Industry Experts Warn New Labour Codes May Add to MSME Compliance Burden, Call for Further Review

New Delhi, Nov 3 (KNN) The implications of the new labour codes for micro, small and medium enterprises (MSMEs), including changes in compliance thresholds and social protection requirements, were discussed at a roundtable conference organised by the Centre for Labour Studies at Dr B.R. Ambedkar National Law University in collaboration with the Atal Incubation Centre, IIT Delhi.

The conference, titled ‘MSMEs and Emerging Challenges: Labour Laws, Social Protection and Ease of Doing Business’, brought together stakeholders and MSME representatives to discuss the challenges arising from the new labour framework.

A key issue was the Occupational Safety, Health and Working Conditions (OSHWC) framework, particularly Rule 53 of the OSHWC Central Rules, which provides for an on-site or common canteen in establishments and factories employing 100 or more workers, including contract labour.

The discussion highlighted the shift from the earlier threshold of 250 workers under the Factories Act, 1948, although the applicability of specific provisions may vary depending on state-level notifications.

MSMEs Flag Infrastructure and Compliance Challenges

Speaking to KNN, Rakesh Chhabra, President of Rai Industries Association (RIA) and the Federation of Indian Micro and Small & Medium Enterprises (FISME), who attended the conference as Guest of Honour, said the numerical thresholds under labour laws could create practical difficulties for existing MSME units.

“All the Labour laws mostly work according to numbers. So for MSMEs who have already completed their Floor Area Ratio (FAR), where and how will they build the canteen,” he said.

Chhabra noted that state governments should consider allowing additional FAR for canteen facilities when implementing the requirement, particularly for existing businesses that were not previously required to provide canteens under the 250-worker threshold.

Stakeholders Seek MSME-Specific Review

The discussion also highlighted the need for further examination of labour law provisions and their implications for smaller businesses, with participants calling for more stakeholder consultations involving MSMEs and industry representatives.

“Labour laws need to be reviewed further, particularly from an MSME perspective, as even enterprises with fewer workers face the same compliance burdens as large companies. As a result, instead of benefiting from these provisions, MSMEs face additional compliance burdens,” Chhabra said.

He emphasised the need to assess whether the new requirements are practical for MSMEs, particularly those facing constraints in land, infrastructure and resources.

(KNN Bureau)