UP labour law reforms: The big climbdown

KEY HIGHLIGHTS

• Yogi government on March 20 ordered employers to pay full wages during lockdown. This triggered protests by shops, commercial establishments and factory owners.
• UP Labour Commissioner on April 21 wrote to field officers to consult him before lodging a first information report (FIR) against owners of any factory.
• UP government on May 6 decided to bring an ordinance to altogether exempt factories and establishments from most labour laws barring four for a period of three years.
• Among key rights worker would lose include right to form unions, right to raise an industrial dispute, right to have grievance redressal machinery, among others

Within weeks of asking factory-owners and private firms to pay workers full wages and not retrench them during Coronavirus-afflicted lockdown, the Uttar Pradesh (UP) government decided to suspend all key labour laws suggesting major climb down in the face of protests from industries. In a notification issued on March 20, Suresh Chandra, UP Principal Secretary (Labour) said that all employees and workmen of the shops/commercial establishments/ factories which closed temporarily by the orders of the state government or District Magistrate shall be provided holiday with wages by their employer for the period of closure.

The order was issued under Section-2 of the Epidemic Disease Act, 1897 which provides for penal action including jail term for non-compliance. Factory-owners and private firms vigorously protested against the move arguing how can they be forced to pay full wages when there was no cash flow.

Sensing annoyance in the industry, UP Labour Commissioner Sudhir Mahadev Bobde on April 21 wrote to field officers to consult him before lodging a first information report (FIR) against owners of any factory, shops or commercial establishments. In effect, Bobde substantially diluted the March 20 order.

After two weeks on May 6, the UP Cabinet chaired by Chief Minister Yogi Adityanath decided to bring an ordinance 'Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020' to altogether exempt factories and establishments from most labour laws barring for a period of three years.

Once the ordinance gets all necessary approvals, only the Building and Other Construction Workers Act, 1996, Workmen Compensation Act, 1923, Bonded Labour System (Abolition) Act, 1976 and Section 5 of the Payment of Wages Act, 1936 (the right to receive timely wages), will be in force in the state.

This has caused massive resentment among trade unions including RSS-affiliated Bharatiya Mazdoor Sangh (BMS). They are ready to hit the streets against the decision. BMS General Secretary Virjesh Upadhyay has stated that decision to suspend key labour laws by various state governments was against the International Labour Organisation (ILO) conventions.

Terming the UP government's decision as draconian, XLRI Jamshedpur professor and labour economist KR Shyam Sundar said that workers would be stripped off a host of their rights following suspension of the labour laws. Among the key rights worker would lose are the right to form unions, right to raise an industrial dispute, right to have grievance redressal machinery, right to gratuity, right to have fair machinery in case of their dismissal for alleged misconduct and also the right to have welfare facilities.

Also read: Lockdown 3.0: After UP, MP, other states relax labour laws to pump up industrial activity

Sundar said that many major economies including US had robust labour protection and welfare laws. He noted that US had followed hire and fire policy but it provides unemployment benefits.

"Even in China there are enough protections. The only thing is they are totalitarian but they have social security which is very good. In the last 10 years, real wages of Chinese workers have increased multiple times which is one of the reasons for their labour becoming a little less competitive. Bangladesh, after Rana Plaza disaster has also introduced certain reforms in inspection and labour standards," said the XLRI professor.

"Labour law reforms may be necessary because of change in business conditions and globalised world but the wholesale exemption is draconian," Sundar added.

Meanwhile, industry is jubilant over dilution of labour laws saying it will provide them a lot of flexibility and boost investment. "The labour law changes initiated in UP and MP are both steps that will give huge flexibility to industry in their labour practices," said Chandrajit Banerjee, Director General at industry chamber CII.

Sanjay Kaul, Chairman (taxation and banking) of Lucknow-headquartered Indian Industries Association endorsed the UP government move saying liberalisation of labour laws was necessary and long due.  "It will add to the efficiency of workers," Kaul said.

Also read: UP allows industry to hire and fire! Suspends all labour laws, except three