The Rajya Sabha in September 2020 approved three labour codes subsuming 25 central labour laws, effecting a major reform that has been on the table for at least 17 years.
The three codes on — social security, industrial relations and occupational safety – already cleared by the Lok Sabha on Tuesday, will now offer industries flexibility in doing business, hiring and firing, make industrial strikes difficult while promoting fixed term employment, reducing influence of trade unions and expanding social security net for informal sector workers.
Along with the Wage Code, passed in August 2019, the National Democratic Alliance (NDA) government has now merged 29 central laws into four codes reducing compliance hassles, and streamlining laws – which have been the demands of industries for decades. After the assent of the President, India will have four labour codes henceforth.
Some of the existing laws date back to pre-independence. Some of central laws which have merged with these codes are the Factories Act, the Industrial Disputes Act, the Trade Union Act, the Mines Act, the EPF Act, the Employees State Insurance Corporation Act, and Maternity Benefit Act, among others.
The industry and some economists, however, views this as a great reform that shall boost investment and improve ease of doing business. “This reform was two decades in the making. Welcoming the passage of the codes, Lohit Bhatia, president, Indian Staffing Federation (ISF), a federation of staffing and human resource companies said: “Market forces that offer greater employment demand and more opportunities for formal gainful employment with social security and financial inclusion are better suited for workers’ rights than the lack of formal employment with the protection of laws.”