India’s New Labor Law Codes: Major Changes & Challenges in 2021

Are you up to date with the changes in labour law compliance? If not, this article is for you. The Indian labour law underwent drastic amendments when it consolidated 29 separate central labour laws into 4 simplified labour codes.

This move of the Indian government is considered a much-required change that has been pending for several years. Moreover, unlike any other typical law change, which disturbs the existing mechanism, the new amendments to the labour laws is a welcome move by almost all of the big industries and associations.

Let’s get the POV of a labour law advisor regarding these changes.

The most visible impact of the change is that it would make protecting labour laws less complex and would bring more clarity to its actual working. With 29 laws outlining the boundaries of the industry at work, it made the mechanism more sophisticated and confusing.

There are still some loopholes in the method of its implementation, something the industrial sector is demanding to be worked on.

While it looks quite easy to follow at the first glance, in order to truly understand the new changes, the crux of the major changes must be clearly understood.

Prompt Personnel, a popular labour law consultancy destination, has prepared a detailed list of the major changes that this amendment would bring.

  • Understanding the new Labour Code
  • The four new labour codes are:
  • Health and Working Conditions Code 2020
  • Industrial Relations Code 2020 and Occupational Safety
  • Code on Social Security 2020
  • Code on Wages 2019

Expert labour law consultants say that even though these received the president’s assent in 2019-20, some other aspects, such as identifying the workers for the purpose of social security through Aadhar and provisions related to minimum wages are yet to be brought into effect through some effective means.

The initiation of implementation of these codes would be delayed because each state is to identify their own rules under the new provisions. These would be finalised keeping in mind that the provisions, when implemented, must benefit a majority of the private sector.

Major changes
As per experts in labour law consultancy, some really important and noteworthy changes brought to the existing system by the labour law amendments are listed below: The most visible and appreciated change is that the new code lays down a standard definition of the term “wage”. Moreover, wages are to be maintained at a minimum of 50% in terms of the overall calculation of benefits and payments.

Changes in payments of wages are to apply to all employees and as well as establishments, irrespective of their pay bracket.
Another significant change is ensuring the compounding of specific offences along with the different conditions that apply in such scenarios.

One of the most important changes is also the introduction and explanation of the term “fixed-term employment”, which also brings along several prorated statutory benefits.

What is also added by the labour codes is that it lays down a limit on the period in which the due amounts can be determined. It also has a provision specifying that an enquiry against an amount due can only be initiated in the 5 years starting from the day when it was due and not after that.

It also lays down guidelines for the establishment of Negotiating Council and Negotiating Union for disagreement resolution.

Major challenges

Since the amendment brings a huge number of laws down to just a few, it certainly is not free of challenges. These challenges have mostly been voiced by the industrial sector in order to get their queries answered.

According to our labour law advisor, some of the most important challenges are listed below:
Mere consolidation or true reform exercise? An important question, which emerged during discussions revolving around the practicality of implementing the labour code, is whether the amendment which brings down the number of labour laws is truly a reform in the existing system or it is just a different mould of the same laws with fancier names.

These codes do not provide any details about the provision that deals with the obligation of the employer in specific situations like the pandemic.
There are many criticisms of the codes pointing out that, just like the old laws, it too fails to address the need to recognise and deal with unions in various sectors like IT, which do not have a lot of experience in this field.
The new code also fails to specify provisions in order to provide employees social security in MSMEs, small startups, etc.
The labour codes do not take steps in the direction of increasing job opportunities.

As an employer, ensure your firm follows labour law compliance. It is ever more critical to do so now.

Prompt Personnel is among the most sought after labour law consultants. Reach out to us for guidance and our experienced team will be happy to help.

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