New Delhi. Four new labor codes have been implemented in the country. This is being said to be the biggest change in the labor system so far. The special features of these labor codes include the guarantee of timely minimum wages for all workers. Along with this, guarantee of appointment letter for the youth, guarantee of equal pay and respect for women, guarantee of social security for 40 crore workers, guarantee of gratuity after one year of service for fixed-term employees etc. are important. The government claims that the new labor codes will bring changes in the lives of more than 40 crore workers. Experts say that the bigger this change is, the more employees and companies will benefit from it in the long run.
The government implemented all four labor codes with immediate effect yesterday itself. The industry expected that some time would be given for this, but after the sudden implementation, companies and HR teams will have to immediately change their policies and procedures according to the new rules. The four labor codes notified by the Central Government on Friday are Code on Wages 2019, Occupational Safety and Health and Working Conditions Code (OSHWC), Industrial Relations Code and Social Security Code. Together, these four codes convert about 29 old labor laws of the country into a simple and modern framework.
transformative step
According to a report by Moneycontrol, experts say that these labor codes will benefit both the industry and the employees. This will provide stability to industries and increase job opportunities. CII Director General Chandrajit Banerjee described the move as “transformational”. According to him, this reform will not only improve wages and social security, but will also make the workplace safer and the rules clearer.
Sudhakar Sethuraman, partner at Deloitte India, says that this change was the need of the hour. The government implemented it at a time when India is rapidly adopting AI and new technologies. In such times, new labor codes will play an important role in protecting the interests of employees. These rules have been made keeping in mind the future work culture and keep pace with India’s rapidly changing economy.
Companies will have to make important changes
Experts say that under the new labor code, companies will have to make many important changes. Like annual health checkup of employees will now be mandatory. Fixed-term employees will also get gratuity. Gig and platform workers like app-based delivery boys or drivers will also be brought under the ambit of social security. Apart from this, paying salaries to companies on time will now be enforced more strictly than before.
The changes are also big on the compliance front. Now companies will get facilities like all India licensing, single registration and joint returns. This means paper work and filing will be reduced. This will provide a lot of relief to small and medium industries. Akhil Chandana, partner, Grant Thornton India, said that state governments’ own “Shops & Establishments” laws will still be applicable. That is, in some cases like holidays, overtime or working hours, there may be overlap in the rules of the Center and the State. In such a situation, companies will have to comply very carefully so that no mistakes are made.
There will be a lot of benefit in the long term
Suhail Nathani, managing partner of Economic Law Practice, says that companies will have to make major operational changes in the implementation of these labor codes. But in the long run, these codes will provide a stronger protection framework for unorganized sector workers, increase transparency and bring India’s labor market closer to world standards.
Anshul Prakash, partner, Khaitan & Company, said that partial implementation of the Wage Labor Code and Social Security Labor Code was already expected. But now the real role will be of those officers working at the central and state level who will implement these codes. Experts say that if they adopt a cooperative approach instead of a punitive attitude, then the implementation of these codes will be smooth and effective.
