Grant Thornton Survey states 50% companies ready to implement labour codes

An industry expectation survey by Grand Thornton Bharat reflected that 50% of the companies are ready to implement the new labour codes in India. The new labour codes consolidate and simplify 29 existing labour laws into four new labour codes.

The four labour codes are – Code on Wages, Industrial Relations Code, Code on Social Security and the Occupational Safety, Health and Working Conditions Code. The government is yet to notify these codes for implementation. The CII (Confederation of Indian Industry) and Grant Thornton Bharat surveyed the new labour codes implementation in the companies by tapping into a pool of 4000+ respondents, including middle and senior managers and C-Suite executives. 

The survey shows that around 43% of the organisations have started internal reviews regarding the four labour codes keeping in mind the practical implementation objective. The survey reflects that 54% of respondents think that the new labour codes can widen social security coverage to the unorganised sector, whereas 29% disagree.

Around 20% of organisations have onboarded external consultants for better preparedness. In comparison, 20% of organisations have not yet decided their implementation strategies, and 13% of them are waiting for the implementation date’s announcement.

Nearly 85% of respondents stated that there needs to be a minimum six-month transition period for implementing various obligations and compliances applicable under the new labour codes. Around 54% of the respondents welcomed the labour codes’ positive impact of reducing employers’ compliance burden and time.

The survey also reflects that 55% of the respondents support overtime payment entitlement for employees/workers with fixed minimum wages, while 26% state that this entitlement should be reserved for people in non-managerial roles. Nearly 66% of respondents favoured providing flexibility to organisations for hiring contractual employees for their core activities, while 7% were not sure about the benefits.

The survey shows that nearly half of the organisations accept the changes brought about in the new labour codes. They are preparing and taking steps to implement it in their organisations. In contrast, the other half are yet to take steps to implement the new labour codes. The changes in the new labour codes are plenty.

The new labour codes have significant changes when compared to the existing labour laws. The Code of Wages applies to all employees, whereas the present Wages Act, 1936, applies to the employees earning wages up to Rs.24,000 per month. 

The employers under the Industrial Relations Code include the contractors and legal representatives of the deceased employer. Thus, it widens the definition of the employer by covering the contractors under the Industrial Relations Code.

The Social Security Code applies to even the unorganised sector, gig and platform workers. Thus, there is an extension of social security measures such as ESI, EPF, gratuity, and maternity benefits to even the workers in unorganised sectors, gig and platform workers. 

The Occupational Safety, Health and Working Conditions Code apply to all establishments. Under the present labour laws, the provisions relating to occupational safety and health do not apply to employees in supervisory roles and managerial roles in industrial establishments.

The changes in the new labour codes look promising and beneficial to the employees and the employers. It reduces the compliances to be followed by the employers and saves their time. Implementation of the new labour laws in the companies will take some time. Still, with half of the companies already preparing to implement them, we can expect the implementation process to be carried out without much hassle.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in