Rajasthan: Critiques of the Labour Law Reforms

August 6, 2014

1. The implications of changes in the labour laws proposed by the state of Rajasthan – Ashok Khandelwal
2. Critique of the Government of Rajasthan’s proposed Amendments of the Factories Act, 1948, Contract Labour (Regulation and Abolition) Act, 1970 and Industrial Disputes Act, 1947 – Prem Krishna Sharma
The implications of changes in the labour laws proposed by the state of Rajasthan

By. Dr. Ashok Khandelwal

The Rajasthan state government has announced to amend five labour laws in favour of employers (See Table 1). As it is all the labour laws have been written from the employers’ point of view, yet five of them are now being further diluted. The number and money filters are common feature of most of our labour laws that deny benefits of the labour laws to a majority of the workers. Through the proposed amendments of the laws these filters are now further widened and deepened with the intent and purpose to deprive the benefits of these laws to more and a larger number of workers already employed and new set of workers.

The amendments also provide a clear message to employers that you can treat your workers as you want. To workers the message is clear that ‘submit to employers’ or ‘remain unemployed’. The workers are left with Hobson’s choice. Since they will have to work to survive they would have to serve the ‘maliks’ as per their dictates.

The proposed changes would lead to:
1. Replacement of permanent labour with contract labour: Changes in Chapter VB of ID Act would now sets stage for a good number of employers owning enterprises employing 101 to 299 workers to retrench permanent workers working for decades with impunity and replace the costly permanent workers with cheap young contract workers. Also, Companies now would open new production sites with young and cheap labour or may even manipulate number of employees to replace the permanent labour with young cheap labour. The production sites would not have permanent workers.

2. Promoting uncertainty of jobs as a tool of exploitation:  The above change in the ID Act would now employers’ anti-labour measures like lay off, retrenchment and closure without Government permission legal. Thus, the sword of losing job would hang over the head of much more workers now and thus there would be a phenomenal increase in kind of enslaved/footloose labour which would be severely exploitative. The number of hours would increase, wages would be lower, work conditions would deteriorate, there would be no state interventions to protect interests of the workers for almost entire industrial work force.

3. Further increase in Invisibility of Labour: The increase in limit from 20 to fifty in case of contract labour would lead to more and more labour being employed or work being done through unscrupulous contractors without any check or fear of being punished or caught. This would lead to spurt in human trafficking for a new type of labour bondage which is already visible at many of the construction sites for instance.

4. No state protection for workers in larger number of enterprises: A step forward towards jungle Raj- The proposed changes in labour laws would considerably restrict state regulation to protect basic rights of the workers. The conditions at worksite would have no checks in large number of enterprises. Thus there would be increase in inhuman conditions of work places. There would be no legal assurance regarding provisions of basic facilities like toilets, ventilation, safety, etc. as the factories act regulate and ensure working conditions like working hours, pollution, safety, lights, ventilation, adequate space, crèches etc. Since many more enterprises now would not be covered by the Factories Act. The proposed amendments would now leave out all those enterprises employing 20 workers using power and 40 workers in without power from the current stipulations of 10 and 20 respectively. This would now also encourage employers to set-up smaller units or to show only that many labourers on record so as to keep outside of purview of provisions of ID Act, Factories Act, Contract Labour Act etc.

5. Freedom for erring employers: The employers would now be let out even for the multiple/habitual violations of provisions of Factories Act done earlier as the offences now would be compounded and they would be let free even if they are in jail now just on payment of fine. Prospectively a larger number of the employers would literary get the liberty to violate these provisions with impunity without fear of being prosecuted.

6. Making a recognized union more difficult in an enterprise: Increasing the percentage of workers to 30 from the present fifteen would make the recognition of the unions in an enterprise more difficult especially in large units. The management as it is uses various techniques not to recognize a union. This would also promote more pro-management unions.  There is already competition among various unions and such a measure would render many unions derecognized. There is no clarity weather unions jointly can be recognized. This means there is infringement on TU Rights.

7. Delayed and/or denied justice to workers: The justice to workers would be further delayed as for prosecution for violations of the Factories Act the permission of the state government would be required. Earlier the inspector, a government employee could permit to file a case against the erring employer but now permission of the state government would be required. The chances of justice therefore stand delayed/denied.

8. The ranks of unorganized workers would swell: It is expected that with development the workers would get benefits of job security, social security, health benefits, leaves, humane working conditions, etc.  The present measures would on the contrary now increase the number of unorganized workers. This would happen in two prominent ways. One those permanent workers who have served in enterprises for decades would now lose jobs. Second, the new recruitment would be of unorganized nature without any security of any type.

The labour laws are for the welfare of the laboring people. They are not only the result of the hard fought battle of the workers but also the Constitutional obligations of the welfare elected State. The Article 39 of Constitution of India enjoins the state to ensure “(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment”. The proposed amendments and in fact entire thrust of the budget is going to violate this directive principle in the Constitutions.

The government of Rajasthan has introduced the amendments without giving any informed reasons for the need of such amendments. The likely impact of the measures on the workers and their rights has not been spelt out. The stated purpose is to increase employment and facilitate manufacturing.  But the moot question is can we ignore the welfare of the labour.

It is interesting to note that the State government has shown tremendous enthusiasm and eagerness to take these anti-labour measures but has completely ignored their own state election promises outlined in the Manifesto released at the time of state election in late 2013 on page 44 to promote welfare of the unorganized labour.  Of the several promises made therein like registration of workers, setting-up of a welfare board, increase in the pension from Rs 1000 to 1500, etc has not been even initiated and does not find any mention in the budget. But anti-labour blatantly pro-employer amendments have been articulated in Budget speech.

We therefore demand that

  1. All the proposed amendments should be immediately withdrawn. No amendment of any sort should be proposed without proper assessment and clear statement of pros and cons especially from the labour point of view. The likely adverse impact must be spelt out clearly.
  2. Nothing should be amended without the approval of the trade unions
  3. Immediately announce labour welfare measures promised at the time of election
Table showing important changes in the labour laws


Sl NoSectionExisting ProvisionNew ProvisionRemarks

A: Contract Labour (Regulation and Abolition) Act, 1970

1Section 1 (4)Applies to (i) establishments with 20 workers and (ii)contractors employing 20 or more workersWould apply to those establishment and contractors who employ 50 or more workersFilter number increased by two and half times to deprive benefits of provisions of act to many more workers

B: Factories Act, 1948

2Section 2 Sub-clause (i) and (ii) of clause (m)Applies to establishments employing 10 workers with power and 20 without powerApplying to establishments employing 20 workers with power and 40 workers without powerFilter number doubled to deprive benefits of provisions
3Setion105   Sub-section (i)Prosecution on violation by Inspector or his written consentCognizance of offence by a court on complaint by Inspector with written permission of State GovernmentProsecution made more difficult- anti-worker and pro-employer measure
4New provision-Section 106BNo provision for compounding of offenceInspector can compound any punishable offence before or after institution of prosecution on payment of fine not more than prescribed.

On fine payment (i) no prosecution and if in custody will be set free

(ii) after institution of prosecution compounding would lead to acquittal of the offender

(ii)           Inspector can favour employer


(ii)Employers would be saved from prosecution on payment of small fine.


C: Industrial Disputes Act, 1948

5Section 2 Sub-clause (iii) of clause (g)Employer is considered owner for employed contract workersDeletedRemoved due to separate Act to regulate contract workers now.


A progressive amendment of 1958 stands withdrawn



6Section 2 Clause (s)Expression “by an employer or by a contractor in relation to the execution of his contract with such employer”Deleted
7Section 2A (4)New AdditionIntroduces three year time bar for raising a dispute related to lay off, retrenchment and closure
8Section 9DUnion with membership of 15% workers can get recognitionIncreased to 30% workers in an enterpriseThis amounts to infringement of TU rights
9Section 25KChapter VB applicable to enterprises with 100 and more workersLimit increased to 300 or more workersEmployers now can retrench workers without government permission in more enterprises. State protection stand removed.
10Section 25N Clause (a) Sub-section (1)Expression “; or the workman has been paid in lieu of such notice, wages for the period of the notice”Deleted


Section 25N Clause (a) Sub-section (9)New insertionAfter expression, “six months” and before punctuation “, ”, insert “and an amount equivalent to his three months average pay”
12Fifth Schedule after Para 5 of Part IINew AdditionGo slow has been defined as “any such activity by any number of persons, employed in any industry, acting in combination or with common understanding, to slow down or to delay the process of production or work purposely whether called by work to rule or by any other names, so as to fixed or average or normal level of production or work or output of workman or workmen of the establishment is not achieved”This addition defines the ‘go slow’ in a very broad way which would now make the action against workers easy on any pretext. This leads to complete control over workers by the management in fixing and realization of production targets. This would lead to intensification of work and muffle any kind of protest.

 The writer is Dr. Ashok Khandelwal, Economist, was formerly with the National Labour Institute, worked with the Bharatiya Khet Mazdoor Samiti, the Joshi Adhikari Institute, now in Rajasthan, as the advisor to the Supreme Court Commissioner in the Right to Food case 196/2001/ as well as working with unorganised sector labour.


 Critique of the Government of Rajasthan’s proposed Amendments of the Factories Act, 1948, Contract Labour (Regulation and Abolition) Act, 1970 and Industrial Disputes Act, 1947

 By Prem Krishan Sharma

The BJP Government of Rajasthan has proposed certain amendments in the Factories Act, Contract Labour (Regulation and Abolition) Act and Industrial Disputes Act.

At the outset it may be stated that labour laws in our present times have become irrelevant for all practical purposes. The Trade Union Movement has become so weak that it cannot ensure any relief to workers or proper implementation of labour laws. What we are observing therefore is the nexus between capitalist right wing politicians, so called trade unions leaders sponsored by them and officers and inspectors of labour department has made all labour laws only a show piece on paper. The recent judicial pronouncements are also tilted against labour. Therefore even if there were no amendments the position would have remained the same.

These amendments, as we are all aware, is part of the exercise of the present dispensation in the State and the BJP Party to prove its faithfulness to the exploiters, who already had a free hand to loot our resources and exploit labour. For example in capital of Rajasthan, in Jaipur itself, several factories employing more than thousand workers closed their operations without following either section 25 N or section 25 O of I.D Act, 1947,and the workers are still waiting after more than 20 years for benefits legally assured by law. There is no action against the employers for the open violation of provisions of the Sections 25 N or 25 O of I D Act. These industries are Jaipur Metals, Man Industrial Corporation, Indian Fibers and some other medium scale industries.

In Chapter II B of the ID Act, regarding representative Trade Union a requirement of 15% membership of work force has been raised to 30% in the amendments being proposed. It may be pointed out that that a representative trade Union is one which gets the highest number of votes if an election is held. The Registrar Trade Union can also declare any trade union as representative trade union only by inspecting papers and random checking. In fact, the existing provisions were already flawed as practically it benefited only that paper trade union which maintained record better. The field strength was not considered relevant. The trade union movement have been demanding that every time there must be an election  after fixed period for registering representative trade union.  This requirement of 30 % membership will further benefit the trade unions dearer to employers and any other genuine fighting trade union will be suppressed.

Under Section 25 K of the ID Act, raising cap for retrenchment and closure from 100 to 300 workers will further facilitate the employers to retrench or artificially close the industries and throw out the entire work force, without the permission of the Government. It has been our experience, that even now many of the industries which were actually employing more than 100 workers did not show them  in their records and thus were bypassing Section 25 N and Section 25 O. Now all such mischievous employers will have the freedom to do exactly what they want. . It is also well known that even in well established Industries which are running, these methods are frequently adopted so that the non technical workers can be frequently changed and are always under the thumb of employer.

Till now there has been no limitation in time frame regarding the raising of an Industrial Dispute. But now now for the first time a limitation of 3 years has been introduced under section 2 A of I D Act. Till now the thinking was that the hands of an industrial adjudicator should not be tied down either in the matter of procedure or limitation of time frame. It is for the adjudicator to judge the reasonability of the matter looking into the circumstances of each case, but now this important space will not be there anymore.

We are afraid that this limitation provision will be interpreted strictly and even if a relaxation is made by the Industrial Court, still it will give a further issue to the employer to go to the higher court and further delay the matter.  It will be interesting to note that though in the Central Act there was a limitation of 3 months for deciding a dispute by an Industrial Court but it was never adhered to. But the present situation of the Industrial Court is such that no case takes less than 10  to 15 years to be decided. If the government was keen to protect the workers interest it would have been better if a strict limitation provision should have been introduced or deciding a dispute finally which should not been more than 1 year in any case.

Further “Go Slow” ( Section 2 (ra), 5) has also been defined. It will only mean that from now on all types of protest and resistance by the workers will be suppressed. The definition is so wide that it is open to any interpretation which the employer likes.

The purpose of amendments in the Contract Labour Act and Factories Act is also to deny many legal rights which are basic for the working conditions and welfare of the workers to more number of workers. Even today the employers of small industries were using devious methods to subvert the law, in connivance with the Labour Inspecters. For instance they will take on record names of only a few workmen keeping it short of 1 or 2 of the required strength to come under the purview of the law. Though in actual strength the workers working there are much more.

Now this devious means of subverting the law will be easier for the employer to indulge in and so the gains of the amendments as is the objective, going to be only beneficial to the employers. The applicability of the Contract Labour Act will be only on the establishments which employ  more than 50 workers which was presently restricted to 20. Similarly in Factories Act the requirement of the number of workers for the implementation of the law was 10 workers with use of power. Now this has been raised to 20. And for factories without power it has been raised to a minimum of 40 workers from 20.

It means that even the basic facilities like cleanliness, drinking water, ventilation, safety requirements, employment of child workers, working hours, weekly rest, holidays, maternity leave, creches, overtime will not be necessary in substantial number of industries.

The writer is Prem Krishan Sharma,  with a fifty year old practice as a labour lawyer in the Rajasthan High Court and the Supreme Court, was with trade union movement for decades,  was also the CITU Secretary, Rajasthan and  presently President PUCL, Rajasthan.  


1 Comment »

One Response to “Rajasthan: Critiques of the Labour Law Reforms”

  1. c p audichya Says:
    October 31st, 2014 at 11:06

    Governments do not want labour welfare orient laws which is self explanatory from the recent amendments proposed in the labour statutes.

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