Changing India's labour laws during the pandemic: Why the move is contentious

Workers at a handicraft manufacturing enterprise, Uttar Pradesh Image credit: By JJ Harrison ( - Own work, CC BY-SA 3.0,

Around 10 trade unions have called for a nationwide strike on May 22 in protest of the suspension of labour laws by many states - an action the unions have termed anti-worker and anti-people. The International Labour Organisation (ILO) has also asked authorities to ensure that all relaxations adhere to global standards and that amendments to labour laws are made only after tripartite talks between the government, workers’ organisations and employer’s organisations.

India has more than 200 state laws and nearly 50 central laws. These laws encompass a number of aspects including wages and remuneration, working conditions and social security. The Factories Act 1948, for example, which focuses on safety measures at factory premises and health and welfare of workers, the Industrial Disputes Act, 1947, which relate to terms of service including retrenchment, layoffs, strikes and closure of industrial enterprises and the Minimum Wages Act, 1948, are some of the vital laws that ensure right to dignified life and livelihoods for workers.

In order to woo more businesses to generate employment, revive the economy and spur economic growth, some states including Madhya Pradesh, Uttar Pradesh, Gujarat, Rajasthan, Odisha and Punjab have made amendments to many major labour laws

Uttar Pradesh’s action of exempting businesses from having to comply with all, but three, key labour laws for the next three years, is amongst the most contentious of the moves. On May 6, the UP government passed the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020, which suspended 35 out of the 38 labour-related laws which are in the state. This makes it easy for companies to hire and fire, without facing action. Bonded Labour System (Abolition) Act 1976, Section 5 of the Payment of Wages Act 1936 (which relates to the timely payment of wages) and the Employees Compensation Act 1923, remain out of the purview of the Ordinance. The UP government has also retained laws related to women and children and the safety and security provisions of the Factories Act.

However, the ordinance makes employees no longer responsible for various welfare provisions, including working conditions of workers, maintenance of facilities such as canteens, creches, restrooms, and laws related to migrant labourers, trade unions and contract workers. It also amends laws concerning minimum wages to be provided and salary to be deposited into their bank accounts, and not through cash. The UP Government has, however, withdrawn an order which had increased daily working hours from 8 to 12.   

Madhya Pradesh’s approach to amending labour laws has been called a more balanced one, where the focus is on incentivising new establishments. MP has exempted 11 categories of the industry – leather, iron and steel, textiles, sugar, electricity, public motor transport, engineering, including the manufacture of motor vehicles, among others from the Madhya Pradesh Industrial Relations (MPIR) Act of 1961. This will allow them to not recognise trade unions for collective bargaining.

Earlier agencies who supplied labour had to obtain modifications to their license each time new labour joined or left their force. With the amended regulations under Contract Labour (Regulation and Abolition) (Madhya Pradesh) Rules, 1973, agencies who supply labour will now have a licence that is fixed for a stated period of time, regardless of any new labour joining or leaving. The earlier requirement of filling 61 registers and filing 13 returns to obtain a license, has also been done away with. Instead, companies will now need to only fill one register and file one return would be sufficient.

Any new manufacturing units that will come up in the next 1,000 days will not need to take permission from the government for layoffs but will need to do so for retrenchment and for retrenchment compensation to workers. The Shops and Establishment Act has also been amended to allow them to be open from 6 AM till 12 midnight. Further, where earlier registrations/licenses used to be issued in 30 days, now it will be completed in one day.  

States such as Maharashtra, Goa, Odisha and Rajasthan have increased also working hours from 8 hours to 12 hours, while Gujarat has allowed overtime of up to 72 hours.                

India’s labour laws, archaic or essential?    

Those in support of the decision have praised the move for coming at the opportune time. With many companies considering moving out of China, India should act quickly and woo foreign investors. Supporters of the amendments point out that a majority of India’s 47 crore-strong workforce, have not benefitted from many central and state labour laws, in the first place. Rather, many companies have tried to bypass laws by employing workers without a formal contract, as, otherwise they would need to notify the Government each time they fire a worker. The amendments have, hence, been deemed necessary to remove businesses from the complications of India’s infamous license raj.

However, activists and critics have said that the move will further distress workers, who are already reeling under the loss of livelihoods caused by economic inactivity during the prolonged lockdown. Diluting these laws would make working conditions and life even more difficult.

While Kiran Mazumdar Shaw, Executive Chairperson, Biocon has spoken about the need to ensure minimum income to labour, Wipro founder and Indian business tycoon Azim Premji has cautioned states against the suspension of labour laws as this would add on to the woes of migrant workers who are already finding it difficult to fend themselves and their families with almost no social security. A parliamentary standing committee is also seeking clarification from nine states on dilution of the laws. Even the Bharatiya Mazdoor Sangh, the RSS labour wing, has opposed the changes, calling the decisions to amend labour laws a bigger pandemic.

Critics also argue that with labour laws removed or amended and without security net, the whole move of trying to formalise the labour sector will fall on its head. Before making any changes to the laws, states should ensure that human rights of workers, who are the ones building the nation, are not trampled upon further.