Impact Analysis of the New Labour Codes on Companies and International Subsidiaries in India
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Abstract
With the new labour codes emerging, the same is paving a path for more global companies to establish business in India, including and especially subsidiaries of international companies, which will improve the ease of doing business in the country. This is because the codes are now aligned with global standards and the same is conducive to the preferred work structure that companies and international subsidiaries established in India wish to achieve.
For the above reasons, it is pertinent for international companies in India to analyse the impact of the codes prior to their implementation from a legal and regulatory, financial, operational and functional perspective. The goal of such impact analysis is to minimize the negative repercussion on possible non-compliancy due to the change in the composition of the payment structure and other company practices vide the introduction of the new labour codes, and to maximize the positive ones. This article aims at aiding companies in making an informed decision by providing clear understanding of the potential impacts of a change during a possible and required re-structuring.
Each impact analysis suggested in this article endeavours to address an understanding of the following nature:
- Legal and regulatory impact analysis will primarily evaluate the effects of proposed regulations so that the potential costs do not outweigh the benefits. Further, the said analysis will also assess the promotion of the overall welfare of the company.
- Financial impact analysis ensures a careful consideration of revenue generation, reduction of cost and allocation of resources from which businesses can obtain a comprehensive understanding of the financial and economic impact of the re-structuring stemming from the intention of being compliant with the new and upcoming labour codes.
- Operational impact analysis in consonance with the other suggested forms of impact analysis discussed herein would aid in analysing the business continuity plan upon possible re-structuring to comply with the new codes and to track and remove prospective and foreseeable roadblocks which may occur during the process.
- Functional impact analysis in addition to the other impact analysis methods, will ensure in providing am effective assessment tool to maintain and keep up the environmental variables that will be conducive in maintaining any challenging behaviour upon the implementation of the new labour codes.
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