India is slowly edging towards a new era in labour and employment law.
According to a Labour Code survey report launched by the Karnataka Employers’ Association (KEA) and boutique employment law consulting firm BCP Associates, 34.9% of companies in India are in a high state of proactiveness to implement new Labour Codes while 18.6% of companies have not initiated any action so far.
The key pain points of the industry in implementing the Codes include wage restructuring, knowledge and understanding of the internal stakeholders who need to implement the codes, increased operational costs and employee communication, says the survey.
The new Labour Codes are aimed at simplification of the current labour laws and promoting digitisation, and thereby easing the burden of compliance for employers besides providing social security for all workforce. The survey report highlights India Inc’s preparedness for the implementation of the proposed Labour Codes.
The survey adds that 67% of the industry prefer a phased roll-out of the Codes, rather than all at once, for better preparation and ease of implementation and 83% of the industry clearly understands that the Codes have an all-encompassing implication on the entire employee lifecycle, as opposed to the general perception that the Codes only entail changes to wages.
Over 133 companies spread across Karnataka, many of them with national operations, participated in the survey, which was unveiled by Pratik Kumar, CEO Wipro Infrastructure Engineering & executive director – Wipro Enterprises, in Bengaluru today.
“The changes that the four codes are expected to bring about have been long overdue and it has been an industry ‘ask’. The codes aim to enhance social security of the workforce and guide implementation of labour law compliance. The codes will cut down on significant systemic complexities and help accelerate economic growth. On their part, organizations need to revisit their HR policies and relook at their employee compensation structure. They have to conduct their own impact analysis and critically look at their own compliance practices,” said Kumar
“The Labour Code survey report by KEA and BCP Associates provides provisional insight and adequacy of preparedness among the industries with regard to implementation of four Labour Codes. Their perceptions and probable impact analysis, gives an idea regarding amendments and other policy prescriptions that governments may undertake in immediate future,” added Manjunath Gangadhara, additional labour commissioner (Industrial Relations & Child Labour), Government of Karnataka.
BC Prabhakar, advocate – president KEA and chairman, BCP Associates, and an authority on Labour Laws in India said that the survey indicates corporate India’s clear understanding of, and readiness to implement, the new labour codes. “The codes focus on digitisation and simplification to enable ease of doing business. I trust this will act as an accelerator for the Government to implement the Codes without any delay,” he added.
Given the history of legal reforms in India, in this case too, implementation will not be a choice. The survey says organisations, big or small, should consider assessing the impacts early on so that they are well prepared once the new Labour Codes take effect.
“Aligning with the Labour Codes will be a full-fledged change management exercise for all organisations. An exercise to understand the true benefits of the Codes must be undertaken at the outset to define clear compliance objectives for the company and balance it with on-ground implementation,” the survey added.