Big Breather for India Inc. as government Defers Implementation of Labour Codes

April 08, 2021

The government has deferred implementation of labour codes beyond April 1, citing delay on the part of states to finalise Rules. The move is expected to give more time and bandwidth to companies to re-tweak their salary structures and other human resource (HR) policies.  Certain provisions of the Code would have led to an increase in employee costs for the companies. A senior labour ministry official told ET that the government wants at least some industrial states, along with the Centre, to release Rules across four labour codes  to avoid any legal void. So far, only Jammu and Kashmir have released Rules for the codes while Uttar Pradesh, Bihar, Uttarakhand, and Madhya Pradesh have put up draft Rules for two Codes and Karnataka for one Code. The delay in implementation of labour codes is a breather for India Inc as resurgence of COVID cases in major industrial states have raised apprehensions that the economic recovery seen so far could be stalled or even reversed if the cases continue to go up. Companies had started preparing for changes based on the provisions of the Codes and the draft rules. Experts feel the Centre should have better helped states in firming up their Rules.