Haryana Labour Law Reforms

This article was written by Akshat Batra a student of Lloyd Law College, Greater Noida.

The Haryana Vidhan Sabha through its Department of Labour passed various amendments to the below mentioned acts in a bid to help rejuvenate industry and bring about positive change to help businesses rather than labourers/workmen.[1]

Industrial Disputes (Haryana Amendment) Bill, 2016

These were the acts mainly affected:

• Industrial Disputes (Haryana Amendment) Bill, 2016
• Factories Act, 1948
• Contract Labour (Regulation and Abolition) Act, 1970
• Payment of Wages Act, 1936

Industrial Disputes Act, 1947

It allows and gives more freedom to industrial units employing up to 300 workers, to shut down and lay off workers, without fulfilling the requirement of permission from the relevant government authorities. This has been suggested as a change from the pre-existing requirement of an industrial establishment employing 100 or more workmen to obtain prior permission for the government in order to effect a lay-off, retrenchment and closure, under Section 25K of the ID Act. Accordingly, the tripling of the limit will make it more difficult for the government to control or help workers of such industries to save their employment.

Contract Labour (Regulation and Abolition) Act 1970

The condition of registration for industrial establishments employing up to 50 workers was abolished.

The Bill concerning contract labour is interested to remove the conditions of registration for industrial establishments that are employing up to 50 workers under the Contract Labour (Regulation and Abolition) Act 1970. The effect of this amendment will increase the existing limit of 20 workers to 50 workers employed for the purpose of application of the Act in Haryana.[2]

However on the other hand, a positive development for contract labourer’s rights was recently declared by the Union Minister of State for Labour (independent charge), Bandaru Dattatreya. The minimum wage for contract labourers shall be hiked to Rs10,000 per month and accordingly a gazette notification shall follow soon to make the same official. This move is an incredible and essential requirement for the crores of contract labour who are generally bereft of any rights and are nearly always exploited given the temporary & (generally) skilled nature of their job. [3] The same pertains to Section 25 of of the Contract Labour (Regulation and Abolition) Central Rules, which sets down the relevant wages to be paid. The proposed hike is in accordance with Supreme Court directions.[4]

Payment of Wages Act 1936

The central government is the relevant authority which has the power to revise wage limits of persons employed in industrial establishments. The current wage limit of is Rs 18,000 per month. The amendment accordingly is proposed to provide remedy to those who are getting wages at higher rate to enable them to agitate their claim in case of delayed payment of wages or illegal deduction from the wages.

The Haryana government mentioned that this shall be done by adding another provision to the Payment of Wages Act,1936 and accordingly specify the industrial establishment through a notification in the Official Gazette.

The employers of such establishments shall accordingly pay such employed persons their wages either by cheque or by directly transferring to their bank account. According to the Payment of Wages Act, 1936, the Central Government is competent to fix or revise the wage limit of persons employed in industrial establishments. The existing limit of such wage is Rs 18,000 per month. There is a provision to review this wage limit after a period of five years. It has been felt that this wage limit needs to be removed in the present scenario as the manufacturing industry in Haryana has been very progressive and the wage levels are usually high according to the text in the Bill. Thus accordingly, the amendment has been proposed with a view to provide remedy to those who are getting wages at higher rate to enable them to agitate their claim in case of delayed payment of wages or illegal deduction from their wages before the statutory authority appointed under the Act.

On the other side, for the welfare of the workmen, the bill further mentions that if the state government is satisfied that for the maintenance of industrial peace, or prevention of victimization of workmen – it might apply the provisions to such industrial establishments employing less than 300 workmen but not less than 100, as may be specified by the State Government.

Factories (Haryana Amendment) Bill, 2016

The aim of this amendment is to give freedom & set the limit for factories which are electrified & employing 20 workers, and 40 workers for the factories who are functioning without electricity, to be exempted from the definition of Factories Act, 1948. Thus accordingly such factories which fit into the aforementioned definition or lesser number of workers respectively, will not be under the purview of the Factories Act. The statement of objects and reasons, orders for supplying the goods are time bound and the factories are to supply the required goods well before the targeted time. This bill again aims to relax factories with lesser funding, small scale operation abilities to be free from any obligations towards its workers. This bill proposes to help small-scale businesses to function without  being held liable for the welfare of those people who it employs.[5]

It also proposes to give relief to factories which are first-time offenders, by giving them the opportunity to get their offences compounded instead of going to court.

Analysis of the reforms

Business-owners or employers are being given greater freedom to run companies without excessive regulatory control and clearance requirements from the government. This is extremely crucial in a time period wherein marketing schemes and ideas such as ‘Make in India’ are being floated and pushed by the government, to attract more investors and help fledgling business startups, especially in the manufacturing sector and not just the service sector, to flourish. This is part of a larger move by the Indian government to help the Indian economy, kick start its economic growth, so as to ensure that areas such as manufacturing which have large scope to build more, must be given incentive so as to boost, and build greater gains for the year-on-year GDP growth. The Indian government also recognises that with a higher rate and increase of entrepreneurs, the focus on job security or stability is less, since there are enough positions are being created everyday to meet growing demands of consumers and consequently businesses as a result, who are in turn creating and supplying more number of jobs. The current environment is such that abolishing and relaxing regulatory control and requirements, is incredibly important to help encourage more and more business owners to come forward and not shy away from taking bigger risks. The government clearly feels that the workers have enough supply of jobs and can afford less regulatory control on businesses.

According to Ved Prakash Saini (Ex. Officio Members- State GS, Bharatiya Mazdoor Sangh), the new labour law amendments will adversely impact the job security of the workers and allow employers to have an even more adverse upper-hand.[6]

The positive outcome amongst these labour reforms is also regarding the granting of permission to be allowed to work night shifts. This is again supposed to achieve the dual benefit of furthering the industry’s business aspects/ambitions, and additionally empower women to be given similar labour rights & promote equality between the two sexes.

According to a paper which considered the causal link change between labour regulation and actual changes in labour & employment law whose effect would be such that it would actually transform the lives of the labourers – “… little attention was paid to the role of the legal system as a causal variable, with the potential to shape social and economic outcomes in its own right. Certain regulatory initiatives, such as minimum wages and employment protection laws, were intensively studied with a view to assessing their impacts on output variables such as unemployment and productivity, but without close regard to their legal form. For the purposes of economic modelling, laws were generally assumed to be self-executing, and issues concerning the incompleteness and imperfect operation of legal rules were left unexplored. As a result, notwithstanding the existence of a large body of literature employing increasingly complex statistical methods, issues of concern to legal researchers and policy makers were only marginally addressed.” The paper accordingly also draws the authors Checchi and Nunziata’s idea, wherein the example of how the UK laws and policies have over the years given way to a pro-union thought, is mentioned. This in turn has led to increased unemployment, low inflation which apparently gave way to the idea that unionization is not an influencing activity/process, but rather an offshoot or an outcome from the different stages or phases of the Macroeconomic cycle. This paper further urges that data points must be used to infer the pulse of the workers’, industry’s and the unions’ behaviour, so as to bring about relevant changes in rules, policy and regulations. Politicians can no longer merely depend on the cries of either the labourers or the industry to decide policy changes. The need of the hour should be on making policy decisions with regards to labour and employment law, using empirical research.[7]

“According to a Study by V V Giri National Labour Institute, about 55 percent of the workforce in organized industry is on contract basis and they are not paid industry-wise minimum wages. According to data collated by Labour Bureau in the year 2011-12, 3886 inspections have been conducted, and about 2451 prosecutions have been launched (about two-third of inspections) for violations, and 1528 persons have been convicted (about 40 percent of total inspections) under the Contract Labour Act.”[8]

The industry standards by themselves are so low that any regulation that even remotely relaxes the existing policy or loosens the grip on employers, will have a direct and immediate adverse impact on the wellbeing of the labourers/workers. The aforementioned statistics are the best example of how even today, receiving minimum wage for all workers is an incredible and frustrating issue. The dignity of labour derives its existence from the mirror that is the minimum wage and the definite receipt of the same consistently. The hurdles unfortunately do not end with legislation but get smaller with greater regulation.

[1] The Indian Express newspaper website (http://indianexpress.com/article/cities/chandigarh/haryana-pushes-for-change-in-labour-laws-passes-4-bills/) (News article, last accessed on 14^th April 2016)

[2] (http://timesofindia.indiatimes.com/city/delhi/Bharatiya-Mazdoor-Sangh-opposes-Haryana-labour-reforms/articleshow/51634038.cms) (News article, last accessed on 17^th April 2016)

[3] (http://www.india.com/news/india/government-to-increase-minimum-wages-of-contract-labourers-to-rs-10000-per-month-1115181/) (News article, last accessed on 17^th April 2016)

[4] (http://www.thehansindia.com/posts/index/Telangana/2016-04-17/Contract-workers-to-get-Rs-10K-minimum-wage/222191) (News article, last accessed on 17^th April 2016)

[5] The Indian Express newspaper website (http://indianexpress.com/article/cities/chandigarh/haryana-pushes-for-change-in-labour-laws-passes-4-bills/) (News article, last accessed on 14^th April 2016)

[6] The Author of this paper conducted a brief telephonic interview with Mr Saini.re

[7] Simon Deakin, The Evidence-Based Case for Labour Regulation, Regulating Decent Work Conference, ILO, Geneva, July 2009

[8] S. Prahalathan Iyer & Renuka Vijay, Comparison of Labour Laws: Select Countries, EXIM Bank, Occasional paper no. 160