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Labour & Employment: Legal Milestones Financial Year 2020-21 And A Look Ahead

14 Apr 2021

With COVID-19 disrupting business continuity in the first half and the new labour codes being passed in the second half, 2020 was an eventful and landmark year for employment laws in India. This update summarises some key developments witnessed in 2020 and provides a brief overview of what can be expected in 2021.

THE YEAR THAT WAS

With the pandemic flaring in India in 2020, the government’s focus was directed more towards containing the spread of the virus. Several directions, orders, advisories and guidelines were issued (both at the Central and State government level) to employers to help them take preventive measures, apply for exemptions to continue business with skeletal staff, and obtain curfew passes for their employees to travel to work amidst the lockdown. Parallelly, being cautious to avoid the negative business impact of COVID-19 trickling-down on employees, the government issued several orders and advisories against terminations, non-payment of salaries and leave adjustments. Labour authorities also closely scrutinised terminations by employers. As the efforts of the government were largely concentrated in this space, no significant legislative changes were introduced during this period. Meanwhile, work-from-home became the ‘new normal’ for several organisations – more so, for those operating in the information technology space and other service industries.

During the second half of 2020, just as the COVID-19 restrictions were eased, the government’s long-concerted efforts to streamline and consolidate existing labour laws into four labour codes came to fruition. While one of the four codes had been passed in 2019, the other three codes were passed and granted Presidential assent in September 2020. These four codes will subsume and replace 29 existing labour laws.

MAJOR DEVELOPMENTS IN THE FINANCIAL YEAR 2020-2021

  • 1. Introduction of four labour codes

    The Indian government has almost completed the process of consolidating 29 existing central labour laws into four labour codes, namely Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions Code, 2020 (collectively, Labour Codes). The Labour Codes govern conditions of employment, social security, employee health, safety and welfare, industrial and labour disputes, payment of wages etc. The prime objective of this consolidation exercise is to facilitate the ease of doing business, rationalise penalties, digitise compliances, and to eliminate multiplicity and inconsistency of definitions across laws.

    The Labour Codes have already been passed by the Parliament and have received President’s assent. The Ministry of Labour and Employment had earlier announced that the Labour Codes were likely to come into effect from 1 April 2021. However, due to the delay in formulation of rules by most State governments, the implementation of the Labour Codes may be postponed by a few months.

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