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Labour Law Compliance Challenges Post COVID-19

In a country of 400 million working people and about 250 labour laws (combining the central and the states), it can be difficult to ensure compliance at all levels. Lately, there was an uproar regarding labour law reforms, and the state government of Gujarat, UP and a few other states underwent some reforms to prevent businesses from going off the market during the lockdown.

The economic losses due to the pandemic amount nearly INR 30.3 lakh crores. It’s about 50% more than the relief package that was declared by the national government and 13.5% of the total GDP. Reports reveal that the GDP for the current fiscal year is going to drop by 4.5%. Clearly, both employers and employees are struggling to survive the crisis, and the labour law reforms, or relaxations aim to help these businesses to some extent.

However, they still pose some big challenges for companies to comply with the legislations meted out by the states and the centre. If you’re currently running a private firm and struggling to ride out the storm, you should be aware of the labour law challenges that help you make your way through the dark days by overcoming them systematically.

Scroll on to know about these challenges and figure out ways to overcome them.

Employee reduction during a crisis (ID Act for Retrenchment)
Many organisations decided to cut down their workforce, during a financial crisis, to maintain the same pay scale for the remaining ones. However, it gets difficult for SMEs and start-ups to comply with the ID Act for Retrenchment regulations. The act mandates letting the employees, who are being laid off, serve a notice period of one month. It also makes it mandatory for companies to provide them with the necessary compensation, which is mostly equivalent to the wages of 15 days, for each year they have worked in the company. If the company could afford to pay that, then the entire decision of terminating such hardworking employees looks pretty absurd.

The Industrial Disputes (ID) Act also prevents reorganisations or regrouping of employees to other companies that may be a client’s or a stakeholder’s without taking the employees’ consent. If the second company doesn’t offer the same perks, credit benefits and facilities offered by the parent company to the selected employees, they can always refuse the offer. On top of that, if the employer still wants to let them off, they should offer the ID Act for the retrenchment notice period and pay the necessary compensation to the employees being transferred.

Complicated maternity leaves
Paid maternity leaves were previously limited to 12 weeks, and that has been significantly increased to 26 weeks, by the Maternity Benefit Amendment Act in 2017. Now, all the companies aren’t equipped to provide so many paid leaves, and during a crisis, it further gets difficult to maintain compliance. However, there’s an easy answer to this. If you can, ask the newbie moms in your organisations to work from home for an indefinite time, after, of course, enjoying their paid maternity leaves. This will not only help you avoid non-compliance but also keep your employees happy and satisfied with their jobs.

Factory regulations (The Factories Act, 1948)
The Factories Act primarily aims to ensure proper working conditions, safety, security and welfare of the labourers. If you have 10 or more labourers working in some manufacturing process, you should note that their work hours shouldn’t exceed 48 hours in a week. The factories should also ensure healthy working conditions through proper sanitisation, deep cleaning, enough lighting, temperature regulators and so on. This apart, the company should also provide their workforce with clean and hygienic washrooms and drinking water.

During a crisis, like the one we are in now, it can be difficult to maintain compliance, owing to the lesser number of people on the site and more work pressure. As most organisations are also letting their employees work from home, the norms of working are changing. However, the remote working option is not feasible for many manufacturing companies, and such companies need to adhere to additional regulations to provide 100% hygienic office space to ensure employee safety. Penalties due to violations of the Factories Act can lead to heavy fines and even jail time.

Wrapping it up
Indian labour law compliance has always been complex, complicated, tedious, and time-consuming. The new rules and regulations introduced after COVID-19, constantly changing state laws introduced in the name of ease of doing business, and remote working have further complicated the matter.

Companies that have been managing their compliance through manual processes are struggling. The costs of compliance are going up.

To help such organisations with their end-to-end compliance needs, we have introduced Virtual Compliance Manager – India’s first solution combining a powerful cloud-based Compliance Platform and Core Integra’s compliance expertise.

The key benefits of Virtual Compliance Manager include


  • Access to a dedicated Person Managing day to day activities of your compliances
  • Strategic inputs and expert opinions
  • Manage communication with government officials in case of questions or disputes
  • SLAs to revert on each query within 24hrs with pre-defined escalations matrix to ensure timely resolution
  • Available on a direct chat line – from 10:00 AM to 6:00 PM


Want to know more? Let’s connect.