There have been complaints emanating from the corporates and the economists with respect to the rigid labor laws. Still no consensus has yet been achieved, although a lot of rhetoric has taken place. All words and no action are meanwhile making “jack” read: the labor market, a very dull boy.

In this paper, we elucidate the major flaws in the Indian labor legislation framework and enunciate reforms for the same.

We will be analyzing the absurd provisions of the following and outlining reforms for the same:

• The Contract Labor (Regulation and Abolition) Act

• Ambiguous & divergent state & central labor laws

There is a separate inspector for all labor legislations and visits of inspectors are not synchronized across all labor enactments. Also no maximum period is prescribed for which records and registers must be maintained. Compliance is thus impossible and visits of inspectors result in bribery and rent-seeking. This system is not distributionally neutral as it tends to hurt the small-scale sector much more than it hurts large-scale industry. That apart, returns under various labor laws are not standardized and inspectors insist on maintenance of manual records and registers.

The reforms that can be suggested in this regard are the following. First of all, the Industrial Disputes Act and the Industrial Employment Standing Orders Act should be made flexible so as to offset the impact of judicial decisions. Secondly, the span of termination form service should be broadened to include more than just misconduct and retrenchment. Thirdly, procedures for internal inquiries should be streamlined.

 There may be a need to create a labor judiciary de-linked from the civil judiciary, as labor cases often require special expertise.

- Supreme Court judgment on the Excel Wear vs. Union of India case

Some topics in this essay:
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