Implementation of the Labour Codes
The Union government has announced the implementation of the four Labour Codes, including the Industrial Relations Code (IRC), 2020, which will be effective from November 21, 2025, and fully operational by April 2026. This includes significant changes to employment security provisions for industrial workers.
Changes in Job-Security Thresholds
- The IRC allows establishments with up to 300 workers to conduct layoffs, retrenchments, or closures without government permission, unlike the previous threshold of 100 workers under the Industrial Disputes Act (IDA), 1947.
- Several states had already amended their laws to raise this threshold, reflecting the national adoption of this flexibility.
Historical Context and Employment-Security Provisions
- The job-security thresholds were introduced during the Emergency period as a response to significant job losses.
- These provisions were designed to prevent mass displacement during technological, political, or economic shocks.
Impact of Automation and AI
- With advances in automation and AI, the workforce faces increased vulnerability, with AI replacing tasks even in skilled and managerial roles.
- Reducing job-security protections could increase job insecurity and vulnerability.
Scope of the IRC
- The IRC's definition of “worker” includes sales promotion employees, working journalists, and supervisory employees earning up to ₹18,000 per month but excludes managerial employees and higher-earning supervisory personnel.
- Many formal workers in the services sector, including IT, fall outside the scope of job-security provisions.
Government Strategy and Proposals
- The increase in the job-security threshold reflects a shift toward a business-friendly regime while protecting workers in larger establishments.
- The government should monitor labor-market conditions and potentially expand job-security provisions if necessary.
- States like Jharkhand and Haryana have provisions to increase coverage to maintain industrial peace.
Worker Re-Skilling Fund
- The IRC includes a provision for a Worker Re-Skilling Fund, requiring employers to contribute an amount equal to 15 days’ last-drawn wages for every retrenched worker.
- This fund aims to help displaced workers upskill and improve employability.
Employer-Employee Relationship
- There is a need for clearer criteria regarding the employer-employee relationship to determine the applicability of employment-protection provisions.
- Judicial interpretations have varied, highlighting the need for statutory guidance amidst evolving work arrangements.
