Restructuring India’s Labor Law Framework

The COVID-19 pandemic has resulted in leaving millions of laborers in India

unemployed. This demonstrates the failures of the Indian labor law framework
and the weak implementation of the laws. Even with an extensive network of
legislation to protect labor rights, there is no hope for social security or
economic benefits in times of uncertainty. There has been a closure of
factories, workplaces, and industries for the past few months to contain the
spread of COVID-19.
There has been a clear order by government advisories requesting the
retention of contractual workers, allowing sick leaves, and payment of full
wages. Despite all these requests employers have proceeded with salary
cutback orders which has resulted in one in four Indians being unemployed.

The constitution of India is the cornerstone of ​individuals'​ rights and liberties, it

provides a basic framework with which all the laws should operate, including
the laws related to labor and employment.
Given the changing economic requirements in recent times, the Indian
government has been slowly and steadily working on the restructuring of labor
laws to improve the ease of doing business in India. There are several
high-end reforms in the channel, which we hope will see the light of ray in the
next few years.

5 main key-points in Indian labor laws:

● Labour and employment laws are listed under the concurrent list
in the Indian constitution, which means the Union Government
and State Governments have co-equal power to enact laws
relating to all labor and employment matters in India.

● Indian labor law distinguishes between employees who are

defined as ‘workmen’ and ‘non-workmen’.
 ● India does not generally recognize employment-at-will.

● Trade unions are restricted to more traditional forms of

businesses such as the manufacturing sector but in recent times
we can see some unionization in the Information Technology (IT)
sector as well.

● The Equal Remuneration ACT, 1976 mandates the payment of

equal remuneration to male and female workers who undertake
similar work.

Even though Labour and employment laws are listed under the concurrent list,
there are hundreds of legislations relating to labor and employment out of
which around 50 are enacted by the Union government. Most of them are
concerned with blue-collar employees or workmen giving more emphasis on
improving working conditions for these employees.
While, on the other hand, not much emphasis is given to the legal structure
relating to non-workmen and most of the laws are evolved mainly through
judicial pronouncements not by parliament. The Equal Remuneration Act has
gradually helped in reducing the gender wage differentials but we can see that
the gender wage differentials are high at the higher end and low at the lower
end.
COVID-19 lockdown has forced several State governments to suspend the
labor laws for a few years. This is one of the moves in hope of attracting
capital investments and reducing the widespread unemployment and
socio-economic unrest.

According to economists and analysts, removing labor laws hasn’t seen any
progress in attracting long-term capital, and reducing unemployment,
however, its constitutional soundness and economic efficacy are still a
question. Moreover, before suspending the existing labor law framework, state
governments should think if the new flexible labor regime would incentivize
additional capital investment and will it help in creating more employment.
Empirically, it has been established that flexibility in labor laws does not
correlate with capital investments which can help create jobs. Similarly
eliminating workers' rights does not guarantee improving unemployment rates.
On the contrary, well-established and well-protected labor laws help in
producing productive workers which trigger capital inflows in new industries.
Indian labor protection framework is focused on government enforced-rights
rather than empowering labor collectives. The main focus has always been on
an agreement framework, which has suffered from a lack of implementation.
The main focus should be on changing the stringent employer agreements in
a workplace environment to empowering labor collectives and giving them
powers to negotiate for their wages and working conditions in a just, flexible
and transparent manner.
It will help both employers and workers to engage and regulate their terms of
work in line with existing economic conditions that are best suited for both
employers and workers. Better working conditions, job security, and a
guarantee of wages would incentivize Indian workers to return to core
manufacturing regions to begin their work again provided the necessary
long-term safety net.
Solution:

● State Governments should be given equal rights when it comes

to legislation related to law and employment. Similarly, the state
government should be involved in every law-making process.

● The government​ should focus equally on workmen and

non-workmen; more emphasis should be given to non-workmen
in the situation of crisis.

● The Equal Remuneration ACT​ should be implemented in all the

workplaces irrespective of working conditions. Women and men
both should be paid equally for the same work.

● All the laws must be followed and checked upon by the

government and strict legislation should come into ​the ​practice to
punish those who are violating the rights of the workers at their
workplaces.