have merged with these codes are the Factories Act, the Industrial Disputes Act, the Trade Union Act, the Mines Act, the EPF Act, the Employees State Insurance Corporation Act, and Maternity Benefit Act, among others.

“It’s the demand of the changing time and changing requirements. It balances the labour welfare and industry welfare," labour minister Santosh Gangwar said in the Rajya Sabha during discussion.

The government has also attracted criticism that states have been given a free hand to exempt laws in violation of labour rights. Minister Gangawar said labour issue is in the Concurrent list of the Constitution and therefore states have been given the flexibility to make changes as they wish. Several states like Uttar Pradesh, Madhya Pradesh, and Gujarat have announced significant labour law holidays or blanket exemptions to companies to attract investment, especially in the aftermath of the pandemic and the ensuing lockdowns.

“It’s a free hand to employers. The labour welfare is going to be a story of past. They have no right to strike, the bargaining power has now got diluted, the job and wage protection has no provision in real sense and fixed term employment will be the new order," said K. R, Shyam Sundar, a labour economist and professor of XLRI Jamshedpur.

The Bharatiya Mazdoor Sangh, a national trade union affiliated to Rashtriya Swayamsevak Sangh (RSS) said RSS said the Industrial Relation Code is tilted too much in favour of the employers and would adversely affect industrial peace. Its general secretary Virjesh Upadhyay pointed out several anomalies including excessive hiring and firing provisions, the power to bureaucrats to change provisions during rule making, and how the new codes have ignored important recommendations of the standing committee on labour.

A.K. Padmanabhan, vice chairman of the Centre for Indian Trade Union was straight to say that now on workers will fight it out in the streets, and at the workspace indicating the imminent industrial discomfort that shall take place due to laws tilt towards employers.

The industry and some economists, however, views this as a great reform that shall boost investment and improve ease of doing business. “This reform was two decades in the making. It drastically reduces complexity and internal contradictions, increases flexibility & modernizes regulations on safety/working conditions," Sanjeev Sanyal, Principal Economic Adviser in the Ministry of Finance, said in a tweet.

Rituparna Chakraborty, executive vice president of Teamlease Services said the labour reform codes is a big boost to ease of doing business and will reduce multiplicity of definition and multiplicity of authority for businesses. “However, we have to wait till the rules are made on how much compliance burden will reduce. There is still scope for further rationalization and now the focus will shift to state labour reforms," she said adding that this will increase formalization and “in the long run increase wages too".

Welcoming the passage of the codes, Lohit Bhatia, president, Indian Staffing Federation (ISF), a federation of staffing and human resource companies said: “Market forces that offer greater employment demand and more opportunities for formal gainful employment with social security and financial inclusion are better suited for workers’ rights than the lack of formal employment with the protection of laws."

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