IMPRI Impact and Policy Research Institute organized a Panel Discussion on The Future of Labour Codes: Impact and Way Forward from Employers’ Perspectives, under #IMPRI Center for Work and Welfare (CWW), with Indian Social Institute (ISI), New Delhi on August 20, 2021. The event was moderated by Professor K R Shyam Sundar, Professor, HRM Area at XLRI – Xavier School of Management, Jamshedpur.
Background and Implementation of Labour Codes
He began the deliberation by explaining how The Code on Wages Bill 2019, or Wage Code, consolidates provisions of four labour laws concerning wages and bonuses while allowing for timely payment of wages for workers in India. The other three are the Occupational Safety, Health and Working Conditions Code, the Industrial Relations Code, and the Code on Social Security. Labour laws constitute an essential component of Labour Policy in India aimed at imparting certain basic rights to workers as enshrined in our Constitution.
Only some time back, a media house, Financial Express elucidated on the implementation of the laws stand deferred, some 19 state governments are yet to lay down their specificities of rules, namely Tamil Nadu, West Bengal, Kerala, and employers have been lobbying with the Centre. The umbrella reason given by the central government for such amendments was to homogenize the labour laws across the country.
While the services sector will continue to provide employment opportunities, for both white- and blue-collar workers, hiring in the manufacturing sector is slowing sharply. One analysis by the Centre for Economic Data and Analysis showed employment in manufacturing in FY21 was nearly half of what it was five years ago. Thus, there is a legislative stalemate between state and central governments.
Analysis of Existing Codes
We further made a micro-assessment of the codes, and the discussion was spurred by Dr. Rajen Mehrotra, Former Senior Specialist of Employers’ Activities for South Asian Region, International Labour Organization (ILO). He shared bases from the first National Commission of Labour established by the then Chief Justice of India. Labour legislations have also been shaped and influenced by the recommendations of the various National Committees and Commissions such as First National Commission on Labour (1969) under the Chairmanship of Justice Gajendragadkar, National Commission on Rural Labour (1991), Second National Commission on Labour (2002) under the Chairmanship of Shri Ravindra Varma and the National Commission for Enterprises in the Unorganised Sector (NCEUS) (2009) under the Chairman of Dr. Arjun Sengupta.
In 1929, the legislation had promised a lot in the direction of social security, social welfare, wages, social insurance, industrial relations, industrial adjudication, and collective bargaining. The organization of the Chief Labour Commissioner (Central) also known as Central Industrial Relations Machinery is an apex organization in the country responsible for maintaining harmonious industrial relations mainly in the sphere of central Government.
In pursuance of the recommendation of the Royal Commission on Labour in India, the organization was set up in April 1945 by combining the former organizations of the conciliation Officer (Railways), Supervisor of Railway Labour, and the Labour Welfare Advisor. It was then charged mainly with duties of prevention and settlement of industrial disputes, enforcement of labour laws and to promote the welfare of workers in the industrial establishments falling within the sphere of the Central Government.
He discussed the issue of recognition of trade unions, the bargaining council being set up, the multiplicity of unions and inter-union disputes, check-off systems and allegations against employers, the lay-off retrenchment, closure of industrial dispute package, and the impact of Emergency. Perhaps the most damaging of Indira Gandhi’s economic legacies was the severe tightening of labour laws carried out in 1976 through the insertion of the restrictive chapter V(B) in the Industrial Disputes Act.
In effect, this made it almost impossible for an industrial enterprise with more than 300 employees to either retrench its workforce or even close down without government permission, which was rarely given. The law was tightened further by lowering the threshold level of employees to 100 in 1982. He also shared how he believes that the implementation would not come up until the elections in UP and Punjab due to socio-political reasons.
Social Security Initiatives
The stage was then passed on to Ms. Nandini Sarkar, Director and Co-founder of C-Quel Management Services, Kolkata. She underlined the political economy of the old and defunct labour law reforms, the disjoint between Ravi Verma Commission of Labour and IR code, but had a counterview to Dr. Mehrotra. She handles labour law compliances and social security through her initiative. Her work spanning 90 cities, she addressed the current situation at hand as a “silent revolution of ruling government”.
She talked about UAN, which stands for Universal Account Number to be allotted by EPFO. The UAN will act as an umbrella for the multiple Member IDs allotted to an individual by different establishments. The idea is to link multiple Member Identification Numbers allotted to a single member under a single Universal Account Number. This will help the member to view details of all the Member Identification Numbers linked to it. She explained how the new definition of contract labour has given the workers legitimacy and eased business for employers.
The EPFO as a vehicle has mandated all principal employers upload monthly attendance, salary, contributions of all contractors on their own UAN portal, and how successful the One India, One Registration model like this one would be. It will do away with sheer exploitation under contract labour, because the government is seeking partnerships from corporates for implementing compliance at the grassroots, making the latter liable for any discrepancies. The government has already opened up one window for aiding licensing and smoothening the process of public-private partnerships. She drew analogies with Gareebi Hatao and other allied efforts and drew attention to how the Maharashtra government has already barred cash payments to workers.
She lauded the Shram Suvidha Portal, the ‘Ease of Doing Business’ Labour Law Reform initiative by the Ministry of Labour & Employment, Government of India, and its linking with The Ministry of Corporate Affairs, and SAMADHAN (Software Application for Monitoring And Disposal, Handling of Industrial Disputes) portal, a cornerstone of relationships, like She portal by Ministry of Women and Child Development.
Currently, most employers have a wage structure in which the basic salary ranges from 25% to 40% of the CTC of the employee, and this forms the basis for both provident fund and gratuity contributions. With the wages under the codes moving to at least 50% of the CTC, there is going to be an impact from both PF and gratuity perspectives. The only negative she highlighted was the budget allocation as compared to GST.
Incorporatin of the Corporate Sector
Then we had Dr. Pallab Bandyopadhyay, Founder of HR Plus, Bengaluru. He is a Leadership Architect, Career Coach, Change, and Transition Specialist. A doctoral fellow in HRD from XLRI, Jamshedpur, he has received training at various human process and organization development interventions at NTL, USA. He is also certified in Hogan and Thomas personality profile assessment.
He has thirty-four years of successful professional experience in managing the entire gamut of Human Resources Management with proven expertise in managing multicultural globally-distributed knowledge professionals as head of HR functions at Country/Regional/Global levels at Citrix Systems, Dell Services, Perot Systems, Cambridge Solutions, Sasken Communication Technologies, and Ashok Leyland Information Technology.
He is currently engaged in providing HR consulting to many large Indian and MNCs and start-ups in the area of Leadership Development, Executive Coaching, Organization development, Long-term competency development for HR professionals, Organization Talent Management, Strategic change, Organization design, and alignment. His diverse set of clients includes names like Dr. Reddy’s Laboratory (DRL), Honeywell Technology Solutions (HTS), Cadila Pharmaceuticals, Manhattan Associates, The Manipal Group, Cambridge Silicon Radio (CSR), Sears, Rasi Group, RP-Sanjiv Goenka Group, KPMG, CGI, Mercedes Benz, Flytxt, Asian Institute of Technology (AIT) Bangkok and Indian Institute of Management (IIM) Indore.
Professor E. M. Rao, Former Professor – Personnel Management and Industrial Relations, XLRI, Jamshedpur quoted various excerpts from a book by Charles Handy, The Age of Unreason.
He examined how dramatic changes are transforming business, education, and the nature of work. We can see it in astounding new developments in technology, in the shift in demand from manual to cerebral skills, and in the virtual disappearance of lifelong, full-time jobs.
He explained how we discontinuous, upside-down thinking, and discussed the need for new kinds of organizations, new approaches to work, new types of schools, and new ideas about the nature of our society. He narrowed his talk to the shamrock organization, described as a type of organizational structure with three parts, or leaves: “A form of organization based around a core of essential executives and workers supported by outside contractors and part-time help”.
Barriers and Challenges
Michael Dias, Managing Partner, Michael Dias and Associates; Secretary, The Employers’ Association – Delhi used India Unbound by Gurcharan Das as his centerpiece and underlined the importance of HR. He explained how Section-17(2) of the Code require has made obligatory for wages payable to an employee to be paid within 2 days of removal, dismissal, resignation, or retrenchment, which in turn mandates for exit formalities and HR processes to be completed expeditiously and for dues to be settled within the prescribed period.
He was very optimistic about there being a change that stemmed from the substandard working conditions, precarious employment, and unbridled freedom of contract. He expressed his faith in the Industrial Relations Code if it is implemented with sincerity. He called for vocational training in schools and universities.
The discussion concluded with insights from our discussant N. S. Iyer, Founder-Director, Help Build Lives; Visiting Faculty, Tata Institute of Social Sciences (TISS), Mumbai, and questions from the audience.
Acknowledgment: Priyanshi Arora is a Research Intern at IMPRI.