Industry stakeholders and experts have called the implementation of four labour codes a historic milestone, which would improve the labour-related regulatory environment for both workers and employers.
Although industry had anticipated a transition period, the notification makes the implementation immediate. Thus, experts say, employers across sectors should promptly assess and align their internal policies, HR practices, and operational processes with the applicable provisions of the Codes.
On Friday, the Centre notified the four codes: Code on Wages, 2019; Occupational Safety Health and Working Conditions Code (OSHWC), 2020; Industrial Relations Code, 2020; and Code on Social Security, 2020.
"The Government’s implementation of the four Labour Codes marks a transformative leap toward a modern, simplified and future-ready labour ecosystem. By consolidating 29 diverse laws, these Codes ensure better wages, stronger social security, enhanced workplace safety and a more predictable regulatory environment for both workers and industry," Chandrajit Banerjee, Director General, CII, said.
"This long-awaited reform brings India in line with global standards, eases compliance, empowers enterprises, and strengthens the foundations for higher productivity, greater competitiveness and accelerated job creation," said Banerjee.
The Parliament had passed these four Codes in 2019-2020.
Sudhakar Sethuraman, Partner, Deloitte India said: "This marks a significant and timely development for India, especially as the country is witnessing rapid advancements in AI while continuing to prioritise and protect the interest of India’s workforce."
As per experts, the key areas of impact which employers should prepare for include mandatory annual health check-ups, gratuity entitlement for fixed-term employees, social security benefits for gig and platform workers, and stricter requirements around timely wage disbursement. On the compliance front, employers are expected to gain from the simplified regime of PAN-India licensing, single registration, and consolidated returns.
"It’s important to note that State-specific Shops and Establishments Acts are not subsumed under the new labour codes. This may lead to overlaps in areas such as leave entitlements, working hours, and overtime, requiring careful compliance by employers," said Akhil Chandna, Partner--Global People Solutions Leader, Grant Thornton Bharat.
Suhail Nathani, Managing Partner, Economic Laws Practice, said that the transition will require substantial operational changes across industries, but in the long run, the Codes are expected to bring the informal workforce in to a safer regime, improve transparency, and better align India’s labour market with global standards.
As of today, all the provisions of labour codes are not yet notified, but are likely to be in the next 45-days.
In line with the wide-ranging consultations carried out during the drafting of the labour codes, the government will likewise engage the public and stakeholders in the framing of the corresponding rules, regulations, schemes, et cetera under the Codes, an official release said.
Anshul Prakash, Partner at Khaitan & Co, said: "Part implementation for Code on Wages and Code on Social Security on expected lines. That said, much would now depend on the ground level machinery of facilitators at Central and State levels who will be expected to approach the enforcement of these laws with a conciliatory mindset instead of that of prosecution for any non-compliance.”
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