Employment Law Relief for Employers in India - Part III
The COVID-19 mark crossed 150,000 in India on May 27, 2020, a number that none of us are proud about. The graph continues to rise and the monsoons may make it worse.
As the central and state governments continue to withdraw the sedative lockdown measures, the COVID-19 affected India Inc. is slowly awakening from an impromptu two-month-long induced coma, mandating major adjustments to the daily routine. Several countries adopted innovative measures to provide conservative reliefs to businesses and employees, that drive the lifeblood of a nation’s economy.
In Employment Law Relief for Employers in India: Part I and Part II, we covered the important measures India initiated in the early phases of lockdown. In Part III, we have focused on major employment-related relief measures, that set the trend for Lockdown 3.0 and Lockdown 4.0:
- The Employees’ State Insurance Corporation has allowed employers to file the return of contribution for the wage months of October 2019 until March 2020 up to June 11, 2020.
- The validity of the declared benefit under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) by virtue of which the government will now pay the employer’s and employee’s provident fund (PF) contributions for certain employees (earning less that INR 15,000 (~USD 200) per month) in smaller establishments (with less than 100 employees and with 90% of the employees earning below INR 15000 per month) until the wage month of August 2020.
- The rate of PF contribution for employers and employees in private sector establishments has been reduced from 12% to 10% for the months of May, June and July 2020.
- In order to attract investments in the manufacturing sector, some states have proposed reforms in their state labor law:
- Uttar Pradesh government has reportedly approved an ordinance exempting factories and manufacturing establishments in Uttar Pradesh for the next 3 years from all applicable labor statutes except Bonded Labour System (Abolition) Act, 1976, health and welfare-related provisions under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, laws related to the employment of women and children and Sec. 5 of Payment of Wages Act, 1936 with a few other restrictions. The ordinance reportedly awaits Presidential assent and has raised much debate amongst trade unions. The Uttar Pradesh government had also issued a notification permitting engagement of factory workers for up to 12 hours in a day which was withdrawn recently.
- Madhya Pradesh government has promulgated an Ordinance to make the Madhya Pradesh (Industrial Employment) Standing Orders Act, 1961 applicable only to establishments with more than 100 workers. Additionally, it also seeks to amend the Madhya Pradesh Labour Welfare Act, 1982 to allow the state to exempt any establishment or any category of establishment from its purview. The ordinance reportedly awaits Presidential assent.
- Gujarat governor has reportedly approved an Ordinance to exempt new units in service and manufacturing sectors commencing business in the state in the next one year, for a period of 1,200 days from almost all labour laws except Minimum Wages Act, 1948, Employees’ Compensation Act, 1923 and safety provisions related to factories. The Ordinance also reportedly awaits Presidential assent.
- Madhya Pradesh government has allowed certain general relaxations including some compliance and procedural relaxations to certain employers and establishments. The notable ones include exemption of all new industries which will be registered under the Factories Act, 1948 in the state from all the provisions of the Industrial Disputes Act, 1947 except certain provisions related to lay-off and retrenchment of workmen, unfair labor practices, closing down and restarting of undertakings for 1,000 days, subject to certain conditions. The Madhya Pradesh Industrial Relations Act, 1960 has been made prospectively inapplicable to certain industries such as those engaged in textile, iron and steel, electrical goods, motor vehicle engineering, etc. The notification also exempts factories registered under the Factories Act, 1948 in the state of Madhya Pradesh from all the provisions of the factories act and rules thereunder except certain provisions on safety, overtime, employment of young children, leave with wages, a notice of accidents until August 5, 2020.
- In addition to existing relaxations in states such as Gujarat, Haryana, Madhya Pradesh, Himachal Pradesh and Punjab (although Rajasthan recently withdrew its existing notification) some other states have also granted exemptions under laws governing factories and commercial establishments to permit daily engagement of employees for a longer period beyond existing statutory limitations:
- The state government of Goa has exempted all adult factory workers from the applicable provisions on weekly hours, weekly holidays, daily hours and spread over until July 31, 2020. Such workers may be required to work for up to 12 hours in a day (13 hours maximum spread-over) and up to 60 hours in a week, subject to certain conditions, with the applicability of overtime wages for the period of work exceeding 48 hours in a week.
- The state government of Maharashtra has exempted all factories from the applicable provisions on weekly hours, weekly holidays, daily hours and spread over until June 30, 2020. The workers may be required to work for up to 12 hours in a day (13 hours maximum spread-over) and up to 60 hours in a week, subject to certain conditions.
- The state government of Assam has exempted factories in Assam from the provisions relating to weekly hours, weekly holidays, daily hours and spread over with respect to adult workers. Shops and establishments in Assam have been given similar exemption allowing engagement of employees/ workers in factories and establishments for up to 12 hours in a day (13 hours maximum spread-over), subject to mutual agreement between employers and employees which may remain valid for 3 months or until the withdrawal of the notification, whichever is earlier.
- The Karnataka state government has exempted all factories from weekly hours and daily hours provisions until August 21, 2020, permitting engagement of adult workers in factories for up to 10 hours in a day and 60 hours in a week, with applicable overtime payments.
- The Odisha state government has also exempted all factories from provisions related to working hours, daily hours, intervals for rest of adult workers under the Factories Act, 1948 until August 8, 2020 permitting engagement of workers in factories for up to 12 hours in a day and 72 hours in a week, subject to certain conditions.
The radical labor law amendments proposed by some Indian states attracted global attention. The International Labour Organization (ILO) has reportedly written to the Prime Minister of India in an attempt to mitigate the situation. The Supreme Court on the other hand is in the process of reviewing the writ petitions by employers challenging some of the government notifications restricting wage cuts.
While ILO has advised employers to retain the workforce, India is yet to provide enough incentives for employers to retain their workforce in the plummeting economy.