Delay in implementation of new labour code; here's why
UP Polls and state’s reluctance are behind the delay in implementing new labour codes
The four labour codes that were passed by the Parliament in September last year are unlikely to be notified within this fiscal. There are two major reasons for this. Firstly, many states have not notified rules under the new codes. Labour, being a subject on the concurrent list, requires both the Centre and the states to notify the rules to turn the codes into laws in their respective jurisdictions.
Labour Codes not to be notified till UP polls
The second reason for the delay in notification of the four labour codes – the Code on Wages, the Code on Social Security, the Industrial Relations Code and the Occupational, Safety, Health and Working Condition Code – is the upcoming Uttar Pradesh Assembly elections. PTI quoted a source as saying, “The Ministry of Labour is ready with the rules under the four labour codes. But the states have been slow in drafting and finalising those under new codes. Besides, the government is not keen to implement the four codes due to political reasons, which are mainly elections in Uttar Pradesh, scheduled to be held early next year.
The government is apprehensive of implementing the new labour codes as the take-home salary of the employees is likely to be affected and the government is seemingly reluctant to take such a step ahead of the Assembly elections.
The government has argued that the four labour codes ‘rationalise’ 44 Central labour laws. It has also been claimed that the new industrial relation code would improve the ease of doing business.
Labour codes in a nutshell
As per the new codes, allowances are limited to 50% of the gross income, meaning that basic wages would be half of the take home salary and PF contribution by the employer would increase since it’s calculated on the basis of basic wage and dearness allowance. The employer would be expected to pay half of the gross pay of the employees. This means that the burden on the employers to provide PF contribution would increase substantially. The last major change in the code is that any company with up to 300 workers is allowed to fire its staff or wind up its business without the permission of the government. The earlier limit set by the government was 100. Many labour unions, including RSS-backed Bhartiya Mazdoor Sangh, had protested against the labour codes.
Many states have also dragged their feet on finalising the rules under the new codes. Only nine states have finalised the rules under the new codes, of which only two are non-BJP states – Punjab and Odisha. The rest of the eight states are Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Gujarat, Karnataka and Uttarakhand.