Labour reforms & the 3Cs— Convenience, Compliance, Challenges!

The LABOUR CODE 2020 : IMPACT ON BUSINESS survey report, by HRKatha and UKG, throws light on what HR professionals feel about the labour reforms


Labour reforms have been a hot topic of discussion ever since the Parliament passed the three labour codes. With these reforms set to impact workers as well as their employers, it is not surprising that the HR fraternity is all eyes and ears. After all, it will affect the employer-employee relationship as well as the overall business. The essence of the codes can be described in terms of the three Cs. While many things will become more convenient for sure, and compliance will be easier, there will be newer challenges too.

To find out what the HR professionals had to say about these reforms and the repercussions once the codes are implemented, HRKatha and the Ultimate Kronos Group (UKG ) conducted a survey. While they are confident of many positive outcomes, there remains a bit of uncertainty regarding how things will actually play out post implementation.

Labour cost will increase due to the new laws say a good majority. While 16 per cent are sure of significant impact, 67 per cent are sure labour cost will go up a little. The impact on labour cost was disproportionately more for larger organisations than the smaller ones.

‘Changes in wage definition’ is the main contributor to increase in labour cost with around 82 per cent of the respondents considering this a reason for increase in labour cost.

Almost 60 per cent of the respondents said the new labour codes will ease compliance administration. More people from IT & ITES than manufacturing, believe that the ease of compliance administration will increase.

Factors such as restrictions on strikes and lockouts, and fixed-term employment will hardly have any impact on compliance, feel many.

Nearly 50 per cent of the respondents believe that engagement levels of contract workers will increase.

More people are positive that the new labour laws will have a high impact on employer obligation towards contract labour.

The Occupational Safety, Health, and Working Conditions Code, 2020 recognises the rights of contractual workers, and the Industrial Relations Code now lays down a statutory framework for fixed-term employment.

Seven out of 10 CXOs are of the opinion that digitisation of the workforce-management process will be highly impacted and get a push due to the new law.

‘Better late than never’ seems to be the general reaction to the labour code reforms. From social security being expanded to inter-state migrant workers being included in the definition of workers, to new conditions being laid down for carrying out legal strikes, the reforms have grabbed the attention of all sectors.

For more insights, download the report

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