Explore - Experience - Excel

Reforms in Labour Laws in India

Reforms in Labour Laws in India
                                                         By Shurlly Tiwari
Most of the labour laws in India are enacted decades ago, some of them were from pre independence era of at that time the working conditions were different from the current scenario. Therefore, there is a pressing need to reform these laws. And the implementation has also to be charged so that the benefits of these reforms reach to the maximum number of work force.
To encourage economic growth and generate employment opportunities in the country, the government has proposed that 44 labour laws be consolidated into just 5 laws
1.      The Industrial Relation Code Bill 2016(dealing with industrial relations)
2.      Wage Code Bill 2016 (dealing with wages)
3.      The Small Factories Bill (Regulation of employment and conditions of services, dealing with Safety and social security)
4.      Employees Provident Fund and Miscellaneous Provisions(amendment) dealing with welfare.
5.      The Shops and Establishment Bill.
Draft bill:
The Ministry of Labour and Employment introduced the Draft Labour Code on Industrial Relation Bill, 2015 (hereinafter referred as DRAFT BILL) in April 2015
The Government’s objective was to overhaul several issues pertaining to industrial relations including:
Registered Trade Unions, Standing Orders, notice of Change of terms of Employment, Strikes, Lockouts, Lay-offs, Retrenchment etc.
Need for Draft Bill:
Introduction of draft bill is a significant proposal to overhaul the labour laws.
Presently in India the labour laws are so ambiguous that they promote the industrial dispute rather than facilitating business friendly environment for both the employees and the employers. In this regard India’s needs a good labour policy that simplifies and rationalise the complex and ambiguous extant pieces of labour legislation into simple code rather than impaired or short-sighted law amendments that would address only the present problems.
This will also help to increase the confidence of the industry. And encourage fresh investments from multinationals.
ID Act 1947 , requires industrial establishments hiring at least 100 workers to obtain the permission from the Govt. in lay off.
Draft Bill proposes to allow industrial establishment s employing up to 300 workers to lay off without seeking the permission from the Government
Limit of Liberty of Workers in registration of trade union is 10%
10% will not apply in the following circumstances.
a)      Where 10% workers exceed 100
b)      Where 10% is less than 7 workers. Minimum of 7 workers shall be required to make an application for registration.
Industrial Act 1947 , requires an employer to pay compensation equivalent to 15 days average pay for each completed year of service , or any part year in excess of 6 months
Draft Bill aims to increase the compensation at the time of retrenchment to 45 days , average pay for  each  completed year of  continuous service.
Under the I.D. Act , workers employed in Public Utility Service to go on strike only after giving 14 days advance notice to the employer
Draft Bill pr
oposes to govern all industrial workers by the same rule for the strike .not for only Public Utility Service.
Employer and the workmen refers  industrial dispute to arbitration only prior to approaching the labour Courts
Draft Bill abolishes the concept of labour courts and propose to introduce a Dispute Resolution Mechanism through industrial tribunal.
 Under sec. 50 draft bill entitles the parties to refer the dispute to arbitration at any time.
Under sec.35 sexual harassment, refusal to undergo training organised by the employer etc . is now classified as misconduct under Model Standing Order.
The time limit for completion of Disciplinary proceedings within 3 months to 1 year from the date of suspension.
The time limit for completion of disciplinary proceedings within 90 days from the date of suspension.
Works men compensation act
For injury and death the amount is increased to 1,20,000 from 80,000.
Total disablement amount is increased to 1,40,000 from 90,000.
Maximum amount of claim can be 4.56 lakhs in case of death, and 5.48 in case of permanent disablement.
Maternity benefit amendment bill(2016)
Maternity leave are increased from 12 weeks to 26 weeks(paid)  8 weeks before delivery and 18 after child birth.
For woman who have 2 or more children, the duration of maternity leave shall continue to be 12 weeks (i.e. 6 weeks pre and 6 weeks post the date of delivery).
12 weeks for surrogate mothers.
Free crèche facility for women, if the number is more than 50. (earlier it was 30).
Women can visit the crèche 4 times in a day.
IT Industry in the state, has enjoyed the blanket exemption from the Industrial Employment Act 1946, for 11 years, will now have to adhere to the rules under the labour legislation.
This means that IT industry, like all other industries that employ over 100 workers, have to define with sufficient precision the conditions of employment under them and make these conditions known to the workmen working under them.
Industrial relations Bill 2015 seeks to integrate 3 labour laws
Industrial Dispute act 1947 , Trade Union Act 1926 and Industrial Employment act 1946 into a single code
Child labour Prohibition act
Now ,a  child under the age of 18 years, is not allowed to work in the Factory premises. Earlier it was 14 years.
Gaps to be Addressed.:
World Bank Data suggested that in 2013 , the contribution of manufacturing sector to India economy was just 13%.
India Contribution to world manufacturing is 1.8%, that states that India’s Stand in manufacturing is very poor (Goyal , Kaur & Singh 2015)
·         India is a mixed economy with stringent labour laws; labour laws in India make employees and employers prone to harassment, thereby making it difficult for them in India to compete against the global Giants in countries with simplified laws.
·         Several recommendations have been made to make labour laws less restrictive for employers, this will help create a level playing field against their international counterparts.
·         The total GDP contribution of Manufacturing sector is 20%, which engages nearly 17% of total labour force. the attempt made by the government is laudable effort, as It will provide flexibility to the employers which will help the industry to function in a more efficient fashion. This will also help in improving the productivity and efficiency of worker, it also helps in improving and uplifting their life styles.
To match the Pace of manufacturing revolution, India needs to attain a share of at least 25% contribution to Indian GDP, for attaining such growth, introducing reforms in the labour laws of India is a new beginning which helps in starting the new era of growth and development. It is the most important aspect in bringing the discipline and also in bringing the flexibility to the system.
Many Multi-National companies were reluctant to start their business in India because the rules were very stringent but by bringing these reforms the system will welcome the new entrants into the economy, which will not only help in shaping up the industry but will also help in the growth of economy and development of the nation.
These new proposals are very helpful and are in line with Make in India, as they are catering to the most important part of the country, which is labour. According to the need of the nation, these laws should be implemented with immediate effect.
Source: Labour Law Reporter, January, 2009. “Workmen’s Compensation Act to be Employees’ Compensation Act.” Page No. 17.
Human Capital – realising Business strategy through people –vol. 20.
IJETMAS , April 2016 , vol. 4, ISSN 2349-4476.