• The Law Gazette

Labour Laws Amendment: The Leash Unleashed

Under the Constitution of India, labour laws fall within the concurrent list which makes it come under both Centre and State governments. This has resulted in a plethora of central and state laws related to wages, employment, industrial relations, social security etc being enacted to protect the interests of the labours to increase employment opportunities in a labour-abundant country like India. In India, several legislations have been enacted to prohibit discriminations against protected classes of persons.

However, since the commencement of COVID-19, we have seen a number of amendments and changes in the labour laws. The coronavirus led crisis in India has made many states to ease labour laws in order to give a stimulus to the economy and attract more investments. Recent changes and amendments have been made in labour laws due to this global pandemic. India is a labour integrated country, the economy is based on its labour and yet we have failed in providing adequate necessities to this prime sector. As a country, somewhere we have been ignorant to this major part of our economy.

Labours are the backbone of the economy and not taking care of the backbone can lead to several disasters we can’t even imagine about. As the economy struggles with the lockdown and thousands of firms and workers stare at an uncertain future, some state government decided to make significant changes in the application of labor laws. On the face of it, these changes are being brought about to incentivize economic activity in the respective states. Keeping aside the questions of law — labour falls in the Concurrent List and there are many laws enacted by the Centre that a state cannot just brush aside.


Under the constitution of India, labour laws falls within the concurrent list which makes it come under both Central and State government. The term ‘labour’ means productive work especially physical work done for wages. Labour law also known as employment law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations.

There are two broad categories of labour law. The relevance of the dignity of human labour and the need for protecting and safeguarding the interest of labour as human beings has been enshrined in Chapter-III[i] and Chapter IV [ii]of the Constitution of India keeping in line with Fundamental Rights and Directive Principles of State Policy. The Labour Laws were also influenced by important human rights and the conventions and standards that have emerged from the United Nations. These include right to work of one’s choice, right against discrimination, prohibition of child labour, just and humane conditions of work, social security, protection of wages, redress of grievances, right to organize and form trade unions, collective bargaining and participation in management.

The labour laws have also been significantly influenced by the deliberations of the various Sessions of the Indian Labour Conference and the International Labour Conference. Labour legislations have also been shaped and influenced by the recommendations of the various National Committees and Commissions such as First National Commission on Labour (1969) under the Chairmanship of Justice Gajendragadkar, National Commission on Rural Labour (1991), Second National Commission on Labour (2002) under the Chairmanship of Shri Ravindra Varma etc. and judicial pronouncements on labour related matters specifically pertaining to minimum wages, bonded labour, child labour, contract labour etc.


While the economy is struggling to stabilise and workers and organisations are staring at an uncertain future, a few state governments have decided to make some changes to address the issue. In the past week, states such as Uttar Pradesh, Madhya Pradesh and Gujarat have made some significant changes in their labour laws. Other states, such as Rajasthan, Punjab and Kerala have also made alterations, albeit with a narrower scope.

States and its Amendments

The boldest move has come from the Yogi Adityanath-led government in Uttar Pradesh. It has made defunct all laws including the Minimum Wages Act. The laws that are relaxed include those relating to settling industrial disputes, occupational safety, health and working conditions of workers and those pertaining to trade unions, contract workers and migrant labourers for the next three years.

In Rajasthan, the government has increased the threshold for layoffs to 300, from the earlier 100. Moreover, membership threshold for trade unions has been increased from 15 per cent to 30. Working hours have also been raised to 12 hours per day from the earlier eight. Other states, such as Punjab, Himachal Pradesh and Gujarat have also increased the working hours. In Kerala, it will be possible to get a new industrial license within a week of filing the application.


These laws and changes are claimed to bring about increased and incentivised economic activity. The rationale behind it being that the labour laws in India are too restrictive or inflexible, and because employers have to go through a plethora of restrictions before firing an employee, they hold back on hiring, and this has impeded the growth of organizations in the past. Following this logic, organisations will have an easier time adjusting to market conditions leading to growth and better benefits for workers.

While there is much contestation on whether the change will be positive or will end up adversely affecting industrial relations as we know it, the result is yet to be seen. Suspending all labour laws, barring a few, may be seen as an understandable move by the governments of, say, Uttar Pradesh and Madhya Pradesh. However, the manner in which this has been carried out may raise questions on how it will affect employees and employers alike.

Suspending all labour laws, barring a few, may be seen as an understandable move by the governments of, say, Uttar Pradesh and Madhya Pradesh. However, the manner in which this has been carried out may raise questions on how it will affect employees and employers alike.There are potential pitfalls in the move concerning labour law amendment. Few come to mind as being more prominent than others, such as change regarding the Industrial Disputes Act, 1947, and the Industrial Relation Acts, 1960.Cessation of the entire dispute-settlement mechanism will mean labour courts, tribunals, works committee and conciliation officers to be rendered null and void.This may lead to potential unrest and aggressive campaigning for even minor disagreements.

In addition, the suspension of the Industrial Relations Act, 1960, is further damaging to the workers. The provisions of this law ensured that unions were recognised and workers were protected from unfair dismissal and reduction in pay. Suspension of provisions, such as these, further makes labourers vulnerable to exploitation. Removal of most labour laws renders the workers victims to lower wages and no rights. Moreover, extending working hours will only ensure that companies employ lesser numbers of workers and take responsibility only for them. Fewer workers will work for longer hours and employment will take a hit. With firms doling out pay cuts and job cuts, the question remains as to who will hire more employees now. In Uttar Pradesh, however, provisions relating to minimum wages and safety provisions [iii]will continue to apply to all organisations. In Gujarat as well, similar provisions have been assured.


The amendment raised quite a controversy in many part of the country. A PIL has been filed in the Supreme Court challenging the decision of three States - Gujarat, Madhya Pradesh, and Uttar Pradesh - to relax and dilute labour laws in the wake of the new amendments. The petition filed by one Pankaj Kumar Yadav through Advocate Nirmal Kumar Ambastha seeks directions to quash these notifications issued by these states. Also the bench of Chief Justice Govind Mathur and Justice Siddhartha Varma of Allahabad High Court has issued notice in a PIL moved by the Uttar Pradesh Worker Front through its president Dinker Kapoor. After the Notice the Uttar Pradesh government, on May 15, withdrew its notification dated May 8 in which it was stipulated that daily work hours for factory workers will be increased to 12 hours and weekly hours will be increased from 48 hours to 72 hours. Further it had also amended the interval of rest by reducing it to half an hour which can be taken after 6 hours of continuous work, while the law stipulates one hour break after 5 hours of continuous work.


Theoretically, it is possible to generate more employment and output in states with lesser labour law restrictions. A study by Timothy Besley and Robin Burgess (2004) found that restrictive labour laws tend to be detrimental to increased output and employment in states. Another study by Rana Hasan, Poonam Gupta and Utsav Kumar (2009) revealed that output and employment growth in labour-intensive industries was slower in states with more rigid labour laws as compared to others.

However, for productivity, few points need to be kept in mind, such as occupational safety and healthcare. In Madhya Pradesh, all provisions relating to hazardous processes, overlapping shifts and welfare measures have been done away with. Any change going forward will need to take into consideration the best interests of both the employer and the employee, even while ensuring a balance between them. Labour rights are human rights and the Indian state cannot abdicate its constitutional obligations and the commitments that it has made by reason of ratifying the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights and various Conventions of the ILO as a result of which it is bound to promote decent work in conditions of freedom, equity, security and dignity.


[i] Articles 16, 19, 23 & 24 of The Constitution of India

[ii] Articles 39, 41, 42, 43, 43A & 54 of The Constitution of India

[iii] Factory Act, 1948 and Building Act, 1996


This blog has been authored by Prakriti Parashar who is a 1st Year B.A., LL.B. (Hons.) student at ICFAI University, Dehradun.