In a significant move to reform India's complex labour landscape, the government has drastically reduced the number of offences that can lead to imprisonment under the new set of labour laws. According to a senior official, the number of such offences has been cut to just 22 from 87 earlier, marking a major shift towards decriminalisation.
A New Era of Labour Compliance
The overhaul is part of a broader initiative to consolidate 29 older labour laws into four streamlined and modern codes. These are the Code on Wages (2019), the Industrial Relations Code (2020), the Code on Social Security (2020), and the Occupational Safety, Health and Working Conditions Code (2020). The primary objective is to strike a balance between making compliance easier for employers while simultaneously strengthening the protection offered to workers.
Of the 22 offences that still carry the threat of imprisonment, a majority—16—are now compoundable. This means that for these violations, the matter can be settled by paying a prescribed fee to a designated authority, avoiding a protracted legal battle. Only six sections now mandate imprisonment, primarily for serious, first-time violations related to critical areas like worker safety and social security, and these come with substantially higher fines.
Key Features of the Labour Reform
The introduction of compounding of offences is a cornerstone of the new system. It allows first-time violations that are punishable by up to one year in prison to be resolved financially. The codes also provide a pathway for compounding repeat offences, but only after a cooling-off period of three to five years has passed since the previous violation.
Another progressive step is the concept of an "improvement notice". Before initiating prosecution, authorities will now issue this notice, giving businesses a clear opportunity and a timeframe to rectify identified issues. This is designed to reduce unnecessary litigation and foster a cooperative environment. Furthermore, purely procedural lapses have been fully decriminalised and made compoundable, applying equally to employers, employees, and trade unions.
Industry Applauds Facilitative Approach
The business community has welcomed these changes. As reported by ET, Rishi Bagla, chairman of the CII Western Region, commented that provisions like the inspector-cum-facilitator, compounding, and rationalised penalties are creating a more facilitative regulatory environment. He emphasized that the focus is decisively shifting from punishment to compliance.
This comprehensive rationalisation of India's labour laws represents a fundamental philosophical change. By reducing the fear of imprisonment for minor infractions and introducing more collaborative mechanisms, the government aims to boost business confidence and ease of doing business, while ensuring that core worker rights and safety are not compromised.
