Labour Codes –

what lies ahead?

—
July 2022
 Recent Media Highlights
India's
2 The
new
Financial labour
Express, codes can
Wednesday, July be
20,real
2021 New labour codes from July 1: Full-and-final New Labour Laws From July 1: All You
game-changers. A minister explains how 1 payment to be credited within 2 days, more Need To Know On In-hand Salary,
5The Hindu , September 8, 2021
retirement fund, 3 week offs2 Increased Work Hours3
The new laws are designed to ensure that
interests of both businesses and people who From July 1, new labour codes can be implemented As the Centre plans to implement labour laws
work for businesses are protected. They are in across the country which can impact your inhand from July 1, the in-hand salary, contribution to
tune with the changing labour market trends. salary, weekly offs and daily hours of work. The Employees' Provident Fund, and working hours
Centre has finalised these four codes. Now it is up to could change significantly.
the states to implement them.

New labour codes will impact salary No, Labour Codes are not coming into Labour codes not to kick in from Friday
structure but when will they come into effect from July 15 even as states, UTs frame rules6
effect? 4
The Union government will take a bit longer to
Notwithstanding wide speculations and scattered introduce the much-awaited labour codes even as
While presidential asset has been received for all
news reports, the four labour codes on industrial the majority of states and Union Territories (UTs)
the four codes, the central government is yet to
dispute, social security, wage and occupational have framed rules on them. There were
notify the effective date of operationalising them.
safety, are not coming into effect from 1 July. speculations that these would be introduced from
This being a concurrent subject, it is important for
Friday.
the states also to notify the relevant rules and
regulations under the four labour codes.

3 Republic World, June 25, 2022

1 The Economic Times , June 1, 2022 2 The DNA India, June 30, 2022
6 Business Standard, July 1, 2022
4 The Economic Times , June 28. 2022 4 Moneycontrol, June 30, 2022

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Contents
01 Quick recap

02 Where we stand

03 State Rules

04 Conflicting Provisions

05 Clarifications required

06 Implementation Readiness

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01
Quick recap

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Recap
Introduction of
new category of Ease of operation
employees
New beneficial
Uniformity in Rationalisation of provisions for
definition of wages compliances employees and
employer
Replaced/ merged
twenty-nine More stringent
existing Central penalty provisions
labour laws

Labour Codes have been passed by the Parliament and have received Presidential assent; however, they will come into force on the date notified by Central Government.

Schemes, Rules and Regulations are yet to be finalised and notified

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02
Where we stand

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Until now…
The Code on Wages 2019 Central Government has issued
received Presidential assent the draft Central rules for all 4 Labour Codes
in August 2019 Labour Codes
becoming effective?

The Code on Social Security 2020, Industrial Many States and UTs have
Relations Code 2020 and Occupational safety, published draft
health and working conditions Code 2020 rules for all 4 labour codes
received Presidential assent in September
2020

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 Roadmap ahead…

01 02 03
Concurrent List - both Centre and Some States and UTs are to Draft Central Rules to be finalised
State need to make their own rules publish their draft rules yet by Central Government

05 04
Relevant notifications to Draft State Rules to be
be issued by Central and finalized by State Government
State government*
Labour Codes
* Key areas - Floor wages,
go LIVE and
Minimum wages in line with floor OPERATIONAL
wages, Limit for ESI contributions,
Statutory Bonus, Gratuity 06 07 08
(Maximum limit), Scheme for
Modification to online Notification/ Central Government to
Gig/Platform workers etc.
government portals for Clarificatory circulars, if notify the effective date
implementation any, on open issues

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03
State Rules

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Appropriate Government ?
‘Appropriate Government’ means:
A private establishment having
presence in multiple states –
State Rules would be applicable
State Government any other establishment

Mumbai

Central Government
Bengaluru Delhi
xx
ABC
Private
• establishment under the authority of Central Government such as
Limited
railways, mines, oil field, major ports, air transport service,
Chennai Company
telecommunication. Hyderabad
• banking and insurance company
• central public sector undertaking or subsidiary companies set up by
central public sector undertakings
• subsidiary companies set up by the principal undertakings or
autonomous bodies owned or controlled by the Central Government,
including establishment of contractors, corporation or other authority,
central public sector undertakings

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Key areas where State Government will frame rules
Code Code on Industrial OSHW Code
on Wages Social Security Relations Code
• Minimum wages.
• Nomination • Application to Grievance • Annual health examination
Redressal Committee
• Normal working hours
• Registration of an • Format of appointment
establishment • Grievance Redressal letter
• Deductions from wages
Committee composition
• Gratuity recovery • Constituting a safety
• Bonus eligibility
• Registration of Trade Union committee
• Maintenance of records,
• Time limit for wages and
registers and returns • Name of Trade Union • Appointment of safety
bonus payment
officers
• Compounding of offences • Utilisation of Re-Skilling fund
• Appointment of Inspector
• Return filing
cum Facilitator
• Compounding of offences
• Licence and renewal
• Maintenance of registers
and wage slips

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 State Rules update

Source - Economic Survey 2021- 22 Report (status as on 11 January 2022 and respective State labour department website

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04
Conflicting
Provisions

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Overlap of Provisions
Overlapping provision In case of conflict –
what will prevail?
• Labour Codes - Total number of days of leave that may Doctrine of Repugnancy - In accordance with Article 254 of
be carried forward to a succeeding year shall not exceed the constitution of India, if any part of State law is repugnant
thirty days. or conflicting to any part of a Central law which the Parliament
is competent to enact, or to any part of a law of the matter of
• Shops and Establishment - Total number of days of leave
List III, then the Central law made by the Parliament shall
that may be carried forward to a succeeding year shall
prevail and the law made by the State legislature shall
not exceed forty-five days*. become void, to the extent of its repugnancy.

*The Tamil Nadu Shops and Establishments Act, 1947

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05
Clarifications
required

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 Ambiguities
Definition of wages
Classification of Worker
and Contract Labour 1
Clarification – Gig / Platform
workers
6 2 Payment of Gratuity

Payment of wages at
Payment of overtime 5 3 the time of resignation

4
Deduction from
wages

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06
Implementation
Readiness

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Cross -functional Synergy

CEO office IT Team

Compensation and
Human Resource Benefits

Legal Team Finance

Tax Team Compliance Team

Payroll Team / Vendor

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Analyse -Financial Impact

Probable Increase in Increase in Increase in Increase - Increase in

increase - coverage of Gratuity cost - Fixed Leave cost - Gig
PF and ESI ESI term and encashment and Platform
contribution members contractual and workers
employees overtime
(for workers)

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Planning + Preparation = Smoother Transition

1 6
Awareness of stakeholders on statutory
Analyse Financial impact payments

2 7
Review salary structure - Tax and Labour Analyse roles and responsibilities to
code provisions demarcate employee and worker

3 Evaluate alternative compensation structure 8 Review of vendor agreements

4 Review existing HR and payroll policies

9 Align the employment contract

5 Be ready to implement new compensation

structure, process and policies 10 Compliances / Checklist/ Technology

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Thank you!
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