News: Are you all set for the new Labor Law reforms?


Are you all set for the new Labor Law reforms?

The Indian Government is preparing in full swing to bring in reforms with the aim of making a more effective, transparent and user-friendly Labor law system in the country
Are you all set for the new Labor Law reforms?

Keeping pace with the emerging economic and industrial scenario, the current government has been planning several coherent reforms in HR Labour Laws. Digitization of EPFO and simplification of related transaction process of transferring/withdrawing PF has already been implemented last year. An initiative on the rationalization of forms and reports under certain Labour Laws Rules, 2017 was also carried out in the recent past. Keeping the count on, now the government plans to amalgamate, simplify and rationalize 44 of its existing labor laws.

Union Labour and Employment Minister Bandaru Dattatreya announced this Thursday while addressing an ASSOCHAM summit on 'Second Auto Forum and Awards 2017 that "Out of 44 labor laws, we are going to amalgamate, simplify and rationalize them into four". The plan is to group the existing Labour Laws into four Labour Codes on the functional basis. 

The Government aims to undertake these changes in order to:

  • Reduce complexity

  • Enhance the ease of compliance

  • Reduce redundancy

  • Promote safety, security, and health of workers

  • Increased transparency in the system

Earlier in the month of April, the government had undertaken an exercise to foster easing of Labour Laws compliances and Rules of various establishments. Many forms and reports were rationalized with the objective to reduce the numbers prescribed under 3 Acts and the Rules under 36 to 12. 

NITI Aayog has pressed for reforms in labor laws to take the country out of what it calls the low-productivity and low-wage jobs situation. There are many other initiatives being concurrently planned in this area, some of which are enumerated below:

  • The government has enacted the Unorganized Workers’ Social Security Act, 2008 in order to provide social security benefits to the workers in the unorganized sector.

  • The government has allocated Rs 16,000 crores for skill development by recognizing the importance of skilling the workforce.

  • The ministry has plans to create multiple jobs in the coming years. As per Dattatreya, the government plans to create 65 million jobs by 2026.

  • The government is trying to provide comprehensive social security to all unorganized workers under the following programs:

    • Atal Pension Yojana

    • Pradhan Mantri Jeevan Jyoti Bima Yojana 

    • Pradhan Mantri Suraksha Bima Yojana

India, with an over regulated and poorly governed labor law system, is in immediate need of labor laws overhaul. Abolition of archaic laws, rationalization, simplification, and unification of all these existing laws has become the need of the hour. The recent steps undertaken by the government to revamp the regulatory eco-system seems a progressive one.

These changes coupled with effective interventions can improve India’s ranking with regard to the ease of doing business and eventually raise the labor force participation in the formal sector. All these changes will also have a direct impact on the productivity and social security quotient of the unorganized sector.

A report by Teamlease states that “Revamp of labor laws can help in raising participation in the formal sector and increase the share of formal employment from current 11 per cent to nearly 40 per cent besides improving India's ranking in ease of doing business”.

A step towards making a transparent compliance system which is seamless and user-friendly should be taken in a good stride by the industry provided it is implemented efficiently and effectively.

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Topics: C-Suite, Employee Relations, Compensation & Benefits

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