Labour law changes: MP follows Rajasthan, takes ordinance route

Sends proposal on changing 8 labour laws to President, including retrenchment of up to 300 workers without state approval

Following its Rajasthan counterpart, the Madhya Pradesh government has sent proposed amendments to eight labour laws in the form of an ordinance to President Pranab Mukherjee for his assent.

These were sent to the central government last month. The state legislative Assembly session was due only in December and even then, the government was not sure of there being enough time to get a legislation through on the matter.

"We intend to issue an ordinance and have sent it for the approval of the president. The Bills to replace the ordinance will be tabled later in the state Assembly," M K Varshney, principal secretary in the Madhya Pradesh labour ministry, told Business Standard.

On September 22, the Madhya Pradesh cabinet had okayed amendments to 20 labour laws, including some in the concurrent list of the Constitution - meaning, subjects on which both Centre and state can legislate. In this case, these include amendments to the Industrial Disputes Act, Factories Act and the Contract Labour Act. Since the proposed ordinance involves changes to legislation passed by Parliament, the President's prior assent is needed.

The proposed changes in the Industrial Disputes Act would allow companies in the state which employ up to 300 people to retrench workers or shut down the establishment without government approval. Earlier, only companies with less than 100 employees were allowed to do so.

The same change was enacted by the legislative Assembly in Rajasthan and was approved by the president on November 7.

"Since the Assembly session was long-pending and local body elections were to be held, the state government decided to formulate an ordinance so that at least we get the president's approval by the time the session begins," said a government official who did not wish to be named.

MP's Assembly session is to begin on December 8 and continue till December 12. The official said it was unlikely the Bills could be introduced so soon, as it would take time to draft these.

Besides amendments to the Acts mentioned earlier, other changes involve the Building and Other Construction Workers (BOCW) Act, the BOCW Workers Cess Act, the Child Labour Act, Inter-State Migrant Workmen and Motor Transport Workers Act.

States and the Centre can both frame laws on these subjects. Legislation by a state or a change by a state needs to be passed in the state Assembly and sent to the president for approval. In case the Assembly is not in session, a state can issue an ordinance but before its promulgation, the president's nod is required. The ordinance is sent through the state governor to the president.

After promulgation of the ordinance, the state Assembly is supposed to replace this with a Bill or Bills. These might, depending on the governor's decision, might again have to be sent for presidential approval.

The Rajasthan government did not begin with an ordinance - it brought the proposed changes in the form of Bills to the state Assembly. After their passage, it went to the president for approval, which was given. Mukherjee had given his assent to Rajasthan's amendment to three laws, the Factories Act, Industrial Disputes Act and Contract Labour Act.

Union Labour Minister Bandaru Dattatreya said on Thursday that states could follow Rajasthan's example in amending their labour laws.

"Every state government is looking at Rajasthan. Let state governments first take a decision. If a state wants to adopt that model, you can't object," he'd told Business Standard.

So far as amendments to laws in the states' list under the Constitution are concerned, the state government will introduce these in the next session, it is reported. These include amendments to the Madhya Pradesh Industrial Employment (Standing Orders) Act, Trade Union Act and Madhya Pradesh Labour Welfare Fund.

One of the key measures is allowing small and medium enterprises to terminate the services of an employee without furnishing a reason or conducting an enquiry. This will apply to enterprises employing less than 50 people.

Business chambers have appreciated the move. "This heralds a new era, where state governments have taken the vanguard position to provide a conducive environment to industry for doing business," said Chandrajit Banerjee, director-general of the Confederation of Indian Industry.

Trade unions, on the other hand, said the Centre was pushing states to make labour law changes. "A planned and systematic effort by the Centre is sending signals to all states ruled by the Bharatiya Janata Party (BJP) to start making amendments," said A K Padmanabhan, president of the Centre of Indian Trade Unions, associated with the Communist Party of India (Marxist). Both, MP and Rajasthan are ruled by the BJP, as is the central government.