Budget 2022: All eyes on labour codes implementation

One of the biggest impacts the upcoming Union Budget 2022 may have on employees and organisations could be in the form of announcements around the four proposed labour codes, the implementation of which has been long delayed. 

India Inc. has been awaiting clarity on their implementation as the rules, if brought into effect, are expected to increase the cost burden for companies. “The rules are likely to impact take-home salary of employees, working hours, and the number of weekdays,” said Aon’s partner for human capital business, Roopank Chaudhary. 

Conglomerate ITC’s Head of Corporate Human Resources Amitav Mukherji told Business Today he will certainly be watching out for “anything on labour codes implementation” in the upcoming Union Budget to be presented by Finance Minister Nirmala Sitharaman on February 1.

The government has proposed four labour bills -- Wage Code, Occupational Safety, Health and Working Conditions Code, Social Security Code and Industrial Relations Code -- to rationalise 44 central labour laws. The codes passed between 2019 and 2020 were originally planned to be implemented from April 1, 2021. Some of its provisions include statutory floor-level minimum wage and provision of gratuity based on the new wage definition which caps allowances at 50 per cent of the wages.  

“Budget 2022 should focus on implementing the new labour laws in a well understood and methodical way. The State labour rules have to be aligned with the Central rules to avoid any ambiguity. Clarity should be provided for the licensing process. Staffing companies having presence in more than one state should be provided with a national licence,” said staffing and recruitment firm Randstad India in its Budget recommendations. 

The Labour Ministry has finalised the rules under the four codes. However, both the Centre and the states have to notify the rules under these codes to convert them into laws as labour is a concurrent subject. The states are in various stages of progression on the codes. 

Union Labour Minister Bhupender Yadav in a reply to the Rajya Sabha in December 2021 had said that 24 states/UTs have pre-published draft notifications on The Code on Wages, 20 states/UTs on The Industrial Relations Code, 18 states on The Code on Social Security and 13 states on the Occupational Safety, Health and Working Conditions Code. 

The central government notified the Code on Wages, 2019, on August 8, 2019. It notified the remaining three codes on September 29, 2020.