The three labour codes passed in Rajya Sabha is expected to make companies revisit their operational and employment structure. It is important for the companies to understand the nuances of the regulations and enhance their readiness to be compliant with these, said Saraswathi Kasturirangan, Partner, Deloitte India. Some areas where the companies need to focus on include review of the employment models that the company is adopting, need for change in policies and processes, revisit the salary structure of employees, and determine the financial implications triggered due to the changes, Saraswathi Kasturirangan added.
In the wake of the coronavirus pandemic and a large scale disruption in the labour market, the government had brought major changes in the labour laws. The Occupational Safety, Health And Working Conditions Code, 2020; the Industrial Relations Code, 2020; and the Code on Social Security, 2020 were created by merging 24 central labour laws in a major boost to labour reforms. After the three new labour codes were passed in the upper house, Prime Minister Narendra Modi said that the reforms will ensure the well-being of industrious workers and give a boost to economic growth. The new labour codes have been designed to universalises minimum wages and timely payment of wages, while giving priority to the occupational safety of the workers.
The reforms will contribute to a better working environment, which will accelerate the pace of economic growth, PM Modi added. He further said that the labour reforms will ensure ‘Ease of Doing Business’ and are futuristic legislations to empower enterprises by reducing compliance, red-tapism and ‘Inspector Raj’.
Though the companies may need some time to adjust with the new labour codes, they are expected to provide cushion to the financial woes of certain sectors. One of the major challenges during the current pandemic was the financial stress which large sectors like retail, IT/ITeS, hospitality, aviation and manufacturing have been facing, especially regarding their affordability to continue paying on-roll and off-roll employees. However, with over 300 relaxations, they would now be able to stay afloat, said Prashant Singh, Business Head – Compliance & Payroll Outsourcing, TeamLease Services.
In the times when India struggles to create a sufficient number of job opportunities to absorb nearly 50 lakh new entrants in the job market every year, the new labour codes are also likely to boost job opportunities due to the provisions of contract staffing. It will be easier for employers to seek contract staffing rather than manage the regulatory complications through unorganised contractors, the lack of which until now has been seriously felt during the pandemic initiated income shock and unemployment, said Lohit Bhatia, President- Workforce Management, Quess Corp.