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Legislations, The Law

Uttar Pradesh Temporary Exemption From Certain Labour Laws Ordinance, 2020

CHANGING FACE OF INDIAN LABOUR. Uttar Pradesh government immunes industries with power to hire and fire: 35 out of 38 labour laws adjourned.

By: Pallavi Kumari, 2nd Year LLB Student, Symbiosis Law School, Pune.

To contain the spread of coronavirus in India, a nationwide lockdown was imposed by the central government. Apart from essential activities, all other economic activities were suspended. To put the economic activities back on the track, the central and the state government brought about relaxations to the manufacturing industries and factories from the existing labour laws. Also, the government took the step to attract investment in the state as the labour inflow increased during the lockdown.

In an official release, based on the decision of the Uttar Pradesh Council of Ministers, the suspension of labour laws has been justified by stating that it is the need of the hour to give concessions to ongoing and new industrial establishments, businesses and factories.

How is labour regulated in India?

Regulation of labour and safety in mines and oilfields falls under Union List and the Labour falls under the Concurrent List of the Constitution. Therefore, both the Parliament and State Legislatures can make laws regulating labour. States can formulate their own laws but would come into force only when it is passed by both the houses of the state legislature and gets the assent of both the Governor and the President. Presently, there are more than  100 state laws and 40 central laws regulating various facets of labour.

The Ordinance 

Yogi Adityanath led Uttar Pradesh government, through an ordinance, suspended all the labour laws applicable on industries, manufacturing units and companies for a period of 3 years subjected to the accomplishment of certain conditions.  These conditions consist of:

Wages: The Ordinance lays down that workers cannot be paid below the minimum wage. Also, workers must be paid within the time limit as stated in the Payment of Wages Act, 1936.

  • The Act specifies that: 
    1. establishments with less than 1,000 workers must pay wages before the seventh day after the last day of the wage period 
    2. all other establishments must pay wages before the tenth day after the last day of the wage period and  
    3. Wages must be paid into the bank accounts of workers. 
  • Health and safety:   The Ordinance states that provisions of health and safety enshrined in the Building and Other Construction Workers Act, 1996 and Factories Act, 1948 will continue to apply.  These provisions regulate the usage of dangerous machinery, inspections, and maintenance of factories, amongst others. 
  • Work Hours:  Workers cannot be forced to work beyond eleven hours a day and the spread of work may not be more than 12 hours a day. 
  • Compensation:  In case of mishaps like accidents leading to death or disability, workers will be compensated as per the Employees Compensation Act, 1923. 
  • Bonded Labour: The Bonded Labour System (Abolition) Act, 1976 will remain in force.  It provides for the eradication of the bonded labour system. Bonded labour means the system of forced labour where a debtor enters into an agreement with the creditor under certain circumstances such as to reimburse his or his family members debt, due to his caste or community, or due to a social compulsion.  
  • Women and children:  Provisions of labour laws relating to the employment of women and children will continue to apply.  

However, all labour laws associated with Labour Unions, settling work Disputes, Regulations for working conditions and Contracts will cease to exist for a period of 3 years. These laws include:

  1. The Apprentices Act 1961;
  2. The Beedi and Cigar Workers Act 1966;
  3. The Cine Workers and Cinema Theatre Workers Act 1981;
  4. The Contract Labour (Regulation and Abolition) Act, 1970;
  5. The Dookan Aur Vanijya Adhisthan Act, 1962;
  6. The Factories Act, 1948 (barring provisions relating to safety and security of workers);
  7. The Industrial Disputes Act, 1947;
  8. The Industrial Employment Act, 1946;
  9. The Minimum Wages Act, 1948;
  10. The Motor Transport Workers Act, 1961;
  11. The Payment of Bonus Act, 1965;
  12. The Payment of Gratuity Act, 1972;
  13. The Payment of Wages Act ,1936 (barring Section 5);
  14. The Public Liability Insurance Act,1991;
  15. The Sales Promotion Employees Act, 1976;
  16. The Indian Boiler Act, 1923;
  17. The Trade Unions Act, 1926;
  18. The Weekly Holidays Act, 1942;
  19. The Working Journalists Employees Act, 1955;
  20. The Dangerous Machines Act, 1983;
  21. The Sick Industrial Companies Act, 1985;
  22. The Building and other construction workers (Regulation of Employment and Conditions of Services) Act, 1996 (barring provisions relating to safety and security of workers);
  23. The UP Shops & Establishments Act, 1962;
  24. The UP Welfare Fund Act;
  25. The UP Industrial Peace (Timely Payment of Wages) Act, 1961;
  26. The UP Industrial Housing Act 1955;
  27. The Industrial Establishment (National Holidays) Act 1961;
  28. The UP Industrial Undertakings Special Provisions for Prevention of (Unemployment) Act 1966;
  29. The UP Employment of Substitute Workmen Act 1978; and
  30. The UP Sugar & Power Alchohol Industries Labour Welfare & Development Fund Act 1950.

With the Ordinance the state will have 3 active laws:

  1. Building and Other Construction Workers Act, 1996: As the name states this Act aims to  protect the workers and the interests of those employed in construction activities of any type be it a building, street, road, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, generation, transmission and distribution of power, water works, oil and gas installations, electric lines, wireless, radio, television, telephone, etc. This Act regulates the hours of work, welfare measures, and other service conditions of such workers.
  2. Workmen Compensation Act, 1923: This act provides for payment of compensation to workmen and their dependents in case of injury and accident including certain occupational disease arising out of and in the course of employment resulting in disablement or death.
  3. Bonded Labour Act, 1976: It is the Act which deals with abolishment of bonded labour, or in other words, that no labour shall be obligated to provide bonded labour under any contract, agreement or social custom in existence. 

Industries covered

The Ordinance covers all the existing industries and manufacturing units as well as the new ones that are coming up in the next few years.


Arguments in Favour to The Ordinance

This ordinance will provide employment opportunities to the migrant workers who have migrated back to the state during the pandemic, by providing flexibility to the business and industry.

  • The workers will remain to be protected, as some of the labour laws have still been untouched and kept intact.
  • It will help to reskill and map the workers who have been displaced. And help to employ them as per the needs of the industry.
  • The flexibility provided to the industry and manufacturing units will help to bring back the economy on track.
  • The ordinance promotes investments and ease of doing business.
  • Indian regulations make labour “more costly”. So, suspension of laws will ultimately reduce labour cost.
  • 90 per cent of India’s labourers did not have the legal protections in the first place. The laws only served only 10% of the Indian workers including unionised labour, small segment of Indians in the formal sector, labour inspectors, middlemen, and champagne socialists. The cost of keeping this small work force in business has left the other 90 per cent in the informal sector, totally unregulated, and with no legal protection.

Arguments Against the Ordinance

  • Considering the size of the population, even the formal sector is made up of several lakhs of workers, who will be affected by the ordinance.

It will give a liberty to the business and industries to operate the way they wish and boost hire and fire rules at a time when job security and wage security issues are facing a bigger challenge.

  • If the state wanted to protect the unorganised workers, a legislation was already there- The Unorganised Workers Social Security Act, 2008.

But this legislation has not been implemented by any state till date.

  • The ordinance could ultimately result in the termination of the services of all the permanent employees and they could be replaced with contract workers.
  • It has randomly and absolutely unfairly infringed the very basic rights and fundamental rights of all those covered under labour laws.
  • The power of the worker is diluted and the power of the contractor is enhanced.
  • The state government could have also resorted to adopting certain features of the consolidated labour code, if it felt the need to balance the interests of employer’s vs employees/workmen.

While this ordinance has been appreciated by many industrial executives but the trade unions on the other hand have criticised it for diluting the labour rights of workers.

Even the International Labour Organisation has requested States in India to go for proper consultation prior to enforcing any such changes that adheres to the global standards. However, it appears that other States are likely to follow in a similar direction to suspend/relax labour laws in order to attract investment.

After Uttar Pradesh, Gujarat, Madhya Pradesh, Rajasthan and Himachal Pradesh had also announced sweeping changes in labour laws with the intention of giving some relief to the industry reeling under the lockdowns.

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