The government has deferred implementation of labour codes beyond April 1, citing delay on the part of states to finalise Rules. The move is expected to give more time and bandwidth to companies to retweak their salary structures and other human resource (HR) policies as certain provisions of the Code would have led to increase in employee cost for the companies.
A senior labour ministry official confirmed to ET that implementation of labour codes has been deferred for some time. “Implementation of labour codes looks unlikely from April 1. The government wants at least some industrial states to notify rules across four labour codes along with the Centre to avoid any legal void,” the official said.
The labour ministry is ready with the rules on four codes and will notify them once some states are ready with rules in their domain. So far, only Jammu and Kashmir has notified Rules for the codes while states of Uttar Pradesh, Bihar, Uttarakhand and Madhya Pradesh have put up draft Rules for two Codes while Karnataka has put it up for one Code.
The delay in implementation of labour codes is a breather for India Inc as resurgence of Covid-19 cases in major industrial states have raised apprehensions that economic recovery seen so far could be stalled or even reversed if the cases continue to go up.
Suchita Dutta, executive director of the Indian Staffing Federation said people are living in some bit of ambiguity till there is clarity though preparation is on. “Companies had started preparing for changes based on the provisions of the Codes and the draft rules, including the budgeting of wages and gratuity” Dutta said.
Experts feel the Centre should have handheld states in firming up their Rules. “Preparatory work for implementation of all labour codes has been as shoddy as the Codes themselves. The central government should have taken abundant measures of guidance to the state governments and also send signals to employers and trade unions that they are serious about implementation of the four codes,” KR Shyam Sundar, labour expert and professor at XLRI said.
“The inordinate delay in implementation of the Codes is in utter contrast to the haste shown in implementing the Code during the pandemic. Uncertainty will also affect foreign direct investment,” Sundar added.
The Parliament had in 2019 approved the Code on Wages while in September 2020 it gave its go ahead to the Social Security Code, the Code on Industrial Relations and the Code on Occupational Safety, Health and Working Conditions.
The labour ministry had amalgamated 29 labour laws into four Codes to significantly reduce compliance burden, improve the ease of doing business, greater ease of hiring and firing of workers and enhanced flexibility to employers in terms of work hours.