Analyse the recent Labour Law Reform & its impact on businesses

Labour market flexibility is a very important factor that influences the flow of foreign direct
investment in any country. A need was seen for having fewer laws, like a unified labour code
and ensuring better enforcement. In order to make India a business-friendly nation in line
with changing market conditions, initiatives have been undertaken by the government since
2014.
The reform will see the repealing of 38 of the existing labour laws, and replace them with
four new labour codes with the stated objective of streamlining labour law and making it
more efficient. These are the Industrial Relations Code (replacing three labour laws), the
Code on Wages (replacing four labour laws), the Code on Social Security (replacing 15 laws)
and the Code on Occupational Safety and Health and Working conditions (replacing 16
laws).

The Maternity Benefit (Amendment) Act, 2017

The Maternity Benefit (Amendment) Act, 2017 has come into force on March 28,
2017 after receiving the assent from the President on March 27, 2017. The major
changes brought by the amended Act, compared with the provisions of the earlier
Act are: -
 Now in recent there is an increase in the duration of the maternity leave from
12 to 26 weeks which can be availed prior to 8 weeks from the date of
expected delivery (earlier it was 6 weeks prior). And From third child
onwards, maternity leave to be for 12 weeks which can be availed 6 weeks
prior.
It is anticipated that as now the employer will have to pay full wages for 26 weeks.
The aforesaid amendments may have an adverse impact on job opportunities for
women. The amendment is silent on paternity leave. The women who work in the
unorganised sectors are not covered due to their unstructured employment
conditions.

The Child Labour (Prohibition and Regulation) Amendment Act, 2016

The Child Labour (Prohibition and Regulation) Amendment Act, 2016 has come into
force on July 30, 2016. The major changes brought by the amended Act compared
with the provisions of the earlier Act are: -

 New category of person “adolescent” who is between the age of 14 to 18

years. Has been Prohibited of employment in any hazardous occupations and
processes as specified in the Schedule.
 It provides for regulation of work conditions viz. working hours limited to 6
hours in a day, 1 hour’s rest after every 3 hours of work, no overtime etc.
  In case of violation enhanced penalty of the provisions of the amended Act:
Imprisonment: 6 months to 2 years (earlier it was 3 months to 1 year)
Fine: INR 20,000 to 50,000 (earlier it was INR 10,000 to 20,000)

Regulation will be a challenge as the amendment does not provide the criteria to
determine if an enterprise is a family enterprise or not. Amendment legalises child
labour in "family business" and is silent on regulation of working hours, overtime,
weekly holidays etc. for such child labour, thereby, making this provision exploitable
for employment of child labour.

The Employees' State Insurance (Central) Amendment Rules, 2016

The Employees' State Insurance Rules, 1950 ensure implementation of the provisions
of the Employees' State Insurance Act, 1948. The Rules have been amended 4 times
since June 2016. The major changes brought by the various amendments are as
under: -

 An employee whose average daily wage is up to INR 137 is exempted from

contribution (earlier it was INR 100).
 In areas where the Act is implemented for the first time, the rates of
contribution for initial 24 months:
Employer - 3% of the wages
Employee - 1% of the wages.
 Wage limit for coverage of an employee has been enhanced from INR 15,000
to 21,000.

Amendments to have a financial impact on employer's contribution as they cover

more employees due to increase in the wage limit and the benefits will have to
be provided to insured women as well.

The Payment of Wages (Amendment) Act, 2017

The Payment of Wages (Amendment) Act, 2017 changes the method of payment of
wages to the employees. Now the employer can pay wages to its employees by the
following modes without obtaining written authorisation (as required earlier):
 in coin or currency notes;
 by cheque;
 by crediting them into his bank account.

The relevant government may notify establishments, whereby the employer

should pay the wages only by cheque or crediting the wages in employees' bank
account (and not through cash).
Ease of Compliance Rules, 2017

In order to facilitate the ease of doing business in India, the Ministry of Labour and
Employment has notified the Ease of Compliance rules to maintain registers under
various labour laws, which have been in effect since February 21, 2017.
Compliances under every statute resulted in multiple efforts by the employer in
maintaining separate registers, which was a major drawback under the Indian Labour
Laws. Therefore, in order to avoid overlapping/ redundant fields and to save costs
and efforts, maintenance of combined registers was introduced by way of these new
rules, thereby ensuring better compliances of labour laws.
Further, the rules provide that combined registers may be maintained either
electronically or otherwise, without obtaining any prior permission. The enactments
on which these rules would be applicable are:
 Building and Other Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996
 Contract Labour (Regulation and Abolition) Act, 1970
 Equal Remuneration Act, 1976
 Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979
 Mines Act, 1952
 Minimum Wages Act, 1948
 Payment of Wages Act, 1936
 Sales Promotion Employees (Conditions of Service) Act, 1976
 Working Journalists and Other Newspaper Employees (Conditions of Service)
and Miscellaneous Provisions Act, 1955

Conclusion

Making ‘bold’ labour reforms, either at the Centre or in the States, to give employers
more freedoms to fire workers, may please financial markets for a while, as
Thatcher’s reforms did in the UK. However, it will weaken the already fraying social
compact in India between the elite and workers, as happened in the UK, and in the
US too with a similar disrespect for the demands of workers and their unions.
Whereas India must strengthen the social compact and build a strong industrial base
democratically, like Germany and Japan did, with consensus amongst unions and
employers.