A senior government official told ET that since the majority of states are on board, the Centre does not see any big challenge in rolling out the codes.
“Once the old Acts are repealed, automatically new codes will prevail. If these states want to attract investments and create jobs, they will have to eventually align with the central policies,” the official said, adding the Centre will continue to address any legal challenges that come up in the way.
As per the labour ministry’s monthly progress report, eight states and Union territories – Meghalaya, Nagaland, Tamil Nadu, West Bengal, Lakshadweep, Sikkim, Andaman & Nicobar Islands and NCT of Delhi – are yet to pre-publish draft rules under one or more labour codes.
In order to improve the ease of doing business and move towards universal social security, the government had consolidated 29 central labour laws into four labour codes. These include the Code on Wages, 2019, the Industrial Relations (IR) Code, 2020, the Code on Social Security (SS Code), 2020 and the Occupational Safety, Health and Working Conditions (OSH&WC) Code, 2020.Saraswathi Kasturirangan, partner at Deloitte India, agrees that the reluctance of a few states will not impact the rollout and the accruing benefits of the codes.”States not issuing rules under the new labour codes may not be a show-stopper since many provisions, even today, are governed by central Acts like the provident fund, gratuity, etc,” she said, adding that even under the current laws, many states have not issued rules despite labour being a concurrent subject.
Impact on investments
Dorothy Thomas, partner at law firm Shardul Amarchand Mangaldas, is of the view that the rollout of the codes may result in continued agitation of labour unions in heavily industrialised states such as Tamil Nadu and West Bengal with a high degree of collective bargaining culture.
“However, investments in such states would not be impacted as it is largely attributed to the pre-existing infrastructure and the trained labour available in these states,” Thomas said.