The Centre is hoping that the much delayed Labour Codes are implemented in the next three to four months with most States having finalised their own draft rules and deliberations are ongoing on the way forward.

According to sources, “Barring a few, almost all States have now finalised their draft rules. It would be ideal if the Codes can be rolled out over the next few months.” The Centre would hope to have the codes implemented before the end of the current fiscal.

“We are in July, with most of the work now completed. The Codes can be implemented by October or November,” another source said, adding that discussions with all stakeholders including employers and trade unions have been completed.

Problems in mid year roll out?

Most companies and employers had anticipated that the Labour Codes would be implemented from the start of the current fiscal and had also revamped their salary structures and plans accordingly.

However, “A mid year roll out of the Code could be challenging as it would lead to problems in computation of bonus, etc,” said an expert who did not wish to be named, adding that implementing the Codes from the start of the fiscal year would be ideal.

However, with elections coming up in 2024, it is to be seen whether the government would choose to implement the Codes in 2023 as they are also an emotive issue, he further noted.

Labour laws codified

In order to streamline and modernise the plethora of labour laws, the government had codified them to replace 29 labour laws into four codes. These include Code on Wages, Code on Social Security, Occupational Safety, Health and Working Conditions Code and the Industrial Relations Code. The Labour Codes are one of the most long pending and much awaited reforms of the government.

Amongst various measures, the new Codes would rework the wages and provident fund calculations through restructuring of salaries. It would also improve ease of doing business by permitting firms with up to 300 workers to decide on lay-offs, retrenchment and closure without government permission.

The Parliament had passed the Code on Wages in 2019 and the other three Codes in 2020. They were initially expected to be implemented from April 1, 2021 but were delayed due to the Covid-19 pandemic. It was then expected that these would be rolled out from April 1 this year but with many States yet to finalise their rules, they were pushed back again.

Union Labour Minister Bhupendra Yadav had in April this year exuded confidence that the Codes would be implemented soon as around 90 per cent of States have already come out with draft rules.

Labour is part of the Concurrent List of the Constitution and both the Centre and States have to draft their own set of rules.