R Krishna Das
The Industrial Disputes Act was probably the most talked about laws that had dampened large-scale economic activities in India.
Besides other provisions in question, the act required private companies to take permission from the government before retrenchment of workers. Originally applicable on companies with more than 300 employees, it was subsequently reduced to firms with more than 100 employees.
Consequently, the provision propelled companies to remain small and inefficient that literally resulted in India missing the manufacturing bus. The new code on industrial relation restores the condition back to 300 employees, thereby granting some flexibility to small and medium manufacturers.
It implies that industrial establishments with up to 300 workers will not be required to furnish a standing order; a move which experts said would enable companies to introduce arbitrary service conditions for workers.
The Standing Committee on Labour, in its report submitted in April, had also suggested hiking the threshold to 300 workers, noting that some state governments like Rajasthan had already increased the it and which, according to the Labour Ministry, had resulted in “an increase in employment and decrease in retrenchment”.
The contest with the new provision was that it would provide greater flexibility to employers to hire and fire workers without government permission. But the government had simultaneously armed the workers with more power; literally, engaging more organisations to raise voice for them.
Many small units did not have recognised trade unions. Now, even an activist or a Non Government Organisation (NGO) could fight for their rights.
In case of an accident, the workers will have his stage in the penalty and the industrialist could be behind the bars for two years. The code had made provision that the victim would get half of the penalty imposed on industry for the violation of safety norms. The penalty would range from Rs 5 to 10 lakh. besides compensation.
The problem with India’s old labour codes was that they were too many laws with too many inspections and little flexibility for businesses. The reforms that clubbed shattered provisions had been an attempt to seriously make an aggressive push for attracting supply chains and attract investments besides allowing gradual shift of surplus labour (and land) from low productive primary sector towards manufacturing sector.
The new industrial relation code also views the issue of worker strikes and mandates that instead of the previous two weeks, now workers will need a 60-day strike notice. There is no reason to debate as barring one or two, most of the states across India have a very friendly industrial environment with major plants never ever shut down even for a day due to strikes.
The new code also leaves the provision for states to further undertake labour reforms and exempt any company, or companies (or sectors) from complying with one or more of these labour laws. This would be critical as it gave states a much-needed provision to alter their labour laws with the intention of attracting investments.
