Affects of new labour codes on Cable Industries

Introduction :

Wires and cable are everywhere in today’s world to make our connected, electrified way of life possible. These flexible strands of metal are used to transmit data, voice, and power across short and long distances. Throughout history, wire and cable have come a long way.

Wire & cable industry comprises companies that operate by manufacturing, supplying and distribution of industrial standard wire & cable for various machines, electronic and equipments, and also manufactures insulated fiber-optic cable and insulated metal wire and cable using wire drawn by non-industry companies. Basically, the firms in this industry manufacture cables and wire products for use in the communications, construction, power transmission, industrial and other sectors, and these cables are made of copper, steel or aluminium.

The global cables market was valued at nearly USD 149.90 billion in 2020 is expected to grow further in the forecast period of 2021-2026 at a CAGR of 4.10% to attain USD 190.77 billion in 2026.

The Central government proposed to replace 29 existing labour laws with four Labour Codes on wages, social security, occupational safety and industrial relations. Since the issue of labour came under the Concurrent List of the Constitution, there were over 100 state and 40 central laws regulating the various aspects to it. Since these laws were found to be complex, with archaic provisions and inconsistent definitions, it was advised that the laws be clubbed together to improve ease of compliance and ensure uniformity. It was also suggested that the central labour laws broadly cover the aspects of industrial relations, wages, social security, safety and welfare and working conditions.

Trade unions have stridently opposed the ‘labour law reforms’ on the grounds that they undermine the hard-won rights of workers and will lead to greater exploitation of workers. Trade unions have repeatedly charged that the government has been acting unilaterally, without holding tripartite consultations. On account of the stiff resistance of the trade unions, the Central government has been unable to effect the changes at the pace that it would have liked.

How the new bills affect Cable Industry

Ø  Labour and employment regulations have far-reaching implications for every business organization. Firstly, these are crucial for a congenial and harmonious relationship between employers and employees. 

Ø  The Code on Occupational Safety, Health and Working Conditions, 2020 seeks to regulate the health and safety conditions of workers in establishments with 10 or more workers.

Ø  The Code on Social Security, 2020 consolidates nine laws related to social security and maternity benefits.

Ø  The Code on Industrial Relations, 2020 seeks to consolidate three labour laws namely, The Industrial Disputes Act, 1947: The Trade Unions Act, 1926 and The Industrial Employment (Standing Orders) Act, 1946. The Code aims to improve the business environment in the country largely by reducing the labour compliance burden of industries.

Ø  Impending changes in everything from basic pay to the contract work regime means India Inc has its work cut out

 

Ø  Consistency in the definition of wages: Under the current labour laws, there are nearly 12 definitions assigned to the term “wages” alone! This was resulting in a lot of litigation and confusion for the companies. The term ‘wages’ has been uniformly defined under the 4 codes and therefore, it is expected to reduce much confusion about what is specifically included in wages.

 

Ø  Impact of the new codes on social security and take-home salary: Due to the change in the definition of wages and the fact that the various social security such as Provident Fund, Gratuity, ESIC, etc. have now been pegged as a percentage of the ‘wages’ and not just the basic or basic plus dearness allowance, there is expected to be a change in the total payouts on account of social security and retirement benefits. Depending on the employment letters and salary breakup of existing employees, even the take-home salary of employees may be affected. Even TDS calculations based on the revisions in the take-home need to be carefully considered as the obligation to deduct TDS in case of salary is on the employer.

 

Ø  Businesses need to clearly understand ‘Inclusions’ and ‘Exclusions’ in Wages: The definition of wages is probably the single most important aspect that the industry needs to consider. The Code on Wages contains specific inclusions as well as exclusions in the definition of wages. Further, under the Code of Wages, it has been specified that the total of the specified exclusions, if the same exceeds 50 per cent (or such other per cent as specified by the Central Government) of the remuneration, then the amount exceeding such 50 per cent would be deemed to be remuneration and would be added in wages as per the definition. All companies need to consider the definition of wages, look at their employment letters, analyse each of the components of their employees’ CTC, and may need to revisit the components in case of non-compliance with the definition of wages under the new proposed labour laws.

 

Ø  Much wider coverage: Unlike the current labour laws, where coverage is different for each of the laws depending on the type of work done by the employee or coverage is restricted to workers or employees drawing certain remuneration, the 4 labour codes seem to apply to all employees and certainly have much wider coverage than each of the current laws looked at individually. The new labour codes also look at new-age working models and seem to give protection and legal remedies to 21st-century workers as well. The labour codes cover contract labour, fixed-term employment, gig workers, platform workers, and many more concepts. Thus, the laws appear to be forward-looking and are more inclusive.

 

Ø  Faster F&F Settlements: Section-17(2) of the Code on Wages requires wages payable to an employee to be paid within two days of removal, dismissal, resignation, or retrenchment. This will require exit formalities and HR processes to be completed expeditiously and for dues to be settled within the prescribed period. Companies must take note of this and make the necessary changes to their internal processes.