06 October 2020
- Labour codes expected to reduce compliance burdens, but implementation may be complicated by federal-state tensions
- Government will aim to implement changes by December, as it seeks to attract investors by simplifying regulatory landscape
- Lack of parliamentary consultation and tensions over missing tax shortfall payments may reduce states’ willingness to cooperate, causing delays
President Ram Nath Kovind approved three new labour codes on 28 September. The Industrial Relations Code 2019 consolidates three existing laws and increases the size of companies requiring government permission for retrenchments from those employing 100 workers or more to those employing 300 workers or more. It also allows for quicker dispute resolution and increases the notice period required before strikes. The Occupational Safety, Health and Working Conditions Code 2019 consolidates 13 laws, with key changes including a clause allowing state governments to exempt new factories from its provisions, and the addition of some protections for migrant workers. The Code on Social Security 2019 notably includes measures to protect unorganised, platform and gig economy workers.
The codification of the country’s labyrinthine labour laws has been under discussion since 2002, and the recent developments follow the passing in August 2019 of the Labour Code on Wages, which consolidated four laws. Together, the codes subsume 29 central labour laws into four, and 1,458 separate sections into 480. The opposition has argued that the latest changes should have been sent for parliamentary review, particularly given the contentious amendment to the size of companies able to fire workers without government approval. However, the codes were passed without discussion after the opposition boycotted parliamentary proceedings over the earlier agriculture reform…