Decoding India’s new labour reforms

The three labour codes passed by Parliament have opened the doors for much-awaited reforms in labour laws in the country. With these changes, the government has merged more than 25 labour laws, a move which is seen as a big boost to labour reforms, putting to rest many issues that have been long overdue.

These laws are designed to be more effective for the workers and to give an impetus for organisations to expand and add more jobs.

A sense of identity

Through the Occupational Safety, Health and Working Conditions Code, the government has tried to take a step towards universalisation of formal employment contracts. The code, inter alia, provides for mandatory appointment letters for all workers, which will go a long way in giving workers the much-needed job security, clarity as regards to employment terms and conditions, and the ability to assert their employment rights under the law. Seen as a push to engage more women in the workforce, the code provides that women employees are entitled to be employed in all establishments for all types of work, for night shifts with their consent, and subject to conditions relating to safety, holidays, and working hours. This provides the much-needed empowerment and flexibility to the women workforce in the country. Addressing the larger needs of the employees in a structured manner, the code provides for free annual health checks, canteen facilities, first aid, etc. in an establishment that would go a long way in improving the health and working conditions of workers across industries and organisations, irrespective of scale.

Bridging the gap between organised and unorganised sectors

The Social Security Code brings in the much-needed parity between employees and workers of the organised and unorganised sectors and extends social security across both the sectors. The government’s proposal to formulate a social security fund for the unorganised sector will provide fiscal security to its workers. This code ensures that a fixed term employee is treated at par with a permanent employee and should also be eligible for all statutory benefits, including gratuity. It also proposes to extend the ambit of the employees’ state insurance scheme to all the 740 districts of the country and thereby ensures not only the deeper penetration of insurance across the country but also helps workers in remote rural areas to be benefitted by this. One of the other advantages of the new social security code is that it brings grandparents in the ambit of dependents, if no parent of the employee is alive.

A step towards growth

The Industrial Relations Code, on the other hand, deals with the laws relating to trade unions, conditions of employment in an industrial establishment, and investigation and settlement of industrial disputes in a more defined manner. The code also requires a contribution towards a new ‘worker re-skilling fund’ in case of retrenchment of workers.

Over the years, India has created value in the labour-intensive part of the value chain, and accordingly, labour regulations remain at the heart of the country’s current and future economic progress. All these codes, read with the Code on Wages (which amalgamates four labour laws) while harmonising the respective legislations, also usher in the much-needed reforms to bring the labour laws of the country in line with the demands of recent times and would go a long way in building an Aatma Nirbhar Bharat and achieve India’s dream of being the manufacturing and services hub for the world. These codes would also benefit the workforce of the country by providing definitive rights, especially for the unorganised sectors of employment, which had been left behind under the previous regulations.

Views are personal. Mukherjee is chairman of PwC India; Jain is partner, Tax & Regulatory Services, PwC India.