Govt plans big labour reform push in monsoon session

The government plans to table four labour reform bills in the upcoming monsoon session of Parliament that are designed to promote industrialization while protecting workers’ rights, labour secretary Shankar Aggarwal said.

The four bills are the Employees Provident Fund and Miscellaneous (Amendment) Bill, Payment of Bonus (Amendment) Bill, Small Factories Bill and the Child Labour (Prohibition and Regulation) Amendment Bill.

“All the amendments are being done keeping in mind three things—need of the times, workers’ protection and creating an environment for more job creation,” Aggarwal said. “Every year, the country needs to create an excess of 10 million jobs and for that manufacturing sector is key. The proposed labour reforms will help the pace of industrialization while keeping workers’ rights intact.”

Aggarwal said the child labour amendment has already received cabinet approval and the Employees Provident Fund (EPF) amendment is likely to be taken to the cabinet by the first week of August. The other two bills are expected to get approval before 10 August. The monsoon session begins on 21 July.

Under the bonus amendment, the government is looking to increase the wage ceiling for payment of bonus from the current Rs.10,000 a month to Rs.20,000 a month. Once enacted, it will mean all employees who are drawing a salary up to Rs.20,000 will automatically be eligible for bonus if a firm announces one.

“The payment of bonus amendment has been pending for a few years. A few months ago, the (labour) ministry conducted a tripartite meeting on this. Besides the eligibility wage ceiling, the government proposes to increase the monthly bonus ceiling from Rs.3,500 to more than Rs.6,000,” said D.L. Sachdeva, national secretary of the All India Trade Union Congress, a workers’ union.

As part of the EPF amendment, the labour ministry is looking to bring in some flexibility. It wants to make the National Pension System (NPS) an alternative to the EPF and allow small factories to deduct 9% of salary instead of the current 12% for mandatory provident fund compliance. Additionally, it has decided to bring firms deploying 10 or more workers under the ambit of the EPF; the current rule covers firms deploying 20 or more workers. It also wants to club all allowances with basic pay for provident fund deduction by redefining wages. “The Employees Provident Fund amendment bill will be good for both employees and employers,” said central provident fund commissioner K.K. Jalan.

Sachdeva predicts that the bill will run into stiff opposition in the Rajya Sabha, where the ruling coalition does not have a majority. “NPS has several flaws but no one is talking about them. Everybody wants to put poor workers’ money in the stock market or make NPS an alternative. Here, the government’s intention is doubtful,” he added.

By enacting the small factories bill, the labour ministry wants to exempt factories deploying fewer than 40 workers from complying with 14 central labour laws, including the Industrial Disputes Act. Instead they will have to comply with just one law—the Small Factories Act—leading to ease of doing business, less paperwork and faster decision-making. If approved, the bill will also allow the doubling of overtime hours from 50 hours a quarter to 100 hours and from 75 hours to 125 hours in cases of emergencies.

“For job creation, small factories need to be given incentives. The labour laws need to be flexible and less cumbersome. If the government eases the process of compliance, people will come forward to abide by the law. At the end of the day, growth of a factory will lead to more jobs,” said Y.K. Gupta, chief executive of Saral Industries, a small engineering goods company.

Under the child labour amendment bill, the government will impose stricter punishment on those employing children below the age of 14. But it will allow children to “help” families in non-hazardous enterprises. “The employee-employer relation will end after the bill gets Parliament’s approval. The relaxation is in the nature of help, not for a worker-employer relationship,” Aggarwal said.

HT Mint, New Delhi, 8th July 2015

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