Post Covid: Will it be an era of hire and fire for industries?

With the relaxations in working hours under factories Act provided by many states to allow industries to restart operations during lock down with certain guidelines to follow in respect of workers’ health and safety, the final stroke has been played by UP Govt., when an Ordinance exempting factories and establishments engaged in manufacturing activities from the applicability of almost all the Labour Enactments for the next three years, to give a “boost” to investment in the state, which has been negatived by Covid-19. was approved.

 The Ordinance is named as THE UTTAR PRADESH TEMPORARY EXEMPTION FROM CERTAIN LABOUR LAWS ORDINANCE, 2020. This Ordinance shall come into force on the date of its publication in the Gazette. The ordinance draft as available on internet contains only three chapters but while numbering them chapter III is missing and after chapter II chapter IV is there. It may be a human error while drafting the statute in hurry. It has in total only seven sections. It is also said that previous operations of labour laws will not be affected because of this ordinance, which means any action, proceeding, adjudication initiated under existing labour laws before the date of bringing this ordinance in force will continue to be unaffected. 

It can be said that except Building and Other Construction Workers Act, 1996; Workmen Compensation Act, 1923; Bonded Labour System (Abolition) Act, 1976; and Section 5 of the Payment of Wages Act, 1936 (the right to receive timely wages), will apply in the state.It also said the provisions related to children and women and health and safety of workers in the Labour Laws would continue to be in force. 

 It means UP Industrial Disputes Act, Minimum Wages Act, Trade Unions Act, Factories Act, Contract Labour Act, Industrial Employment (S.O.) Act, Apprentices Act, Beedi Cigar,Cine Workers,Dangerous machines Acts ,EPF Act, ESI Act,Employment Exchange Act,Mines Act,Motor Transport workers Act, Payment of Gratuity and Bonus Act, Private Security agencies,Sales Promotion, Working Journalists and Migrant Workmen Act will cease to apply in the state, once the ordinance is approved by the central Govt . and published in the Gazette. 

This will apply to both the existing businesses and the new factories being set up in the state. 

 With this move, experts of the subject have said that an era of hire and fire will be back post Covid while industries have welcomed the move as an appropriate step needed at this hour to provide flexibility and increase employment opportunities.

 In case of approval of such ordinance by central Govt, Industries and establishments engaged in manufacturing activities will be given free hand to run their businesses.

 Let us examine the impact of the ordinance

1-   Employer will be free to employ as many employees as he wish on any terms of employment that suits to his business and terminate anyone in accordance with terms of employment any time.

2-   Employer will not be required to pay any compensation for lay off, retrenchment or closure to any employee and take recourse to any such action even without informing the Govt.

3-    Employer will be competent to change the service conditions of any employee at any time, reduce the wages ( Not below minimum wages), facilities, may alter terms of settlement executed after ordinance regime and any such actions will not be challenged.

4-    Employer will not be liable to comply with ESI/PF provisions and pay any ESI or PF either his contribution or employee contribution.

5-    Employer will not be liable to pay bonus or gratuity to its employees.

6-    If any employee is terminated, he will not be able to challenge his termination in labour court. No conciliation, not adjudication.

7-    Workers will not be in a position to get their union registered, though can function as unregistered trade union.

8-    Neither the Principal employer nor the contractor will be required to obtain registration or licence under contract Labour Act.

9-   If contractor defaults in paying salaries to its workers, principal employer will not be responsible for making payment.

10-If any accident happens in any factory, there will be no prosecution of occupier or manager.

11-There will be no forum available for workers to complain against employer if any unfair labour practice is adopted by employer.

12-Employer will not be under any obligation to follow any process like issuing charge sheet, or holding domestic inquiry before termination.

13-The employment will be governed totally on the basis of terms of employment mentioned in the appointment letter agreed by the employee.

14- Employer will be free to keep the employee either on temporary basis or on probation or on fixed term period or on permanent basis and there will be possible either by paying notice if mentioned in appointment letter or immediately if no such mention is there.

15-Employer will be exempted from filing any return in any such exempted laws.

16-When there will be exemptions from labour laws, there will be no inspections. It will provide big relief to employers.

17- Though sec.5 of payment of wages Act will remain in force, but if the employer contravenes this provision and do not pay salary by timeline, action against the employer may be taken as per provisions of existing payment of wages act as per sec. 3 of the Ordinance.

18- Since provisions of working hours as mentioned in Factories Act will not be applicable, there will be no compulsion for the employer to give weekly off and overtime at double rate of wages.

What Employer is expected to do?

1-The name and details of all employed workers shall be entered electronically on attendance register prescribed in section-62 of the Factories Act, 1948.

2-No workers shall be paid less than minimum wages as prescribed by UP Government.

3-The wages to workers shall be paid only in their bank accounts.

What employer cannot do?

1.    Employer has to pay maternity leaves maintain crèche facilities for female employee as laws relating to women will still be in force.

2.    In case of any accident either fatal or otherwise, employer will have to pay compensation as per provisions of Employees compensation Act, as this Act will be effective.

3.    Workers engaged in building construction work will have to get registered and employer will have to pay cess on such construction work and take care of construction workers in respect of health and safety as building construction workers Act will remain in force.

4.    Section 5 of Payment of wages Act will be in force, which means employer will be responsible to adhere the time line of payment of wages to workers. In case of employing less than 1000 employees, salary/wages are to be paid up to 7th of succeeding month and if more than 100 employees are there, it can be paid up to 10th.

5.    The employer can not violate provisions of safety and security of workers as laid down in Factories act as those will remain in operation.

6.    The employer cannot take work for more than 11 hours from workers on any day and spread over of the work will not be more than 12 hours of work.

7.    Employer will not be allowed to employ children in the factory as provisions of Child Labour ( Prohibition and Regulation) Act, 1986 will remain operative.

8.    Employer will also not be allowed to keep bonded labour as Bonded Labour Act will also be effective.

In this backdrop time will only tell whether the employment opportunities as now being claimed will also be increased along with flexibility and more and more workers are employed directly on regular rolls and there will be an end to contract labour employment in factories.