Recently, the departments of labour and employment from 18 Indian states enforced some levels of regulatory amendment in labour laws within their jurisdictions to attract investments and enhance the ease of doing business. These amendments ranged from extensive to sporadic across states. However, some of them hit striking disapproval from the public considering the latent degrees of dilution they affected workers’ rights. Such dilution is being equated with the exhaustion of useful public remedies and an institutional disdain in securing the welfare of the working class whose lives are distraught because of the COVID-19 pandemic.

The nature and number of the amendments are as varied as any. There are few, however, which are contentious in particular. The first among them is the increase in working hours from 8 to 12 in some states. Critics of this amendment are keen to cite the International Labour Organization’s (ILO) Conventions which directly contradict the application of this amendment. However, advocates of the amendment contest this notion on the ground that India has not yet ratified the Convention, thus bearing no sanctioned accountability. This article thus attempts to analyze the impact of the proposed amendments on labour welfare, security, and industrial growth. It also attempts to showcase the dichotomy in constitutional law and international conventions on one side and unmitigated employment of labour laws on the other.

Nature of the Amendments

Irrespective of the Conventions’ applicability to these amendments, one must realise the consequences of a worker engaging in 12-hour shifts which inevitably reduces his efficiency and increases operational fatigue. To top it off, states like Gujarat and Himachal Pradesh, have invoked state amendments to Section 5 of the Factories Act, 1948, a provision that allows suspension of the Act as a whole in a situation deemed as a ‘public emergency’. Given that the said emergency has been qualified under the Act to include only those situations which ‘threaten the national security of India’, it is premature to assess whether the effects of the pandemic have risen to the point of jeopardizing the national security. Therefore, invoking such a provision to exempt industries from the application of the Act, by no longer mandating them to pay overtime wages to the workers working beyond 8 hours, is an unfortunate use of executive power. It is tantamount to violating the spirit of the delegated legislative process, a cornerstone of modern democracies, and is also a possible overreach of Articles 23 and 24 of the Constitution which guarantee the fundamental right against exploitation without provision for the payment of overtime wages to workers working beyond 8 hours. This shows an executive excess of such nature that defies federalism, delegated legislation, and is possibly an overreach of Articles 23 and 24 of the Constitution.

The disentitlement of fair wages for work that is commensurate to the degree of labour, (such as putting in 4 extra hours during a pandemic at a time when working from home is the new normal) is a vitiation of the Right against exploitation. It would be easier and simpler to employ a greater number of workers than have them stretch their duties.

The second amendment in question is the change in the processes of licensing and registration. In states like Kerala, Uttarakhand, and Odisha, the factory licenses are up for renewal once every 10 years, as opposed to every year earlier. This decadal in regulatory scrutiny is responsible for reducing logjams and red taping, which was much to the chagrin of prospective investors. The cost of regulation and monitoring is such endeavor is tremendous as well. Likewise, Madhya Pradesh has increased the validity period of licenses granted to contractors for engaging contract labour. As a result, the contractor’s tenure for renewal of license now extends for the entire period of the contract, thus relieving him of annual statutory review.

Contractors with less than 50 labourers are exempted from registration. The time between successive factory inspection has been raised to 3 months and firms with less than 50 employees are exempted from inspection. Startups can avail of a one-time registration that won’t be subjected to renewals. Most importantly, the turnaround time for granting all registration and licensing permits has been amended to 1 single day, a record in the history of Indian regulatory compliance!

(Un)Intended Consequences?

What started as an ambitious target of the Prime Minister in the form of ‘Make in India’ initiative, now seems wishing to dispel all supervising rules and constraints in the way to achieve industrial development. Agreed, the global unfavourability towards China will divert a lot of its investment away and it is only diligent for India to capitalize on such diversion. The vehicle to attain this capital, however, should not make headway into the Indian markets upon the backs of workers whose livelihoods face imminent challenges on account of the proposed amendments.

Initiating fast-track single-window clearance offices to issue the permits is a tried-and-tested process that could materialize industrial operations quickly. Additionally, such an initiative will need personnel to function, which in turn would give rise to jobs. As is understood, the state governments wish to attract investments without contributing anything towards supporting infrastructure, which is perhaps why taking the high road by cutting down on labour expenditure seems like an advantageous alternative.

Reducing the threshold of workers’ strength necessary to employ collective bargaining efforts proves detrimental to the small groups of workers employed in a factory who are not only suffering on account of working in the unregulated sector but are also bereaved of the power to voice their concerns to their employers. Regulatory approval for smaller groups is a hard pass if they wish to unionize. Excusing firms from existential edicts such as registration and licensing are an exercise in futility as far as the promotion of business interests are concerned. Such an exemptional climate gives rise to unscrupulous undertakings which are primarily set up to evade audits and are often stations for profiteering or money laundering.

Protection against lay-off and retrenchment is a hallmark of Indian labour law. However, eight states have effectively amended Chapter VB of the Industrial Disputes Act, 1947, thereby increasing the threshold of the industrial workforce from 100 to 300, which is a precondition for seeking government approval before firing workmen. The power of collective bargain is a pivotal construct of workmen’s rights and this power is rendered utterly infructuous against the whims of an employer who can now redesign his holdings by capping employee strength under 100, and thereafter, practice hiring and firing at will. Perhaps the states choose to see it as an alternate reality wherein a limited workforce translates into limited impediments for layoff, which further translates into increased industrial autonomy sought by the investor community. Nevertheless, when the day comes where the nation’s industrial prosperity is achieved by traversing upon workmen’s interests and not by building a holistic symbiosis between labour and investor classes, that is the day when the presupposed irony in these amendments stops dying a painful death.


Labour laws are central to building the industrial foundations of a nation. The flexibility of a labour regime, the rights and recourses provided to workers, the apparatus of addressing disputes, and the instrumentalities of collective bargaining, give an insight into the business environment and industrial aptitude of a nation. Since it falls under the Concurrent List of the Constitution, both Parliament, as well as state legislatures, are equipped to make laws on labour and employment. It is, therefore, expected of some states to have more flexible norms than others in the hopes of attracting investments.

According to ILO estimates, the pandemic is expected to wipe out 6.7 percent of working hours globally in the second quarter of 2020, which is equivalent to 195 million full-time workers. We must follow the lead of countries like the UK where government-supported furlough schemes have helped the workforce tide over the catastrophic economic fallouts resulting from the pandemic. Cash-in-hand delivery, tax credits for payments of immediate expenses, and interest-free loans extended to the working class can go a long way in preserving their spending capacity, which in turn can keep the economy running. A coalition of countries from Africa is mooting the idea to propose an IMF-supported bailout package to revive their domestic economies. Prudent diplomatic efforts and international lobbying by leaders of emerging economies like India can set the stage for a global scheme to channel credit and financial assistance from the developed world that can trickle down and repair our employment and labour health.

However, in the race to garner external funds and develop into marketable industrial complexes, it is not wonton upon the states to disregard the basic standard of a rule that is impressed upon them under the Central statutes. One could make the argument that the resulting changes are temporary and are necessitated from the obligation to revive a slowing economy. It is now incumbent upon the Supreme Court, which has taken cognizance of these developments and will emerge as the final arbiter on the issue. Nonetheless, bearing witness to a legislative overhaul of such drastic nature in labour and employment laws is quite radical and hardly conducive to the Indian citizenry who pride themselves in being a welfare state.

Title Image Source: New Indian Express

The article has been written by Padmini Subhashree, who is a Policy Analyst who works with Citizens' Foundation for Policy Solutions, a Delhi-based public policy think tank. She is also an alumnus of National University of Juridical Sciences, Kolkata."