People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 01

January 06, 2008

Employers' Recipe For Killing Labour Laws


M K Pandhe


With the advent of globalisation, non-implementation and violation of the labour laws have become a common feature. In several states the working hours have been raised to 12 hours a day blatantly violating the Factories Act. Contract workers are engaged in permanent and perennial nature of jobs in defiance of the Contract Labour (Regulation and Abolition) Act. Non-payment of minimum wages has become a matter of daily occurrence while victimisation for trade union activity has become a routine affair. Sexual harassment of working women has increased phenomenally including in IT sectors and special economic zones where women are working in night shifts.


The judiciary has become hostile to the working class and the trade union movement. Denial of right to strike, refusal to accept the right of a contract worker to become a regular worker after prohibition of contract system in that particular category, refusal to grant jobs to workers on compassionate grounds, opposition to organisation of bandh as a form of popular protest against anti-people measures are only some of the examples of pro-employer attitude of the judiciary influenced by the policies of globalisation. The Supreme Court has justified the policies of privatisation. Workers are therefore losing faith in judiciary and official labour relations machinery.




The World Bank and the IMF are trotting the idea that labour laws should not be punitive but they should emphasise self-compliance. As per this dictate, the government of India has drastically reduced punitive action against employers ignoring the violation of labour laws. The slogan of abolition of Inspector Raj is for granting the employers a license not to implement any labour law for workers. The present inspection machinery is no doubt seething with corruption but the solution does not lie in giving up inspections but making them more effective. Hence, self certification cannot be a solution.


Several spokesmen of foreign embassies in India have been periodically making open statements in meetings of employers that the present labour legislation in India is preventing large scale foreign investment into the country. It amounts to virtual interference in the internal affairs of India. The industry associations in India have made a common cause with the comments made by the foreign ambassadors in India and are advocating for making labour laws more flexible; the FICCI, Assocham, CII, Indian Chambers of Commerce or Employers Federation of India, PHD Chambers Of Commerce etc. have been continuously pressing the government to modify the present labour laws for their benefit.


However, the government of India could not make any major changes in the labour legislation only due to the strong opposition by the trade union movement in India. But the situation is deteriorating fast and is leading towards collapse of labour legislation in the country. Already due to reduction of manpower, the inspection machinery has got considerably weakened.




Though inspections have reduced drastically, the Assocham has submitted a memorandum to the union ministry of labour recently states "inspectors appointed under various labour laws who drop in quite often one after the other prima facie to look after the compliance of statutory provisions." It further notes that "procedures which virtually gag the industry are needed to be done away with, but the harassment caused by frequent inspections have also to be eliminated."


The employers thus do not want any check up of their non-implementation of the labour laws. The employers organisations never impress upon their members to pay the Provident Fund dues promptly, to pay the loans borrowed from banks in time, to pay minimum wages fixed by the statutory authorities, to fully comply with the provisions of the labour laws etc. As a matter of fact, they are making out a case of withdrawing all the beneficial provisions to the working class so that the employers are free to exploit the working class mercilessly.


The Assocham memorandum advocates major changes in Industrial Dispute Act (1947). The Factories Act (1948), Contract Labor (Regulation and Abolition) Act 1970, and Payment of Bonus Act to make them totally pro-employer.


The Assocham wants to change the definition of industry itself. The historic Supreme Court judgement given by Justice V R Krishna Iyer clearly defined industry which characterised services like hospitals, educational and research institutions etc also as industries. Today several commercial organisations have invested money in these services and are minting money, includinig by collecting huge capitation fees. However, the rational judgement of Justice Krishna Iyer was unjustly modified by the Supreme Court itself and the government of India kept hospital and educational institutions out of the purview of Section 2-J by amending the definition of industry in 1982. However due to the pressure of the trade union movement the government has still not notified the amendment. The captains of industry now want the government to notify the amendment so that these organisations go out of the purview of the Industrial Disputes Act (1947).




The employers argue, "Excessive protection given to the employees in the higher salary brackets in the organised sector like Airlines, Banks, Insurance etc has not helped to make these employees accountable to the establishment in particular and to the society at large, rather it has tended to erode overall discipline". The Assocham memorandum demands, "Employees receiving salary beyond Rs 10,000, irrespective of the nature of function/job including higher paid technical persons and supervisors should be taken away from the ambit of the definition of workman, to maintain discipline at workplace".


This will exclude large number of public and private sector workers from the purview of the Act and thus deprive them of their trade union rights. Salary limit was never a consideration for exclusion from the purview of the Industrial Disputes Act.


Section 9-A of the Industrial Disputes Act provides that the employers should give notice to the union for change in working conditions. The employers now want to deprive the trade unions of this right. They propose "Notice should not be required for rationalistion, standardization or improvement of plant or technique which may likely to lead to retrenchment". Their proposal is that, "Notice of change should be for giving information in advance and to consult workers. Dispute being raised during notice period should not act as stay on the action of management even though industrial dispute is raised by workmen. After the notice period employer should be enabled to effect changes as per business need". Thus the unhindered right of the employer is advocated to make unilateral changes in the working conditions.


The employers want to widen the scope of public utility service and want to include continuous process industry, hazardous industry and export oriented industry also to be considered as public utility service. The proposal of the employers will only add to the already widespread misuse and make the employers more autocratic.




The government of India came to a wrong conclusion that the grievance procedure machinery decided by the Indian Labour Conference in 1957 was not working well due to lack of statutory backing. In 1982 the government amended the Industrial Disputes' Act providing for statutory grievance procedure in establishments employing 50 or more workers, but this was not notified by the government so far due to a decision of a tripartite meeting that the legal provision was dilatory and unworkable. The employers now want this amendment to be notified and make the grievance procedure unworkable.


Today if the filing of a claim is justifiably delayed by a union, the courts have powers to condone the delay. The employers now want that limit of three years should be fixed beyond which no claim should be entertained by the courts. The employers also want to keep only one year limit for filing claim of recovery of dues though the delay is due to the dilatory tactics by the employers.


Section 11-A of the Industrial Disputes' Act provides for modification of the punishment at the instance of the Labour Courts or the Industrial Tribunal. This section is provided due to arbitrary punishment imposed by the management by holding fictitious domestic enquiry. The managements want this section also deleted.


Section 17-B of the Act provides for automatic payment of the last drawn wages of the employees in case if the employers prefers to file an appeal in higher courts against the award. The employers now want to nullify the protection given to the worker and stop payment of wages.


"Work to rule" or "mass casual leave" are protest actions resorted to by workers when managements resort to dilatory methods to deal with legitimate grievances of workers, but take action against the workers, when they arbitrarily change work practices calling it go-slow. The employers now want to ban these forms of action and they even quote Supreme Court judgement to justify their claims. They, however, want to preserve their right to arbitrarily declare lay off, lockout or closure, they even resort to non-payment of electricity bill and close down the operation of the unit. The Assocham memorandum has no word to say about this.




The employers further want Export Processing Zones or Special Economic Zones to be exempted from the purview of the Industrial Disputes' Act. Already several state governments have announced exemption of Special Economic Zone from the purview of the labour laws. All Central Trade Unions have opposed this but the Govt. of India continues to allow the operation of the jungle law in SEZs.


Regarding the factories Act the employers propose that the working hours should be raised in Export Oriented units. The ASSOCHAM Memorandum suggests exemption to Textile Garments units and all export oriented units from all provisions of Sections 51,52,54, 56 of the Act. Thus working hours may be increased from 48 to 60 per week (Section 51), Daily working hours from 9 to 11 (Section 54) and spread over from 10.5 hours to 13 hours (Section 56) without overtime payment but compensatory off will be given to the workers.


The employers further want blanket permission for night shift working for women in most of the establishments. Though security arrangements are not strictly followed anywhere.


Today, Factories Act is blatantly violated by the employers by splitting the unit in smaller establishments. The present Act provides that the units employing 20 workers without power and 10 with power would be covered under the Act. The employers now want to increase it from 10 to 25 and from 20 to 50 which will exclude a large number existing units from the purview of the act and employers would get ample opportunity to evade the provisions of the Factories Act. In units having sophisticated technology even if less than 10 workers are working turnover of the unit exceeds Rs.100 crores per annum and contract workers are not covered by the definition and employers are already in a position to evade the provisions of Act by engaging more and more contract workers.




Regarding the Contract Labour (Regulation and Abolition) Act, the employers want the provisions for regularization of Contract Labour should be deleted and the managements should be given unlimited right to engage contract labour. The Assocham Memorandum states, " The worldwide trend is on outsourcing, hiring contract labour and vendorisation with a view to create a hassle free, cost effective and flexible atmosphere for the industry."


Regarding the Payment of Bonus Act the employers desire that the concept of Bonus as a deferred wage, should be given a go bye. Many companies are showing losses by manipulating their balance sheets to avoid paying taxes.


If the proposals given by the employers are accepted by the Government it will make these labour laws toothless and will allow the employers to violate all the existing provisions with impunity.


The Government of India is in favour of these proposals, it is only the opposition of the trade union movement that has prevented the Govt. of India to formally implement these proposals.


Trade unions also are demanding changes in labour laws. But they want modifications in favour of workers, but the Government of India has no intention to do that.


Trade Union movement must strengthen its opposition not these retrograde proposals which seek to marginalize the trade union movement. The working class of India should not allow the capitalist class to wipe out the gains made by them in the past.