India And The Freefall of Labour Rights In The Wake Of COVID: How far is it justified?

Guiding Businesses

India And The Freefall of Labour Rights In The Wake Of COVID: How far is it justified?

We celebrate May 1 as labour day as a tribute to working men and women. In contrast, in May, a few states in India curbed labor rights through an amendment in the labor laws as part of the campaign to make India self-reliant (Atmanirbhar Bharat Abhiyan). The labor reforms are portrayed as essential to attract foreign investment, and boost the Indian economy in the background of the COVID pandemic.

These reforms are also expected to give a boost to the “Make in India” campaign if foreign companies were to set up factories in India due to abundant labour at cheap cost. Recently, India jumped 14 places in the World Bank’s Ease of Doing Business 2020 survey to stand at 63, among 190 countries. But should “Ease of Doing Business” justify human right violations? Should it justify damaging the health of people? Should it be allowed to dilute the labour laws and de-humanise labours on whose strength the economy strives?

Rajasthan has amended Industrial Disputes Act 1947 to increase the threshold limit for lay-offs and retrenchment to 300 from 100 earlier. In Maharashtra, shops and factories no longer have to submit multiple returns under various labour laws but one consolidated annual return. The Factories Act 1948 has been amended in 3 states (Punjab, Himachal Pradesh and Gujarat) to increase the work time to 12 hours every day and 72 hours every week, compared to 8 hours every day and 48 hours every week. Except for the following legislations, the UP government has suspended all labour laws:

  1. The Building and Other Construction Workers Act, 1996
  2. Workmen Compensation Act, 1923
  3. Bonded Labour System (Abolition) Act, 1976; and
  4. Provisions related to Children and Women in the labour legislations.

What is worrisome is the varying length of suspension of these labour rights-which vary from 1,000 days in Madhya Pradesh to three years in Uttar Pradesh. Gujarat, Punjab, Rajasthan, and Himachal Pradesh have restricted labor rights for a short-term (2-3 months), in the background of COVID situation. However, U.P suspended labor rights for three years justifying on the grounds of the pandemic. Does the Constitution allow for such extreme measures? Why wasn’t the draft circulated in the public before the amendments were introduced?

Even then the policy may prove to be futile as investors need policy stability, predictability and consistency before investing and a three year window might not give enough concession as it could easily take anything between 18 to 24 months to set up a factory and get all licenses and authorisations. Predictable environment is crucial for any private investor before committing their money, so for instance, a home buyer may not invest in a flat even if it offered at dirt-cheap prices with additional benefits if there is no guarantee as to the time of its completion.

Following these, other states of India might also do away with the Labour laws in the near future however it is only West Bengal’s Chief Minister Mamata Banerjee who has criticised the BJP-ruled states for bringing about such changes to labour regulations stating that they are jeopardising workers’ job security. She has further clarified that the key to revive the state’s economy lies in strengthening the infrastructure of rural Bengal.

Contrary to this, the Indian Staffing Federation(ISF) has welcomed the decisions of various states to suspend multiple labour law provisions. ISF’s President Lohit Bhatia said in a statement "India has been lagging in simplifying its labour laws for nearly 70 years, though the government did try and bring about legislation in past three years to reduce over 44 labour laws to four labour codes, the current set of announcements by the state governments will be more likely to achieve the results.” However, the decision has been taken without any discussion and thereby defying the democratic procedure which needs to be followed in a democratic country.


Labour comes under the concurrent list under the Seventh Schedule of the Indian Constitution, which mean that both the Centre as well as State can make laws under this subject. This means that the State cannot completely suspend Central laws. U.P has suspended for three years the central laws like the Minimum Wages Act, the Payment of Wages Act, and the Payment of Bonus Act. Under the Constitution, the Government is allowed to promulgate an ordinance if there is an exigency, and meeting of the state assembly or Parliament is not possible. However, the respective state legislature must approve such ordinance within six months of its promulgation.

Article 254(2) of the Constitution stipulates the procedure to be followed in case the bill enacted by a state legislature on a subject matter in the concurrent list violates the Union Law on the same subject. The bill mentioned above needs the approval of the President for it to transform into an act. If not, the bill is void to the extent it violates the Union laws. This procedure has not been followed yet.

Furthermore, as opposed to urging labourers to return by securing wages and improving working conditions, the changes presented by the States are taking away the most basic labour law protections. Article 23 of the Indian Constitution prohibits trafficking in Human beings and forced labour. The word “begar” in the said provision denotes a form of forced labour under which a person is compelled to work without receiving any remuneration. Even though wages will be paid on time under the Workmen’s Compensation Act, 1923 which will still be in force, the amount would not be in tune with the Minimum Wages Act and Rules. The motivation behind the ordinance is to encourage industries to freely employ the enormous number of migrant workers that have returned without going through the normal process of employing them. Due to vast unemployment, these workers will be willing to take up jobs at meagre wages which is nothing but a form of beggary. The Supreme Court in People’s Union for Democratic Rights and Ors. v. Union of India[1] has held that "To contend that  exacting labour  by  passing some remuneration, though  it be  inadequate will not attract the provisions of Article 23 is to unduly restrict the amplitude of the prohibition against forced labour enacted in Article 23. The contention is not only ill-founded, but  does not accord with the principle enunciated by this Court in Maneka Gandhi v . Union of India[2] that when interpreting the provisions  of the Constitution conferring fundamental rights, the attempt of the Court should be to expand the reach and ambit of the fundamental rights rather than to attenuate their meaning and content.” Hence, there is no logic in attracting Article 23 only in cases where no remuneration is paid to the workers for the work received but not when inadequate remuneration is paid. Even in Sanjit Roy v. State of Rajasthan[3], the Apex court ruled that the fundamental right enshrined in Article 23 is violated by non-payment of minimum wage.

In addition to this, the Supreme Court clarified that the rights and benefits conferred on the workmen employed by a contractor under the provisions of the Contract Labour (Regulation and Abolition) Act 1970 and the Inter State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 are clearly intended to ensure basic human dignity to the workmen and if the workmen are deprived of any of these rights and benefits to which they are entitled under the provisions of these two pieces of social welfare legislation, that would clearly be a violation of Article 21 of the Constitution.

The May 7, 2020 gas release occurrence at the Visakhapatnam polymer factory, LG Polymers India Pvt. which is an ongoing crisis has left in excess of 300 individuals in hospitals. Right to health of workmen has been recognised as part of the right to life under Article 21.[4] However, the suspension for Factories Act, 1948 which provides for fire safety rules, facilities for first aid, regulation of hazardous processes and waste management, etc will leave these workers remediless and will also violate their right to life.

A lot of other Fundamental Rights as well as Directive Principles of State Policy(DPSPs) are violated on account of the abrogation of labour rights. These rights and principles lay the foundation of labour rights, conditions under which they can be made to work and the responsibility of both Central and State Governments toward the labour class. For example, the fundamental right guaranteed under Article 19(1)(c) to form associations, including a trade union will be taken away by suspending the Trade Unions Act, 1926. The DPSPs even though unenforceable are constitutionally-mandated goals, for example Article 43 gives the Government the responsibility “to secure to all workers a living wage, conditions of work ensuring a decent standard of life.” All the same, it is unclear whether the abrogation of the labour laws will benefit the industry or attract FDI as speculated by the Government. In such an event, this is a well-suited opportunity for both Governments to renew their commitments to the DPSPs.


International Labour Organisation(ILO) has asked the concerned authorities to ensure that the relaxations adhere to the global standards. The amendments should come as a result of a tripartite consultation involving the government, the workers’ and the employers’ organisations. Finally, they should be consistent with the International Labour Standards, including the Fundamental Principles and Rights at Work (FPRW) (adopted by India in 1998). It is well settled that “the provisions of the Treaties/Conventions which are not contrary to Municipal laws, be deemed to have been incorporated in the domestic law.”[5] Hence, international labour standards ratified by India cannot be violated as it forms part of the domestic law of the country. The FPRW makes it clear that the rights enshrined under it are applicable to all States-regardless of the level of economic development.[6]

Ten Central Trade Unions on 11 May 2020, said that they are considering approaching the ILO against the decision to abrogate major labour laws in some states. The Unions consider these moves as gross violation of the following ILO Conventions:

  1. Right to Freedom of Association
  2. Rights to Collective Bargaining
  3. Internationally accepted norms of eight hour working day
  4. Tripartite Consultation

Over and above this, in a joint statement the Central Trade Unions has also threatened to call for a nationwide agitation to protest against such moves by the State Governments.

A petition has also been filed in the Supreme Court of India on 20 May 2020 challenging the constitutional validity of the said decision taken by various States. The petitioner contends that a Central law cannot be suspended by the state without due procedure and that the Factories Act even though can be diluted, it can be done only in case of a public emergency and such a situation has not yet arisen. Also, this arbitrary move has opened up room for sheer exploitation of labours in a time when a two square meal a day is a luxury for them. The judicial decision on the same is much awaited.


Regulating laws and changing certain policies is one thing but suspending the major labour laws with utter disregard to humanitarian grounds while flouting even international norms is like throwing the baby out with the bathwater. It is fascinating to note that while Indian States are attempting to suspend labour security and making it simpler for employers to hire and fire employees as per their whims and fancies, numerous other countries are attempting to limit lay-offs in this time of emergency by giving wage subsidy to employers to induce the workers on the payroll. One such example is of Canada which has introduced an emergency wage subsidy scheme which will provide a subsidy of 75% of the eligible remuneration paid by an eligible entity (eligible employer) to each employee – to a maximum of $847 per week. As mentioned earlier, the policy of suspending labour rights to attract foreign investors by reducing labour costs might prove to be futile unless there is certainty and stability. Hence, scrapping of almost all labour legislations is not the answer but a regulatory mechanism and the need to amend the outdated labour laws is the way. For example, if flexibility is to be given to employers in recruiting and terminating, it can be combined with a reasonable scheme of unemployment compensation in which both employers and employees consistently contribute. There needs to be maintained a balance between the need of firms/industries and workers’ employment security.



[1] 1982 AIR 1473

[2] 1978 AIR 597

[3] (1983) 1 SCC 525

[4] Occupational Health and Safety Association of India v. Union of India (2014) 3 SCC 547

[5] T.N. Godavarman Thirumulpad v. Union of India (2012) 4 SCC 362



About the author :  Tisha Chhaparia is an undergraduate student pursuing BBA LLB(Hons) at Symbiosis Law School, Pune. She enjoy's solving real-life problems and interested in corporate law. She wants to someday create a measurable impact on the legal system and believe's “Every day is a second chance” and that one can always start afresh. In her free time, she love's to read thrillers or bake."


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One Response

  1. Like!! Really appreciate you sharing this blog post.Really thank you! Keep writing.

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