TeamLease RegTech Releases Whitepaper on India’s Labor Law Compliance Challenges and the Need for Reforms

TeamLease RegTech Releases Whitepaper on India’s Labor Law Compliance Challenges and the Need for ReformsMumbai, May 6th, 2024: TeamLease RegTech, India’s leading Regulatory Technology (RegTech) solutions company, has released a whitepaper on the occasion of International Labour Day. The whitepaper dives into the past, present and future of labour law compliances in India. It traces the journey of the present-day regulatory framework and discusses the challenges faced by workers and employers alike.

Present-day employer compliance in India is regulated by 1,536 acts and rules, 69,233 compliances, and 6,618 annual filings. Among these, 26,134 compliance obligations prescribe imprisonment as a penalty for contraventions. Labour regulations constitute a major part of these compliances. In fact, labour-related acts account for 30.1% (463) of the total applicable acts and rules, 47% (32,542) of the total compliances, 46% (3,048) of the filings, and also represent 68% (17,819) of the provisions that carry clauses for imprisonment.

Labour compliance requires enterprises to deal with sensitive employee data (PAN, UAN, Aadhaar, Contact Information, Address, Financial Details, etc.). Without proper safeguards, the data can easily fall into the hands of threat actors and cause significant damage. The Digital Personal Data Protection Act, 2023 addresses the regulatory arbitrage around the collection, storage, processing, sharing, and disposal of sensitive PII (Personal Identifiable Information). Labour consultants have been heavily reliant on spreadsheets for data storage and sharing. While convenient, they are also vulnerable. Technology-backed digital solutions can enable these third parties to comply with the data confidentiality requirements under the DPDP Act and its oncoming regulations.

According to Sandeep Agrawal Director & Co-founder, Teamlease RegTech: “India’s current labour laws have their roots in the colonial era and are laden with duplication, redundancy, and overlap. Our peaking demographic dividend window is opening up a world of possibilities and opportunities for the workforce. Ensuring appropriate employment and training opportunities is critical for the nation to become a $10 trillion economy by the end of the decade. Facilitating the young workforce to live up to its potential is going to be the key to taking complete advantage of the ‘Amrit Kaal’. The labour codes provide the necessary foundation to accommodate the nation’s growth aspirations. The three-vector framework of rationalising, digitising, and decriminalising India’s compliance ecosystem will form the backbone of this success.”

The whitepaper gives a brief overview of the history of labour legislation in India and the extant union acts, and their recent codification. It goes into the criminalization of compliance and the challenges faced by entrepreneurs and employers in the current regime. Moving forward, it dissects the recent labour reforms and labour codes and delves into the key changes introduced into the framework and compliance obligations.

The paper concludes with recommendations on compliance reforms that can further improve the ease of doing business and provide a new-age solution for compliance management for employers.

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