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The government in India both at the central and the state level aspires to boost economic activity after the lockdown is removed. They also consider the Covid-19 related disruptions to the global and regional value chains as an opportunity to attract manufacturing investment to India and to their respective states. A slew of measures have either been announced or are in the pipeline for this purpose.
Written by our legal expert Sambhrant Krishna
One measure that has garnered considerable attention is the suspension of a large number of labour laws by a number of states (13 as per latest count). These have either been achieved by the state governments by promulgating ordinances or by issuing notifications under the relevant Acts. Since labour laws are concurrent subject in the Constitution of India, these ordinances need to be approved by the President, in effect the central government. The consultations by the governments on economic revival were mostly general in nature and limited to industrialists, industry associations and experts. No discussion was held with stakeholders – which includes trade unions – on labour law amendments in wake of the Covid-19 crisis.
The most controversial of the amendments is by Uttar Pradesh, promulgated through an ordinance on 8 May, 2020. Through it, a majority of the key labour laws and rules thereunder will be suspended for a period of three years for all factories and establishments engaged in the manufacturing process, subject to the fulfilment of certain conditions. Madhya Pradesh, Gujarat, Rajasthan, Himachal Pradesh, Haryana and some other states have brought changes through notifications, affecting maximum hours of work, operation of Industrial Disputes Act, 1947 etc. For example, Gujarat and Himachal Pradesh have increased the maximum number of hours a worker can work in a day to 12 hours from 10 and to 72 from 60 in a week. Similarly, Madhya Pradesh, through a gazette notification dated 5 May, 2020 exempted new industries from the provisions of the Industrial Disputes Act, 1947, except the provisions of Chapter V-A and sections 25-N, 25-O, 25-P, 25-Q and 25-R (retrenchment, lay-offs and closure conditions will continue to apply) for the first 1000 days subject to certain conditions.
So far as the questions of legalities are concerned, the ordinances should pass the test if they are approved by the President of India. Presidential assent is also presumed because the ordinances are by BJP-ruled states and the same party is in power in the Centre as well. Two niggling doubts remain: one, because the central government itself is working on the consolidation and codification of labour laws which it claims is in the interest of the employer and the employees. So, ordinances by the States put a question mark on the claims of labour law reforms by the Centre. Secondly, the central government is not willing to be seen as anti-poor, especially after the fiasco related to migrant workers.
Labour requires social and economic welfare legislation for their protection. However, some of the requirements under labour laws may be outdated, redundant or impose undue compliance burden without any concomitant benefit. This brings us to the desirability of these so-called reform measures enacted/notified by various States. Wholesale suspension of labour rights cannot be justified on any ground. Allowing excessive overtime is a violation of the human rights of workers. To not provide for a neutral third-party arbitrator in the case of an industrial dispute between the workers and management goes against the basic principles of natural justice. Even the International Labour Organisation (ILO) has expressed its concern at the changes being sought to be implemented by the States. The unilateral amendments in law violate Convention 144 of the ILO which talks of tripartite consultation before amending any labour law. India had ratified this convention in 1978. The other ILO conventions that are likely to be violated are C001 dealing with hours of work and C081 dealing with labour inspection.
Though most of the current changes come with a pre-defined sunset clause ranging from a few months to a few years, it would be naive on the part of the workers, unions and activists to trust them. Such relaxations, once allowed, have a tendency to entrench themselves. The evisceration of labour laws by the States also has dangerous portends for the country as regulatory arbitrage would make it attractive for companies to shift or establish manufacturing facilities in the State that offers the most lax labour regulations. The host States would be compelled to relax labour laws in order to retain companies. Thus, there is every likelihood of competitive deregulation spiralling into a race to the bottom with labour standards being relaxed at each level. This will have ominous repercussions for the labour force. A pushback from the workers and unions could lead to strife, worsening of industrial relations and loss of production. This, in turn, will have a negative effect on the industrial climate of the country and reduce the attractiveness of India as a favourable alternative to establish manufacturing facilities. Thus the very purpose of the changes in labour laws might be defeated.
An advisable course of action on the part of the States would have been to persuade the Centre to expedite its codification of labour laws under four broad heads, something that has been a work under progress for quite some time now. Even the Finance Minister in her press conference on the economic stimulus package mentioned the consolidation of labour laws. It is hoped that the central government will advise the President of India to not give his assent to the labour law ordinances and work vigorously to ensure that the new central laws see the light of the day. This does not in any way mean that the consolidated codes by the Centre are not likely to have controversial provisions when looked at from the point of the workers. Such provisions need to be challenged on merits and resisted as well.
Until then, the central government must allow the existing laws to hold the field.