India: Labour Laws Amendments - Initiatives By State Governments To Provide Impetus To Economic Activity

1. INTRODUCTION

With the announcement of 'unlock-2' (phase-2 of opening of lockdown), except for few areas, industries or establishments have gradually started inching towards operations of businesses with the limited workforce or resources to not only sustain the businesses but also to contribute to the economic growth of India.

Since COVID-19 has led to slow down of economic growth in India, besides the federal (central) government, state governments have also commenced introducing various measures by way of amending labour and employment statutes, such as granting exemption in working hours and raising the statutory thresholds, amongst others, to ease the financial burden on employers

2. LEGAL FRAMEWORK

The subject "labour" falls under the concurrent list of the Constitution of India, thus giving power to both federal and state governments to make laws regulating labour and employment, with the exception of certain matters being reserved for the federal government. State governments generally provide for amendment, exemptions, or additions concerning the subject "labour" either by introducing a subject specific statute relevant for such a state or by amending the federal statutes, within the rights available to states, which requires assent of the Hon'ble President of India.

State governments derive power from Article 213¹ of the Constitution of India which allows amendments by way of ordinances in the statutes (when not exercising the powers given within the statutes). In the last few weeks, state governments, exercising the powers under Article 213, have passed certain ordinances to carry out major amendments in federal laws, which would come into force as soon as the ordinances receive President's Assent. Simultaneously, exercising the rights available within the statutes, various state governments have brought in several changes, which are relevant for the specific period.

3. ORDINANCES BY VARIOUS STATE GOVERNMENTS

A. UTTAR PRADESH

The Uttar Pradesh ("UP") Government on May 08, 2020 has introduced the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020, applicable to all factories and establishments engaged in manufacturing process and intends to exempt the said factories and manufacturing establishments from the operation of certain labour laws for a temporary period of 3 years subject to the conditions, amongst others, mentioned therein:

1. The name and details of all employed workers shall be entered electronically on attendance register prescribed in Section 62 (register of adult workers) of the Factories Act, 1948, which is to be maintained in a physical register;
2. No workers shall be paid less than minimum wages as prescribed by the Government of UP;
3. The workers shall not be allowed or required to work for more than 11 hours per day and the spread over of the work shall not be more than 12 hours per day, which is currently 9 hours in a day and spread over not exceeding 10 ½ hours;
4. Wages to be paid in the bank account only and as per the time limit prescribed under the Payment of Wages Act, 1936;
5. The provisions relating to safety and security of workers as provided in the Factories Act, 1948 and Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 will continue to be applicable;
6. The various laws relating to employment of children and women will continue to be applicable;
7. For any death or disability due to accident arising out of and in the course of employment, compensation to be paid in accordance with the provisions of Employees' Compensation Act, 1923; and
8. The provisions of Bonded Labour (System) Abolition Act, 1976 will continue to be applicable.

B. MADHYA PRADESH

The Madhya Pradesh ("MP") Government on May 06, 2020 also has introduced the Madhya Pradesh Labour Laws (Amendment) Ordinance, 2020, which aims at amending two state laws, the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961 and the Madhya Pradesh Shram Kalyan Nidhi Adhiniyam, 1982.

The Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961 is applicable to all the undertakings² having 50 employees³. The MP Government by way of an amendment intends to increase the applicability threshold to 100 or more employees.

The Madhya Pradesh Shram Kalyan Nidhi Adhiniyam, 1982 provides for constitution of a labour welfare fund that will finance the activities related to welfare of labour. Under the said Act, an employer is required to deposit contribution on behalf of both employer and employee⁴ at the rate of INR 1 (employee's contribution) and INR 3 (employer's contribution) every 6 months. The proposed ordinance intends to amend the said Act by including a new section to allow the Government of MP to exempt any establishment or class of establishments from the provisions of the said Act through a notification.

C. GOA

Vide the Contract Labour (Regulation and Abolition) (Goa Amendment) Ordinance, 2020 introduced on June 26, 2020, the State Government of Goa intends to amend the threshold of employees from 20⁵ workmen to 50 as prescribed under Section 1 (4)⁶ of the Contract Labour (Regulation and Abolition) Act, 1970 (the "CLRA Act") for applicability of CLRA Act in the State of Goa and, also incorporate a new section with respect to compounding of offences, depending upon number of workmen employed in the establishment and number of times such an offence is committed.

Further, vide the Industrial Disputes (Goa Amendment) Ordinance, 2020 introduced on June 26, 2020, the State Government of Goa wants to amend the Industrial Disputes Act, 1947 (the "ID Act"), as in force in the state of Goa. The State Government of Goa intends to lower the limitation period from 3 years to 1 year under Section 2 A (3)⁷ of the ID Act.

Further, a new sub-section (4) in Section 2A is proposed to be inserted which makes it mandatory for raising the dispute before conciliation officer within 1 year from the date of discharge, dismissal, retrenchment or termination in order to qualify as an "industrial dispute" under the ID Act.

The Government of Goa intends to amend the threshold regarding applicability from 100 to 300 workmen, as provided in Section 25K⁸ (Chapter V-B) of the ID Act (special provisions relating to lay-off, retrenchment and closure in certain establishments). In case of retrenchment (under Section 25F⁹ and Section 25N of the ID Act) or closure of an undertaking (under Section 25O of the ID Act), compensation to be paid to workmen is sought to be enhanced from 15 days' average pay to 45 days' average pay, for every completed year of service part in excess of 6 months.

Further a new Section 31 A relating to compounding of offences is proposed to be incorporated for any offence punishable under Sections 25Q, 25R, 25U, 26, 27, 28, 29, 30A and subsections (1) and (2) of Section 31.

D. ASSAM

The Factories (Assam Amendment) Ordinance, 2020 introduced on June 30, 2020 aims at amending the threshold of employees in the definition of factory¹⁰, as defined in the Factories Act, 1948, from 10 workers (where manufacturing process is with the aid of power) to 20 and from 20 workers (where manufacturing process is without the aid of power) to 40.

E. BIHAR

The Factories (Bihar Amendment) Ordinance, 2020 introduced on July 02, 2020, aims at amending the threshold of employees in the definition of factory, as defined in the Factories Act, 1948, from 10 workers (where manufacturing process is with the aid of power) to 20 and from 20 workers (where manufacturing process is without the aid of power) to 40.

Vide the Industrial Disputes (Bihar Amendment) Ordinance, 2020 promulgated on July 02, 2020, the state government intends to amend the threshold regarding applicability from 100 to 300 workmen, as provided in Section 25K (Chapter-V-B) of the ID Act (special provisions relating to lay-off, retrenchment and closure in certain establishments).

The Contract Labour (Regulation and Abolition) (Bihar Amendment) Ordinance, 2020 promulgated on July 02, 2020 proposes to amend the threshold regarding applicability of statute from 20 to 50 workmen, as prescribed under Section 1 (4) of the CLRA Act.

F. GUJARAT

The Factories (Gujarat Amendment) Ordinance, 2020 introduced on July 02, 2020 aims at amending the threshold of employees in the definition of factory, as defined in the Factories Act, 1948, from 10 workers (where manufacturing process is with the aid of power) to 20 and from 20 workers (where manufacturing process is without the aid of power) to 40.

Further, the State Government of Gujarat also intends to incorporate a new section with respect to compounding of offences, which may be specified by the State Government of Gujarat by way of notification.

The Industrial Disputes (Gujarat Amendment) Ordinance, 2020 introduced on July 03, 2020 aims to amend the threshold regarding applicability from 100 to 300 workmen, as provided in Section 25K (Chapter-V-B) of the ID Act (special provisions relating to lay-off, retrenchment and closure in certain establishments).

Under Section 25N of the ID Act, the option to pay the workman wages in lieu of 3 months' notice is sought to be done away with. Further, in case of a retrenchment (under Section 25N of the ID Act) or closure of an undertaking (under Section 25O of the ID Act), an amount equivalent to the workman's last three months' average pay has been added in the last of each section.

The Contract Labour (Regulation and Abolition) Gujarat Amendment Ordinance, 2020 introduced on July 20, 2020 aims at amending the threshold regarding applicability of statute from 20 workers to 50, as prescribed under Section 1 (4) of the CLRA Act.

G. HIMACHAL PRADESH

The Contract Labour (Regulation and Abolition) Himachal Pradesh Amendment Ordinance, 2020 introduced on July 09, 2020 aims at amending the threshold regarding applicability of statute from 20 workers to 30, as prescribed under Section 1 (4) of the CLRA Act.

The Industrial Disputes (Himachal Pradesh Amendment) Ordinance, 2020 promulgated on July 09, 2020 aims to amend the threshold regarding applicability from 100 to 200 workmen, as provided in Section 25K (Chapter-V-B) of the ID Act (special provisions relating to lay-off, retrenchment and closure in certain establishments). Further, in case of retrenchment (under Section 25F of the ID Act), the compensation is sought to be increased from 15 days' average pay to 60 days' average pay for every completed year of continuous service or part thereof more than 6 months. Further, the provisions governing prohibition of strikes and lock-outs under Section 22¹¹ is sought to be made applicable to public utility and non-public utility services.

The Factories (Himachal Pradesh Amendment) Ordinance, 2020 promulgated on July 09, 2020 aims at amending the threshold of employees in the definition of factory, as defined in the Factories Act, 1948, from 10 workers (where manufacturing process is with the aid of power) to 20 and from 20 workers (where manufacturing process is without the aid of power) to 40.

Further, the State Government of Himachal Pradesh also intends to incorporate a new section with respect to compounding of offences which are punishable with fine only and committed for the first time.

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Footnotes

1. 213. Power of Governor to promulgate Ordinances during recess of Legislature

(1) If at any time, except when the Legislative Assembly of a State is in session, or where there is a Legislative Council in a State, except when both Houses of the Legislature are in session, the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinance as the circumstances appear to him to require: Provided that the Governor shall not, without instructions from the President, promulgate any such Ordinance if

(2) An Ordinance promulgated under this article shall have the same force and effect as an Act of Legislature of the State assented to by the Governor, but every such Ordinance

(3) If and so far as an Ordinance under this article makes any provision which would not be valid if enacted in an Act of the legislature of the State assented to by the Governor, it shall be void: Provided that, for the purposes of the provisions of this Constitution relating to the effect of an Act of the Legislature of a State which is repugnant to an Act of Parliament or an existing law with respect to a matter enumerated in the Concurrent List, an Ordinance promulgated under this article in the Concurrent List, an Ordinance promulgated under this article in pursuance of instructions from the President shall be deemed to be an Act of the Legislature of the State which has been reserved for the consideration of the president and assented to by him.

2. The Madhya Pradesh Industrial Relations Act, 1960 defines 'Undertaking' as a concern in any industry. 'Industry' means:

(a) any business, trade, manufacture or undertaking or calling of employers.

(b) any calling, service, employment, handicraft, or industrial occupation or avocation of employees, and includes-

3.The Madhya Pradesh Industrial Relations Act, 1960 defines 'employee' as any person employed in any industry to do any skilled, unskilled, manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied, and includes—

(a) a person employed by a contractor to do any work for him in the execution of a contract with an employer within the meaning of sub-clause(e) of clause 14, and

(b) an apprentice other than an apprentice under sub-clause (v) but does not include any person-

Explanation— An employee who has been dismissed, discharged or retrenched from employment or whose employment has been otherwise terminated shall, in respect of matters relating to such dismissal. discharge, retrenchment or termination, be deemed etc., be an employee for the purposes of this Act.

4. Under Section 2(3), "employee" means any person who is employed for hire on reward to do any skilled, semi-skilled or un-skilled, manual, clerical, supervisory, or technical work in an establishment but does not include any person:—

(a) who is employed mainly in a managerial or administrative capacity; or

(b) who, being employed in a supervisory capacity draws wages exceeding one thousand and six hundred rupees per mensem or exercises, either by the nature of the duties attached to the office, or by reason of the powers vested in him, functions mainly of a managerial nature.

5. The Goa government had already reduced the threshold from 20 to 10 employees for the applicability of the Contract Labour (Regulation and Abolition) Act, 1970 vide Gazette Notification dated April 30, 2001.

6. 1 (4) It applies -(a) to every establishment in which twenty or more workmen, art employed or were employed on any day of the preceding twelve months as contract labour;

(b) to every contractor who employs or who employed on any day of the preceding twelve months twenty or more workmen. Provided that the appropriate Government may, after giving not less than two months' notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment or contractor employing such number of workmen less than twenty as may be specified in the notification.

7. (3) The application referred to in sub-section (2) shall be made to the Labour Court or Tribunal before the expiry of three years from the date of discharge, dismissal, retrenchment or otherwise termination of service as specified in sub-section (1).

8. 25K. Application of Chapter V-B.- (1) The provisions of this Chapter shall apply to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than 2[one hundred] workmen were employed on an average per working day for the preceding twelve months. (2) If a question arises whether an industrial establishment is of a seasonal character or whether work is performed therein only intermittently, the decision of the appropriate Government thereon shall be final.

9. 25F. Conditions precedent to retrenchment of workmen

No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until,

(a) the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice:

(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof more than six months; and

(c) notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the Official Gazette.

10. (m) "factory" means any premises including the precincts thereof-

but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place.

Explanation. I--For computing the number of workers for the purposes of this clause all the workers in different groups and relays in a day shall be taken into account;

Explanation. II.--For the purposes of this clause, the mere fact that an Electronic Data Processing Unit or a Computer Unit is installed in any premises or part thereof, shall not be construed to make it a factory if no manufacturing process is being carried on in such premises or part thereof;

11. 22. Prohibition of strikes and lock-outs

(1) No person employed in a public utility service shall go on strike in breach of contract,

(2) No employer carrying on any public utility service shall lock-out any of his workmen,

(3) The notice of lock-out or strike under this section shall not be necessary where there is already in existence a strike or, as the case may be, lock-out in the public utility service, but the employer shall send intimation of such lock-out or strike on the day on which it is declared, to such authority as may be specified by the appropriate Government either generally or for a particular area or for a particular class of public utility services.

(4) The notice of strike referred to in sub-section (1) shall be given by such number of persons to such person or persons and in such manner as may be prescribed.

(5) The notice of lock-out referred to in sub-section (2) shall be given in such manner as may be prescribed.

(6) If on any day an employer receives from any persons employed by him any such notices as are referred to in sub-section (1) or gives to any persons employed by him any such notices as are referred to in sub-section (2), he shall within five days thereof report to the appropriate Government or to such authority as that Government may prescribe the number of such notices received or given on that day.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.