How Changing landscape of labour laws will impact the future of work?
The long-overdue labour law reforms are expected to be implemented from 1st July 2022. Here, you will find how these new laws impact the future of work.
The long-overdue labour law reforms are expected to be implemented from 1st July 2022, changing the future of work. The new codes discuss employee benefits, change in wage computation, providing social security to self-employed, and recognition of fixed-term contract hiring. Once implemented, these new codes will replace 29 central government laws to avoid any multiplicity.
These new codes aim to ensure better use of technology and achieve equity for all. These labour codes will imply to all employees of an organisation irrespective of their role, level or nature of duties.
How will these new laws impact the future of work? Let's find out.
-
01- The Four-day work week debate:
The future of work hints towards the four-day work week becoming the new norm. Matching pace with changes, the labour laws are letting the companies decide if they wish to implement a four-day work week in their organisation. But the catch here is that the overall work hours of employees will increase. In other words, employees opting for a four-day week will have to work 12 hours a day instead of 08.
The decision on a four-day work week will depend upon every organisation's values, culture, employee preferences and how the company imagines their future of work.
For instance, if a company's workforce primarily consists of young working professionals who believe in working hard and growing accordingly, they may adapt to the four-day work week set up. Employees preferring a professional setup may choose the current 9-5 norm.
Implementing a four or five-day work week will also depend on the number of productive hours the employees provide daily. Only after considering all these factors can a company make a decision. The idea of a three-day weekend seems appealing, but whether employees will be ready to increase and push their productive hours in exchange for an additional day off is yet to be seen.
-
02- Cautious hiring of permanent employees:
The new codes aim to increase the social security benefits for the employees. These include higher gratuity, provident fund and other benefits.
To support the work-life balance and a better future of work for employees working from home, the law codes contain guidelines regarding working hours and overtime while working from home.
These new benefits will have pros and cons for both employers and employees.
Overtime bonus and emphasis on better work-life balance is beneficial for employees. Although higher provident funds and gratuity are for future security, this will reduce their current take-home salary, something employees may find a little bothersome, especially when the country is undergoing inflation.
For employers, focusing and providing these employee benefits is one of their core duties. However, where benefits such as provident fund and gratuity are a part of the CTC, benefits such as overtime pay and leave encashment will become additional costs. Also, the labour codes have changed the definition of employee wages. And there is no clarity whether variable benefits such as annual bonus and other incentives are a part of those wages or not.
These changes together will impact the cost of hiring an employee. Employers will become more mindful about their hiring decisions and start creating more rigid hiring plans, affecting employment opportunities.
-
03- More Recognition to Contractual Employees:
Hiring contractual employees through third parties has been a prevalent practice in the Indian market. It has further increased today. Hence promising a brighter future of work for contractual employees, the labour codes will term them as fixed-term employees. Companies can hire these fixed-term employees for their core functions without time restrictions. Also, companies will provide equal benefits to fixed-term employees as permanent employees for the same role. Fixed-term employees will also be entitled to gratuity after one year.
Hiring fixed-term employees for short-term projects can reduce the overall costs of the company and improve flexibility. Hence more companies will rely on contractual employees in the future to improve their overall agility.
-
04- A Secure Future of Gig Workers:
The proportion of freelancers is rising in India. Currently, over 15 million freelancers are operating in the market, taking up domestic and international gigs. Observing the increasing number of freelancers, the central government has notified social security schemes for gig workers to improve the future of work for freelancers in the country. They will be entitled to benefits such as accident insurance, maternity benefits, disability cover etc.
Online marketplaces and aggregators who use freelancer services shall pay 1%-2% of their annual turnover towards the social security benefits of gig workers.
Once these guidelines are implemented, we will witness more professionals transitioning to freelancing. Also, these benefits will further strengthen the Indian freelance economy.
Something for Staffing Firms as well:
Expansion across the country is a bit challenging for staffing agencies. Currently, 24 states issue staffing agency licences. An agency needs to apply for several licences to expand to multiple states.
However, the new law prescribes a single licence to staffing firms to hire contract employees across different locations, improving the future of work for businesses.
The new labour codes will require management to make numerous changes in their overall policies. Every company will adapt to these labour codes in its way. Implementing these labour codes may keep the industry buzzing for the next few years. As the law evolves and implementation occurs, both employees and employers will gain further clarity, and some new practices will emerge in the market. And this will keep the industry buzzing for the next few years. Some companies may even introduce a hybrid workforce structure to cut costs and benefit from the talented gig workforce. For policy formation, every functional department of an organisation will have to contribute to creating policy frameworks that are beneficial for business, cut costs, abide by the laws and align with the future of work.