Labour reforms take a hit; no change in hire-and-fire norms

Protests by central labour unions and widespread criticism from Opposition parties because of job losses on account of demonetisation and the GST have put the contentious labour reform proposals in the slow lane.

The Union government is likely to put its proposal to ease retrenchment norms, by allowing factories with a large workforce to hire and fire without seeking its permission, on the back burner.

Several protests staged by central labour unions, including the Rashtriya Swayamsevak Sangh-affiliated Bharatiya Mazdoor Sangh (BMS), and the widespread criticism from Opposition parties because of job losses on account of demonetisation and the Goods and Services Tax (GST) might have put the contentious labour reform proposals in the slow lane, government officials said.

“We are likely to maintain the status quo on the controversial labour law proposals, as trade unions are hell-bent that the retrenchment norms should not be touched.

"The government may also not be willing to take a political risk, especially after it has come under attack of the Opposition parties on demonetisation and the GST,” said a senior government official, on condition of anonymity.

The Centre had proposed the Code on Industrial Relations Bill, allowing factories with up to 300 workers to retrench, lay off or shut shop without seeking the government’s nod.

At present, factories with up to 100 workers can do so.

It had also proposed increasing the severance pay for retrenched workers three times to 45 days’ salary for each completed year, from 15 days at present.

The proposed Bill was to combine the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947, into a single code.

The government is now contemplating whether or not to increase the compensation package to 30 days’ salary for every completed year or to keep the severance pay at the same level, a labour ministry official said.

“However, in case the retrenchment norms are unchanged, the severance pay will also remain the same, as changing it will be an anti-industry move,” said another labour ministry official.

“We feel that the threshold limit for allowing retrenchment should be taken away completely.

"Factories doing business with 100 workers 20 years ago are employing only 10-20 workers now due to automation.

"Ease of doing business has to be maintained and not the ease of closing business,” BMS president C K Saji Narayanan said.

In November, 10 central trade unions jointly organised a three-day protest outside Parliament to press for their charter of demands and oppose the proposed labour reforms.

The BMS staged a separate protest in New Delhi on November 17, opposing the labour reforms “curtailing workers’ rights”.

The RSS-affiliated union leaders later met a ministerial panel on labour led by Finance Minister Arun Jaitley to discuss their concerns.

Government officials said since labour is a concurrent subject, where states can bring their own amendments with a final nod from the Centre, states would be pushed to come forward to undertake contentious labour law reforms.

Over the past few years, Gujarat, Jharkhand, Uttar Pradesh, Madhya Pradesh, Rajasthan, Haryana, Andhra Pradesh, and Maharashtra have allowed factories with 300 workers to retrench without official sanction.

A proposal from the Assam government to change the law on similar lines is awaiting the Centre’s nod.

Officials said the labour ministry would focus on pushing for the Code on Wages Bill 2017 that seeks to establish a national minimum wage for different states and geographical areas.

However, the Centre may restrict outsiders’ role in trade union leadership in the Code on Industrial Relations Bill.

According to the proposed Bill, only people engaged or employed in an industry can become office-bearers of a trade union in the formal sector and only two outsiders can become office-bearers of a trade union in the unorganised sector.

At present, at most five persons in the organised sector and half the office-bearers of a trade union in the unorganised sector can be outsiders.

The central trade unions viewed this as an attack on the trade union movement and said that the government should not interfere in trade union composition.

However, the Centre may likely allow only two outsiders to become office-bearers of a trade union in organised sectors according to its fresh proposal, officials said.

Photograph: Henny Ray Abrams/Reuters