20, How does an organisation prepare for the implementation of the new labour codes
The newsletter on Human Resource expert opinion, for the Indian context
The labor codes have been in the domain for some time now, and it is expected that whenever the government does notify that the labor courts are effective, organisations should have already done their homework or their preparatory work, and should be able to implement them within a reasonable time.
So what is it that we should have done as an organisation?
What is it that is required to be done if we are still not prepared for making sure that we are ready for the labor codes implementation.
The basic understanding one needs is that the foundation of the new labor codes is a lot of existing labor laws. The new labor codes are built by trying to amend, by trying to modify, by trying to rework some of the existing laws.
So it is not that there is going to be some new concept that is going to come, which is going to be totally out of the blue, or which is going to require total reworking of the systems.
Therefore, one of the first and the basic things that any organisation needs to make sure, as they prepare for the new labor codes, is to make sure that their existing compliance to the labor laws is done.
That means they should be able to figure out what are the current labor laws and what are those labor laws expecting you as an organisation to do. If you've got that in order, if you understood that these are the things we need to do in the current scenario, and you're able to implement them, then amending or changing to the new labor code should be a fairly reasonable task.
And it will not have so much of a business impact that your operations may get.
A lot of management time is being focused on managing the new labor codes. Even though It's a fairly business as usual change. It is not something so drastic that it's going to change the way you or we do business in India.
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So one of the first things to do as a preparatory work is to ensure your current compliance to the labor laws. As soon as you're able to figure that out, there is a bit of planning that needs to be done in terms of the impact of the labor laws or the impact of the new labor codes.
The new labor codes, while a lot of things are done on employee benefit side and the terms of work, a key focus area which is going to be impacting the business and which a CEO or a managing director should be aware of is the financial implication of this change.
Now, the financial implication of this labor code introduction is going to have a little bit impact on the employee welfare cost. There is also a chance that your payroll and the way payroll is managed is going to go up.
So the payroll cost of your organisation is going to get impacted. These two things are directly linked to how you manage your profitability, how you plan for your organisation's salary budgets for this year and next year. Because, irrespective of how you implement the labor laws, the impact on financials, specifically the employee welfare cost and the payroll cost, is a direct outcome that is visible from the new labor codes.
Any change that happens as a result of the rest of the things are manageable because they are changing certain processes, changing certain systems. But changing on the financial side are these two prominent things, apart from the other small things. And as a CEO, you should be able to consult an expert and have these budgets sorted out.
India HR Guide is aimed at discussing and shedding light on aspects in a crisp manner that organisations in India follow in the area of Human Resources. It is aimed at CEO's, MD's and line managers to understand how various aspects of Human Resources can help shape their organisations journey in India. Our industry leading expert, Mandeep Singh, offers years of accumulated knowledge from having advised clients across sectors, and spread across the remotest corner of the country. Let's make the workplace, a better place.
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