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Sunday 17 May 2020

State Governments Order Changes in Labour Laws – What Stands to be Gained and Lost

The world is dealing with a pandemic of unimaginable proportions. While countries are struggling with curbing its spread, they are also battling to ensure the healthy have a chance at life. However, governments are trying to set in place measures to ensure human welfare is the greatest priority.
Our government mandated the payment of wages for every employee. They also laid down guidelines to ensure employees retained their jobs and were not penalised in any way even while working from home. As the duration of the lockdown continued and employers lobbied heavily against the directive, the Supreme Court has now ruled that employers can face no prosecution for non-payment of wages. The matter is still waiting for a final authorisation from the central government.  

The dilemma between protecting the employee and safeguarding industries is getting more serious. As companies are facing the growing realities of bankruptcy, economic slowdown and absence of immediate relief, times are getting more desperate.

Several states have taken on the onus of instituting reforms in order to protect their industries and bring about a revival of some sorts. Many states have made relatively small changes to the number of working hours, intervals of rest and payment of overtime. Some significantly larger changes have been instrumented in the states of Gujarat, Uttar Pradesh and Madhya Pradesh.

Many opine that these changes are backed by a clear political agenda. Others view it as an opportunity of diverting business from China to India. Whether as an incentive to bring about economic resurgence or simply a measure to save the industry from impending doom, the question of intent cannot be ignored. Are these really measures that will give the economy impetus? Is this the right time to clip the wings of employees? Are we creating more opportunity or just taking away existing ones?

Here are some of the most major changes witnessed in the country so far.

  • All new establishments need only adhere to the following laws – Minimum Wages Act, Industrial Safety Rules and Employees Compensation Act.
  • The government has also facilitated the process of setting up industries and new businesses. Over 30,000 hectares of land have been set aside, and will be available within 7 days of application.
  • All approvals will be sanctioned online within 15 days. Special benefits will be made available for 1,200 days
Madhya Pradesh
Following a host of exemptions, the most important revisions include:
  •       Hiring for establishments with up to 100 employees according to their needs. Registration for contractors with below 50 labourers has been withdrawn
  •           Inspections have been mandated once in three months, with inspections waived off for factories with under 50 workers. Third party inspections have been sanctioned
  •      Registrations and licenses will be available within a day. Factory licence renewals need to be made once in 10 years. There will only be a one-time legislation with no renewals for start-ups
  •      Shift durations have been raised from 8 to 12 hours. Overtime permissible for up to 72 hours. Shops have permission to remain open from 6am to midnight 

-       Uttar Pradesh
The state has revoked all labour laws through the Temporary Exemption from Certain Labour Laws Ordinance 2020. This will apply for the next three years. The only acts that continue to be relevant include:
  •      Building and Other Construction Workers Act, 1996
  •         Workmen Compensation Act, 1923 
  •      Bonded Labour System (Abolition Act), 1976
  •      Section 5 of Payment of Wages Act, which deals with timely disbursement of wages for various employees including cases of termination

-       Government perspective
Along with giving added incentives to set up new industries and boost the economy, there is optimism in the government that the flexibility is warranted. They also seem to feel that a state of healthy competition will be promoted among states allowing for better standards and greater reform.

Business Perspective
Those setting up businesses are truly beginning from a position of power. The current scenario allows employers to hire and fire at will. Intervention from the government and inspections is reduced to being almost non-existent. The role of unions has been made redundant.

The Employee Angle
What is perhaps most impacting is the human angle. Here are some things employees across these states stand to lose:
  •           Neglect of health and safety: Amendments do not make it necessary for companies to conform to norms on working conditions. This includes waste disposal, drinking water, canteens, urinals, cleanliness, ventilation, lighting, crèches, restrooms,  or the reporting of employees with occupational diseases
  •       Compromised working hours and wages during leave period. Denial of simple entitlements like leave and overtime
  •       Disguised unemployment: There is little job security. Although the move is aimed heavily at creating more jobs and generating employment, they have also created avenues for employers to fire people and hire them for significantly less pay. This is a far cry from the appeal of the government to companies to pay employees wages in full. Social security of employees has also reduced significantly as most employees will be converted into casual labour
  •       Absence of redressal mechanisms: Labour stands to lose the power to form unions. They have no machinery to voice grievances, and have no opportunity to voice their case in the event of dismissal for misconduct. Welfare facilities have been abolished and there is no scope to raise industrial disputes. There is no protection from layoff, lockout, retrenchment or strikes

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