India has so far the most inflexible labour market regulations which are inclined towards the labour. These laws have protected the ‘workers’ and not the jobs. These regulations have in turn proved to be a hindrance to the large scale investments, productivity and enhancement. Several studies have shown that these laws, rules and regulations have proved to be an obstruction and has hampered the ability and capability of various enterprises to respond to the changing dynamic of businesses. Labour regulations which intended to protect the labourers were coincidentally and unintentionally coming in the way of the benefit which could have been provided to the new workers.[i]
The spread of coronavirus mandated that some incentive must be offered to the industry because the industry was passing through a very bad phase after the lockdown for about 3 months, post March 23, 2020 so that the investments could come even in this atmosphere of gloom and despair and some growth strategies could be developed to set the economy back on trail. One of the strongest, boldest and daring initiatives after the spread of COVID-19 pandemic were the radical labour market reforms ushered in by Uttar Pradesh, Madhya Pradesh, Gujarat and other states by freezing and suspending a vast number of acts and giving the industries flexibility and openness.
This setup was aimed at boosting the economy during the COVID-19 pandemic. These states came out with various notifications and ordinance which contained the exemption from compliance about certain laws, rules and regulations with regard to the labourers. These labour reforms became crucial to offset the effect of social distancing norms which mandated lower number of employees which was ultimately going to affect the productivity of the industry concerned and consequently its profitability and survival. Such kind of suspension or exemption has proved to be beneficial for the businesses and industries as these laws were labour centric and it created fear in the minds of various industries to establish their setup as these laws proved to be a blockage for them amidst COVID-19 pandemic and this suspension has helped them to curb the effects of the COVID-19 nationwide lockdown.[ii]
The good thing about the new initiative is the fact that all the clauses related to minimum wages of the worker; number of hours; safety and security measures have been kept fully functional. The laws related to child and bonded labour will be kept intact and will be applicable. Another feature which was introduced in Gujarat for the special economic zones has also been made sure to be complied with which includes that the terminated employee must get 45 days’ worth of salary for every year of work.[iii]
The following Labour Reforms have been introduced by the various governments:
On May 8, 2020, The State Government in Uttar Pradesh promulgated an ordinance called the ‘Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020′ (“Ordinance”) which suspends a majority of labour laws for a period of three years and exempted from compliance a majority of the labour laws for a period of three (3) years.
Except 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 the other labour laws were suspended in the State.[iv]
The State Government in Madhya Pradesh vide a gazette notification dated May 05,2020has amended the Industrial Disputes Act,1947, wherein the new establishments shall be exempted from the provisions mentioned in Industrial Disputes Act, except for Chapter V – A which lays down the provisions of Lay off and Retrenchment along with various other provisions as mentioned in the ordinance. The exemption is applicable for a period of thousand days which is subject to the condition that appropriate provisions are made for settlement and resolution of the disputes of the workmen which have been employed by them in these industries on which there is an exemption.[v]
The State Government in Gujarat vide a notification dated April 17, 2020 has exempted all factories which were registered under the Factories Act, 1948 from various provisions relating to weekly hours and daily hours to be completed by a worker, rest intervals etc., with effect from April 20, 2020, with the following conditions until July 19, 2020[vi]:
- 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).[vii]
Chief Minister, in an announcement on May 08,2020 had issued a statement which stated that the labour law relaxation shall only be applicable in the state on the condition that these laws and regulations shall operate for at least twelve hundred days and for those which are already operational in that period. It was also clarified that anew ordinance will be brought in to bring this into effect.[viii]
The State Government of Rajasthan had 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. The Notification 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.[ix]
The State Government of Himachal Pradesh had issued a notification dated April 21, 2020 which exempted all the factories registered under the Factories Act, 1948 from various provisions like weekly and daily hours, intervals of rest and so on and so forth till the period of 20 July , 2020 subjected to following conditions[x]:
- 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.[xi]
Contentions in Support of Labour Law Reforms:
The labour reforms introduced by the several states received strong support and endorsement by top notch policy makers which indicated that Centre may give its nod and approval to the changes and initiatives taken up by various states which is aimed at attracting large scale investments, creating an arena for jobs and helping to build a second supply chain that the world is aimed at building in order to de-risk itself from China against the backdrop of pandemic.[xii]
“It is a good move. For the time we are giving the needed flexibility to employer. State governments working in close cooperation with workers’ representative organisations, will ensure workers’ interests are protected while giving flexibility,” Rajiv Kumar, Vice Chairman of Government Think tank Niti Aayog told to TOI.[xiii]
Former Aayog Vice Chairman. Arvind Panagariya said that the reforms will go down as one of the biggest moves in the country’s reforms story. “The reforms must still be blessed by the Centre. Assuming this is done, there is no denying that the reforms by UP and Gujarat would go down as the biggest bang reforms in the history of Post-Independence reforms,” said Panagariya, a professor at Columbia University.[xiv]
“One of the most important factors to restarting economic activity is the need for labour law reforms,” said Vikram Kirloskar, President of Industry Lobby Group CII.[xv]
Contentions Against the Labour Law Reforms:
On the other side, at the grass root level, labourers are not satisfied with these reforms as their rights are getting affected by these rules and regulations.
The labour ministry has indicated some concerns over the complete suspension of the labour laws. The ministry stated that it has been communicated to the States that complete suspension is against the Centre’s commitment to ILO conventions. The States cannot completely abolish the labour laws in the name of reforms as India is a signatory to the International Labour Organisation(ILO) and it is the duty of the Centre to protect the interest of the workers.[xvi]
The Single Judge Bench of Aurangabad of the Bombay High Court recently opined during this period of COVID-19 Pandemic that the principle of ‘no work – no wages’ cannot be observed and be made applicable by the employers. In the present case, a plea was put forth wherein the Contract Workers’ Union raised a grievance that despite the workers offering their services and being able to serve as security personnel or any other duty at Tuljabhavani Mandir Sansthan ,they were debarred from performing their duties due to the Nationwide Lockdown and consequently not being paid. [xvii]
The Court said that it cannot “turnaNelson’seye“ to this situation and the plight of the workers. The court was also of the view that due to the inability of the employer to not being able to give jobs during this period does not signify that the principle of ‘no work – no wages’ can be applied. The court accordingly ruled in favour of employees and awarded them wages for the period of lockdown.[xviii]
Other Contemporary Reforms:
The Minister of State for Labour and Employment, Mr. Santosh Kumar Gangwar, on 11 December, 2019 introduced the Code on Social Security, 2019 which aims to replace nine laws related to social security, including the Employees’ Provident Fund Act,1952, the Maternity Benefit Act, 1961 and the Unorganised Workers’ Social Security Act,2008. Social Security can be understood as the measure to ensure access to health care and the provision of income security to workers. The 9 different legislations presently governing the Social Security benefits are subsumed into one single code, viz., Code on Social Security. The aforesaid legislation is awaiting the parliamentary scrutiny and informed deliberations over it.[xix]
The labour reforms are aimed at boosting the economy so that the large scale investments can be brought in and people from various sectors show willingness to establish industries. The suspension of these labour reforms is necessary to the extent of establishment of industries of diversified sectors especially in this post COVID environment. But at the same time, a balance should be struck in the future and labour reforms in the actual sense should be adopted as the Industries’Mandarins were of the view that these laws restricted their work and they were in a constant fear due to the ‘Labour centric laws’. An equilibrium shall be created where neither the rights of the labourers are at stake nor does the company has to compromise with respect to establishing their industries and they can do so with more flexibility and openness.
[xvii] Rashtriya Shramik Aghadi v. State of Maharashtra; https://www.barandbench.com/news/litigation/covid-19-principle-of-no-work-no-wages-cannot-be-applied-in-these-extraordinary-circumstances-bombay-high-court