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Column

FEMA regulations on cross border merger

RBI issued the Foreign Exchange Management (Cross Border Merger) Regulations, 2018 (FEMA Regulations) on 20 March 2018 to address various issues that may arise concerning cross border mergers from an exchange control perspective.

By: Riya Singh, 4th year, BBA LLB, KLE Society’s Law College, Bangalore.

Introduction

On 13th April 2017, the Ministry of Corporate Affairs (MCA) notified Section 234 of the Companies Act, 2013 and inserted a new Rule 25A (merger or amalgamation of a Foreign Company with an Indian company and vice-versa) in the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 (Compromises Rules), paving way for merger and amalgamation of a Foreign Company with an Indian company and vice-versa. Since Rule 25A required prior approval of the Reserve Bank of India (RBI) for the cross-border merger, without corresponding procedural aspects in place, the cross-border merger could not take-off. Now, with the RBI notifying the Foreign Exchange Management (Cross Border Merger) Regulations, 2018 (FEMA Regulations/Regulations) for mergers amalgamation and arrangement between Indian and foreign companies on 20th March 2018, this gap has been bridged.

Key definitions under the Regulations 

  • ‘Cross border merger’ means any merger, amalgamation, or arrangement between an Indian company and foreign company under the Act. 
  • ‘Foreign company’ means any company or body corporate incorporated outside India whether having a place of business in India or not. For outbound mergers, a foreign company should be incorporated in a specified jurisdiction. 
  • ‘Inbound merger’ means a cross border merger where the resultant company is an Indian company. 
  • ‘Indian company’ means a company incorporated under the Companies Act, 2013, or under any previous company law. 
  • ‘Outbound merger’ means a cross border merger where the resultant company is a foreign company. 
  • ‘Resultant Company’ means an Indian company or a foreign company, which takes over the assets and liabilities of the companies involved in the cross-border merger.
  • The Ministry of Corporate Affairs, Government of India notified Section 234 of the Companies Act, 2013 and Rule 25-A of the Companies Merger Rules, providing for a mandatory prior approval of the Reserve Bank of India, to transit mergers and amalgamations between Indian companies and companies incorporated in International/foreign jurisdiction (cross-border merger).

Cross-border merger: Procedural aspects

Inbound Mergers

When the Resultant Company is an Indian Company, the following procedure becomes applicable:

  • Issue/Transfer of securities:

The issue or transfer of any security and/or a foreign security, to a person resident outside India should be made under the pricing guidelines, entry routes, sectoral caps, attendant conditions, and reporting requirements for foreign investment as laid down in Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 (TISPRO). However, this is subject to the following conditions:

Where the Foreign Company is a joint venture (JV) or a wholly-owned subsidiary (WOS) of the Indian company, it shall comply with the conditions prescribed for transfer of shares of such JV/ WOS by the Indian party as laid down in Foreign Exchange Management (Transfer or issue of any foreign security) Regulations, 2004 (TIFS); 

where the Inbound Merger of the JV/WOS results in the acquisition of the Step-down subsidiary of JV/ WOS of the Indian party by the Resultant Company, then such acquisition should comply with Regulation 6 and 7 of TIFS which provide for permission for direct investment in certain cases and investment by Indian party engaged in financial services sector respectively.

  • Borrowings:

Any borrowing of the Foreign Company from overseas sources that becomes the borrowing of the Resultant Company shall conform within two years, to Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 or Foreign Exchange Management (Guarantee) Regulations, 2000, as applicable.

Outbound Mergers

  • Any person resident in India may acquire or hold securities of the resultant company under ODI Regulations5 (or under LRS6 in case of a resident individual). 
  • Any office of the Indian company in India shall be deemed to be a branch office of the resultant company under the Branch/Liaison Office Regulations, 20167. 
  • The guarantees or outstanding borrowings shall be repaid as per the sanctioned Scheme. Ø Any liability not in conformity with the FEMA regulations shall not be acquired by the resultant company. Further, a no-objection certificate to this effect is to be obtained from the Indian lenders. 
  • The resultant company may acquire, hold, and transfer any asset in India which a foreign company is otherwise permitted to acquire. 
  • Where the asset or security is not permitted to be acquired or held, the resultant company shall sell/ dispose of such asset or security within two years from the date of sanction of Scheme and repatriate sale proceeds outside India through banking channels. Repayment of Indian liabilities from sale proceeds of Indian assets within two years permissible.

The legislation provides that any transaction undertaken concerning a cross-border merger under the FEMA Regulations shall be deemed to be approved by RBI under Rule 25-A.

While the FEMA Regulations intend to cover cross-border “merger, amalgamation, demerger or arrangement”, the jurisdiction of legislative provisions of the Companies Act and Merger Rules are delimited to only “mergers and amalgamations”, without any explicit mention of “arrangement or demergers”. This is likely to have a trickle-down impact on insolvency and bankruptcy proceedings as well since it will encourage foreign bidders to consider buying Indian assets. In an inbound merger, the new rules allow the resultant company to issue or transfer any security to a person resident outside India subject to pricing and sectoral foreign investment conditions and FEMA regulations. For an outbound merger, the new provision allows resident Indian entities to acquire or hold securities of the resultant company under FEMA regulations.

Conclusion

After the introduction of the provisions for cross border merger in the Act, the notification of these Regulations would now enable active evaluation of cross border merger. Any transaction on account of a cross border merger undertaken in compliance with these Regulations shall be considered to have deemed approval of the RBI subject to obtaining other applicable regulatory approvals as provided under the Act. Further, for all practical purposes of corporate planning – extant direct and indirect tax laws, statutes governing corporate-conduct, accounting norms, and other relevant compliance provisions of respective jurisdictions need to be evaluated in greater detail concerning cross border arrangement.

Column

Broadcasting Rights in India

The reality of how broadcasting rights are interpreted and managed in India is rather grim as compared to the variety of provisions laid down by the law. India faces the problem of illegal and pirated documentation of movies which is highly dysfunctional in encouraging these broadcasters from reaping the full potential of the broadcasting industry. Indian law, in this domain, is still young and requires an effective legal mechanism for technological developments which have been established in international articles and treaties.

By: Muskan Nagdawne, Third Year Law Student at Symbiosis Law School, Pune.

Introduction

From local performing arts to large scale movie production- the range of what is covered under rights of broadcasting in India is immaculate. Under the legal provisions designed by jurists, the Copyright Act of 1957 governs the laws related to the display of artistic expression. Implementation of the same is not only to protect the database involved in creativity but also to encourage the society to lay a foundation for creativity by promoting their efforts and fair use of editorial or artistic work.  

The Copyright Act of India provides an arrangement of rights and liabilities when it comes to internet broadcasting and technical measures. These have been designed in a similar fashion to international guidelines for the protection of media. 

Broadcasting Rights under Copyright Law

Section 37 predominantly lays down the rights for broadcasting in India via seeking legislative and an interpretive theory for protection. The moment you perform something original, your performance acquires protection. The acquiring of a performer’s right enables you to bar anyone from:

  • Making a sound recording or visual recording of the performance without permission
  • Reproducing a sound recording or a visual recording, wherein such recording was made without the performer’s consent or was made for purposes different to what the performer had consented.
  • Broadcasting the performance.
  • Communicating the performance to the public.
  • Issuing copies of the performance to the public where such copies are not ones already in circulation.
  • Selling or giving it on commercial rental or offer for sale or commercial rental any copy of the recording.

In addition to this, the Copyright Act also vests certain moral rights in performers. These have been enumerated in S 38B of the Copyright Act. S 38B provides that even in the event of the assignment of rights, a performer has the right to:

  • Claim to be identified as the performer of his/her performance except where omission is dictated by the manner of use of performance.
  • Restrain or claim damages in respect of any distortion, mutilation, or other modification of his/her performance that would be prejudicial to his/her reputation.

With rights, come limitations. Exceptions to the rights of broadcasting in India are governed under S.39 of the Copyright Act, which provide that if:

  • The sound/video recording of the performance is made solely for private use or for bona fide teaching and research;
  • The use is consistent with fair dealing.
  • Any other act which does not constitute an infringement under S 52.

The performer in these events, cannot claim to have conducted a faithful performance of their rights. 

Concept of Neighbouring Rights

The concept of neighbouring rights is subject-matter to and for the full establishment of legal protection for pre-existing materials. It enables protection of the rights of broadcasters and performers by bestowing upon them rights in three distinguished categories; namely for Performers (actors/musicians); Producers of sound recordings (also referred to as phonograms); and Broadcasting organizations.

The reason for these to be called neighbouring rights is because even though broadcasting and performing are not the subject matter of copyright, they are incidental to it.

In this manner, by providing a narrow space for individuals of niche categories into the rights of a broader category of the understanding of copyright, the Indian law sets out to expand what is essentially a corporate notion into a moral dialogue. 

Commercial exploitation of original work of literary value and a profound poetic expression is as important to invest in and protect as any other legal rights. The justification provided primarily for the protection of neighbouring rights in such scenarios is that the public performer displays certain creativity in making the work enjoyable to the public. The aspect of the credibility of performance therefore is as much of an intellectual creation as a copyrighted work. Therefore, as long as they can easily satisfy the test of originality as has been required under traditional copyright protection, the remuneration for exploitation is likewise provided.

Legal Measures

In the event of an infringement of such rights, the person is made available with both civil and criminal remedies. In the case of civil remedies, the person would be able to claim for an injunction, damages, or accounts of profit. The remedy of injunction originates from tort law which is a restriction of conduction of certain activity by a person upon violation of rights. Apart from this, criminal remedies wherein the infringer shall be punished for a term not less than six months and which may extend to six years also exist. Furthermore, the infringer is liable to pay a fine not less than fifty thousand rupees which may extend to two lakh rupees. A subsequent offense would invite a higher punishment.

Judicial Interpretation

In the landmark judgement Of Eastern Book Company and Others V. D.B. Modak and another the Hon’ble Apex court pronounced that in case of reproduction or publication of work in the public domain, the same does not account for the infringement of any copyright issue.

The court went on to give that the pure novelty of an idea or how innovative an invention does not amount to arousal of any copyright protection of such broadcasts and that in order to establish any right, one much prove the labour, skill and capital invested in the project.

Therefore, the execution of the idea is a more quantifiable variable over the mere thought under S.51 of the Copyright Act.

The court in New Delhi Television Ltd V. Icc Development (International) Ltd & Anr an interpretation to the concept of “FAIR DEALING” was questioned before the court in deciding whether the use of the footage of cricket matches by NDTV channel is consistent with the principles of fair dealing envisaged under Section 39(b) and Section 52(1)(a)(iii) of the Copyright Act. The court announced in their judgement that in case of such broadcasts being in accordance to the ICC guidelines, but anything restrictive in the guidelines, which distorts the principle laid down here would not be protected under law. 

Conclusion

The reality of how broadcasting rights are interpreted and managed in India is rather grim as compared to the variety of provisions laid down by the law. The broadcasting bill of 1997 is one example, which provides for independent authority of broadcasting services to still be implemented in India. India faces the problem of illegal and pirated documentation of movies which is highly dysfunctional in encouraging these broadcasters from reaping the full potential of the broadcasting industry. Indian law, in this domain, is still young and requires an effective legal mechanism for technological developments which have been established in international articles and treaties.

News, Top Stories

No Responsibility Or Duty To Run Administration; Can’t Issue Mandamus To Shift Mobile Tower To Another Place: Uttarakhand High Court [READ JUDGMENT]

The Uttarakhand High Court on Friday (15th January) refused to issue a mandamus writ in the case of Samay Sharma v. State of Uttarakhand & Others.

By: Megha Ravindran BBA LLB Nehru Academy of Law.

Chief Justice Raghvendra Singh Chauhan and Justice Manoj Kumar Tiwari said that it is neither the responsibility nor the duty of the Court to run the administration.

Brief of the case

Indus Tower Ltd was permitted to build a Mobile Tower in Aaganwadi Campus, Shivlok Colony, Ramnagar, Raipur, Dehradun.

So, Samay Sharma filed a petition that the Mobile Tower may adversely affect the children in the residential area of the colony and prayed that the State of Uttarakhand, District Magistrate, Dehradun, Dehradun Smart City Limited, Mussoorie Dehradun Development Authority, and Nagar Nigam, Dehradun should be directed to move the Mobile Tower to some other place.

Observation of the Court

The Court remarked that no bar in the law prevents a Mobile Tower from being erected. It is not the responsibility of this Court to run the administration. Consequently, the Court refused to issue mandamus. The Court also directed the Respondent to pass a reasoned order.

Legislations, The Law

Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020

In the midst of 2020, when the global pandemic of COVID-19, has wreaked on economic stability both in India and worldwide, The Parliament of India passed a number of resolutions to improve traditional corporate practices and evolving better systems of governance. One of the important Bill passed by the Indian Parliament in its Monsoon session is The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020. The article discusses the key highlights of Taxation and other Laws (Relaxation and Amendment of certain provisions) Bill, 2020.

By: Syed Suhaiba Geelani, 4TH year B.A.L.L.B, (Five-year law), University of Kashmir.

Introduction:

Taxation and other Laws (Relaxation and Amendment of certain provisions) bill, 2020 was initially introduced by Finance Minister Nirmala Sitaraman on 18-9-2020 in Lok Sabha and was subsequently passed in the Lok Sabha and Raj Sabha on 19-09-2020 and 22-09-2020 respectively. It received the Presidential assent on 29.09.2020 and finally, on the same day, it was notified to become Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020).

This newly proposed bill embodies a number of tax-related and other changes that seeks to provide relief to taxpayers, from various compliances under certain ‘specified Acts’, for the Financial Year 2020-21. The Bill aims to provide concessions in the payment of interest arising due to delay in the payment of taxes.  In addition to this, in cases where there is any delay in the payment of taxes for the specified period if the same is paid within the prescribed date, the bill contains provisions for waiver of penalty and prosecution. The bill has incorporated and ratified all the provisions of the Ordinance and the two notifications issued thereunder.

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020, containing a lot of amendments seek to supersede prior law of Taxation and further to amend the Income Tax Act, 1961 including amending section 12AB – new registration procedure for Trusts and Institutions, faceless assessment, and other various faceless proceedings.

The amendments have been made, either through changes in existing provisions or by incorporation of new ones. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 covers  8 laws including Wealth-tax Act, 1957, Income-tax Act, 1961, Prohibition of Benami Property Transactions Act, 1988, Chapter VII of the Finance (No. 2) Act, 2004 (related to Securities Transaction Tax), Chapter VII of the Finance Act, 2013(related to Commodities Transaction Tax), Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Chapter VIII of the Finance Act, 2016 (Equalisation Levy), Direct Tax Vivid se Vishwas Act, 2020. As the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 provides relaxation in compliances, it is also known as Specified Act, 2020.

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 is composed of the following 8 Chapters:

Chapter-IPreliminary chapter.
Chapter-IIRelaxation of certain provisions of specified Act
Chapter-IIIAmendments to the Income-tax Act, 1961
Chapter-IVAmendments to the Direct Tax Vivad Se Vishwas Act
Chapter-VRelaxation of a time limit under certain Indirect Tax laws
Chapter-VIAmendment to the Central Goods and Services Tax Act, 2017
Chapter-VIIAmendment to the Finance (No. 2) Act, 2019
Chapter-VIIIAmendment to the Finance Act, 2020


Highlighted below are the important changes introduced by the new Bill and the objectives that it seeks to achieve: 

  • The provisions of section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020, provides for the extension of various time limits for completion of actions under the specified Acts. It provides that where any due date is specified or prescribed or notified under any specified Acts including the Income Tax Act and such due date falls between the period of March 20, 2020, and December 31, 2020, then the tax or levy may be paid by 31 March 2020 or such extended date as may be notified later by the Central Govt.
  • The Bill further provides for a reduction in interest, waiver of penalty and prosecution for the delay in payment of certain taxes or levies during the specified period. However, all the above relaxations are provided only for payment of any tax, cess, or levy under the Income Tax Act, 1961 and or under any other specified Acts.
  • The Bill also offers amendments to the Income-tax Act, 1961. Such amendments include providing of tax incentive for Category-III Alternative Investment Funds located in the International Financial Services Centre (IFSC) to encourage relocation of foreign funds to the IFSC, deferment of a new procedure of registration and approval of certain entities introduced through the Finance Act, 2020, providing for a deduction for donation made to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) and exemption to its income, incorporation of Faceless Assessment Scheme, 2019 therein, empowering the Central Government to notify schemes for faceless processes under certain provisions by eliminating physical interface to the extent technologically feasible and to provide deduction or collection at source in respect of certain transactions at a three-fourths rate for the period from 14th May 2020 to 31st March 2021.
  • It proposes to amend the Direct Tax Vivad se Viswas Act, 2020 and the Finance Act, 2020. 

The Direct Tax Vivad se Vishwas Act, 2020  has been amended to extend the date for payment without 10% additional amount to 31-12-2020 in line with the relaxation provided in the Ordinance of 2020.

  • It also empowers the Central Government to notify certain dates relating to filing of declaration and making of the payment.  It provided to amend the Finance Act 2020 to clarify regarding capping of the surcharge at 15 per cent. on dividend income of the Foreign Portfolio Investor.
  • The Bill empowers the Central Government to remove any difficulty up to a period of two years and provide for repeal and savings of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020.
  • The Bill under clause 4 seeks to amend certain provisions relating to the Income-Tax Act, 1961. It provides the mechanism for calculation of the income of non-resident in the prescribed manner. (clause (4D) of section 10.)  

The Bill has prescribed a new registration procedure for Charitable Trusts and Institutions under section 12AB.

  • Regarding furnishing statement of donations, the proposed amendment to sub-section (5) of section 80G empowers the Board to provide for furnishing a statement of donations received from the dunes to the income-tax authority in the prescribed form and within the prescribed time limit.
  • The authority to withdraw approval to an association or institution for carrying out any eligible project or scheme has been granted to Principal Chief Commissioner of Income Tax (Exemption) or the Chief Commissioner of Income Tax (Exemption) 
  • Additionally, the insertion of sub-section (1A) in section 115AD provides for the calculation of income that is attributable to units held by a non-resident in the prescribed manner.

Conclusion:

Taxation and other Laws (Relaxation and Amendment of certain provisions) bill, 2020 has introduced a number of progressive provisions, curbing the effect of the pandemic, and proving beneficial for National economy.

Reference:

Legislations, The Law

The Uttar Pradesh Temporary Exemption from Certain Labor Laws Ordinance, 2020

The Uttar Pradesh government, on May 8, 202O, cleared an ordinance that exempts its factories and industries from all labor laws. Could a boon to industrialists and factory owners possibly be a curse to the laborers?  The article focuses on the conditions and impact of such an ordinance on the factory owners and the laborers they employ.

By: Maulika Memane, 3rd Year Student, ILS Law College.

Labor laws 

It is needless to say that industrial progress is fundamental to the growth of any nation. The growth of industries in a country determines the overall development of a nation. That being said, it is also important that there be continuous production and to ensure that matters such as disputes and safety concerns do not hamper the growth of an industry and that the rights and welfare of individuals working in such industries are given equal importance. Labor laws ensure exactly this.

Labor laws are an assortment of laws, administrative rulings, and precedents that address the legal rights of the people working in an organization and the organization itself.

Labor laws attempt to intervene in numerous parts of the relationship between an employer and the employees. It seeks to define the obligations between both these parties. As far as labor law regulations in India are concerned, it is important to shine a light on the major acts regulating the labor laws in India which are- Industrial Labor Act, 1947, Contract Labor Act, 1970, Minimum Wages Act, 1948, and Factories Act, 1948. 

According to Article 246 which talks about issues related to labor and labor welfare, these matters fall under List- III which is the concurrent list. In simple terms, it means that both the central as well as the state government can make laws regulating labor.

Due to this, there are currently 47 central laws and 200 state laws concerning the matters of labor and industries. 

The state legislature may exercise its right to regulate labor laws by either amending central law according to the feasibility and requirement of its state or by enacting its law regulating labor. In times when the state law does not adhere to the central laws, the state laws can be implemented after it receives the approval of the President.  

Terms and conditions of the ordinance 

On May 8, 2020, the Uttar Pradesh cabinet cleared an ordinance, the “Uttar Pradesh Temporary Exemption from Certain Labor Laws Ordinance, 2020″ which exempts all factories and other manufacturing establishments from the application of certain labor laws for three years.

This ordinance was promulgated by the governor of the state on the belief that such an ordinance would increase investment and provide the necessary boost to industries in hard times brought about due to the CO-VID 19 pandemic.

The ordinance also clearly states that even though the state legislature is not in session, the Governor is satisfied that such circumstances exist which make it necessary for him to take immediate action. The ordinance goes on to define the meaning of necessary terms such as factory, minimum wage, wages, and workers. Chapter two of the ordinance, however, talks about the conditions required for such an exemption by all factories and establishments engaged in manufacturing

So what are the conditions required?

Wages: The ordinance prohibits employers from paying less than the minimum wage prescribed by the UP government. The ordinance also states that employers are required to make payments to their employees within the time limit that has been prescribed under the sections of Payment Of Wages Act, 1936. The act states that “any establishment, in which less than one thousand persons are employed, shall be paid before the expiry of the seventh day after the last day of the wage period. In case of all other establishments, the employer shall pay its employees before the expiry of the tenth day, after the last day of the wage period in respect of which the wages are payable.” Lastly, the ordinance states that all payments must be made only to the bank accounts of the workers.

Safety and health of workers: The ordinance states that provisions of the Factories Act, 1948, and the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 relating to the safety and security of workers shall remain applicable.

Working hours: According to the ordinance, the workers cannot be required or be permitted to work for more than eleven hours a day. It also requires that the spread over of the work should not be more than twelve hours in a day.

Compensation Act: The ordinance requires establishments to provide compensation to employees for any death or disability due to an accident occurring because of and in the course of employment under the Employees Compensation Act of 1923. The act states that compensation should be made as follows:

1) Where death results from the injury: An amount equal to fifty percent. of the monthly wages of the deceased [employee] multiplied by the relevant factor; or an amount of one lakh and twenty thousand rupees, whichever is more;

2) Where permanent total disablement results from the injury: An amount equal to sixty percent. of the monthly wages of the injured [employee] multiplied by the relevant factor or one lakh and twenty thousand rupees, whichever is more be payable to the employee.

 The relevant factor mentioned being the complete age of the worker as per his last birthday. The act also lays down provisions in case of temporary disablement as well as the employer’s liability in case of non-payment of compensation.

Provisions relating to women and children: All provisions of labor law relating to women and children shall remain applicable to establishments according to the acts such as the Maternity Act, Equal Remuneration Act, and Child Labor Act.

Bonded Labor Act: All the provisions under the Bonded Labor Act which was introduced to abolish bonded labor and prevent economic and physical exploitation of weaker sections of the society and all matters concerning that are also to remain applicable to all establishments. 

Critical analysis 

The government of Uttar Pradesh issued a statement that stated that due to the negative impact of the COVID-19 pandemic on the economic and industrial activities, the workers’ welfare has also been affected. In an attempt to revive economic activities and bring them back on track by creating new investment opportunities and boosting old industrial, it has proposed such an ordinance.  The ordinance, which even though, has not received the required approvals to be made into law has received a considerable amount of criticism.

The ordinance has been accused of focusing merely on the growth of industries but considerably overlooking the welfare and rights of its workers.

Many provisions relating to the workers’ rights of the already existing acts have been rendered completely inapplicable due to the ordinance which exempts both old and new units of industries from previous provisions.

What is being considered a victory by factory owners and industrialists, may not have the same effect on laborers, who in uncertain times that this pandemic has brought about, are being subjected to face more uncertainty in terms of employment. The ordinance hands more power to owners of factories and industries with regards to hiring and termination of employment while attracting minimum corrective measures from the labor department.  Since the ordinance nullifies such provisions as related to settling disputes, trade unions, contract workers, and migrant workers, one can argue that it may lead to the ill-treatment of workers. The government must consider the negative impact such an ordinance could have on poor workers who have already been hit hard by the lockdown and what it would mean for their employment status and working conditions.

Other states which have amended laws 

Uttar Pradesh is not the only state to promulgate ordinances exempting laws related to labor due to the economic downfall during the pandemic, but Madhya Pradesh as well the state of Gujarat have also issued similar ordinances. The Gujarat ordinance, however, is limited to only new units that are being established. The ordinance issued by the Madhya Pradesh government provides an exemption from state laws under the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961, and the Madhya Pradesh Shram Kalyan Nidhi Adhiniyam, 1982 and exemption from certain provisions of the Industrial Dispute Act of 1947 to all new factories. 

Conclusion 

The Uttar Pradesh Temporary Exemption from Certain Labor Laws ordinance, 2020 is yet to receive the assent of the president as it restricts the application of central laws. The passing of such ordinances has also resulted in states extending working hours of laborers such as in states of Haryana, Himachal Pradesh, Rajasthan, Assam, and Odisha that have increased working hours to 12 hours a day for three months. It is however important to keep in mind that labor laws fall under the concurrent list that provides joint jurisdiction and needs to be approved at a federal level. The labor ministry is examining whether the ordinances impact the conventions of the International Labor Organization. The ILO, in return, has expressed concerns over the moves of free labor law in the states and has issued an appeal to the Prime Minister regarding the same.

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