Striking balance between Industrial and Labour Rights to Achieve ‘Ease of Doing Business’

India, being the second-most largest populated country in the world is emerging as the fastest and biggest economy and has the potential to become the third largest economy after United States and China in the span of 30 years. India, a developing economy is a favorable place for the foreigners to invest in. Business flourish only in the environment where there are less expensive and less time consuming legal processes and there is business friendly environment. According to the World Bank’s Ease of Doing Business, 2020 India rises to 63rd Rank out of 190 countries from 77th Rank in 2019. The efforts of India to make a business run easier in the country are appreciable. India is one among the top ten economies which have shown a major improvement in ease of doing business along with China, Kuwait, Tajakistan, Pakistan, Saudi Arabia, Nigeria, Bahrain, Togo and Jordan.

India aims to build $5 trillion economy by 2024. There has been lot of improvement in the World Bank’s Ease of Doing Business Rank in the leadership of Prime Minister Narendra Modi. From 2015, PM Modi has emphasized on his “Make in India”, “Skill India” and “Digital India” campaign and has focused and worked upon making India, a self-reliant country, i.e. Atmanirbhar Bharat. Digitialisation is the great step towards making the legal compliances and requirements for running business easier and attracts the talented and skilled mind for start ups.

“India is a heaven for those wanting to invest; we are working on the ease of doing business in the country.”

-Narendra Modi

Few years back India was among the countries which did not attract much foreign investment due to the complexity and multiplicity of the laws and legal regulations, compliance procedures, unreasonable delays in approvals and registrations, different levels of payment, numerous departments or authorities to deal with which discourages the entrepreneurs to invest their finances.

It is believed that the labour reforms will give a big push to the investment and will improve the ‘Ease of Doing Business’ index of India. The new labour codes were proposed with a view to subsume 25 Central Government labour legislations governing industrial relations, occupational safety, health and working conditions and social security for the workers. These improvements in labour laws reduces the complexity and reduces the internal contradictions, increases the flexibility in regulations and modernizes the rules for the safety or working conditions for employees and workers. The growth of the labour sector has not only regulated and made it easy to comply with the regulations but has also promoted transparency in the operations of the business and improved the cost-effectiveness.

The labour is a subject in the Concurrent List of Schedule 7 of the Constitution. Thus, the State and the Central Government both are empowered the legislations governing wages, employment, social security and industrial relations of the workforce. Labour laws in India are evolving to resolve the long-standing issues and to adapt to the needs of the changing labour markets and the business models. Such as the proposed Code on Social Security 2019, has identified and seeks to regulate the platform or gig workers like Uber or Ola drivers and food delivery agents who were earlier not covered under any security legislations.

The complexities and innumerable compliances in the labour legislation in India was the stumbling block for the entrepreneurs interested in establishing the business in India. Central Government took various initiatives in the year 2019 to refine, consolidate and simplify the countless number of the labour law legislations in India. These all labour reforms are made for achieving the objective of improving the ‘Ease of Doing Business’ for the country. The codification of the different labour laws has reduced the multiple definitions and authorities under different Acts without changing the basic objective of workers welfare and benefit. The codes provide for 'one labour return, one license and one registration' to smoothen compliance. The Central Government under the directions of Prime Minister Modi is now focused to digitalize the labour compliance processes.

In order to consolidate the labour laws in the country, four codes have been formulated by the Central Government which are yet to be brought to implementation. These are:

1. Code on Wages, 2019: This Code has been formulated with the object of replacing the already existing enactments such as Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965; and Equal Remuneration Act, 1976. The Code has been enacted by Parliament and received the presidential assent on 8th August, 2019 but is yet to be enforced by the notification of the Central Government.
2. Occupational Safety, Health and Working Conditions Code, 2020: The Code seeks to replace the labour laws which dealt with the safety, health and the working conditions of the workers and employees. These laws included Factories Act, 1948; Mines Act, 1952; Contract Labour Act, 1970; Inter-State Migrant Workers Act, 1979; and Dock Workers Act, 1986. The Code has now been passed by both Lok Sabha and Rajya Sabha. The Code has focused on providing the safe and healthy working conditions for the workers. It has also fixed 8hours or 6 days a week for working in any industrial establishment. The Code has made certain changes in respect of women and transgenders right of work and has thus empowered them to do any kind of work at any time as they desire.
3. Industrial Relations Code, 2020: This Code seeks to replace the Industrial Disputes Act, 1947; Trade Unions Act, 1926; and the Industrial Employment (Standing Orders) Act, 1946.

The Code was earlier introduced in November, 2019 but it was withdrawn and the new Code with certain modifications has been again introduced in Lok Sabha on 19th September 2020. The Code has been passed both by the houses of Parliament. The Code proposes to protect the workers right to form union, to minimize the disputes between the employers and the workers and also provides provisions for investigation and settlement of the industrial disputes. It aims to balance the rights of the employers and the workers for achieving increased productivity and effectiveness in the operations of the business. The basic objective behind introducing such a labour reform is to promote the industrial peace and harmony in resolution of industrial disputes or conflicts of interest. Such a harmony and cordial relationship between the employers and the labour force is essential for the economic growth of the nation. Easy settlement of industrial disputes and the cooperation between the employers and workers also makes the business environment favorable and the boosts the investment on the economy.

• Hire, Fire and Retrenchment: The Code of 2020 has made it easier for the companies to hire and fire workers without the prior permission of the government. The organizations up to 300 workers need not compulsorily frame the rules of conduct of workmen employed industrial establishment. If the employer is in need of workers within one year of retrenchment of workers, he will prefer the retrenched workers over other persons. The company or organization of more than 300 workers is also required to prepare the standing orders on certain matters relating to employment.
• Right to Strike: The Code has amended the provisions relating to the strike by labour unions and now the workers who want to go on a strike for some issue has to give the prior notice of 2 months, i.e. 60 days to the employer and if the matter is pending before the industrial tribunal then the workers can’t go for strike for 60days after the matter has been concluded.
• Fixed Term Employment: The Code provides the right to the employer to enter into fixed term employment through a written agreement with the worker and then the employer shall be responsible for providing all the statutory benefits to the worker as of a regular employee. This will benefit the employer as well as employee as he will be entitled to social security and the wages at par with the regular workers and employer can therefore employ the workers on the basis of requirement.
• Negotiating Union and Negotiating Council: The Code prescribes for constitution of negotiating union and council for the purposes of negotiating between employer and workers. Every trade union having the support of at least 20% of the workers of the industrial establishment shall have one seat in negotiating council.
• Voluntary Arbitration: The Code contains provisions according to which the employers and the workers can voluntarily take course of Arbitration for the settlement of the industrial disputes through a written agreement. After the investigation and hearing both the parties, Arbitrator will pass an arbitral award and submit that to the Government. Industrial disputes are related to employment, non-employment, dismissal, retrenchment or the termination of workers.
• Resolution of Industrial Disputes: The conciliation officers may be appointed by the Central or the State Governments to mediate between the parties at dispute and promote the settlement of industrial disputes. The Conciliator will conduct the investigation and the proceedings for arriving at the fair and peaceful settlement of the industrial dispute. In case, the conciliation proceedings do not settle the dispute, the parties may apply to the Industrial Tribunal constituted under the Code of Industrial Relations. The industrial tribunal shall have one judicial and one administrative member. The Code also provides that the National Industrial Tribunal may be constituted by the Central Government for the settlement of industrial tribunals which involves the question of national importance or if the dispute could impact industrial establishments of different states.
• Re-Skilling Fund: The Code has prescribed for setting up of the re-skilling fund for the retrenched workers training. The employer shall contribute fifteen days wages of the worker before his retrenchment into this fund and it shall then be credited to the workers account within 45 days of retrenchment.
4. Code on Social Security, 2020: The Code passed by both houses of parliament in September, 2020 and after the presidential assent it will subsume nine social security laws including Maternity Benefit Act, 1961, Employees Provident Fund Act, Workmen Compensation Act, Employees Pension’s Scheme, and others. This Code has for the very first time covered the workmen from the unorganized sector such as migrant labourers, gig or platform and agricultural workers under the social security schemes such as EPF, Gratuity, etc.

Conclusion

For any business organization to run efficiently and grow, the business environment should be designed so as to give opportunities for investors and business to expand. India is one of those countries who have shown remarkable improvement in the past three years and their regulatory reforms have made it easier to do business in India. In order to smooth the operations of the business and keep the economy on track, there must be the cordial relations between the industrial and labour rights. The country needs to grow economically but it should not be at the cost of the rights of the workforce. Thus, the three codes now passed by both Lok Sabha and Rajya Sabha in September, 2020 are aimed to provide flexibility in the restrictive and numerous labour laws at Centre and State levels and will eventually facilitate ease of doing business in India.

India now aims to be among the top 50 rankers for ease of doing business and is working upon making India the most attractive destination for investors. We hope the business strategies or policies of the Government will not be confined to the metropolitan cities only and the Indian economy will grow as a whole benefitting every area be it a big city or the rural sector of the country. Thus, concluding that the optimal balance between the industry and the people who are the backbone of the industry, i.e. its workers is essential for achieving the ease of doing business in India.

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