Suspension of labour laws: Centre objects to states’ Ordinance plan | Business Standard News

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UP, Gujarat govts are seeking to suspend major labour laws via this route; ministry firming up its response

Both the state governments have justified the need for an Ordinance to exempt companies from labour laws for three years to boost investment in the state, as businesses and jobs have been severely impacted by the Covid-19 pandemic.

The Union labour and employment ministry is not in favour of the plans by some state governments to temporarily abolish most of the labour laws through the Ordinance route.

“It doesn’t seem right,” a senior labour ministry official said, when asked about the Ordinances proposed by the governments of Uttar Pradesh and Gujarat.

“How can an Ordinance abolish labour laws in a state? It’s not merely about labour laws but also about labour rights. Who will benefit if the industrial dispute mechanism is abolished?” the official added, requesting anonymity.

The official said the ministry was firming up its response to the Ordinances and a final decision would be taken in the next couple of days. Last week, the UP and Gujarat governments had sent their draft Ordinances for approval of the President, after getting a nod from their Governors. Since labour is a concurrent subject under the Constitution of India, states can frame their own laws, but need the approval of the Centre for making amendments to central laws. The President will take a final view of the Ordinances after seeking advice from the central government. Labour and Employment Secretary Heeralal Samariya didn’t respond to queries from Business Standard.

He told this correspondent to get in touch with a joint secretary in the ministry who refused to interact.

Both the state governments have justified the need for an Ordinance to exempt companies from labour laws for three years to boost investment in the state, as businesses and jobs have been severely impacted by the Covid-19 pandemic.

However, the Ordinance will take away the right to raise industrial disputes or form trade unions, and get compensation in the case of layoffs. It will also do away with inspection systems.


Apart from trade unions, industrialists such as Wipro founder Azim Premji and Bajaj Auto Managing Director Rajiv Bajaj have publicly criticised the move to do away with labour laws.

“The President will seek the advice of the Council of Ministers, so a Union Cabinet meeting has to be convened to decide upon the Ordinances. The Cabinet will communicate the formal decision to the President and if he doesn’t agree, he can return it to the states for reconsideration,” Constitution expert and lawyer Gautam Bhatia said. He termed the Ordinances as “illegal”, citing a Supreme Court judgment of 2017 which stated that the Ordinance route could only be used in the case of an emergency.

Even then labour law experts felt that by abolishing central laws through an Ordinance amounts to an abuse of concurrent legislative powers under the Constitution. “Using an Ordinance to eliminate labour legislation and create a vacuum in the field is an abuse of legislative powers granted under the Constitution of India. States can exercise their powers to modify the law but cannot create a vacuum,” labour law advocate Ramapriya Gopalakrishnan said.

In the past, too, the central government has sent back proposals of the state governments on proposed labour law changes through the Ordinance route. In 2015, the National Democratic Alliance government had objected to labour law changes proposed by the Bharatiya Janata Party-led Madhya Pradesh government through an Ordinance.

Back then, the central government had rejected a proposal to exempt micro industries (those with investments not exceeding Rs 25 lakh) in MP from the application of seven central laws, including the Trade Unions Act, Industrial Disputes Act, Contract Labour Act and Factories Act, and to increase the weekly work hour limit to 72 hours.

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