PM puts labouring efforts on the right track with the onus on states !!!!
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Compliance with labour and employment laws has become one of the most important issues that many establishments in India have to deal with. Many employment disputes result in litigation. 

Karma is an Indian HR, Payroll, and Compliance firm advising clients worldwide on local, regional and global regulatory compliances in relation to their business goals, business strategies, and resolving disputes.

It gives valuable suggestions and advice to corporates, investors, institutions,  contractors, establishments, industries, etc. on the need for lowering employment risk across all levels and adhering to the laws of the land.

It has a lot of expertise on employment-related compliance issues, as well as day-to-day support for the human resource department and in-house counsels.

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PM  addresses the National Labour Conference of Labour Ministers of all States and UTs on 25th August

Prime Minister has emphasized on the crucial need for a speedy rollout of the four labour codes—in which 44-odd central labour laws have been converted into codes on wages, social security (SS), occupational safety, health and working conditions (OSH), and industrial relations (IR)—at the national conference of labour ministers of states and Union territories held in August 2022.

In this connection, there have been pro reforms and anti reforms brigades, however, the need of the hour is to provide elastic flexibility to adjust the workforce with the ups and downs of the business cycle, while trade unions have been putting spokes in the wheels by resisting any effort to make regulations less restrictive as they considered it an unchecked license to hire and fire!

The present Government has been trying ways and means to grasp the challenges  However, as labour is a concurrent subject, the delay in rolling out these four codes is large because quite a few state governments still haven’t notified them.  Although these laws were passed in Parliament between August 2019 and September 2020, till now, five states still have not released draft rules under the wage code, nine for IR, 10 for SS, and 11 for OSH.





Over 25% of the world’s workers are Indian

300 million young people are set to enter the labour force by 2025

With an average age of 29, India’s population is in the middle of a demographic boom

2020 onwards, when the global economy is expected to run short of 56 million young people, India, with a youth surplus of 47 million, could fill the gap


Why labour reforms are needed?

India is one of the largest democracies and with its  current population estimated to be 1.412 billion people being almost 17.7% of the world’s population, it becomes all the more important to create avenues for growth and employment

India still has an inherent strength to use its optimum potential to the fullest with  its vast labour force still awaiting exploration of its use productively

Almost 93% of India’s workforce is in the unorganized sector, ranging from vegetable vending to diamond trading.

Also, over the last decade, the compounded annual growth rate (CAGR) of employment has slowed to 0.5%, with 13.9 million jobs created in 2012 when the labour force increased by 14.9 million.   Subsequently, as per the study, the aggregate headcount or employment increased at a CAGR of 3.3% over a four-year period from 2014-15 to 2018-19 compared with a CAGR of 7.5% in the gross domestic product (GDP) during this period. In terms of growth in employment on an annual basis, it was 2.5% in 2015-16 and 4.1% in 2016-17

Therefore, there is a case that supports the argument that employment growth has not been commensurate with GDP growth with a difference of 4.2% in CAGR during this period,” the study showed and thus the urgent need for acceleration and the dynamic option is LABOUR REFORMS

It showed that around half the companies had witnessed a decline in growth in employment over this time period while 35% of them had witnessed a growth of 11.5% on the aggregate each with an above.


What has the government done?

ShramSuvidha, a unified labour portal scheme, has been launched to provide timely redress of grievances and facilitate self-certification by the industry.

More transparent labour inspection regime, with inspection reports uploaded within 72 hours.

A focus on cutting down red tape, by amending nearly 40 Central and 150 State labour laws, has been launched, with significant consequences on hiring and firing

Proposals for exempting small-scale industries, employing up to 40 workers, from 14 basic laws, including the Factories Act, the Industrial Disputes Act, and the Maternity Benefits Act, are being considered.

Amendment in apprenticeship act.


What is the need of the hour?

Enabling conducive environment should be provided so that more and more opportunities  can be created with an appealing job market

The labor law must be rationalized by defining minimum wages and linking them to inflation. Minimum wages ought to be revised annually, with penalties for their violation dramatically raised

With no labor laws applying to apprentices, care must be taken to ensure that they are not transformed into contract labor.

Contract laborers and unorganized sectors must be protected and brought into the fold

A modern labor law that encourages employers to keep more workers in formal roles, with work-linked wages and social security benefits is vital.

The dispute settlement mechanism should be simplified

Self-certification of compliance should be given much more prominence

Contribution of the manufacturing sector to employment must be increased with substantial sops given to employers


Features of the 4 prominent codes:

Betterment and empowerment of the labour community

Equivalent, timely payments

Introduction of floor wages

Health and wellness facility

Freedom of contractual agreement

Abolition of gender discrimination


Let us get a brief  description of the following codes:

The social security code – The social security code ensures the maintenance of the social security of the working class. This code includes 9 prominent laws concerning the social welfare of the labour community. Under this code, the government of India has planned to introduce various social security schemes such as EPF, EPS, and ESI. These schemes are solely dedicated to the empowerment of the labour community in all the working sectors.

Also, the social security code has set the provision to provide a security fund for the workers. This provision would be applied to workers working in unorganized sectors. The workers may also get the benefit of working for only 4 days a week instead of 6 under this scheme.

The code of wages – Under the code of wages, which was notified in 2019, there are provisions of 4 laws. The 4 laws are the Payment of Wages Act, the Equal Remuneration Act, the Payment of Bonus Act, 1965, and the Minimum Wages Act.

Under this code, the labour community is liable to receive timely and uniform payments along with a minimum floor wage. The floor wage is the minimum amount that the worker should get based on their Condition of living and standard of lifestyle. The floor wage of each worker has to be determined by the Central Government after considering their standard of living. The State Government of every state must maintain the floor wage, and it must be ensured that no worker gets paid below the floor wage amount decided by the Central Government. This code also prohibits gender discrimination and encourages equal pay for the same work.

The health and working conditions code (OSH) – This code has been introduced to look after the health and wellness of the labour class.

This code comprises 13 existing labour laws. This code applies to two types of factories. The factories have an electric supply and a minimum of 20 workers working with the help of electricity. And the factories have at least 40 workers working without electricity.

This code compels the supervisor to maintain and look after the safety of the working premises. The health and working conditions code makes the employer supervise the working premises thoroughly. Along with this, all the workers would avail of the facility of free annual health check-ups.

The industrial relations code – This code includes 3 existing labour laws and applies to individuals earning less than 18,000 per month. Under the provision of this code, employers would be able to hire workers both permanently and contractually. Moreover, this code ensures that the contractual or temporary workers would be able to receive the same payments, opportunities, privileges, and facilities provided to the permanent workers.


These are the four codes passed by the central government for the amendment of the existing labor laws, which have remained unchanged since Independence 15th August 1947. Though the code suggests working entirely in the interests of the labor community, there have been certain criticisms too. Though these codes have not been enforced yet, they have been already considered and are soon expected to be successfully implemented all over India.

The Central power has drafted the modifications made to these four codes, but no complete response has come from the State Governments, which is the main cause for the delay. The majority of the  Indian states have forwarded their draft and final rules. There has been no update from the other Indian states regarding the labor reform in some the States.

The Conference was convened in the spirit of cooperative federalism to discuss various significant labor related issues. It will help create further synergy amongst the Centre and State Governments in formulating better policies and ensuring effective implementation of schemes for the welfare of workers.


The Conference had  four thematic sessions:

integrating the e-Shram portal for onboarding social security schemes to universalize social protection;

Swasthya se Samriddhi for improving medical care through ESI hospitals run by State Governments and integration with PMJAY;

framing of rules under four Labour Codes and modalities for their implementation;

Vision Shramev Jayate @ 2047  with focus on just and equitable conditions of work, social protection for all workers, including gig & platform workers, and gender equality at work, among other issues.

Some of the minor nagging problems on the part of the States have to be resolved at the earliest, some of which are :

Higher PF after implementation of Wage Code


The consequent rise in Gratuity also

12 hours work week – change in working hours

Big changes in Earned Leave policy after new wage code implementation

Full and final payment in just 2 days

Impact on allowance components

CII in its representation recommended clarity on the calculation of wages, especially in defining the basic component. It has also sought that gratuity calculation should be prospective with the new law.

The labour codes propose to define wages with basic pay to be at least 50 percent of total salary, which effectively reduces take-home salaries

Also need to sort out issues on covering informal and gig/ platform workers, providing greater flexibility to employers in hiring decisions without government permission by raising the threshold for the requirement of a standing order – rules of conduct for workmen employed in industrial establishments – from 100 workers to 300 workers.

15 Minutes Overtime Payment

Karma hopes that all these concerns will be addressed and resolved at the earliest so that all the parties concerned viz. Government, Employers and Workers, and  Unions reach out to an understanding to amicably close the imbroglio and move ahead.


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This blog has been compiled by the internal staff of Karma with the knowledge and expertise that they possess, for its monthly newsletter Issue 04 of October  2022 in case of specific or general information or compliance updates for that matter, kindly reach out to the

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