2 out of 3 Indian companies want a phased roll-out of the new labour codes: Survey

The Karnataka Employers' Association (KEA) unveiled a survey report titled ‘How Indian Industry Perceives Implementation of the Proposed Labour Codes’

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The industry seems to be receptive to the four new labour codes that the Government is planning to implement in the near future, according to the findings of a new survey released by the Karnataka Employers’ Association in conjunction with BCP Associates.

The four labour codes — Code on Wages, Industrial Relations Code, Social Security Code and the Occupational Safety, Health and Working Conditions Code — are set to replace the 29 labour laws that exist in India.

The survey titled ‘How Indian Industry Perceives Implementation of the Proposed Labour Codes’ was conducted in the last quarter of 2021, to assess India Inc.’s readiness for the implementation of these four codes, which were initially proposed in 2019.

The survey sampled 700+ companies who have a presence in India. About 67 percent of the companies sample said that they would prefer a phased roll out of the codes, rather than all at once, for better preparation and ease of implementation.

About 83 per cent 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.

The report was released virtually by Pratik Kumar, CEO, Wipro Infrastructure Engineering and executive director – Wipro Enterprises.

Delivering the keynote address, Kumar said, “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 the social security of the workforce and guide implementation of labour law compliance. They will cut down on significant systemic complexities and help accelerate economic growth. On their part, organisations 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.”

He adds that the new labour codes would have to strike a balance between enhancing social security and simplifying things in a manner that compliance becomes easy. One of the salient points of the codes is that they cut down on compliances, so that employers could focus on other aspects to a greater extent.

Although the preference would be of a deferred roll-out of the labour code, it’s implementation in that way will not be possible. Opining on the viability of this, Dr Manjunath Gangadhara, additional labour commissioner (Industrial Relations & Child Labour), Government of Karnataka, said that the ministry plans to repeal the 29 labor laws in a single go, and bring in the new laws in place of them together at a pan-India level.

“Panel provisions do not necessarily need to be deferred. The penal codes also have provision of exemption under them. New enterprises can be exempted from their implementation for up to three years. Seeking exemption, companies can work on their preparedness for the same,” Gangadhara said.

Madhu Damodaran, group legal head, Quess Corp, commented on the fact that the survey results showed that 700-odd employers are interested in the implementation. He was “Pleased that more than 57 per cent of the participants are ready,” and concerned that “43 per cent are not prepared”. He felt it was “high time stakeholders ready themselves for the impending change quickly”.

When it comes to measures taken towards implementation of the Codes, the Labour Code Survey Report reveals that 34.9 per cent of companies are in a high state of proactiveness while 18.6 per cent have not initiated any action till now.

The report highlights some common sentiments from the industry bodies that took part in the survey. One of the key demands of the employers from the Government is to provide an adequate time frame to the industry to understand and implement the three codes without issues. Further, they expect to be provided with a financial incentive for a year or two to meet the increased cost of consulting, which companies may incur during the implementation.

The codes are expected to have a huge financial impact on the employers. With so many changes, it will take time for respective stakeholders to understand and abide by the new codes, says the report.

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