Gujarat's approach to labour law reforms different from Centre's

State hasn't proposed easing of rules for retrenchment without permission

The Narendra Modi-led central government's take on labour law reforms and the stance of the prime minister's home state of Gujarat on the issue seem to be at variance with each other.

The state government has proposed a slew of measures but doesn't want to increase the limit for the number of workers an industry must have to be able to retrench without prior official permission (under the Industrial Disputes Act). Gujarat's proposals also differ from those of Rajasthan and Madhya Pradesh, both ruled by Modi's Bharatiya Janata Party (BJP).

Gujarat, though, has eased "hire and fire" provisions in special investment regions like the Delhi Mumbai Industrial Corridor (DMIC), National Investment and Manufacturing Zone (NIMZ), export-oriented industrial establishments and some other economic zones.

"The relations between industry and workers have been cordial. There have hardly been instances of strikes or lockouts," reads the statement of objects and reasons of the labour laws (Gujarat Amendment) Bill, 2015, which the state has sent for the Centre's approval.

The Bill was passed in the state Assembly in February this year and is pending for the President's approval. The President's assent is required because these laws fall under the concurrent list of the Constitution.

The Centre recently proposed amendments to the Industrial Disputes Act that will raise the limit of number of employees up to which an industry could lay off without prior permission - from 100 to 300. It followed in the footsteps of the Rajasthan government, which has already effected the change by passing a Bill in its Assembly and subsequently taking the President's assent. Madhya Pradesh has proposed a similar change but the President's approval to its Bill is pending.

The trade unions have strongly opposed this move, even as the government is making constant efforts to bring them on board. An easing in the rule of retrenchment has been a long-pending demand of industries, which often complain they are not able to grow because of still rules on this.

"We have not changed the threshold (for the Industrial Disputes Act) because that doesn't help. We strongly believe raising the threshold limit has no meaning. It makes workers more vulnerable," said a senior labour ministry official in Gujarat.

The official added: "We are signatories to the ILO (International Labour Organization) Convention. The state cannot wash its hands of the responsibility and say factories with up to 300 workers can do whatever they like. That is not a responsible behaviour. So we are trying to have a more balanced approached; we have a large number of industries." However, workers can raise objections to the dispute only within a year of retrenchment, against the existing provision of three years.

In Gujarat, companies in SEZ units are allowed to lay off workers without the government's sanction, and there is no threshold on the number of workers a company must have to be able to do so. But workers get wages equivalent to 45 days of work every year (three times the compensation provided in the central government Act). This will now extend to special investment zones, NIMZ, and economic zones like garment parks.

"The objective is to augment employment opportunities. If units in this zone find a product is not needed in the global market, they can immediately remove workers. But they have to pay 60 days of salary for each year of work," the official said.

One of the amendments in the Employees Compensation Act will allow a nominated government official to apply for compensation of a worker in case of a fatal injury or partial disability occurred at workplace after 90 days from the date of accident. At present, only workers or their dependents are allowed to seek compensation.

Gujarat has also proposed a compulsory certification-cum-consolidated annual return scheme for factories, by doing away with the burden to submit a large number of annual returns as prescribed under various labour laws. "It is also proposed to exempt the industries that are enrolled from inspections. However, for checks and balance, it is proposed to have regular audit of such industries. The industries that comply with the labour standards will be exempted from inspections. It is also proposed to award such industries with appreciation certificates," said another state government official.

The state has also inserted compounding of offences provision for the Industrial Disputes Act, Minimum Wages Act, the Payment of Bonus Act, the Contract Labour Act, the Payment of Gratuity Act, the Motor Transport Workers Act, Equal Remuneration Act and the Beedi Cigar Workers Act.

"At present, criminal cases are filed in courts for violation of labour laws. It takes years for disposal of such cases. The amount of fine is meagre too. We have enhanced the fine," said the official quoted above.

GUJARAT PROPOSES

• Easing 'hire and fire' provisions at special investment regions and export-oriented industrial units. Firms in these will be allowed to retrench without prior permission, irrespective of the size of the factory
  

 

Workers in these zones will get wages equivalent to 60 days of work a year, against 45 at present
 

Workers could raise complaints within a year of retrenchment, against 3 years at present
 

No change in Industrial Disputes Act as proposed by the central government
 

A nominated govt official could apply for compensation for a worker in case of fatal injury or partial disability at workplace after 90 days of the date of accident
 

A compulsory certification-cum-consolidated annual return scheme for factories, doing away with the burden of submitting a large number of annual returns