States’ labour reform moves hit hurdle; Centre may say ‘no’ to key changes

A senior functionary with the Union labour ministry told FE that suspension of labour laws by the states under the Factories Act can’t last for more than three months at a time.

The plan by some states to usher in key labour law relaxations in the wake of the job crisis created by Covid-19 may hit a wall. A senior functionary with the Union labour ministry told FE that suspension of labour laws by the states under the Factories Act can’t last for more than three months at a time.

The person asserted while states are within their rights to make certain specified changes like enhancing working hours to 12 hours from 8 hours to deal with crises like the current one, many of the proposed modifications, including suspension of substantive provisions of the Industrial Disputes Act for all establishments, might not stand scrutiny by the Centre.

So, the proposal of Uttar Pradesh to give employers freedom to hire and fire and hold in abeyance workers’ rights to lockout and strikes for up to three years might not be accepted by the Centre. However, since relevant orders issued by Madhya Pradesh and Gujarat seek to suspend the provisions of the Act only for ‘new establishments’, these might get the concurrence of the Centre. Also, any ordinance in this regard would need to be issued by the Centre after securing Presidential assent, the source added.

“If they (states) change labour laws, they can do it for three months (under Factories Act). Let their proposals come to us, and then we will deliberate on them and take a call. However, if any ordinance has to be promulgated, the Centre will do that, and not the states,” the official said. “On its own, the Centre has no plan to bring in labour-law ordinances,” said the official.

“If any proposal (from a state) contains something for which approval was given to any other states earlier, the labour ministry approves that proposal almost immediately. But, in cases where there is something new, which is not legally correct and is too extreme, the ministry analyses such proposals and give its comments to the Ministry of Home Affairs. The MHA then takes a call and gives it views to the President, who can only promulgate ordinance. This is the procedure,” the official explained.

“Before any ordinance to take effect, it requires various approvals. We are deliberating on Uttar Pradesh’s proposals,” said the official. Following a rap from the Allahabad High Court, the UP government withdrew its order in which it had diluted certain sections of the Factories Act 1948, exempting factories from the 8-hour shift per day and allowing them to extend the shift to 12 hours for three months, beginning April 20.

Rajasthan, Punjab, Himachal Pradesh and Gujarat have amended Factories Act via notifications to increase the work time to 12 hours/day and 72 hours/week, in place of 8 hours/day and 48 hours/week.

“Labour law amendments by the state governments is a continuous process and follow a standard procedure. Whenever a proposal is received from any state government, the same is examined thoroughly with respect to its legality and also as a policy decision. If the central government does not agree with the proposed policy, comments are given to the state government,” the official said.

Within the power vested with states under Section 5 of the Factories Act, Madhya Pradesh has already issued a notification to make changes in provisions like enhancing working hours from eight hours to 12 hours. Following the Factories Act, MP has also entitled workers to get paid at double the regular wage rates for the extra work time. “States are empowered to enhance working hours from 8 to 12 and can do it through notification only. And for overtime, factories and establishments need to pay at double the wage rate under the Factories Act,” the official said.
Gujarat’s proposals have been received by the labour ministry, but the state has not done anything which could be dubbed as “extreme”, the official added.