New labour rules to hit outsourcing firms

Kathmandu, December 31

The new Labour Rules, which the government is preparing to issue to define the provisions of the Labour Act, 2017, has put stringent provisions for worker outsourcing firms under which those firms supplying workers to various companies have to deposit at least three months’ salary of workers hired by them.

Firms providing security, call centre, cleaning, driving, gardening and construction services workers, among others will be hit hard by provisions of Labour Rules as they hire thousands of workers and outsource them to different companies, corporate houses, government offices and private residences.

“It will be difficult for the companies offering worker outsourcing services to sustain as per the new rules,” said an owner of a renowned security service providing company requesting anonymity.

Moreover, one worker outsourcing service provider will not be allowed to deal with more than two types of services, as per new rules. For example, if a firm is providing workers for security and driving purposes it will not be allowed  to provide gardeners.

Companies providing worker outsourcing services have said that the licensing fee for such firms is also high. Those firms that want to obtain the licence to provide worker outsourcing services have to pay Rs one million and a further Rs two lakh for each type of service that they want to provide.

Start-ups and micro, small and medium enterprises largely rely on such outsourcing firms for workers which helps them to maintain cost of production as they do not have to bear additional expenses that they would have had to if they had employed staffs directly.

Worker outsourcing service providing firms have said that a majority of firms will pull down their shutters as they will not be able to operate companies as per the new rules. Currently, there are around 2,500 worker outsourcing service providing firms across the country.

The Labour Act, 2017 has allowed the businesses to outsource the staffers apart from the core function of the concerned company. Even in the government offices, drivers, cleaners and gardeners are being outsourced massively.

Meanwhile, officials from the Ministry of Labour and Employment (MoLE) have said that they have introduced the new rules as the worker outsourcing service providing companies have been paying low wages to the workers hired by them. “Worker outsourcing service providers have been making huge profits from the high margin between the amount paid by those obtaining the services and the amount paid to the workers hired,” said a joint secretary from MoLE seeking anonymity.