Suspension of labour laws in different states: Immoral and Inappropriate

In the midst of the Corona Virus when millions of migrant labourers are stranded in different states due to nationwide lockdown and millions of unorganized labourers lost their jobs. Several state governments in order to boost economic growth and revive industries which faced tremendous stress due to nationwide lockdown and slump in aggregate demand tweaked labour laws of their respective states. At a time when labourers are worst hit and their employment opportunities are shrinking the changes in labour laws which were meant to protect their interests and provide them options against exploitation will add more pain to their suffering. These laws guaranteed minimum wage among other social security to the labourers. According to a report by the Centre for Monitoring Indian Economy (CMIE) there is huge unemployment crisis with more than 27 million youth in the age of 20-30 years lost their jobs in the month of April 2020.


To answer the issue of massive unemployment which has only skyrocketed since the beginning of this pandemic, some of the labour surplus states have made sweeping changes in their existing labour laws. Uttar Pradesh government through an ordinance has suspended all but three labour laws in the state for next three years. The state has suspended Minimum Wages Act 1948, Maternity Benefit Act 1961, Industrial Dispute Act 1947 and Trades Union Act 1926 to name a few. The laws exempted from this ordinance are Payment of Wages Act 1936 and The Bonded Labour System (Abolition) Act 1976. Some provisions of Building and Other Construction Workers Act, 1996 and Factories Act, 1948 will continue to apply that are related to ex gratia payments in case of work-related diseases and disabilities. The ordinance is yet to be approved by the President as it seeks to amend Central legislations.


Similarly in the state of Madhya Pradesh, the state government promulgated an ordinance which has amended two state laws i.e. Madhya Pradesh Industrial Employment Act, 1961 and Madhya Pradesh Sharam Kalyan Nidhi Adhiniyam 1982. The 1961 Act regulates the conditions of employment of workers and applies to all establishments with 50 or more workers. The Ordinance increases this threshold to 100 or more workers. Therefore, the Act will no longer apply to establishments with between 50 and 100 workers that were previously regulated. The 1982 Act provides for the constitution of a fund that will finance activities related to welfare of labour. The Ordinance amends the Act to allow the state government to exempt any establishment or class of establishments from the provisions of the Act through a notification. Government has further amended certain provisions of Industrial Dispute Act, 1947 to exempt new establishments from the requirements under the act as long as it feels that there exist a mechanism of dispute resolution in new establishments.

Gujarat has also amended certain labour laws exempting establishments from various obligations pertaining to the welfare of labour. The state has increased working hours from 48 to 72 a week with no overtime pay required. Other states like Haryana and Rajasthan have also tweaked their labour laws in the favour of industries and other manufacturing establishments, both the states have increased the working hour from 8 to 12 per day with overtime payment required.


The question that arises is in regards to the moral and constitutional validity of the changes that have been made in the labour laws. At a time when migrant labourers are forced to walk hundreds of miles bare footed and when their livelihood are at stake, such changes to labour laws will only add insult to their injury. These changes would further aggravate problems for labourers, with no or little social security, no employment term surety and no grievance redressal mechanism.


The suspension of labour laws has sparked a new debate, especially the ordinance of Uttar Pradesh government has divided the country into two sides, with one side especially industrialist welcoming the move while the other on hand trade unions and some economists criticizing the government for its anti-poor stance. This move of the state governments has created a wave of fear and panic with millions of labourers fearing that all their working rights would be taken away and usurped.


The argument from the government side is that, the rigid labour laws for long have prevented the investment in these states and manufacturers’ are not keen to invest because of the rigours of labour laws and related diligences. The government also argues that as the pandemic has brought the economy to a standstill and rendered millions of people unemployed, this move will help to kick-start the economy. The investment government is expecting would result in job creation, which will ultimately benefit the labourers and general public. Government has also argued that these rigid laws have only left labourers more vulnerable to Inspector-Raj. It further argues that industrialist would be more willing then ever to invest in these states and this investment would stimulate the economy of the state. There has been no theory or concrete evidence put forward by the government to vindicate its claim. The efficacy of such laws is to be doubted, and without building the infrastructure and pumping money into the economy, laws like these may prove counterproductive.


Labour unions have strongly protested against these changes. The RSS backed trade union Bhartiya Mazdoor Sangh has been vocal against these changes. Noted labour economist Shayam Sundar said that the problem with the economy is falling demand for goods and services and making any changes in the labour laws will not serve the purpose as the existing laws have not caused substantial damage to the economy. He went on to saying that "It seems the government is capitalising on the desperate situation of workers during the COVID- 19 pandemic.”


Another issue of contention in the Uttar Pradesh ordinance is that it denies labourers access to court, paid leaves, compensation for retrenchment and overtime payment. The already skewed relationship of employer and employee has been made more favourable to the employer, thus making labourers more vulnerable to exploitation. Employer would hire and fire employees as per his whim and fancies. The suspension of Minimum Wages Act has taken a guarantee from them at a time when state should actually be bringing legislations making living wages mandatory. The definition of payment under Payment of Wages Act will become more ambiguous in the absence of Minimum Wages Act. The ordinance further has substantially brought down the bargaining power of trade unions, since Industrial Dispute Act has been suspended and in absence of no alternative dispute resolution and grievance redressal mechanism the employees are more susceptible to gross misconduct by their employers. Such changes to labour laws are aimed at reducing the labourers to the state of paid slaves working tirelessly without any rights.

Prof. Shayam Sundar along with several other economists rightly pointed out that states like Gujarat and Maharashtra have been able to reap the benefits of foreign direct investment with the same labour laws because these states have better infrastructure, access to credit, mobility for raw material, ports and energy supply. In the absence of these facilities in states like Uttar Pradesh, Madhya Pradesh and Bihar industrial output would hardly increase in these states. Instead of blaming labour laws the government should shoulder responsibility itself by enhancing the infrastructure and by facilitating availability of credit in these states.


Prof. Faizan Mustafa said that in times like these we need laws which actually strengthen social security measures for labourers not laws which take away all the rights of these workers.

The judgment of the Supreme Court of India in the case of PUDR vs Union of India recognised that minimum wages stems from Article 23 of Indian Constitution, and not paying minimum wages would amount to forced labour. The condition to provide decent and safe working environment has also been recognised as part of fundamental right to live with dignity under Article 21 of the Constitution. Labour protection has also been enshrined under Directive Principles of State Policy.


International Labour Organisation (ILO) has also released a statement warning these states about adhering to the labour conventions. ILO convention 144 to which India is a signatory, deals with tripartite consultation including the government, the workers and the employer in matters of changes in labour laws.


“Certain states in India are moving towards relaxing labour laws with a view to revitalise the economy from the impact of COVID-19. Such amendments should emanate from tripartite consultation involving the government, the workers’ and the employers’ organisations and be compliant with the international labour standards, including the Fundamental Principles and Rights at Work (FPRW),” this was ILO response to the set of questions sent to it by Business Standard.


The Centre of Trade Unions (CITU) has termed the government actions as "inhumane crime" and said that these are in violation of the conventions of ILO. It has also warned the government that is seriously considering moving to ILO complaining about the "misdeeds" of the government. The move of state governments is also in violation of ILO convention 87, which guarantees freedom of association, ILO convention 98 which deals with Right to Organise and Collective Bargaining and core convention of ILO about working 8 hours a day only.

There is a need to do away with some of the outdated labour laws, but suspending all major labour laws will serve no purpose, it will only add to the already vulnerable situation of workers. Government is also tasked with reviving the state of economy but it shouldn't be done at the cost of labour rights, certainly government needs to find a more balancing path where it can manage both the economy and labour protection. Whole burden of adjustment cannot be shifted to the labourers.


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