States’ reluctance to frame rules under the four labour codes could delay, if not derail, the Centre’s ambitious labour reforms. The plan to roll out the codes from April 1, 2021, has been put on hold, official sources said, citing the lethargy displayed by several states.
The development might hit India’s prospects of attracting fresh investments, at a time fixed asset creation in the economy needs to gather pace for the much-awaited economic rebound.
The states’ dithering would prolong the wait for increased labour flexibility by the existing establishments. Among the reform proposals are freedom for businesses to retrench workers or close units without prior government permission and fixed-term employment scheme, which are in sync with the nature of business of several establishments, especially the export-oriented ones.
On its part, the Centre is ready with the rules for implementation under all the four codes – codes on wages, industrial relations, social security and operational safety & health — but while central rules are applicable for the central sphere such as ports and railways, the codes empower the states to make rules, modelling on central rules, for establishments under their jurisdiction. Only three-four states have prepared the draft rules so far, the sources said.
The Centre, however, may not wait for long to implement the rules; it will wait till some major industrialised states come out with the rules.
“The codes have a concept of the appropriate government. The central government is the appropriate government for public sector undertakings, railways, ports. But for the vast majority of the industry, which practically covers all the private sector, the state government is the appropriate government. Until the states come out with their own rules, then there is no framework at all that will apply to those entities,” said Atul Gupta, partner, Trilegal.
“Gradually, states will frame the rules, then the consultation process will begin. I think it will take at least a couple of months or more,” he added.
XLRI professor K R Shyam Sundar said there has been a visible lack of coordination between the Centre and the states on framing the rules. Even the Centre is not very keen to give effect to the labour codes at this juncture because along with the farmers’ issue, the labour codes could become contestable.
“The Centre government should call for state-level ministers’ conference which is a historical practice and stress the need for making the rules quickly,” he said.
Amalgamating 29 central labour laws into four codes, the Centre wanted to bring in a sea change in the way business and industry functions today. While the code on wages was passed in August 2019, the Parliament approved three other codes on September 23 last year.
Apart from various industry-friendly proposals, the new laws ensure minimum wages along with timely payment of wages to all workers and propose to bring them all under the social security net.
Source : Times of India