Analyzing the Legality of UP Governments’ Ordinance on Exemption of Labour Laws

COVID-19 was declared as a pandemic by the Director-General of the World Health Organization on 11th March 2020. The crisis has not only had a significant and catastrophic effect on the lives of individuals all over the world but also continues to have an apparent and profound influence on all the industries.

Labour and employees play a major role in the industries. The Indian Labour laws exist so that the workers are treated well in such work environments and help protect their rights including timely wages, necessary compensations and bonuses, and health care facilities, etc.  But with an outbreak of this scale, even the automated industries are at the hinge, leading them to consider cost-cutting, salary/wage reduction, or even layoffs. At the same time, there is also a need to ensure the protection of these workmen/labourers during such time while parallelly harmonizing the interests of the company/ industries and the employees.

The Central and State governments have already taken various measures for safeguarding the interest of both labourers and industries. However, states like Uttar Pradesh, Madhya Pradesh, Rajasthan, and Gujarat have brought ordinances to amend the existing labour laws particularly imposing a blanket ban on the labour laws.

However, the Uttar Pradesh government has approved of an ordinance to exempt all establishments, factories, and businesses from the purview of all but four labour laws, for three years.  In this article, the authors will discuss the ordinance, its advantages and disadvantages, and the constitutional validity of such ordinance will also be examined.

The Ordinance

The Uttar Pradesh government on 8th May 2020 has brought an ordinance exempting the companies from complying with almost all labour laws except three acts and a section of another act for the next three years to boost the economy and to revive businesses that are hit by COVID-19.

The “Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020 “ has been cleared by the state cabinet to exempt all establishments, factories, and businesses from the purview of all, but four laws for three years.[1]

According to the ordinance, the three active laws will be – Building and Other Construction Workers Act, 1996, Workmen Compensation Act, 1923, Bonded Labour Act, 1976 and Section 5 of the Payment of Wages Act, 1936, which talks about timely wages to be received by the employees.[2] Although the ordinance is yet not in the public domain various news reports suggest that the ordinance would also exempt women and children.[3] New industrial investments, establishments of new industries in the state as well as existing industries will be under the purview of this ordinance.

The basic purpose to boost the economy and encourage investment in the state may seem to be fulfilled by this ordinance. But in lieu of the same other major labour laws relating to industrial disputes, trade union, contract labour, minimum wages, health and working conditions, migrant labourers, layoffs, and other such laws will be left redundant.

The ordinance will not just lead to the abuse of the labourers in many ways, but will also put the employers at a disadvantage in some ways, for example:

  • Not adding the Minimum Wages Act under the ordinance will lead to major exploitation of the workmen, now the employer can pay as much money as they want. There is no requirement of minimum wages to be paid to the employee with the inoperability of this act. Luckily the Bonded labour Act provides for the cut to be paid hence the employer cannot make workmen work for free. Apart from this, the Factories Act and Shops Establishment Act provides for the overtime wages, work by hours wages, etc., which would not be enforceable for the next 3 years, which automatically will lead the employer to get the workmen to work for as many hours as he wants with no guarantee of overtime pay.
  • Due to the suspension of major social security legislation like the Gratuity Act etc., the employers will obviously find an opportunity to remove permanent labourers and therefore leading to non-payment of gratuity or retrenchment fees, etc.
  • If workers of a unit threaten to go on strike or resort to impermissible industrial action such as ‘go-slow’ etc., due to the suspension of Trade Union Act, the employees can resort to such options and no legal protection will be available to the employer.
  • Due to the defunct Industrial Disputes Act any dispute which may arise, no adjudication could be done for the same.

This ordinance will lead to slave-like conditions for labourers and it will be in violation of the constitutional and fundamental rights of an individual.

Also, such a policy cannot be held economically suitable as such a policy will not attract long term capital, providing only three years concessions would only increase the chaos in the market and no addition to the new and serious investors would take place.

Is it constitutionally valid or not?

Covid-19 has posed a test for the Indian government in taking actions that do not have any effect on the Constitution fabric of the country but almost every day we come across various instances of PILs and petitions being filed in the Supreme Court for the violation of rights and constitutional provisions because of the arbitrary actions of the government.

The government is taking various steps that are economically viable. But the question that still remains relevant is whether such actions are not violating the rights of some communities. UP government, in order to create employment and bring investment in the state, has scrapped labour laws which were enacted with the aim of safeguarding the human rights of the workers.

The labour laws that have been scrapped include Minimum Wages Act, Industrial Disputes Act, etc. These labour legislations were enacted by the government so as to provide and ensure minimum livelihood to the workers and protect them from harassment by their employers. The pandemic has already cost millions their jobs and with the enforcement of such ordinances, the employers would no longer be under any obligation to furnish a proper notice for the removal of the worker which is prima facie violation of principles of natural justice enshrined in the constitution of India.

Looking at the constitutional validity of the same, firstly, Article 19(1)(c)[4] of the Constitution grants the right to form associations and now by the scrapping of trade unions act the government has acted in violation of this constitutional provision. Associations are a must as with the help of such associations’ are workers able to put forth their grievances anything goes against their welfare. Although restrictions can be imposed on such associations in case of:

  1. The Association is a threat to sovereignty and integrity of India
  2. To maintain the public order it is necessary to prohibit the formation of such associations
  3. If the formation of any such association is against public morality.

But in the present scenario, no such ground has been stated by the government in scraping the trade unions act and the associations formed under it.

Secondly, Article 21[5] of the Constitution of India states that every citizen in the country has the right to life and liberty and with time the scope of this Article has been broadened by various judicial pronouncements. This includes right to livelihood, right to minimum wage as opined in PUCL v. Union of India[6]. By scrapping of labour legislations such as minimum wage act the government’s action is against the word and spirit of Article 21.

Further, this also violates Article 38[7] read with Article 42[8] of the Constitution which states that States are under the mandate to provide humane conditions to the all the workers working in the state. Both these articles state that it is the duty of the government to secure a social order for the promotion of welfare and humane conditions for the workers employed in the country. Hence, the action of the UP government is in clear violation of these constitutional provisions.

Judicial Approach

Judiciary has played the most important role in securing human rights for the marginalized sections of society. Courts in India have made liberal and socialist interpretation of statutes from time to time. This approach can be seen in the case of Central Inland Water Transport Corporation v. BN Ganguly [9] wherein the Apex Court observed that:

“As society changes, the law cannot remain immutable. The law must march in tune with the changed ideas and ideologies, Legislature are, however not best fitted for adopting the law to the necessities of the time, for the legislature policy is too slow and the legislatures often divided by politics slowed down by periodic elections and overburdened by myriad other legislative activities. The process of amending a constitution is too cumbersome to meet immediate needs. Their task must, therefore of necessity fall upon the courts because the courts can by process of judicial interpretation adopt the law to the needs of society.”

Thus, in the light of the above-mentioned observation, the beginning of socialistic approach of interpreting legal provisions began. One such instance can be seen in PUCL v. Union of India[10] wherein the Court interpreted Article 21 and said that not providing the minimum wage is in clear violation of the right to livelihood and dignity.

The best instance wherein the principle of social justice has been propounded upon by the court can be seen in the case of Gujrat Steel tubes v. Gujarat Steel Tubes Mazdoor Sabha[11] wherein, Justice Sabhawherein Iyer demonstrated the socialist approach in case of a strike and has shown the approach to balance conflicting interests, observing that, strike though may be illegal but still may be justified. Does it not tantamount to saying that the parliament has, through legislation, illegalized what is in fact just? It seems Iyer J. here gives precedence to his own reason than to the express and clear intention of the legislature.

Violates ILO Conventions

India is one of the founding members of ILO. Recently, ILO warned the Indian States against the scrapping off labour laws without any prior consultation with the Government, the workers and the employers as per the International Labour standards. Article 2 of the Tripartite Consultation (International Labour Standards) Convention, 1976 (No. 144) states that before taking any such action the ratifying nations should ensure that proper tripartite consultation takes place between the representatives of the government, of employers and of the workers.

Also, the government by doing away with the Trade Unions Act has violated Article 2 of the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) which states that workers and employers have the right to organise themselves into an association and the members of the ILO are mandated by Article 11 of the Convention that the workers exercise this right freely.

Concluding Remarks:

So, in the light of the presented arguments, the authors would like to conclude that although the government is compelled by the circumstances owing to this pandemic to take such actions at the same time a system of proper checks and balances must be maintained, else it would be like twisting the knife in the wound. Governments around the globe are taking a number of steps to ensure that their economy doesn’t collapse. Scrapping all the laws would be a very harsh decision rather the state governments should take measures which are neither rigid nor flexible.

This action of the Uttar Pradesh Government is against the word and spirit of the Constitution of India. Labour legislations of the country were enacted with the aim of providing social security and social justice to the workers in India. The preamble of the Constitution of India states that India is a ‘Socialist’ country, a term incorporated in our Constitution by the 42nd constitutional amendment in 1976. In 1991, the Government was faced with a similar question on whether to adhere to the preamble or introduce necessary economic reforms in the country. The term “Socialism” is no-where defined in the constitution but in the case of Air India Statutory Corporation v. United Labour Union[12], the Supreme Court had discussed the concept of “Socialism” and elaborated that the term is incorporated in the Constitution so as to establish an egalitarian social order through the rule of law as its basic structure.

Although we understand that there is an urgency to take the necessary steps so as to help jumpstart the nation’s economy from the damage caused by this pandemic but steps with regards to labour reforms should be taken after the tripartite consultation between representatives from the government, workers’ and employers as per International Labour Standards. Governments at such times should understand that no such actions that affects the rights of the people of a particular class can be taken unilaterally, as amidst this crisis are India’s workers’ that are going to suffer the most.

[1] https://www.business-standard.com/article/economy-policy/up-govt-to-exempt-businesses-from-all-but-three-labour-laws-for-3-years-120050701531_1.html last accessed 15 May, 2020.

[2]https://advocatetanmoy.com/2020/05/09/suspended-laws-under-up-labour-laws-ordinance/ last accessed 15 May, 2020.

[3] https://thewire.in/labour/adityanath-govt-in-up-to-suspend-key-labour-laws-workers-rights-for-three-years last accessed 15 May, 2020.

[4] The Constitution of India, 1950

[5] Ibid

[6] (1982) 2 LLJ 454

[7] Ibid

[8] Ibid

[9](1986) 3 SCC 15.

[10] (1982) 2 LLJ 454

[11]1980 AIR 1896 SC

[12] (1997) 9 SCC 377


ABOUT THE AUTHORS

Animesh Upadhyay

PHOTO-2020-04-21-19-55-22

Animesh Upadhyay is a fourth-year BA.LLB (Hons.) student at Dr. Ram Manohar Lohiya National Law University. His subjects of interest are Constitutional Law, Labour Laws and Criminal Laws.

Harsh Gupta

PHOTO-2020-06-22-23-49-04

Harsh Gupta is a fourth-year BA.LLB(Hons.) student at Dr. Ram Manohar Lohiya National Law University. His areas of interest include Labour Laws and Arbitration.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s