CHANGES IN THE LABOUR LAWS AMIDST COVID CRISES

The Labour Laws in India

Labour matters come under the concurrent list under the Indian Constitution, which means that both the Centre and the States have a say over labour issues. There are about 200 state laws and 50 central laws regulating labour issues. Our labour laws mostly enacted during the British period are anarchic in nature. They have not kept pace with the changing needs of globally competitive industrialization and have been largely seen as a disincentive for foreign investment into large industrial projects. Our Labour laws can be categorized into the following four categories:

1. (a)Laws Relating to Conditions of Work
   1. (i)The Factories Act – 1948. To ensure safety measures on factory premises and to promote health and welfare of the workers.
   2. (ii)The Contract Labour (Regulation & Abolition) Act 1970
   3. (iii)Shops and Commercial Establishment Act. To regulate the timings, payment of overtime, weekly holidays, working hours etc.
2. (b)Wages & Remuneration
   1. (i)The Minimum Wages Act 1948. This defines minimum wages payable to organized labour. The central government legislates as central minimum wages, whereas the states also legislate their own Minimum Wages Act and pay accordingly.
   2. (ii)The Payment of Wages Act 1936. Its purpose is to ensure regular and prompt payment of wages.
3. (c)Social Security
   1. (i)Employees Provident Fund Act, 1952. A welfare scheme for the welfare of employees in which, the employee and the employer contribute equal parts for the employee’s savings.
   2. (ii)Workmen’s Compensation Act 1923. It was enacted to provide for compensation to employees who sustain injuries as part of their employment.
   3. (iii)Employees State Insurance Act 1948. It is meant to provide for medical benefits to employees and their families during the period of employment.
4. (d)Employment Security and & Industrial Relations
   1. (i)Industrial Disputes Act, 1947. It is legislated to provide for harmonious resolution of disputes between the labour and the management through labour unions.
   2. (ii)Industrial Establishments (Standing Orders) Act 1946. It requires employers to formally define conditions of employment and have its Standing Orders certified by competent authority.

What is the Criticism of Labour Laws

There is no clear definition of labour laws in India. Large numbers of laws, both central and state cumulatively give a great leverage to trade unions and become very inflexible. This puts the employer at a bind. It is for this reason that all big employers, hiring more than 100 people tend to take contractual labour as against regular hiring. At present nearly 90% of India’s workers are part of the informal economy, resulting in a great disparity in wages. This is contrary to the good intentions for which labour laws are enacted. Therefore a woman working in unorganized sector in rural areas gets only 20% of what her male counterpart in urban organized sector earns. Essentially if India had fewer and easier to follow labour laws, businesses would have been able to expand and contract depending upon the market conditions.

Changing Landscape of Labour Laws due to uncertainty in Market Conditions

As the nation struggles with the lock down and lakhs of workers stare at an uncertain future, a lot of State Governments in India have decided to make drastic changes in the labour laws, thereby giving greater flexibility to the employers. The most significant changes were announced by three BJP ruled states in the first week of May 2020, i.e. UP, MP and Gujarat. Reforms include freezing a vast number of acts with an intention to eliminating red tapism and inspector raj. This includes a single form of registration, valid licences for life of a project with no annual renewal. Only one return will replace the present requirement of maintaining 61 registers and 13 returns. Many other states, including many Congress ruled state have also made changes. UP has summarily suspended almost all labour laws for a period of three years. However, important legislations pertaining to inimum wages,, number of working hours, safety and security have been left intact. This will result most employment being turned informal, leaving more flexibility in the hands of employers and thereby bringing down the wage bills. This step will give boost to industrialization along with job creation. it will also give investment a boost, by laying out a predictable and consistent policy.

The Road Ahead

This is an extreme step taken in highly unusual circumstances. In the current financial situation this may be OK to kick start the economy, but as the wheels of economy start rolling, it will be important to transform into clear, investment friendly laws which take care of genuine labour issues, and reducing inspector raj. In order to facilitate the manufacturing sector, there is a need to need to remove the permission clause for retrenchment, lay offs and closure by making it mendatory to pay pay suitable compensation to the workers in such contingency. Therefore, this is a very opportune time to suitably reframe these laws, so that they can be at par with the best in the world so to invite greater investment and to give boost to industrialisation and Make in India a true success.