Labour Code 2020: An Attempt To Keep up With Changing Times

As the second largest labour force in the world, India is all set to embrace the new labour code bill that was passed in September 2020. While much is being debated on whether the recent changes are employee or employer friendly and a final judgement on that remains to be seen till the actual rules are notified, one thing is certain – the recent changes are reflective of the government’s acknowledgement of the changing times in the business world today.

Concession to business vagaries

It is a fact that the economy today is volatile and sensitive to the most unexpected of events. Who would have ever thought that a tiny virus could disrupt the world as we know it? The largest casualty of Covid-19 has been the SMEs as they are usually the first to succumb to cost and margin pressures. In the midst of this volatility, the recent codes allowing organisations of 300 or less employees greater flexibility, whether it is with regard to how standing orders may be framed or the procedural aspects of downsizing within the organisation, is definitely a shot in the arm of the SMEs and entrepreneurs in India giving them greater leeway in taking decisions to guarantee the health of the organisation. While naysayers may protest that it reduces employment security, they must recognise the fact that a sick organisation cannot provide job security for long. The conditions for growth in employment are and will always be linked to a strong bedrock of industrial growth.

It is a well understood business fact today that employee engagement is key to business excellence. Moreover, the foundation to any employee engagement programme is to ensure that the basic Maslowian needs regarding health and safety are taken care of before higher needs are met. With the subtle but distinct emphasis on the employee wellbeing programmes, the recent labour codes have sent a clear message – the basic needs of employees are non-negotiable and non-compliance will not be tolerated. While processes and procedures may have been simplified and smaller organisations exempted from the burden of compliance, for the others, compliance adherence will be sacrosanct. Organisations now need to ensure that for the different groups of the workforce, whether it is employees, fixed-term workers or contract workers – PF, ESI, Bonus, overtime and working hour policies are all administered in a compliant fashion. More than ever, organisations will now need to ensure comprehensive management of their workforce where technology will undoubtedly play a critical role to enforce compliance and plug areas of past negligence.

Towards a more inclusive workforce

The insertion of different groups of workforce — like gig worker, platform worker, home-based worker — into the labour code definitions has indicated an acceptance of how the workforce itself has evolved over the last decade or so. While the recent inclusions of different categories have largely been limited to social security schemes, it is a herald of times to come where emerging workforce categories can expect greater rights and benefits accorded to them. This would be the time for organisations to evaluate on whether their work policies across these different categories are reflective of specific needs of each of these groups and move towards more customised workforce processes and policies.

Moving from collective bargaining to individualised preferences

A more resilient economic environment has definitely been a key intent of the current labour code changes. In the past, trade unions have played an important role in organising the voice of the workforce so that they get the right attention from organisations. However, in today’s age of the internet and social media where the voice of an individual can so clearly get broadcasted and amplified cutting all hierarchical barriers, the purpose of the trade union has diminished, leaving it open to hijack by vested interests. The restrictions on industrial strike and agitation will go a long way in curtailing collective bargaining, allowing organisations to look at structuring monetary benefits and policies based on how they impact productivity and workforce development.

Interestingly, even as an attempt has been made to diminish the power of trade unions, the bill has provisions for individuals to exercise their right of choice and refusal. Whether it is with regard to working overtime, or night shift working for female employees — the labour code has requirements for the consent of the employee to be taken in order to ensure that individual preferences are being considered and respected. It will become increasingly important now for organisations to roll out systems across all categories of their workforce that can interact and manage this complex process of balancing individual needs with organisational requirements.

With the recent labour code changes the writing on the wall is clear — compliance is no longer to be viewed as a standalone activity, but it is an integral aspect of how businesses are to be run and needs to be balanced with business profitability and productivity as well as employee wellness and engagement. In the light of the recent labour codes, it is more important than ever for businesses to have strong policies and systems that can provide the visibility and flexibility needed to manage the workforce and stay relevant in today’s changing marketplace.

By – Sumeet Doshi

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