Aimed at boosting the economy amidst the ongoing Covid – 19 pandemic, several States in India have recently come out with ordinance and notifications containing exemptions from compliance with certain labour laws. Such suspension has been sought to give more flexibility to businesses and employers in order to help curb the effects of the Covid – 19 mandated lockdown. Labour laws provide social security measures for workers and while these measures may help boost the economy, they have also raised concerns regarding protection of the rights of the Indian labour force.
The State of Uttar Pradesh (“UP“) has promulgated an ordinance called the ‘Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020’ (“Ordinance“) and exempted from compliance a majority of the labour laws for a period of three (3) years. Other States have issued notifications to grant certain exemptions under the Industrial Disputes Act, 1947, the Factories Act, 1948 and also extended working hours for a period of three (3) months.
On May 08, 2020, the UP Government promulgated the Ordinance which suspends a majority of the key labour laws and rules thereunder in the State for all factories and establishments engaged in the manufacturing process, for a period of three (3) years. The list of suspended labour laws is as follows:
- Apprentices Act 1961;
- Beedi and Cigar Workers Act 1966;
- Cine Workers and Cinema Theatre W. Act 1981;
- Contract Labour (Regulation and Abolition) Act, 1970;
- Dookan Aur Vanijya Adhisthan Act 1962;
- Factories Act 1948 (barring provisions relating to safety and security of workers);
- Industrial Disputes Act 1947;
- Industrial Employment Act 1946;
- Minimum Wages Act 1948;
- Motor Transport Workers Act 1961;
- Payment of Bonus Act 1965;
- Payment of Gratuity Act 1972;
- Payment of Wages Act 1936 (barring Section 5);
- Public Liability Insurance Act 1991;
- Sales Promotion Employees Act 1976;
- The Indian Boiler Act, 1923;
- Trade Unions Act 1926;
- Weekly Holidays Act 1942;
- Working Journalists Employees Act 1955;
- Dangerous Machines Act 1983;
- Sick Industrial Companies Act 1985;
- Building and other construction workers (Regulation of Employment and Conditions of Services) Act, 1996 (barring provisions relating to safety and security of workers);
- UP Shops & Establishments Act 1962;
- UP Welfare Fund Act;
- UP Industrial Peace (Timely Payment of Wages) Act 1961;
- UP Industrial Housing Act 1955;
- Industrial Establishment (National Holidays) Act 1961;
- UP Industrial Undertakings Special Provisions for Prevention of (Unemployment) Act 1966;
- UP Employment of Substitute Workmen Act 1978; and
- UP Sugar & Power Alchohol Industries Labour Welfare & Development Fund Act 1950.
Barring the provisions relating to safety and security of workers under the Factories Act, 1948 and the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; Child Labour (Prohibition and Regulation) Act of 1986; Maternity Benefit Act, 1961; Employee’s Compensation Act, 1923; Equal Remuneration Act, 1976; Bonded Labour System (Abolition) Act, 1976; and Section 5 of the Payment of Wages Act, 1936 (the right to receive timely wages), remaining all labour laws as listed above are suspended in the State. Exemptions are subject to the fulfillment of the following conditions:
- Name and details of all employed workers shall be entered electronically on attendance register prescribed in Section 62 of the Factories Act, 1948.
- No workers shall be paid less than minimum wage as prescribed by the UP Government.
- The wages of the workers shall be within the time frame limit prescribed under Section 5 of the Payment of Wages Act, 1936.
- The wages to workers shall be paid only in their bank accounts.
- The provisions of the Factories Act, 1948 and the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 relating to safety and security of workers shall remain applicable.
- The workers shall not be allowed or required to work for more than eleven hours per day and the spread over of the work shall not be more than twelve hours per day.
- For any death or disability due to accident arising out of and in the course of employment, compensation shall be paid in accordance with the Employees Compensation Act, 1923.
- The provisions of the various labour laws relating to the employment of women and children shall remain applicable.
- The provisions of Bonded Labour System (Abolition) Act, 1976 shall remain applicable.
Essentially, the Ordinance makes the key labour laws and rules thereunder relating to workers and those concerning occupational safety, industrial disputes, contract workers, trade unions, fair practices of hiring and firing, etc. defunct for a considerable period of time.
Madhya Pradesh (“MP“)
The Government of MP vide a gazette notification dated May 05, 2020 has amended the Industrial Disputes Act, 1947 allowing new establishments to be exempt from provisions under the Industrial Disputes Act, 1947, barring the provisions of Chapter V-A (Lay-off and Retrenchment), provisions of Chapter V-B (Special Provisions relating to Lay-off, Retrenchment and closure in certain Establishment) pertaining to conditions precedent to retrenchment of workmen, procedure for closing down an undertaking, special provisions as to restarting of undertakings closed down before commencement of the Industrial Disputes (Amendment) Act, 1976, penalty for lay-off and retrenchment without previous permission and penalty for closure. The exemption is applicable for a period of thousand (1000) days subject to the condition that adequate provisions are made by such industries for the investigation and settlement of industrial disputes of the workmen employed by them.
Further, the notification exempts factories from provisions of the Factories Act, 1948 and MP Factories Rules, 1962 for a period of three (3) months from the date of publication of the notification. Exemption is available from all provisions of the Factories Act, 1948 barring provisions pertaining to approval, licensing and registration of factories, notice by occupier and inspectors, provisions of Chapter IV (Safety), Chapter IV-A (Provisions relating to Hazardous Processes), Section 59 (Extra wages for overtime), Section 65 (Power to make exempting rules), Section 67 (Prohibition of employment of young children), Section 79 (Annual leave with wages), Section 88 (Notice of certain accidents) and Section 112 (General powers to make rules) and rules made thereunder.
The State of Gujarat has vide a notification dated April 17, 2020 exempted all factories registered under the Factories Act, 1948 from various provisions relating to weekly hours, daily hours, intervals for rest etc., with effect from April 20, 2020, with the following conditions until July 19, 2020:
- No adult worker shall be allowed or required to work in a factory for more than twelve (12) hours a day and seventy-two (72) hours in a week.
- No worker shall work for more than six (6) hours before he has had an interval for rest for at least half an hour on each day.
- No female worker shall be allowed or required to work in a factory between 7:00 PM to 6:00 AM.
- Wages shall be in proportion of the existing wages. (E.g. if wages for eight (8) hours are Rs. 80, then the proportionate wages for twelve (12) hours will be Rs. 120).
In an announcement made on May 08, 2020, the Chief Minister of Gujarat has issued a statement that labour law relaxations shall be made applicable to new projects in the State on the condition that they operate for at least twelve hundred (1200) days and for those already operational in that period. It was clarified that a new ordinance would be brought in to bring this into effect.
The State of Rajasthan has issued a notification dated April 11, 2020 for extending working hours to twelve (12) hours per day for a period of three (3) months from the date of the order. To reduce manpower requirements in factories manufacturing essential food and grocery supplies, the Government of Rajasthan has exempted the provisions of working hours of adult workers under the Factories Act, 1948 subject to a few conditions. It is also clarified that the additional four (4) hours per day shall be paid as overtime subject to an overtime limit of twenty-four (24) hours per week.
Himachal Pradesh (“HP“)
The State of HP has issued a notification dated April 21, 2020 exempting all factories registered under the Factories Act, 1948 from provisions relating to weekly, daily, spread hours and interval of rest until July 20, 2020 subject to the following conditions:
- No worker shall work in a factory for more than twelve (12) hours in any day and seventy-two (72) hours in a week.
- No worker shall work for more than six (6) hours before he has had an interval for rest for at least half an hour.
- Wages in respect of increased working hours as a result of the exemption shall be in proportion to existing minimum wages fixed by the Government of HP under the Minimum Wages Act, 1948.
- Provisions of Section 59 pertaining to overtime wages shall continue to be applicable without any change.
It appears that several other States are in the process of exempting businesses and establishments from provisions of labour laws.
Implications of the Suspension
In an official release of May 06, 2020, which is based on the decision of the UP Council of Ministers, the suspension of labour laws has been justified by stating that it is the need of the hour in order to give concessions to ongoing and new industrial establishments, businesses and factories. While this move by the Government aims to revive and boost businesses and industries, it has received criticism on the ground that the Ordinance and relaxations of key labour laws infringe on worker rights.
What remains to be seen is the manner of implementation of the Ordinance and notifications and whether these will be challenged in Indian courts. However, it appears that other States are likely to follow in a similar direction to suspend / relax labour laws in order to attract investment. Interestingly, this move goes against the Centre’s attempt to codify the labour laws via the Code of Wages, 2019, which received presidential assent last year in August. The question then arises is what alternative routes must the Government seek to try to balance the interests of the employers and employees/workmen?