Does labour laws of India need a change?

Modern labour regulation is what we look forward to but what it offers us is truly disappointing. In our country, India, our labour regulation really needs an upgrade from top to the bottom. Only if the regulations are updated and modernise, it will attract foreign investments which will further lead to the creation of numerous jobs and hence, the economy of India will rise high. But then who will bell the cat? It does not seem to be that easy.

The Desi laws are much disorganised

India has one of the largest labour and industrial environments in the whole world and as a result of it; we need to give more importance to this area. However, what is being done by the body of legislation is not up to the mark.

Hereunder mentioned are few age old, chaotic and self contradictory Acts, which more than benefiting the common people; put them into legal doldrums.

• Beedi and Cigar Workers Act, 1966

• Trade Unions Act, 1926

• Minimum Wages Act, 1948

However, the Industrial Disputes Act, 1947 is hugely referred in today’s modern labour law industries and it is still considered as the most important weapon in the legal battle for both the workman and the company. Just before the independence of India, the Industrial Disputes Act, 1947, in short known as the IDA, came into existence with incorporation of certain rules and regulations regarding the method and procedures of hiring and firing related to the industrial sectors. This Act is supposed to make it difficult for the company to fire anyone.

The Industrial Disputes Act, 1947 went through an amendment during mid-80’s. Now any company with more than a hundred workers, need to take State Government’s permission before firing workers. How many of them actually do that is another question!

However, this Act has indirectly harmed the growth of industries like the manufacturing sector. Most of the Indian Labour laws (including the IDA) do not give you the permission of free contracting.

If a fashion garment manufacturer, whose demand is always unpredictable, wants to hire workers at a higher price because of the rise in sudden demand but also wants to make it clear that they serve a month’s notice or so and terminate the service of the workers, in case the demand goes down. But in this situation, the India labour law becomes a hindrance.

A contract like this is not feasible and has no legal value since the Industrial Disputes Act clearly specifies how and when the workers may be retrenched. Thus we do not see these kinds of contracts. Initially these labour laws seem to favour the poor workers and their interests.

Chances of possibilities

Hundreds of companies do not hire eligible workers, with a fear that they will not be able to lay them off in case of need. Then why hire these workers initially? This leads to a good number of unemployment too. Many foreign companies do not feel comfortable in investing in India as they think that it is not feasible to do business in the current legal scenario of India.

However, there is no such data post 1980 which shows that the number of workers engaged in companies with 100+ workers have reduced. This reflects the market’s response towards the amendment made in the Industrial Disputes Act during the middle of 1980.

Companies, which are considered to be in a more economically stable position than a worker, should not be given the opportunity to retrench the service of a worker at their own sweet will. But on the other hand, companies should be allowed to enter in different kinds of contracts as per the need and circumstances of a particular situation.

A company can offer you a meagre salary but with a life long assurance of work, whereas, another company can give you lucrative salary with a possibility of being kicked out from the company by a very short period of notice. Choose whatever you feel like, but the opportunities of entering into such types of contract should be given to both the workman as well the company.

Strict rules regarding the “hiring and firing” policy across the globe

The Work Bank has conducted a research on the hiring and firing policies of companies across various countries and 100 points were given to the country which has the most rigid rules regarding the employment policy.

India scores 48 and ranks among the countries with most unfavourable labour laws. China is moderately below India with a score of only 30 but surprisingly Singapore’s score in very near to zero. Now it is proved that most nations with less rigid labour regulations are more economically efficient than other countries.

Governments need to encourage and make understand the workers about the need and essence of reform of labour regulation. It is the responsibility of the Government to convince the workers to support the reform procedures. But this reform will only be successful, if the Governments assure the workers of some complimentary policies which will provide the social security and benefit in the welfare of the workers.


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