How the new labor codes change the direction of companies; hiring of staff, universal minimum wage, other benefits

The three labor codes approved in Rajya Sabha are expected to cause companies to review their operational and labor structure. It is important for companies to understand the nuances of regulations and improve their readiness to comply with them, said Saraswathi Kasturirangan, partner at Deloitte India. Some areas that companies should focus on include reviewing the employment models the company is adopting, the need for changes to policies and processes, reviewing the salary structure of employees, and determining the financial implications of the changes. Saraswathi Kasturirangan added. .

In the wake of the coronavirus pandemic and a large-scale disruption to the labor market, the government had introduced major changes to labor laws. The Code of Safety, Health and Labor Conditions, 2020; the Labor Relations Code, 2020; and the Social Security Code, 2020 were created by merging 24 core labor laws in a major push for labor reforms. After the approval of the three new labor codes in the upper house, Prime Minister Narendra Modi said the reforms will ensure the well-being of hardworking workers and give a boost to economic growth. The new labor codes have been designed to universalize the minimum wage and the timely payment of wages, giving priority to the occupational safety of workers.

The reforms will contribute to a better working environment, which will accelerate the pace of economic growth, Prime Minister Modi added. He further said that the labor reforms will guarantee “Ease of doing business” and are futuristic legislation to empower companies by reducing compliance, red carpet and “Inspector Raj.”

Although companies may need some time to adapt to the new labor codes, they are expected to provide a cushion for financial problems in certain sectors. One of the main challenges during the current pandemic was the financial stress that large sectors such as retail, IT / ITeS, hospitality, aviation and manufacturing have faced, especially in regards to their affordability to continue paying employees in service and out of service. However, with more than 300 relaxations, they could now stay afloat, said Prashant Singh, Business Head – Compliance & Payroll Outsourcing, TeamLease Services.

In times when India struggles to create enough job opportunities to absorb nearly 50 lakh of new entrants to the labor market each year, new labor codes are also likely to boost job opportunities due to recruitment provisions . It will be easier for employers to seek contract staff rather than handle regulatory complications through unorganized contractors, the lack of which has so far been seriously felt during the income shock and unemployment started by the pandemic, said Lohit Bhatia, president. of the Workforce Administration of Quess Corp.