Outdated labour laws are major roadblocks for economic growth. The compliance systems as per Indian labour laws are more inclined towards encouraging inspector raj rather than serving the intent of legal provisions. Organised sectors, bigger companies, and multinationals usually do not succumb to illegal pressure of labour authorities. But some establishments are forced to meet extortionist demands, since it makes economic sense to compromise rather than comply with unreasonable show cause notices.
Considering the population, literacy and other economic conditions, it is not advisable to completely bypass the checks and compliances in the garb of industrialisation. Rather, the provisions need to be modified so that the intent of legislation is met. Compliances with respect to regular employees in organised sectors, and big and medium-level companies are generally in order. Issues arise more with respect to contract labour, casual, daily wage, temporary workers, smaller establishments, etc.
Various enactments under which monetary depositions are required are Provident Fund, Employees’ State Insurance, cess under building and construction workers, labour welfare fund, etc. Further, there are compliances with respect to contract labour, minimum wages, the Factories Act, the Shops and Establishments Act, and the like. These laws have innumerable provisions with respect to registration, licences, working conditions, maintenance of workplace, statutory payments, registers, records, service conditions, contractual obligations, etc.
Though the intent of the provisions is incumbent to be met, the procedure and number of compliances as well as ambiguous interpretations needs to be simplified. Mala fide show cause notices include exorbitant demands for highly belated time periods, inconsequential compliances and misinterpretation of ambiguous provisions.
Many a time, labour authorities grossly misuse criminal and penal provisions. The proceedings involve criminal prosecution of directors/CEOs, imposition of heavy damages and interests. Further, as per PF and ESI laws, even for filing an appeal against an adverse order, deposition of a percentage of liability imposed is statutorily required. In view of such provisions, companies are forced to either spend huge amounts on litigation or come down to paying under the counter.
Contesting litigations takes years, and paying under the table only encourages illegitimate demands. None of the routes fulfil the intent of legislation. Scrapping these provisions in the name of economic growth will also only lead to mass contravention of provisions leading to exploitation of labour, especially in remote areas.
We need amendments that can serve the purpose of provisions. For instance, managers responsible for compliances should also be made liable as per provisions. They should be trained in compliances, with set criteria for their appointment. This can be done for companies having a minimum number of employees. Further, though e-portals are being introduced, statutory compliances should be made electronic and website-based. Area labour inspectors should also be made responsible for ensuring regular checking of company records, giving reports. While raising a statutory demand, the inspector should be required to issue a reasoned and specific show cause notice, not casual notices on the basis of account books entries. For this, it should be made mandatory that records of all kinds of employees along with employee number, Aadhaar card details, etc. are made available electronically. Most importantly, statutory provisions need to be simplified.
Crores of rupees stand collected in the coffers of labour authorities, while millions still fight for survival. Besides amendments, it should be ensured that depositions are utlised for the purpose they are made, rather than lying in cold storage. Proper application of labour laws can aid in escaping the clutches of poverty to a large extent.
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