On the other hand, the labour enforcement machinery has been ineffective because of poor enforcement, inadequate penalties and rent-seeking behaviour of inspectors.
The Industrial Relations Code raises this to 300, and allows the government to further increase this limit by notification. It has been argued that this has created an exit barrier for firms and affected their ability to adjust workforce to production demands. Retrenchment: Establishments hiring 100 or more workers need government permission for closure, layoffs or retrenchments.Certain Codes retain such size-based thresholds. However, one could argue that basic protections related to wages, social security, and working conditions should apply to all establishments. Size-based thresholds may help firms in reducing compliance burden. Coverage: Most labour laws apply to establishments over a certain size (typically 10 or above).This note discusses these challenges and the approaches taken by the four Codes. Further, with the passage of time, labour laws need an overhaul to ensure simplification and updation, along with provisions which can capture the needs of emerging forms of labour (e.g., gig work).Key debates relate to the coverage of small firms, deciding thresholds for prior permission for retrenchment, strengthening labour enforcement, allowing flexible forms of labour, and promoting collective bargaining. The major challenge in labour reforms is to facilitate employment growth while protecting workers’ rights.The objective is to simplify and modernise labour regulation. The central government proposes to replace 29 existing labour laws with four Codes.
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