Continuing the series of measures that seek to improve the ease of doing business in India, the Government of India is in the process of introducing much needed reforms to its existing labour laws. These are largely aimed at bringing about procedural efficiency and administrative transparency. A unified web portal where employers can register themselves and take the benefit of filing a single return for 16 labour law compliances has been operationalized. To do away with the present system of random selection of units for inspection, a new scheme of computerised selection of units for inspection by labour law enforcement agencies has been introduced. In order to expand the scope for young job seekers and students to gain industry relevant skills on the shop floor, the government has introduced 500 more trades and vocations under the scheme, including skills for IT-enabled services, for which apprentices can now be hired.
Certain changes have been proposed in the legislation that deals with the regulation of factories including the health and safety of workers working in factories. Flexibility has been proposed to be granted to state governments to define the number of workers required for a unit to be classified as a ‘factory’ under this statute. This move is expected to ease the labour law burden on a large number of existing factories by exempting them from complying with the numerous provisions of the statute that relate to safety, working conditions and welfare of the employees, as well as filing lengthy compliance reports with the government. With a view to promote gender equality, many of the restrictions in relation to the employment of women, such as the prohibition on women from working night shifts, are being proposed to be removed.
Whilst these reforms are meant to ease the procedural and administrative requirements of doing business in India, the lack of flexibility in hiring and firing of employees, especially the “blue-collar” workers employed in factory units, largely continues as before. Government approval continues to be required for the retrenchment of even a single workman from an industrial unit employing more than 100 workmen. Such approvals are rarely, if ever, given in practice. The state government of Rajasthan, however, has provided some flexibility by making this requirement applicable only to factories employing more than 300 workmen (as opposed to 100 workmen in other states). The state of Madhya Pradesh is also expected to follow suit. Both Rajasthan and Madhya Pradesh are currently governed by the same political party which is in power at the centre. The overall effectiveness of this reform will, to a great extent, depend on whether other state governments (particularly those not led by the same political party) will make similar amendments in their states as well.