Two labour codes finalised by labour ministry may be tabled in monsoon session

New Delhi: The labour ministry has finalised two labour codes that will give flexibility to state governments on rules related to hiring, retrenchment and fixing work hours in factories and establishments while imposing curbs on workers to form unions.

The quick roll out of these two central legislations would allow industrial states to tweak their work-related rules and allow factories to continue production with minimum workers as labour shortage continues.

Sources told ET that the code on occupational safety, health and working conditions (OSH&WC Code) and the industrial relations code (IR Code) would give autonomy to states to amend labour laws to suit their industrial needs and attract investments through labour reforms.


This would pave the way for states to allow fixed-term employment across sectors, increase the threshold on contract workers for obtaining a licence, and increase work hours or enhance the upper limit for seeking Centre’s permission to retrench workers.

This flexibility is expected to help industries hire labour as required, which would create more employment.

States could even temporarily do away with the bonus for workers as the two codes give powers to “appropriate authority’’ to make amendments to Central laws through simple notifications.

“The bills will be tabled in the upcoming Parliament session in August,” a senior government official confirmed to ET. “However, the last code (in all four codes) on social security is still pending with the standing committee on labour and the ministry is not sure if it would also be tabled in the coming session,” the official added.

ET has learnt that the parliamentary standing committee on labour is finalising its recommendations on the Social Security Code and is likely to submit them by end of this month.

However, the labour ministry could take some time to incorporate the recommendations of the standing committee before finalising the code.

“These two laws will give legal protection to the consumer-driven sectors where production needs to ramp up for the festive season,” Suchita Dutta, executive director of Indian Staffing Federation, said.

“It will help industries increase output several fold with flexible work arrangements put in place.” However, labour expert KR Shyam Sundar is apprehensive if the codes will plug the loopholes and address the labourrelated shortcoming in the existing labour laws, which have become apparent after the Covid-19 pandemic.

“Government should review the two Codes in the light of Covid-19 pandemic as these codes in the present form will not help maximise labour welfare and help economic growth,” Sundar said.