Labour Codes: Draft Rules Released By 15 States, Yet Reforms May Not Be Rolled Out In FY22

As many as 15 states have prepared draft rules under the four labour codes passed by Parliament between between 2019 and 2020, but it is still uncertain if the long-awaited labour market reforms will become a reality in the current fiscal year.

Rules under these codes must be notified by central as well as state governments for enforcing those in respective jurisdictions. The Union labour ministry had planned to implement the four codes on industrial relations, wages, social security and occupational health safety & working conditions from April 1, 2021.

Since labour is on the concurrent list and the codes have a concept of “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, there will be no framework at all that will apply to those entities. This is primarily the reason why the Centre could not go ahead with the original plan despite rules under its jurisdiction being almost ready, sources said.

According to the labour ministry’s Cabinet note, the Centre has finalised rules for the three codes other than the social security code, the rules under which are yet to be vetted by the legislative department.

According to the note, 15 major states like Madhya Pradesh, Rajasthan, Karnataka, Uttar Pradesh and Gujarat have already ‘pre-published’ draft rules under code on wages and code on industrial relations. Nine states including Odisha, Uttar Pradesh, Madhya Pradesh and Chhattisgarh have prepared rules under both social security and occupational safety & health code.

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. Apart from various industry-friendly proposals, the laws ensure minimum wages along with timely payment of wages to all workers and propose to bring them all under the social security net.

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