Published On: Tue, Oct 21st, 2014

India’s new labour reform proposal – removal of Inspector Raj

NEW DELHI: The NDA government is set to unveil its first big-bang labour reform by partially dismantling the factory inspector raj, perceived by industry to be arbitrary and corrupt. Under the proposed reforms, labour inspectors will lose their power to decide which unit to visit and the number of forms related to compliance with labour laws that employers have to file will drop from 16 to 1.

However, cutting down on the inspector raj will be twinned with pro-worker measures, such as making it easier for employees to access provident fund accounts and insurance schemes, according to a concept note prepared by the labour ministry

Some of these changes could be unveiled by Prime Minister Narendra Modi, in the presence of state labour and health ministers from across the country. Modi is likely to inaugurate a new programme, christened Pt Deen Dayal Upadhyay Shrameva Jayate Karyakram.

Under the programme, the labour ministry is setting up a ‘Shram Suvidha’, or labour facilitation, portal and will unveil a new ‘Labour Inspection Scheme’ that will cut down on the inspector raj and bring in transparency for e-filing of returns related to compliance with various labour laws. It will also make it easier for workers to access welfare schemes such as Employees’ Provident Fund and insurance.

Importantly, the new scheme introduces portability for EPF accounts by linking them with bank accounts.

As part of the inaugural ceremony, the PM will send SMSes to 1,800 labour inspectors of four central organisations (Chief Labour Commissioner, Directorate General of Mines Safety, Employees’ Provident Fund and Employees’ State Insurance Corporation), which will immediately come under the new scheme.

These four organisations administer 16 out of 44 central labour laws in government and private companies across the country. In the second phase of the programme, the government intends to  to bring in the remaining labour laws and also all the state governments on to the portal to ensure that all the units of the country are covered by this scheme.

As part of the new system, a unique Labour Identification Number (LIN) will be allotted to factories or industrial units to facilitate online registration. Instead of 16 separate returns, units need to file just one consolidated, self-certified and simplified online return.

Inspectors will lose their power to choose which unit to visit. Instead, a computer-generated random list of units will be given to inspectors, that too only the previous day.

The need to inspect a factory because of a specific complaint will be decided centrally after examining evidence.

Further, the labour inspectors have to upload their reports within 72 hours of the inspection to ensure timely redress of grievances of employers. The eventual aim of the exercise is to have a complete database on employers, employees and industrial units on one website.

The portal will be operated by four central organisations: Chief Labour Commissioner, Directorate General of Mines Safety, Employees’ Provident Fund and Employees’ State Insurance Corporation.

The ministry has already collated information about all the 11 lakh units under these organisations and digitised and de-duplicated them reducing the total number to 6-7 lakh. All these units may be offered LIN on Thursday.

Henceforth, only serious issues will be covered under the mandatory inspection list and a computerised list of units that are to be inspected will be generated randomly based on pre-determined objective criteria. But there will be provision for emergency inspection of workplaces in specific circumstances.

There is also a provision for portability of the EPF account of employees through a Universal Account Number (UAN). The UAN is being linked with the bank account, Aadhaar card and other KYC details to facilitate financial inclusion. By October 16, 2014, approximately 2 crore subscribers will have the benefit of portability through UAN. Subscribers will be informed through SMS/email immediately on inauguration.

A minimum pension has been introduced for the first time so that pension is not less than Rs 1,000 per month. The wage ceiling has been raised from Rs 6,500 to Rs 15,000 per month to ensure vulnerable groups are covered under the EPF scheme.

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