Centre passes the baton on to States for initiating labour law reforms

Topics Centre | labour law reform | states

India is a signatory to the International Labour Organisation’s convention of 1919 on working hours
The Central government is pushing the State governments to undertake labour law reforms, even as it is not willing to take the Ordinance route to codify the laws.

A letter sent by Union labour and employment ministry to the Andhra Pradesh government has asked the State to “expedite” the increase in the daily working limit to 12 hours from eight and to introduce fixed-term employment “to address Covid-19.”

“Please refer to previous communications on labour reforms and telephonic conversations to the Chief Minister of your state. In order to address the challenges (that have) emerged due to (the) Covid-19 pandemic, it is requested to undertake labour reforms on a priority basis,” Union labour and employment secretary Heeralal Samariya wrote to the AP CM Y S Jagan Mohan Reddy’s Principal Secretary Ajay Kallam on May 5.
The labour secretary further told the State government to send action taken or proposed to be taken to the Central government on a weekly basis.

The letter also listed the steps that the state government has already taken in terms of changing the labour laws, which included bringing smaller firms out of the coverage of the Factories Act and the Contract Labour Act, along with allowing more firms to retrench or lay off without seeking the government’s official nod by amending the Industrial Disputes Act.

Incidentally, some of the State governments, like Assam, are initiating steps to change the labour laws in the same manner as was proposed in the letter sent by the Union labour secretary to the AP government.

Samariya didn’t respond to a query from Business Standard on whether such a communication was sent to other States or not. But he had told the industry executives in a meeting held on May 8 that the Central government is in touch with the States to initiate labour law reforms.

“We have seen that since 2014 whenever the Central government wasn’t able to implement the changes to the labour laws at the central level it shifts the onus on to the state governments. The States have been able to primarily drive some of the contentious labour law changes in the past,” labour economist and XLRI professor K.R. Shyam Sundar said.

Finance Minister Nirmala Sitharaman had said in a press conference last week that the government is working on combining 35-odd labour laws into four codes, one each on wages, industrial relations, social security and occupational health and safety. However, she had made it clear that the government will follow the normal procedure of the Parliament – in a way ruling out the Ordinance route.

The Central government’s proposal to increase the working hours to the State governments has already been received a backlash from the central trade unions which have vehemently opposed the move. As many as 10 states in India have increased the working hours in India from 8 to 12 hours. These are Maharasthra, Rajasthan, Gujarat, Goa, MP, Uttarakhand, Assam, Punjab, Haryana and Himachal Pradesh.

Some of the orders have been challenged in the local courts. In fact, recently, the Uttar Pradesh government withdrew an order increasing the daily working hour limit in manufacturing units from 8 to 12 hours.  It was in response to a notice issued by the Allahabad High Court on a public interest litigation challenging the legality of the order.

India is a signatory to the International Labour Organisation’s convention of 1919 on working hours. Though all countries which signed it had to reduce working hours to 48 hours a week, India was given an exemption to keep it at 60 hours.
The Central government is asking the states to implement fixed-term employment – an arrangement through which firms will be able to hire contract workers directly, without the need to go through the contractor system, thereby saving cost and time. But companies will have to offer equal social security benefits to such workers, who will be hired on a fixed number of years, as is given to permanent workers in the same unit, if the governments choose to follow the model law of the Central government.

In March 2018, the government had notified fixed-term employment rules, allowing industries to hire workers for a fixed tenure, but it was only applicable to sectors falling under the Centre's sphere of governance. None of the states had adopted the central government’s rules and industry found it hard to benefit from the central government’s fixed-term employment rules.


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