Good, bad and ugly of industrial relations code

Rituparna Chakraborty, Co-Founder & Senior Vice-President of TeamLease, cautions that this change in notification mechanism does not necessarily mean lesser administrative hassle or follow through for employers

Minister of State for Labour and Employment Santosh Gangwar introduced The Industrial Relations Code Bill, 2019 in the Lok Sabha today. The draft code on Industrial Relations subsumes few Acts, such as Trade Unions Act, 1926, Industrial Employment (Standing Orders) Act, 1946 and Industrial Disputes Act, 1947. This is to simplify and harmonise several differences in definitions and application of labour laws across industry, states and companies.

The code if implemented well, can lead to calmer environment in industrial zones, says Aditya Narayan Mishra, CEO of recruitment firm CIEL HR Services. A series of such quick amendments in laws related to trade unions and employment is encouraging. "It showcases the government's action to creating an eco-system for growth and job creation," says Rituparna Chakraborty, Co-Founder & Senior Vice-President, TeamLease.

In law, entitlement of permanent employees, fixed term employees and contractual employees has always been same. But, its emphasis and restating that wages, statutory and social security benefits for fixed term employees at par with regular employees with same job role in the current notification is a just move.

The Bill has kept the previous threshold of 100 employees wherein companies can lay off employees within this number without any approval. But it added in the notification that if any increase is required, rather than it coming to the Parliament, it can be done by the government.

Chakraborty says the general perception was this number would be taken up to 300. Five states have already done that. In this sense the amendment will have limited impact. "Government should have strengthened the retrenchment clause that anybody who is getting laid off gets a minimum set of entitlements. But, asking employers to take government approval for laying off is based on the old view when companies were smaller. Given the scale at which businesses operate today, this amendment is not pro employers."

She also cautions that this change in notification mechanism does not necessarily mean lesser administrative hassle or follow through for employers. This is likely to impact companies in and related to manufacturing sector.  

"This new process is equally cumbersome and will handcuff employees," says Chakraborty. She adds that that it will instill fear of failure in startup founders and future entrepreneurs which isn't encouraging for job creation.

The bill has asked companies to create a re-skilling fund to be utilised for upskilling workers who are asked to leave. Layoffs usually happen due to skill issues or company performance. Creation of a retrenchment fund is a welcome move, says Mishra of CIEL.

Trade unions feel the code is opposite to expectations of working class. Amarjeet Kaur, General Secretary, All India Trade Union Congress says, "This code is to tame and cripple unions by weakening instruments of collective bargaining including the right to strike, right to represent interests of workers, specially unorganised sector which is more than 90 percent of workforce. The code justifies fix term employment as against job security won over with several decades of struggle."

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