Demystifying the Changes to Labour Laws in States: Madhya Pradesh

By Saurabh Bhattacharjee

Even as the COVID-19 pandemic and the resultant lockdown has sparked an unprecedented livelihood crisis, the governments of many states in this country have unveiled a series of measures for relaxation of labour laws for industries in the states. Several states including Madhya Pradesh, Orissa, Gujarat, Rajasthan, Punjab, Assam, Himachal Pradesh have either announced or have proposed suspension of various labour laws with the aim of facilitating employment and investment as the economy recovers from the pandemic. This post is the first in a series which shall demystify the changes introduced in various states and dissect their implications. The instant piece summarises the changes introduced in Madhya Pradesh. The subsequent piece shall explain why the legality of a few major changes, including the exemption provided from the Industrial Disputes Act 1947 and Factories Act, is suspect.

Simplification of Compliance Under the Contract Labour (Regulation and Abolition) Act 1970

The Contract Labour (Regulation and Abolition) Act 1970 (CLRA), as the name of the statute suggests, provides a framework for regulation and wherever appropriate, abolition of contract labour. The regulatory requirements under the statute include registration of the principal employer and issue of licenses to contractors.

The Madhya Pradesh Government has used its power under Section 35 of the CLRA to amend the Madhya Pradesh Contract Labour (Regulation and Abolition) Rules 1973 so as to relax the procedural compliance requirements related to application and issue of license for contractors. Rule 21 has been amended to allow online application for a license on the Official Portal of the Labour Department, Government of Madhya Pradesh.

Very significantly, the validity of the license period has been extended from a year to “the period of the contract for which the application is made” through an amendment to Rule 27. Until now, a licence granted or renewed expired on December 31 every year. Now, on the other hand, the term of the license shall be co-terminus with the term of the contract and shall not require an annual renewal.

Apart from these changes, the Madhya Pradesh Government has issued a notification under the Public Services Delivery Guarantee Act 2010 wherein the time frame for the issue of a license under the CLRA has been fixed as one day. 

These procedural relaxations are likely to minimise the cost of compliance with the license norms under the CLRA and can certainly go a long way in enhancing the ease of business. Pertinently, The substantive rights of contract labour under the CLRA has not been encroached upon through the Amendment of the Madhya Pradesh Contract Labour (Regulation and Abolition) Rules 1973.  

Exemptions from Industrial Relations Statutes

Among the most controversial changes are the exemptions provided by the Madhya Pradesh government to various industries from laws governing industrial relations and collective bargaining. These exemptions can be categorised into two types: a) exemption for new industries from the Industrial Disputes Act 1947 for 1000 days and b) exemption for 11 categories of industries from the Madhy the Madhya Pradesh Industrial Relations Act 1960.

The Industrial Disputes Act 1947 is the primary legislation in the Indian Labour and Industrial Law that governs industrial relations and provides an institutional mechanism for resolution of industrial disputes. The M.P. Government has used the power vested by Section 36-B of Act to exempt establishments from all or any of the provisions of the Act. A notification issued on May 5, 2020 in exempts new Industries registered in the state under Factories Act 1948 that start production in the next 1000 days in the state have been exempted for next 1000 days from all the provisions of the Industrial Disputes Act 1947except few select provisions. The provision that shall remain applicable are provisions of Chapter V-A and Section 25-N, Section 25-O, Section 25-P, Section 25 -Q and Section 25-R of Chapter V-B of the Act. This exemption is however subject to the condition that adequate provisions of are made by such industries for the investigation and settlement of industrial disputes of the workmen employed by them. As shall be discussed in the next post, existing case law casts a considerable shadow over the scope of the power of exemption under Section 36-B as well as the legal basis of the instant notification.

The second set of exemption has been made in respect of the Madhya Pradesh Industrial Relations Act 1960 (MPIRA). The subject of ‘industrial and labour disputes’ being in the Concurrent List of Seventh Schedule of the Constitution, regulation of industrial relations in India has often been a blend of central and state statutes. The MPIRA is one such state legislation which supplements the central IDA by providing for its own mechanism for resolution of industrial disputes. It is also one of the few state-level labour laws that create a mechanism for recognition to trade unions and employers’ associations to act as a bargaining agent for settling disputes or engaging in a discussion.  The M.P. Government has issued a notification in furtherance of Section 1 (4) of the MPIRA under which 11 categories of industries listed in the schedule have been exempted from the Act for an indefinite period of time.

The complete suspension of the machinery under the IDA and MPIRA is ill-advised. Institutions under the IDA and MPIRA, despite their  red-tape, have served as a safety valve that have helped in releasing the pressure of industrial friction between employers and employees. In their absence, the chances of unrest among disgruntled workers may actually increase. The suspension of IDA and MPIRA also violates the right of industrial workmen to access to legal remedies. As the Supreme Court had observed in Rajasthan State Road Transport Corporation v Krishna Kant [AIR 1995 SC 1715], the objective of IDA “has been to provide a speedy, inexpensive and effective forum for resolution of disputes arising between workmen and their employers.” Absence of such a remedy would leave workers without meaningful access to judicial redress for their employment-related grievance, especially in view of the sclerotic functioning of the civil justice system. The absence of legal remedy also possibly violates India’s obligation under relevant conventions of the International Labour Organisation.

Third-Party Inspection under the Factories Act 1948

The Madhya Pradesh Government has also recognised Third-Party Certification for Factories in the non-Hazardous Categories that employ up to 50 workers. This has been done through a notification issued in pursuance of powers vested by Section 8 and Section 112 of the Factories Act 1948.  In addition, the Madhya Pradesh Factories Rules, 1962 has been amended to add a Rule 18-B allowing inspection by a person or agency authorised by the Labour Commissioner.

The exemption notification further clarifies that factories which submit third-party certification report regarding compliances with Factories Act 1948 within January 31 of a year shall be exempted from routine inspection.

Exemption from Factories Act 1948

Apart from the introduction of Third-Party Certification, the Madhya Pradesh Government has also announced very far-reaching, albeit controversial, exemptions for establishments from most provisions of the Factories Act 1948, for three months. A notification has been issued, under Section 5 of the Factories Act, which exempts all factories registered under the Factories Act 1948 in the state of Madhya Pradesh from all provisions of the Factories Act 1948 and Madhya Pradesh Factories Rules 1962 for three months except for a few stipulated provisions.

The provisions that shall remain applicable include sections 6 (approval, licensing and registration), 7 (Notice by Occupier), 8 (Inspectors) and section 21 to 41-H  under Chapter-4 (provisions on safety), section 59 (extra wages for overtime), section 657 (prohibition on employment of young children), section 79 (annual leave with wages), section 88 (notice of certain accidents), section 112 (Rule-making power). The provisions that have been suspended include provisions on facilities for lighting, drinking water, canteens, creches, hours of work, weekly holidays, provisions on penalties.

The suspension of norms on hours of work and facilities like canteens, drinking water, etc, may arguably be in contravention of Supreme Court’s observation that the ‘right to dignified conditions of work’ is a part of the right to live with dignity for workers under Article 21 of the Constitutions. Such suspension may also constitute a violation of the international labour standards on hours of work and safe and decent conditions of work. This issue shall, however, be discussed in the next piece.

Enhancement of the Threshold for Applicability of the Standing Order Act

The Madhya Pradesh Government has also promulgated the Madhya Pradesh Labour Laws (Amendment) Ordinance, 2O2O. One of the major changes introduced by this Ordinance is the increase of the threshold for applicability of the Madhya Pradesh  Industrial Employment Standing Orders Act 1961 from 50 to 100 employees. This Act requires every employer to frame standing orders on key service conditions specified in the statute and get them certified by the appropriate authorities. The Ordinance means that a large number of establishments would now be exempted from the operation of this Act.

Introduction of the Power to Exempt under the  Madhya Pradesh Shram Kalyan Nidhi Adhiniyam, 1982

The other major change that has been introduced is not a direct exemption but introduction of the power to exempt any establishment or any category of establishments from any or all of the provisions of the Madhya Pradesh Shram Kalyan Nidhi Adhiniyam, 1982. This statute requires employers and employees to make contributions to the Labour Welfare Board constituted under it on a half-yearly basis. While the new Ordinance does not by itself provide any exemption, it has paved the path for grant of such exemption by the government.

Changes in Working Hours for Shops and Establishments

The final component of the catena of changes brought about in labour laws in Madhya Pradesh is the change in the permissible working hours under the Madhya Pradesh Shops and Establishments Act 1958 (MPSEA). Through an order issued in pursuance of section 9 of the MPSEA, shops and establishments in Madhya Pradesh have been now allowed to be kept open from 6 a.m. to 12 midnight. Until now, shops and establishments were allowed to be opened from 8 a.m. to 10 p.m. So, there has been an increase of four hours in total hours of work for such an establishment. It must, however, be noted that there has been no extension of working hours for employees engaged in such establishments.

The above measures constitute the package of changes in existing labour laws in the state of Madhya Pradesh with the aim of catalysing an economic revival after the slump due to the COVID-19 pandemic. Some of these measures, especially those directed at easing procedural compliance norms, are certainly welcome. However, as shall be discussed in the next piece in this series, exemptions granted under the Industrial Disputes Act 1947 and the Factories Act 1948  are likely to be mired in questions of their legality. 

[Saurabh Bhattacharjee is an Assistant Professor at NUJS]

Courtesy: Centre for Labour Laws and Livelihood: A Research and Advocacy Centre at the W.B. National University of Juridical Sciences (NUJS) Kolkata

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