New Labour Code Enables Employers To Fire Workers Easily

As per the new Code, an industrial establishment employing 300 or more workers shall require prior permission from the appropriate government authority for lay-off, retrenchment, or closing down its industrial establishment. Earlier, this threshold was 100. Further, the Code also provides flexibility to states to enhance the limit.

The earlier threshold meant that medium and large enterprises had to seek permission for layoffs. However, this will now be applicable only for large enterprises and state governments can increase the threshold to cover large enterprises as well. This will increase job-related uncertainties for employees.

“More enterprises can lay-off employees without government permission. There won’t be any authority to ensure that the firm has paid all wage dues before retrenching,” said R Sampath, vice president, Working People Trade Union Council.

Further, requirements of certified standing orders shall apply only to industrial establishments employing 300 or more workers. This limit too was 100 earlier, covering medium enterprises. Standing orders ensure that all employees in an industrial establishment are treated under the same terms and conditions.

They clearly communicate the rules of employment to workers so they understand their rights, obligations, and the consequences of certain actions. Standing orders will be mandatory only for large enterprises. Without certified standing orders it is easy for the employer to keep changing terms and conditions.

“The idea is to provide a more liberalised environment favourable to the employer. We will have to see how this is implemented,” said Rohitaashv Sinha, partner, King Stubb & Kasiva.

Further, to discourage flash strike and to promote industrial harmony, the definition of strike has been amended. It includes “mass casual leave also within the ambit”, which comprises cases where casual leave has been taken by more than fifty percent of the workers on a given day. “Such mass leave will be termed as illegal strike,” he added.

The code also shifts focus from imprisonment to monetary penalties for certain offences, making compliance easier for employers. This will avoid lengthy court trials, saving time and resources for employers. It will reduce fear of criminal prosecution, thereby encouraging investment and smoother industrial operations, the government said in a release.

“No employer has been imprisoned for worker-related issues. The new law will make it easier for employers to get away with several offences,” said Sampath.