States Proactively Push Labour Reforms Amid Delay in Labour Code Implementation

 

 

With the long-awaited labour codes yet to be officially notified, many states and Union Territories have taken proactive steps by amending their labour laws to meet the evolving needs of industries. This strategic move aims to position themselves as attractive destinations for investment and job creation.

At least 19 states and UTs have increased the retrenchment threshold—from 100 to 300 workers—without requiring prior government approval. This has been a long-standing demand from industries over the past two decades. In a similar move, many states have also doubled the threshold for the applicability of the Factories Act (from 20 to 40 workers for units without power, and 10 to 20 for units with power).

Under the Contract Labour Act, the threshold for the number of workers for the Act’s applicability has also been raised from 20 to 50.

Key Reforms Adopted by States:

• 11 states/UTs have increased the overtime limit to 125 hours per quarter.
• 19 states have raised the retrenchment threshold.
• 25 states now allow fixed-term employment.
• 31 states/UTs have permitted women to work night shifts.

While some of these changes are being made by NDA-ruled states, other state governments have also adopted reforms, especially those enabling women to work night shifts. All these states and UTs have also introduced protections to prevent the misuse of these provisions, indicating a growing bipartisan consensus on economic reforms.

Furthermore, 25 states have adopted compounding of offences, and nearly two dozen states/UTs are working to introduce a mandatory notice period for strikes and lockouts in industrial establishments—a provision that was earlier limited to public sector undertakings.

Most of the reforms align with the provisions of the four new labour codes that were passed by Parliament over five years ago but remain unnotified. The Centre has been encouraging states to adopt these reforms, especially during workshops conducted by the labour ministry to facilitate this transition within the current legal framework.

A special task force led by Cabinet Secretary T.V. Somanathan is also drafting a best-practices document for states to follow, wherein the revised labour laws are seen as a key component.