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Changing Indian Labour Law Audit Landscape

India is a big country and has lots of local and foreign companies employing skilled, semi-skilled and unskilled workers in various profiles. This country is currently in the process to introduce significant changes in its labour laws. Multiple drivers exist for such reforms. Entrepreneurs interested to start a new business or on the process of expanding it and hiring new staffs should be aware of the changing labour law landscape.

Know the multiple drivers

The first is to recognize that the country’s economic development is predicted on well-administered and well-articulated labour laws. The other vital policy objectives that tend to drive such Labour Law audit reforms include ease of performing business, social security and social equity. It is very much important to be aware of the changing laws in this particular aspect to ensure being on the right side of it to avoid penalties and fines.

Indian labour laws

According to experts, labour laws in the country were already due to get reviewed. It was about a couple of decades ago that such reforms began its journey. These reforms are stated to culminate finally into four major labour codes. It includes health and working conditions, occupational safety, social security and wages. Also are included industrial relations. The new labour does have been authored based on ILO (International Labour Organization) standards. Labour laws compliance is an absolute must by every organization operating its business in the country.

Considering numerous aspects

Also are factored several international best practices. To boost Legal Compliance, it includes introducing inspector cum facilitator. The new labour codes, once it gets into affect is expected to replace approximately 29 existing central government regulated labour laws. This will only have a tremendous effect upon labour laws implemented by the respective state governments. A few include augmenting employee benefits considering workers’ rights protection, wages for computation, balancing employee rights and employer duties, introducing social security for those self-employed, digitization of enforcement and Legal Compliance.

Augmenting employee benefits

Socio-Demographic studies conducted have revealed that a good part of the population is likely to live longer. Eventually, there is a need to rely upon a well-structured social security system allowing people to enjoy reasonable life quality. This is more so once they become economically unproductive. Thus, the government is trying to bring in much wider and comprehensive social security coverage for all citizens. The objective is also enhancing social security benefits. This automatically prompts all organizations to understand the changing labour laws landscape and abide by it.

Proposed labour codes

Employee benefits according to the proposed codes require calculation of all employee benefits on reference ‘wage’. This is as has been defined by labour codes. The existing practice to calculate on basic salary only will be done away with. All salary components under this new definition except specific exclusions get covered. A ceiling is also present on exclusions of 50%. This means, gross remuneration of 50% is likely to be covered for all employee calculations for benefits under wages. New and existing organizations should hire legal experts to ensure the changing laws are adapted as and when it is launched.
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