 "Labour woes ahead of reforms")
Around 2011, a few months before a Chennai-based garment-export unit employing around 200 workers had shut down, delay in salaries prompted a number of workers to quit on their own. Subsequently, a few workers appealed to the newly-formed Garments and Fashion Workers' Union for justice. One of the first things the union did was to ensure the number of workers in the factory does not fall below 100. If it did, the owner could have closed the factory without needing an approval of the government, and would thus not be liable to pay retirement benefits to the workers. The issue was resolved after all the dues of the workers were paid in accordance with government norms.
Meghna Sukumar, organiser, Garments and Fashion Workers' Union in Chennai, argues that if the government's proposals to amend labour laws, particularly the changes in the Industrial Dispute Act 1947, were implemented, the workers of the factory would have been laid off, with no dues paid. In contrast, in jute mills in West Bengal, poor demand forced many employers to curtail working hours, leading to unruly protests by workers and even the murder of a jute mill owner last year.
In the backdrop of a complex labour-management relationship in India, the Central government has set the ball rolling for radical changes in labour laws, instrumental to its 'Make in India' campaign.
The Centre is closely following the labour laws introduced by the Rajasthan government as a model. The Centre is expected to replicate the Rajasthan government's Industrial Disputes Act.
Under the Rajasthan's Industrial Disputes Act, companies employing up to 300 people are free to lay off workers or close down without taking the government's approval. Earlier, those with up to 100 employees were allowed to do so. Defenders of labour rights have called this draconian, while entrepreneurs have hailed it as one of the biggest reforms in the history of labour laws.
"Now many small units which are unviable can close down without any hassle," said Rajiv Shankar Pandya, president, SEEPZ Gems and Jewellery Manufacturers Association.
Some of the other changes that the Central government has proposed in the past few months include amendments to the Factories Act, 1948, the Apprentices Act, 1961, and the passage of the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Amendment Bill, 2014. However, the most sweeping changes in labour laws are summed up in the Small Factories (Regulation of Employment and Condition of Services) Bill, 2014, which was put on the labour ministry's website for public comments till November 10, 2014. A radical change that the Bill proposes is redefining a manufacturing unit on the basis of the number of people it employees - a seemingly small step, with huge repercussion.
Under the Bill, a small factory is defined as an establishment employing less than 40 workers. Earlier, a small enterprise was defined on the basis of investment in plant (Rs 25 lakh to Rs 10 crore). Thus, effectively, all the establishments employing less than 40 workers will now be out of the purview of 14 laws governing factories in India, including some of the most contentious laws.
"In India, 58 per cent factories employ up to 30 workers. Thus, the small factories Bill is going to hugely benefit the manufacturing sector," said N G Khaitan, a partner in the law firm Khaitan & Co.
However, the new proposals are not without loopholes. For example, in the garments sector, often a single employer is known to be running multiple units through sub-contractors, thus effectively keeping a big unit out of the purview of important labour laws, according to Sukumar. Under the Small Factories (Regulation of Employment and Condition of Services) Bill, 2014, as many as 14 Acts will not be applicable to factories employing less than 40 workers. These include laws protecting labour rights such as The Factories Act, The Industrial Disputes Act, The Minimum Wages Act, and The Child Labour (Prohibition and Regulation)Act.
Moreover, the employers of these small factories can register or close down their units by electronically notifying the authorities. On the positive side, amendments such as these now allow night shifts for women and increase the overtime limit to 100 hours in a quarter from 50 hours earlier, a change which will help seasonal industries, particularly export houses, become more competitive.
State amendments
At present, there are nearly 100 labour laws. However, of these, many are in the concurrent list, which implies that states can ask for an amendment in the rules. However, it is up to the Centre to give a nod for the amendment.
Last year, President Pranab Mukherjee gave his consent to amend three laws - the Industrial Disputes Act, 1947, the Contract Labour Act, 1970 and the Factories Act, 1947 - to the Rajasthan government.
Following the Rajasthan model, the Madhya Pradesh government has sent proposed amendments to eight labour laws in the form of an ordinance to the President.
The industry lobby in Maharashtra, too, is pushing for similar changes in labour laws in the state.
"The Central government is simply replicating the labour laws enacted in Rajasthan by removing a large number of workers from the purview of law. Moreover, by not consulting labour unions in decision making, the state government is violating the International Labour Organization Convention 144. On account of the new laws, only 257 factories will now fall under the purview of Factories Act, against 1,400 earlier," said Brajesh Upadhyay, general secretary, Bhartiya Majdoor Sangha. Already, seven to eight cases of violent clashes between the management and labour unions have taken place in the past month in Rajasthan, according to Upadhyay.
Despite the reformist tweak in the new labour laws, the road to 'Make in India' has more jerks than smooth rides.
(State) Shops and Establishments Act
The Equal Remuneration Act 1976
The Child Labour (Prohibition and Regulation)Act, 1986.
Meghna Sukumar, organiser, Garments and Fashion Workers' Union in Chennai, argues that if the government's proposals to amend labour laws, particularly the changes in the Industrial Dispute Act 1947, were implemented, the workers of the factory would have been laid off, with no dues paid. In contrast, in jute mills in West Bengal, poor demand forced many employers to curtail working hours, leading to unruly protests by workers and even the murder of a jute mill owner last year.
In the backdrop of a complex labour-management relationship in India, the Central government has set the ball rolling for radical changes in labour laws, instrumental to its 'Make in India' campaign.
Also Read
New proposals
The Centre is closely following the labour laws introduced by the Rajasthan government as a model. The Centre is expected to replicate the Rajasthan government's Industrial Disputes Act.
Under the Rajasthan's Industrial Disputes Act, companies employing up to 300 people are free to lay off workers or close down without taking the government's approval. Earlier, those with up to 100 employees were allowed to do so. Defenders of labour rights have called this draconian, while entrepreneurs have hailed it as one of the biggest reforms in the history of labour laws.
"Now many small units which are unviable can close down without any hassle," said Rajiv Shankar Pandya, president, SEEPZ Gems and Jewellery Manufacturers Association.
Some of the other changes that the Central government has proposed in the past few months include amendments to the Factories Act, 1948, the Apprentices Act, 1961, and the passage of the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Amendment Bill, 2014. However, the most sweeping changes in labour laws are summed up in the Small Factories (Regulation of Employment and Condition of Services) Bill, 2014, which was put on the labour ministry's website for public comments till November 10, 2014. A radical change that the Bill proposes is redefining a manufacturing unit on the basis of the number of people it employees - a seemingly small step, with huge repercussion.
Under the Bill, a small factory is defined as an establishment employing less than 40 workers. Earlier, a small enterprise was defined on the basis of investment in plant (Rs 25 lakh to Rs 10 crore). Thus, effectively, all the establishments employing less than 40 workers will now be out of the purview of 14 laws governing factories in India, including some of the most contentious laws.
"In India, 58 per cent factories employ up to 30 workers. Thus, the small factories Bill is going to hugely benefit the manufacturing sector," said N G Khaitan, a partner in the law firm Khaitan & Co.
However, the new proposals are not without loopholes. For example, in the garments sector, often a single employer is known to be running multiple units through sub-contractors, thus effectively keeping a big unit out of the purview of important labour laws, according to Sukumar. Under the Small Factories (Regulation of Employment and Condition of Services) Bill, 2014, as many as 14 Acts will not be applicable to factories employing less than 40 workers. These include laws protecting labour rights such as The Factories Act, The Industrial Disputes Act, The Minimum Wages Act, and The Child Labour (Prohibition and Regulation)Act.
Moreover, the employers of these small factories can register or close down their units by electronically notifying the authorities. On the positive side, amendments such as these now allow night shifts for women and increase the overtime limit to 100 hours in a quarter from 50 hours earlier, a change which will help seasonal industries, particularly export houses, become more competitive.
State amendments
At present, there are nearly 100 labour laws. However, of these, many are in the concurrent list, which implies that states can ask for an amendment in the rules. However, it is up to the Centre to give a nod for the amendment.
Last year, President Pranab Mukherjee gave his consent to amend three laws - the Industrial Disputes Act, 1947, the Contract Labour Act, 1970 and the Factories Act, 1947 - to the Rajasthan government.
Following the Rajasthan model, the Madhya Pradesh government has sent proposed amendments to eight labour laws in the form of an ordinance to the President.
The industry lobby in Maharashtra, too, is pushing for similar changes in labour laws in the state.
"The Central government is simply replicating the labour laws enacted in Rajasthan by removing a large number of workers from the purview of law. Moreover, by not consulting labour unions in decision making, the state government is violating the International Labour Organization Convention 144. On account of the new laws, only 257 factories will now fall under the purview of Factories Act, against 1,400 earlier," said Brajesh Upadhyay, general secretary, Bhartiya Majdoor Sangha. Already, seven to eight cases of violent clashes between the management and labour unions have taken place in the past month in Rajasthan, according to Upadhyay.
Despite the reformist tweak in the new labour laws, the road to 'Make in India' has more jerks than smooth rides.
| ACTS TO BE SUBSUMED UNDER SMALL FACTORIES BILL |
|