It is unfortunate that sixty four years after independence and twenty one years after the liberalisation process started, we are subjected to a set of labour laws which are colonial in origin.
Attempts to upgrade or reinvent the same have been opposed by certain political parties on ‘ideological’ grounds, apprehending that the protection level for workers would be diluted. Unfortunately, the end result is that while a certain section is protected, which is the core manufacturing sector, the rigidity of the legal regime has resulted in large numbers being unregulated. The three most contentious laws are the Industrial Disputes Contract Labour Regulating and the Trade Union Acts, all of which proceed on the assumption that every industrialist’s motive is to ill treat and exploit the workers.
The Indian Factories’ Act (Act) was last amended in 1987 on health and safety issues, to introduce the concept and definition of ‘Hazardous Process’ and amending the definition of ‘Occupier’ by inclusion of the ‘ultimate control”, and board membership criteria. Fresh amendments were proposed in 2005-2006, which appeared to send a signal of considering changes in perception. The bill was introduced in August, 2005 and referred to an Expert Committee, which has recently submitted its report.
The Factories’ Act was originally intended to regulate working conditions in factories and issues of safety and welfare. Its only when the heightened perception of pollution and risks had to be addressed, the act was amended to address “dangerous occasions”. While the Act generated a fair amount of public interest litigation pertaining to child labour and environmental issues, the dangerous aspects of the Factories Act made history, other than the Bhopal case, being the challenge to the 1987 amendments on the ‘Occupier’ definition being enlarged to ‘having ultimate control’, and in the case of a company, a director. This was one critical insertion which the Supreme Court upheld and enlarged the scope of the amendments in the JK Industries judgment.
Under the scanner in the resurrection of the Bhopal issue last year, the committee’s task was to specifically address concerns arising out of industrial disaster, such as, mitigation, compensation, health and safety (H&S) in the long term as well as issues of accountability of public servants and other stakeholders. Much of the recommendations are language changes – incorporating and integrating the definition of Hazardous Process with that of ‘Hazardous Substances’, updations on adequacy of shelters, rest rooms and similar other safety issues.
But from the corporate perspective, the contentious issues arising from the amendments are the roles of the Occupier and the Inspector of Factories and gender issues. Opinion of stakeholder was invited on whether the Occupier definition warranted any changes. By and large, there was a consensus that for better accountability the Occupier has to be a senior person having control. However, an exception was made in case of factories owned by the Government, for which separate rules were to be notified and carved out. Reportedly, CII and Assocham representatives protested that this was discriminatory and even the CITU member concurred that the Occupier in PSU factories should not be a lower functionary, but this was not addressed by the Committee, thereby legitimising the view taken by the Supreme Court in the Indian Oil judgement (1998). Affording this exception to public sector facilities, does not appear to be supported by any rationale, except to protect certain heads, while using the same logic against the private sector. Clause (iii) of Section 2(n) has been proposed to be modified accordingly.
There is a reference in the Report of CII’s submission that the definition of Occupier should not deter foreign investors in establishing their units in India. It is true that this is a palpable concern with a section of foreign investors who have a policy issue of not inducting locals on their Board of Directors.
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Some corporations brave it out and designate an expat director. But this is practicable for a single facility only. Also an investor may not wish to add random numbers to his Board, that too when the law differentiates between ‘ultimate’ and ‘day to day’ control and the risk survives.
It was also proposed by these stakeholders that the perception of adversarial position which the Inspector currently has needs to be dispelled and replaced with something on the TRAI lines. The Inspector should be made no less accountable for his acts and deeds and not misuse the system, The powers under section 9, vests the Inspector the power to enter the premises of any facility within the local units to conduct examinations, seize documents, and even direct partial closure of any part of the premises are medievally draconian.
In dealing with gender bias the DG of the National Safety Council has raised an interesting point, which is more general in nature, on whether the Factories Act should deal with issues, such as, working hours and gender issues or pure operational and technical issues. It is advisable that these issues should be segregated and addressed under separate statute. As for the opposition to the proposed amendments for providing transportation, security and other safeguards to women workers, that’s a story for another day.
Kumkum Sen is a partner at Bharucha & Partners Delhi Office and can be reached at kumkum.sen@bharucha.in