Dilution of Labour Laws During COVID -19: A Retrograde Step

Labour Laws have a quite long history in India. India had seen the worst conditions of labourers under the British regime as they created the labour market unregulated and were just focusing on their profit-making industry. Over a century, substantial labour laws have been enacted for the protection of workers and to give them the basic right of livelihood.  As the Indian economy hit the roadblock of the COVID -19 pandemic, so did the labourers with the dilution of labour laws in the Indian states. This article gives an insight into the Labour laws of India and the dilution of state laws in Indian states in 2020.

Evolving Labour Laws in India

During the British regime, not much attention was given to the organisation and regulation of labours and their employees in the factories. They were concerned mainly for their British employers and the steady manufacturing of products with a constant supply of labour. To keep the manufacturing and working of factories at a smooth pace, laws were used to discipline the labours by imposing fines for breach of their employment contracts and invoking specific performance conditions. Labour organisations or trade unions were just some ideas at that time and were a matter of family and cultural regulation. The master-servant or employer-employee relationship and the contract of employment were not so formal and were complex.

However, the British Charters Act,1833[1] provided some labour provisions regarding maximum working hours to be fixed at 8. Also, child labour was abolished and night duty for women was prohibited. From the year 1880, a lot of legislative changes in the labour laws were made with limiting hours of work in factories and mines, Creating a more conducive environment for children and women. However, much of these legislations remained on paper and had not much impact in practice.

During the 1920’s period, nationalist movements, the rise of trade unions like the formation of the All India Trade Union Congress, communist ideology influencing labour movements and the formation of International Labour Organisation (ILO) paved the way for creation and implementation of new labour policies or laws in India. Most of these were the same old legislation that was being followed before impacting working hours, overtime and child and women related employment problem. Legislations like The Mines Act,1922 and the Factories Act, 1922 carried forward the ratified recommendations from the ILO.

The regulation of industrial relations changed with the enactment of 2 key Acts :

Trade Unions Act,1926– It is about registration of trade unions though not made compulsory. Gave proper and formal definition and legal status of trade disputes and trade unions in Section 2 (g) and (h)[2]. Trade unions were also provided with immunity from civil and criminal cases in the course of industrial disputes through Sections 17 and 18. The act didn’t protect unregistered trade unions thus, making registration as a viable option to the workers. Appropriate fund provision was mentioned in the Act, with section 15 stating funds will be given to the registered trade unions and laid down the guidelines to spend it only to carry out the functions of trade unions.

Trade Disputes Act, 1929[3] – It mainly provided conciliation methods to settle industrial disputes and also authorised the government to establish conciliation boards and courts to look into these matters. The Act prohibited strikes carried out due to reason other than industrial dispute and without proper notice and were termed illegal. Still, the Act couldn’t provide resolution of disputes.

In the 1930s, the world economic depression took a hit to the employment conditions of labour in India with wage cut, mass dismissals followed by strikes and industrial unrest. The Royal Commission of Labour was formed in 1930, which submitted its report in 1931. But to the labourers or workers dismay, it stated for more jobs and wage cuts which led to high rising tensions and unrest in the industries. This report led to several legislations, but none of them had much impact.

The Government of India Act, 1935 was a missed opportunity with getting provisional autonomy. Factory and mine workers were hoping for more union and labour-friendly laws. The Payment of Wages Act, 1936 was introduced which regulated the wage payment of certain classes of persons on time and without any deductions employed in the industry. Industrial Disputes Act, 1938 was introduced in Bombay which put an obligation on factory and mines employers to recognise trade unions. However, there were very little measures taken to resolve the disputes.

The post-independence period witnessed substantial changes in the labour laws with more insight in the employer-employee relationship. A conference held in December 1947., wherein agreement was arrived at regarding labour-friendly laws with fair day wage and fair working conditions with no strikes and industrial disputes. Consequently, a lot of labour laws were enacted like

The Industrial Employment (Standing Orders) Act, 1946– The act mandates employers in their industrial establishments to define their condition of employment. It lists out the laws governing the contract between the employer and the employee.

The Minimum Wages Act, 1948–  The act sets minimum wages to be paid to skilled, semi-skilled and unskilled labourers.  A Tripartite Committee on Fair Wages was appointed under this Act, which provided guidelines to formulate a fair wage structure in India. The committee’s recommendations have set the foundations of fair wage fixation.

The Industrial Disputes Act, 1947[4]–  The act made provisions for the settlement of industrial disputes including strikes, lockout, layoff etc. and also provides mechanisms to mediate or adjudicate disputes between employees and employers. It also sets some conditions, which should be met before any termination, retrenchment or laying off an employee, who has been in his job for at least 1 year. The Act also lays down unfair practices by an employer and suitable punishment.

The Constitution of India, 1950[5]– The Constitution provides Fundamental Rights in Articles- 16, 19,23 and 24 and under directive principles of state policy in Articles 39,41,42,43 and 43a regarding labour laws with the need to protect them and safeguard their lives. Labour is also an issue under the concurrent list with entry no. 55,22,66,23,65 and 24 dealing with regulation, disputes vocational training etc.

The Mines Act,1952–  This Act mainly provides provisions for the safety of mines and its workers, defines mine and provides its regulatory procedure as well.

Employees Provident Fund Act, 1952– This Act establishes a Provident Fund according to the employee’s contribution which is at least equal to the contribution made by the employer. The fund amount will be payable to the employee after his retirement.

Shops and Establishment Act, 1954– The Act is state legislation, which varies from state to state. This provides employees with obligations and rights and employers with the unorganised employment sector, i.e. shops and establishments. The Act sets out rules regarding working hours, rest-interval or opening and closings and holidays, children and women, annual leave or leave due to sickness etc., employment and termination and adds provision for these in the other main labour law act passed.

Maternity Benefit Act,1961– This Act provides provision for women’s employment at the time of childbirth and offers certain benefits. Maternity benefits will be available to a woman who has worked in an establishment for at least 80 days.

The Payment of Bonus Act, 1965– The Act provides the Bonus for the employees based on profits or productivity. The Act requires at least 20 people in an establishment to be qualified for giving bonuses.

The Payment of Gratuity Act, 1972– This Act provides a gratuity payment scheme for all workers working in an establishment where there are at least 10 employees or workers. Gratuity will be paid to the employee after his retirement.

Labour Laws Dilution in Wake of COVID 19

After the COVID-19 shock came to the world, a heavy economic recession is not far away. With India already in the turmoil of low GDP growth rate and underlying economic problems like unemployment, COVID -19 would certainly put more stress on the economy.

To ease the economic turmoil, State Governments of Rajasthan, Gujarat, M.P, U.P, Karnataka and Odisha decided to exempt manufacturing and businesses establishments from some of the labour laws through ordinances. Since labour is a concurrent subject, the State can make their laws.

Uttar Pradesh

Perhaps, the UP government has made bold changes with suspending applicability of labour laws for 3 years through its notification  in May 2020[6].  In UP, 35 labour Acts will be relaxed and exempted. But Acts like the Building and Other Construction Workers Act,1996, Workmen Compensation Act,1923, Bonded Labour Act, 1976 and Section 5 of the Payment of Wages Act, 1933 will continue to operate. For factory workers, the working hours were increased from 8 to 12 hours a day and 72 hours a week. According to Section 5 of the Factories Act, the provisions can be exempted for 3 months by the State. However, this relaxation or exemption can only be given in an event of a ‘public emergency’, as a threat to security due to war or external aggression. Wages will be in proportion to the existing wages (for example- If wages for 8 hours are Rs. 80, then proportionate wages for 12 hours will be Rs.120).

Madhya Pradesh

In Madhya Pradesh, industries were allowed to operate without following most of the provisions of the Factories Act. This means more working hours (72 hr per week), and these industries can operate without following the health and safety laws. The factories will not be mandated to follow waste disposals, cleanliness, ventilation etc. Industrial establishments will be relaxed or exempted from a majority of provisions of the Industrial Disputes Act, 1947[7].Industries can keep workers in their service at their convenience. The employers will be able to change working shifts and there will be no factory inspection up to 3 months. Employers are free to use their worker’s services whenever they want.

Also, the factory registration will be done now in a day, instead of 30 days to reduce the paperwork for the factories. Also, the licence will be renewed after 10 years, instead of a year.  There will be a provision of penalty on officials not complying with the deadline. Contractors with less than 50 workers will be exempted from registration and can continue to work.


Gujarat also likes other states, exempted industries with all the labour laws. However, there is no exemption from provisions related to payment of minimum wages, following health and safety norms and compensation to workers in case of an accident.

Impact of Dilution in Labour Laws

The objectives behind  labour law relaxation, as provided by the government are:

The easing of labour laws will help them to attract investment and improve industrial productivity or efficiency. Also, employment opportunities will be generated which will mainly benefit the labourers who lost their job due to the pandemic and lockdown.

It will increase the revenue of the states with the efficient working of industries and more employment opportunities will increase their income.

It will be helpful to attract investors.

No matter what, the Government intentions are, diluting labour laws can create its own sets of problems and violations of norms and standards. Here are some of them:

Undermines the Constitution

The Constitution of India is envisaged as a state of welfare with equal rights and the right to live with dignity guaranteed to its citizens. But the ordinances by the States violate the norms laid down. With the dilution of labour laws, fundamental rights have been violated to a greater extent. Exemption from the Industrial Disputes Act repudiates the right of workers to raise any dispute against the employer. Defences or provisions such as layoffs, retrenchment, strike/lock-out, and compensation have also been denied, which provides a right to the employer to lay-off the workers without any “no probable cause”. This violates Article 14 and 21, as it affects the workers’ livelihood[8].

The ordinances by the state provide relaxation from some provisions of the Minimum Wages Act, 1948, which gives the government a free hand in regulating minimum wages. If the wages fail to secure the minimum living standards, it will violate Articles 21 and 23 laid down in cases of Sanjit Roy vs state of Rajasthan[9] and PUDR vs Union Of India[10]. Also, exemption from equal remuneration violates article 14 laid down in the case of Randhir Singh vs Union of India[11]. The suspension of trade union violates Article 19(1)(c), which guarantees the right to form associations. Also, the ordinances discredit the directive principles enshrined in the Constitution.

Affects Labour Living Standards

The Ordinances doing away with minimum wages, safeguard for health and safety affects the labourers heavily. Firstly, their livelihood will be affected by long working hours and no overtime payments. With a faltering economy, the poor working class will suffer more due to not being able to afford with basic amenities like housing, food etc. In order to increase investment, sacrificing worker’s livelihood will do no good as they constitute a large part of the population. Also, it violates article 21 as discussed with their right to livelihood affected.

Secondly, the worker’s health will be affected severely. Exempting standards or norms for cleanliness, waste disposals, ventilation etc. will degrade the hygiene and make the working place unsuitable. This is also a violation of article 21. Supreme court in Sunil Batra vs Delhi administration[12] held that right to health as part of the right to life. Another example is the case of Consumer Education and research centre vs Union of India[13], where it was held that right to health and medical aid is a fundamental right under article 21.

Violates International Laws

The ordinances are also in violation of International framework of labour laws which have been ratified by India like- Forced Labour Convention 1930, Abolition of Forced Labour Convention 1957, Equal Remuneration Convention 1951, Discrimination (Employment and Occupation) Convention, 1958, Minimum Age Conventions,1973, Worst forms of child labour convention 1999.

The ordinances were not acceptable to the general population as well. A Petition was filed by 2 advocates against the ordinances laid down by the States in the Supreme Court. A petition was also filed in the Allahabad High Court in the case of Uttar Pradesh Workers Front Vs Union of India[14], but the petition was disposed of, as the UP government withdrew their ordinance notification.


Some of the States in our country had taken steps contrary to the action required to make a balance between conducive environment for stable and investment attracting economy and fair employment policies in industries. Other countries like Canada, have agreed to contribute 2.1 Billion Dollars to all workers who are facing income loss and the Government will contribute to the employer’s wage bill to reduce strikes etc.

In the UK the government has agreed to pay 80 per cent of usual wages of the employees.  Instead of relaxing the labour laws and creating exploitive conditions, the Central and State Governments should partner with the industries to help employees of organised as well as unorganised sectors. The steps of dilution of labour laws may cause a long-lasting socio-economic adverse impact in the country by destroying social and legal safety net. The Government should take strong measures to protect rights and to ensure livelihood to a most vulnerable segment of society in this pandemic situation by enforcing labour laws

[1] http://legislative.gov.in/about-us/introduction

[2] The Trade Unions Act, 1926

[3] The Trade Disputes Act, 1929

[4] The Industrial Disputes Act, 1947

[5] The Constitution of India, 1950 Bare Act 2018ed.

[6] Uttar Pradesh Temporary Exemption From Certain Labour Laws Ordinances, 2020

[7] https://thewire.in/labour/labour-law-reform-worker-protection

[8] https://www-barandbench-com.elibrary.rmlnlu.ac.in/columns/exemption-from-labour-laws-unleashing-the-new-normal

[9] 1983 AIR 328, 1983 SCR (2) 271

[10] 1982 AIR 1473, 1983 SCR (1) 456

[11] 1982 AIR 879, 1982 SCR (3) 298

[12] AIR 1978 SC 1675

[13] (1995) 3 SCC 42

[14] PIL 579/2020

Kshitij Pandey from Dr. Ram Manohar Lohiya National Law University, Lucknow

edited by: Rohan aditya

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