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The Planning Commission has proposed a massive overhaul of the country's existing labour laws to boost the sagging manufacturing sector, which contracted two per cent in May, compared with 2.6 per cent growth in the year-ago period.
The panel has proposed a liberal hire and fire policy in the manufacturing sector, besides third party auditing in place of labour inspections to monitor occupational safety and health administration in the sector, said officials. The commission has also suggested easing restrictions pertaining to the number of working hours by amending provisions in the Factories Act. The recommendations mainly target three labour laws--the Industrial Disputes Act, the Factories Act and the Trade Unions Act.
Non-restrictive working hrs
Suggesting changes in the Factories Act, the Plan panel said weekly, daily and quarterly working-hour restrictions could be aligned with international best practices such as 10 to 12 hours, subject to overall existing weekly caps. These recommendations are to be circulated among stakeholders such as the ministries of corporate affairs, commerce and industry, law, labour and micro, small and medium enterprises; Employees State Insurance Corp, state governments, trade unions and employers' organisations for their feedback.
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Aadhar-linked benefit a/c
It has also suggested universal coverage of social benefits, irrespective of the size and nature of employment and a provision for employers to deposit contributions under all labour schemes (employees' provident fund, employees' state insurance, wages, disability allowance, health insurance and other payments) under different sub accounts, which are linked to a single Aadhar account.
Lay off with compensation
On the lay-off provisions, the commission has recommended amending the Industrial Disputes Act, 1947, citing that the present law prohibits lay-offs. It said these provisions posed significant challenges for manufacturing units, which needed relatively more flexibility around the workforce planning to adjust per business requirement.
"Going forward, the lay-off provision needs to be flexible with no quantitative restrictions, without compromising employee welfare," the panel said. Elaborating on the situations that can lead to a worker being fired, it said lay-off could be with or without a reason, adding legal reasons for lay-off should be exhaustively defined to prevent foul play.
As for lay-offs with a reason, the commission said, there was no obligation on the employer and the problem should be resolved in the labour court if required. As for lay-offs without a reason, the employer should provide standardised benefits to the employee linked to the tenure in the firm.
Secret ballot for strike
The Planning Commission has also suggested steps to ensure that the trade union movement achieves its objectives of collective bargaining, while not harming the manufacturing sector.
The Trade Unions Act, 1926 needs to be amended to ensure that every employer sets up a labour welfare board on which representatives of both the management and workers were present, it said, adding there could be no stoppage of work unless 70 per cent of workers vote using secret ballot. The new suggestions, in line with the latest Economic Survey suggestions favouring labour reforms for a robust manufacturing sector, are getting negative reactions from trade unions.
Baij Nath Rai, general secretary of the Bharatiya Mazdoor Sangh, the country's largest trade union organisation which is affiliated with the Bharatiya Janata Party, said a set of recommendations on similar lines were earlier circulated for the national manufacturing zones, but these were rejected by the labour ministry itself, along with the trade unions. "If these come to us, we will reject them," he added.
Industry bodies were reluctant to comment on the issue.
LABOUR LAWS TO BE AMENDED
Factories Act, 1948
Section 51: Specifies maximum number of permissible hours for factory workers in a week
Section 54: Specifies the number hours permitted for a day
Section 64: Maximum number of working hours including overtime permitted under state amendments
Suggestion: Working hour restrictions could be aligned with international best practices, subject to the existing weekly caps
Industrial Disputes Act, 1947
Section 25 M: Provides for prohibition of lay-offs for factory workers Specifies bureaucratic process to be followed for lay-offs
Section 25 G: Allows legal action against lay-offs unless based on last come first go principle
Suggestion: Allow lay-offs, provided the worker gets compensated Trade Unions Act, 1926
Trade Unions Act, 1926
Suggestion: No labour strike unless 70 per cent workers vote for its by secret ballot Wage disputes effective from demand dateLabour welfare boards in every establishment
Occupational Safety and Health policy
Suggestion: Labour inspections be replaced by third party audits
