Patience running out: Govt mulling options to roll out labour codes

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Eager to raise ease of business levels to boost investments in the country, the government is contemplating different ways to implement the four labour codes across the country despite some states and Union Territories fighting shy of finalising rules under these codes, The Economic Times has reported.

The codes were passed in 2020 but the pandemic and the tardy progress by the states that are dragging their feet on drawing up rules have held up their implementation. Labour is on the concurrent list which necessitates cooperation from the states. Labour unions have also resisted the codes arguing they are detrimental to the interest of the workers.

The four codes are an outcome of the government combining as many as 29 labour laws with the ultimate objective of making life easier for investors and managers of businesses. These are the Code on Wages, 2019, the Industrial Relations (IR) Code, 2020, the Code on Social Security (SS Code), 2020 and the Occupational Safety, Health and Working Conditions (OSH&WC) Code, 2020.

One of the steps that the Ministry of Labour and Employment is toying with consists of progressive repeal of old labour laws. This could prevent a legal vacuum in states yet to draft rules. On the other hand, the Union ministry is also goading the state administrations to expedite framing the rules under the code.

“Once the old Acts are repealed, automatically new codes will prevail. If these states want to attract investments and create jobs, they will have to eventually align with the central policies,” a senior bureaucrat told the newspaper. This official also stated that the Centre is ready to tackle legal challenges that could come up in the way.

The labour ministry’s monthly progress report shows that as many as eight states and UTs are yet to come up with draft rules under these codes. These are Tamil Nadu, West Bengal, Meghalaya, Nagaland, Sikkim, Lakshadweep, Andaman & Nicobar Islands and NCT of Delhi.

“States not issuing rules under the new labour codes may not be a show-stopper since many provisions, even today, are governed by central Acts like the provident fund, gratuity, etc,” said Saraswathi Kasturirangan, partner at Deloitte India.

Dorothy Thomas, partner at law firm Shardul Amarchand Mangaldas, is apprehensive that the codes, once rolled out, could trigger continued agitation of labour unions in industrialised states such as Tamil Nadu and West Bengal where trade unions have traditionally been active. “However, investments in such states would not be impacted as it is largely attributed to the pre-existing infrastructure and the trained labour available in these states,” she told the newspaper.

It was reported earlier that the labour codes could kick in from April 1, 2015 so that it could coincide with the business cycle in the country.