Critical Review of the Recent Amendments in Indian Labor Legislations

Submitted By:

Apurva Mittal

20141009

Introduction

Indian labour law is closely connected to the Indian independence movement, and the

campaigns of passive resistance leading up to independence. While India was under colonial

rule by the British Raj, labour rights, trade unions, and freedom of association were all

suppressed. Workers who sought better conditions, and trade unions who campaigned

through strike action were frequently, and violently suppressed. After independence was won

in 1947, the Constitution of India of 1950 embedded a series of fundamental labour rights in

the constitution, particularly the right to join and take action in a trade union, the principle of

equality at work, and the aspiration of creating a living wage with decent working conditions.

Sweeping changes in labour laws are taking place in India. A day after meeting trade union

leaders, Prime Minister Narendra Modi has said changes in labour laws will be carried out

through consensus and in consultation with the unions. The current government is

championing the cause of labour.

There is a thin line dividing the interest of industry and industrialists, government and nation,

and labour and labour organisations. Often one talk about saving the industry but ends up

protecting industrialists, adding there is a need to recognise this thin line in letter and spirit

and adopt a balanced approach to the deal with the issues and change the environment.

Amendments

Workmen Compensation Act, 1923

Workmen's compensation Act has been amended on 9th January 2010. It was effective from

18.1.2010

Given below are the synopses of the changes.

(1) THE WORKMEN'S COMPENSATION (AMENDMENT) ACT, 2009 is now renamed

as THE EMPLOYEE'S COMPENSATION (AMENDMENT) ACT, 2009 and wherever

"workman" or "workmen" is mentioned in the entire Act the same needs to be read as

"Employee"

(2) The compensation payable on death from the injury, is (i) minimum of Rs.80000 is

increased to Rs.120000 or (ii) 50% of the monthly wages of deceased multiplied by the

relevant factor.

(3) The compensation payable on Permanent Total Disablement from the injury, is (i)

minimum of Rs.90000 is increased to Rs.140000 or (ii) 60% of the monthly wages of

deceased multiplied by the relevant factor.

(4) Definition of wages remains unaltered.

(5) For the purpose of claims settlement actual monthly wages have to be calculated without

ceiling of Rs.4000/- which will lead to multifold increase in claim outgo. The maximum

amount of claim compensation payable was Rs. 4.56 lakh in the case of death and Rs. 5.48

lakh in the case of permanent total disablement. *(Refer to table and calculation below).

With the ceiling of Rs.4000/- being removed, the claims outgo will increase.

(6) Definition of workmen replaced by "Definition of Employee"- also now includes CLERICAL

employees.

* Maximum claim outgo in case of death when ceiling of Rs.4000 was there is calculated as

below:

50% of 4000* 228.54 (if age of employee was 16 years from table below) = Rs.4.56 lakhs

the award, order or settlement as if it were a decree passed by it.

Employee State Insurance Act, 1948

Ammended on May, 2010. It was effective from 1.5.2010

Now, therefore, in exercise of powers conferred by section 95 of the Employees' State

Insurance Act, 1948, the Central Government, after consultation with Employees' State

Insurance

Corporation, hereby makes the following rules further to amend the Employees' State

Insurance

(Central) Rules, 1950, namely:-

1. These Rules may be called the Employees' State Insurance (Central) Amendment Rules,

2010.

2. These shall come into force from the l " day of May, 2010.

3. In the Employees' State Insurance (Central) Rules, 1950, in Rule 50, for the words "Ten

Thousand", wherever they occur, the words "Fifteen thousand" shall be substituted.

The Payment of Gratuity Act, 1972

Ammended on May, 2010. Implemented on 24 .5.2010

An Act further to amend the Payment of Gratuity Act, 1972. BE it enacted by Parliament in

the Sixty-first Year of the Republic of India as follows:-

1. (1) This Act may be called the Payment of Gratuity (Amendment) Act, 2010. Short title

and commencement.

(2) It shall come into force on such date as the Central Government may, by notification in

the Official Gazette, appoint.

2. In section 4 of the Payment of Gratuity Act, 1972, in sub-section (3), for the words “Three

lakhs and Fifty thousand rupees”, the words “Ten lakh rupees” shall be substituted.

The Industrial Disputes (Rajasthan Amendment) Act, 2014

An Act further to amend the Industrial Disputes Act, 1947 in its application to the State of

Rajasthan. Be it enacted by the Rajasthan State Legislature in the Sixty-seventh Year of the

Republic of India, as follows:-

1. Short title, extent and commencement.- (1) This Act may be called The Industrial

Disputes (Rajasthan Amendment) Act, 2014.

(2) It shall extend to the whole of the State of Rajasthan.

(3) It shall come into force at once.

2. Amendment of Section 2, Central Act No. 14 of 1947.- In the Industrial Disputes

Act, 1947 (Central Act No. 14 of 1947), in its application to the State of

Rajasthan, hereinafter referred to as the principal Act, in section 2.-

(a) the existing sub-clause (iii) of clause (g) shall be deleted; and

(b) in clause (s), the existing expression “by an employer or by a contractor in relation to the

execution of his contract with such employer” shall be deleted.

3. Amendment of Section 2-A, Central Act No. 14 of 1947.- In Section 2-A of the

principal Act after the existing sub-section (3), the following new sub-section

shall be added, namely:-

“(4) Notwithstanding anything in sub-sections (1), (2) and (3), no such dispute or difference

between that workman and his employer connected with, or arising out of, such discharge,

dismissal, retrenchment or termination shall be deemed to be an industrial dispute if such

dispute is not raised in conciliation proceeding within a period of three years from the date of

such discharge, dismissal, retrenchment or termination:

Provided that an authority, as may be specified by the State Government, may consider to

extend the said period of three years when the applicant workman satisfies the authority that

he had sufficient cause for not raising the dispute within the period of three years.”

4. Amendment of Chapter II-B, Central Act No. 14 of 1947.- Chapter II-B of the

principal Act, as inserted by the Rajasthan Act No, 34 of 1958, shall be

renumbered as:

CHAPTER II-C”

5. Amendment of Section 9-C, Central Act No. 14 of 1947.- Section 9-C of the

principal Act, as inserted by the Rajasthan Act No, 34 of 1958, shall be

renumbered as “9-CC”.

6. Amendment of Section 9-D, Central Act No. 14 of 1947.- In Section 9-D of the

principal Act, as inserted by the Rajasthan Act No. 34 of 1958, the existing

expression “fifteen per cent” shall be substituted by the expression “thirty per

cent”,

7. Amendment of Section 25-K, Central Act No. 14 of 1947.- For the existing

section 25K of the principal Act, the following shell be substituted, namely:-

“25-K. Application of Chapter VB.- (1) The provisions of this Chapter shall apply to an

industrial establishment (not being an establishment of a seasonal character or in which work

is performed only intermittently) in which not less than. three hundred workmen were

employed on an average per working day for the preceding twelve months.

(2) Without prejudice to the provisions of sub-section (1), the State Government may, if

satisfied that maintenance of industrial peace or prevention of victimization of workmen so

requires, by notification in the Official Gazette apply the provisions of this Chapter to an

industrial establishment, (not being an establishment of a seasonal character or in which work

is performed only intermittently) in which such number of workmen which may be less than

three hundred but not less than one hundred, ‘as may be specified in the notification, were

employed on an average per working day for the preceding twelve months.

(3) If a question arises whether an industrial establishment is of a seasonal character or

whether work is performed therein only intermittently, the decision of the appropriate

Government thereon shall be final.”

8. Amendment of section 25-N, Central Act No. 14 of 1947.-ln section 25-N of the

principal Act.-

(a) in clause (a) of sub-section (1), the existing expression “or the workman has been paid in

lieu of such notice, wages for the period of the notice” shall be deleted; and

(b) in sub-section (9), after the existing expression “six months” and before the existing’

punctuation mark “.”, appearing at the end, the expression “and an amount equivalent to his

three months average pay” shall be inserted.

9. Amendment of Section 25-O, Central Act No. 14 of 1947.- In sub-section (8) of

section 25-O of the principal Act, after the existing expression “six months” and

before the existing punctuation work “.”, appearing at the end, the expression “and

an amount equivalent to his three months average pay” shall be inserted.

10. Amendment of Fifth Schedule, Central Act No. 14 of 1947.- After the existing

paragraph 5 of Part-II to the Fifth Schedule of the principal Act, the following

shall be added, namely:-

The Factories (Rajasthan Amendment) Act, 2014

An Act further to amend the Factories Act, 1948 in its application to the State of Rajasthan.

Be it enacted by the Rajasthan State Legislature in the Sixty-seventh of the Republic of India,

as follows:-

1. Short title, extent and commencement.-

A. This Act may be called The Factories (Rajasthan Amendment) Act, 2014

B. It shall extend to the whole of the State of Rajasthan.

C. It shall come into force on and from the date of its publication in the

Official Gazette.

2. Amendment of Section 2, Central Act No. 63 of 1948. – In section 2 of the

Factories Act, 1948 (Central Act No. 63 of 1948), in its application to the State of

Rajasthan, hereinafter referred to as the principal Act.

(i) in sub-clause (i) of Clause (m) , for the existing word “ten”, the word “twenty” shall be

substituted; and

(ii) in sub-clause (ii) of clause (m), for the existing word “twenty”, the word “forty” shall be

substituted.

3. Amendment of Section 85, Central Act No.63 of 1948. – In Clause (i) of sub-

section (1) of section 85 of the principal Act, for the existing words “ten” and

“twenty”, the words “twenty” and “forty” shall be substituted respectively.

4. Amendment of Section 105, Central Act No. 63 of 1948, – For the existing sub-

section (1) of Section 105 of the principal Act, the following shall be substituted.

CL (RA) (Rajasthan Amendment) Act, 2014

An Act to amend the Contract Labour (Regulation and Abolition) Act, 1970, in its

application to the State of Rajasthan.

Be it enacted by the Rajasthan State Legislature in the Sixty Seventh Year of the Republic of

India, as follows:

1. Short title, extent and commencement.-

A. This Act may be called The Contract Labour (Regulation and Abolition)

(Rajasthan Amendment) Act, 2014.

B. It shall extend to the whole of the State of Rajasthan.

C. It shall come into force at once.

2. Amendment of Section 1, Central Act No. 37 of 1970- For the existing sub-

section (4) of section 1 of the Contract Labour (Regulation and Abolition) Act,

1970 (Central Act No. 37 of 1970), in its application to the State of Rajasthan, the

following shall be substituted namely:-

The Employees’ Provident Funds (Fifth Amendment) Scheme 2014

In exercise of the powers conferred by Section 5, read with sub-section (1) of Section 7 of the

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) and in

supersession of Ministry of Labour and Employment’s G.S.R 321(E), dated the 6th

May, 2014

except as respect things done or omitted to be done before such supersession, the Central

Government hereby makes the following Scheme, further to amend the Employee’ Provident

Funds Scheme, 1952, namely:-

(1) This Scheme may be called The Employees’ Provident Funds (Fifth Amendment)

Scheme, 2014.

(2) It shall come into force from 1st April 2011.

In the Employees’ Provident Funds Scheme, 1952, in sub-paragraph (6) of paragraph 60 the

following proviso shall be inserted, namely:-

“Provided that if the settlement of claim in respect of inoperative account is delayed for more

than thirty days from the date of receipt of the application for settlement of claim, interest

shall be credited to the account in accordance with sub-paragraph (2) for delay period

excluding the period of thirty days”.

The Employees’ Provident Funds (Fifth Amendment) Scheme 2014

G.S.R. 891(E). – In exercise of the powers conferred by Section 5, read with sub-section (1)

of Section 7 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19

of 1952) and in supersession of Ministry of Labour and Employment’s G.S.R 321(E), dated

the 6th

May, 2014 except as respect things done or omitted to be done before such

supersession, the Central Government hereby makes the following Scheme, further to amend

the Employee’ Provident Funds Scheme, 1952, namely:-

(1) This Scheme may be called The Employees’ Provident Funds (Fifth Amendment)

Scheme, 2014.

(2) It shall come into force from 1st April 2011.

In the Employees’ Provident Funds Scheme, 1952, in sub-paragraph (6) of paragraph 60 the

following proviso shall be inserted, namely:-

“Provided that if the settlement of claim in respect of inoperative account is delayed for more

than thirty days from the date of receipt of the application for settlement of claim, interest

shall be credited to the account in accordance with sub-paragraph (2) for delay period

excluding the period of thirty days”.

Rationale behind amending the labour laws

International Competitiveness: There is a view that the labour laws at present are

hampering India’s competitiveness in the world market. India essentially being a

labour abundant country has comparative advantage in labour intensive

manufacturing commodities (which could give a thrust to employment growth).

However, this advantage is not fully exploited, it is said, due to the rigid labour laws.

Employment Trend in the 2000s: There is genuine concern about India’s capacity for

job creation in the manufacturing sector. In the 10-year period between 1999-2000

and 2009-10, the net increase in the number of workers in the manufacturing sector

was only 5.9 million

External market: the external market is sought to be achieved through cost cutting – in

turn made possible by diluting employment protection law. But cheapening of

domestic products in the international market can also be brought about by

depreciation of the real effective exchange rate.

Labour market flexibility is hardly the silver bullet for removing output and

employment stagnation in the manufacturing sector. From the foregoing discussion it

follows that amendments to labour laws in Rajasthan and elsewhere are not based on

sound economic logic.

Conclusion

While most of these rectifications seem to be targeting the security of workers, some are

required to make the law hassle-free for the industrialists. “India has long been criticized for

its strict labour laws and burdensome business regulatory environment,” says the World

Bank. Being the country with the largest population of under-utilized labour forces in the

world, the stringent rules make it difficult for employers and industrialists to expand their

businesses in a labour intensive fashion, while the industries keep growing in a capital

intensive manner.

The reformed code has to be quite sufficient to strengthen Indian business standards, to end

up strengthening the state of labour in the country.