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.
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.
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.
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.