Having an enthusiastic worker benefits companies, and labour laws were made for their well-being. The earliest labour laws in India were framed in the late 1940s to safeguard the interest of workers across various sectors and industries. With the evolution of industries and their working environment, the laws were reformed in tandem to generate more employment and ease the environment for conducting business. For the past 18-20 years, the reformation of the multiple labour laws into a unified set of codes had only been a matter of discussion basis the reports submitted by the National Commission of Labour.
The Central government is planning to implement a series of new labour laws from July 1, 2022. The new rules, once implemented, will bring massive changes to all industries and sectors in India. Under new labour laws, the regulations related to working hours of employees, provident fund and salary structures will see drastic changes.
For a while now, India has been in the process of introducing changes to labour laws. There are multiple drivers for these reforms. At the forefront comes the factor that we in India need a set of standards and detailed labour laws. Social equity, social security, and ease of doing business are other policy objectives driving these reforms.
As per reports, 23 states have framed state labour codes and rules based on the new Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020, all of which have been passed by the Parliament. These new labour codes are authored basis of International Labour Organization (ILO) standards and a consultative process involving various stakeholders.
Significantly, Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Odisha, Arunachal Pradesh, Haryana, Jharkhand, Punjab, Manipur, Bihar, and Himachal Pradesh and UT of Jammu and Kashmir are the states that have framed rules under new labour laws.
Working Hours and Days Off:
Under the new labour laws, one major thing that is likely to be implemented is the change in workdays. Once the new rule comes into effect, companies will be able to make employees work for four days instead of five, and there will be three weeks offs. However, there is a catch to it. Employees will need to work for 12 hours a day instead of eight, since work hours will not get reduced. This will be applicable to every industry but may change from state to state depending on the rules set by a particular state.
PF Contributions and Take Home Salary:
Another major change that this is going to bring in is the ratio of the take-home salary and the employee’s and employer’s contribution to the provident fund. As per the provision of the new codes, the basic salary of the employee will have to be 50 per cent of the gross salary. While this will mean that PF contributions of the employee and employer will increase, the take-home salary will decrease for some employees, especially those working in private firms. The money received after retirement as well as the gratuity amount will also increase under the provisions of the new draft rules.
The central government under the new labour laws also wants to rationalise the leave an employee can avail during his or her tenure at a company. The policy of carrying forward leave to the succeeding year and encashment of leaves are also being rationalised. The government is also recognising the work-from-home structure, which has become prevalent during Covid-19, in its draft model applicable to the service industry. On the other hand, the new labour codes have increased the eligibility requirement for leaves from 240 days of work to 180 days of work in one year. This means that in order to be eligible for getting a leave, an employee has to work for 240 days after joining a new job.
Several countries such as Spain, Japan, New Zealand, Ireland, Scotland, and Iceland have already implemented the four-day workweek on an experimental basis. However, this was possible only by reducing the number of weekly working hours. Nothing in the law in India prevents an employer from reducing the number of working hours in the week and, thereby, having a four-day work week. In India, the government may try and bring about an appropriate notification to explore the option of a four-day workweek on an experimental and voluntary basis.
A four-day work week in our corporate world, though it sounds exciting, is a concept that needs to be well-deliberated and well analysed, going in-depth into how it can impact the well-being of the people and their productivity.
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