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Denial of overtime wages in a pandemic in context of Gujarat Mazdoor Sabha v. the State of Gujarat

August 19, 2021
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labour law

This article is written by Aporva Shekhar from KIIT School of law. This article is a brief analysis of the case of Gujarat Mazdoor Sabha v. the State of Gujarat.

Introduction

Unemployment rates have increased manifold due to the coronavirus crisis, the lockdown measures that were necessary to save human lives have butchered the economy. In a country where six per cent of the population is below the poverty line, the effects of the pandemic have been disproportionately felt. Due to the economic slowdown, many have lost their jobs and many are barely hanging on to make ends meet. When situations are dire people expect to be paid at least what they are owed for honest work. But even in this crisis, some people seek to benefit from the misery of others, a similar thing happened in Gujarat where the government relaxed certain provisions of the Factories Act to boost economic activity. But this was done at the expense of the workers who were denied pay for the extra working hours.

Summary of the issue

In order to contain the spread of Covid-19, the government had issued a nationwide lockdown which was extended on several occasions. As a result of this lockdown, the economy of the country detrimentally suffered and all sectors of the economy came to a grinding halt. The department of Labour and Employment in Gujarat issued a notification under Section 5 of the Factories Act, 1948 on 17th April 2020 to provide certain exemptions to factories that were registered under the above-mentioned Act. The notification sought to boost economic activities by relaxing certain compliance requirements and regulations but along with that the notification also unwittingly gave factory owners a free pass to dock the pay of workers for overtime. This exemption granted through the notification was to be operational from April 20th, 2020 to July 19th, 2020. The notification stated that the factories registered under the Act were exempt from various provisions of the abovementioned Act that regulate the working hours, wages and intervals for rest, etc. A similar notification was issued by the department again on 20th July when the previous one lapsed, this notification was to remain operational from 20th July to 19th October 2020. A registered trade union, the Gujarat Mazdoor Sabha along with the Trade Union Centre challenged the notification in the Supreme Court.

Relevant provisions of the Factories Act, 1948

The notification provided an exemption for certain provisions to incentivise the factories to resume work. The provisions that were exempted by the notification are as follows:

Section 5

This Section of the Factories Act, 1948 is an enabling provision that empowers the state government to make exemption notifications to exempt certain classes of factories from certain compliance requirements of the Act in case of a ‘public emergency. The Section states that when there exists a public emergency, through a notification in the Official Gazette the State government may exempt any factory or a class or description of factories all or any provisions of this Act except that of Section 67, for any period that the government may think fit. The proviso to this Section states that the notification so issued under this Section cannot exceed a period of three months in operation at a time. There is also an explanation to this Section that defines emergencies mentioned under this Section. It states that ‘public emergency’ for the purpose of this Section means a grave emergency that directly threatens the security or the territory of India or any part thereof through the means of war, external aggression, or internal disturbance.

Section 51

This provision governs the working hours that an adult worker is subjected, through the notification, the Department of Labour and Employment sought to remove the compliance of this essential provision. This provision states that working hours in a week cannot be more than 48 hours, and no adult worker should be compelled or allowed to work more than this limit. This is an essential provision that ensures the work-life quality of the worker by limiting their work hours to a reasonable limit. But the notification that exempted the compliance of this provision removed the compliance of this safeguard which prevented factories from overworking their workers.

Section 54

This provision governs the daily working hours of the adult worker in factories, and by exempting this Section by the notification the working hours became unregulated. This Section states that subject to the provisions of Section 51, the daily working hours should not be more than nine hours in a factory and no adult worker should be compelled to or allowed to work more than that in a day. There is also a proviso to this Section that allows the daily working hours to be increased by the due permission of the Chief Inspector to facilitate the change of shifts. But this provision was safeguarding the workers from being overworked and the exemption of this Section for the factories by the notification let them bypass this compliance requirement.

Section 55

This Section provides for intervals of rest that should be given to adult factory workers. It states that the continuity of work should not exceed more than five hours without an interval of rest for at least half an hour. The State government or subject to its control, the Chief inspector by specifying reasons in a written order may exempt any factory from this provision but even then, the continuity of working hours should not exceed more than six hours at a time without rest.

Section 56

This Section provides for the spread over of the work so assigned, and it states that the period of work should be so arranged that it is inclusive of the intervals provided for in Section 55 and they shall not spread over more than ten and a half hours in a day for adult workers. But even here the Chief Inspector by specifying in a written order allows for the spread over to be increased up to twelve hours in a day.

Question of law involved

The notification that was issued under Section 5 of the Factories Act by the Department of Labour and Employment should only provide an exemption to a certain class of factories only when a ‘public emergency’ exists. The meaning of ‘public emergency’ with reference to this decides the validity of the notification and the decision of the factories to dock the wages of workers for overtime. Section 5 of the abovementioned Act is an enabling provision and empowers the State Government to exempt certain classes of factories from the provisions of the abovementioned Act, except Section 67 of the same Act. The explanation to Section 5 clearly states that a public emergency constitutes a grave emergency. But then the question arises, whether a pandemic or lockdown shall constitute a grave emergency within the meaning of public emergency as given in the abovementioned Act. While a pandemic does threaten the population of the country but it does not threaten the security of India, and in order to qualify as a public emergency, the emergency must threaten the security of India. The reason for the emergency should be war, external aggression, or internal disturbance, and it is a well-established point of law that the meaning of the term internal disturbance cannot be interpreted separately from the context of the preceding terms. This basically indicates that the definition of public emergency in the abovementioned Act includes any threat to the security or territory of the country and an internal disturbance should be interpreted along with similar parameters. And in the absence of any of the parameters constituting a public emergency, the power granted under Section 5 shall not be operational.

Observation of the court

The Court observed that the pandemic has caused a huge loss of livelihood for the poor and marginalized due to the lockdown. The loss of livelihood had been mostly due to the economic slowdown and the eventual lockdown of factories and other institutions that left labourers without work. In order to remedy this situation, the Department of Labour and Employment released the impugned notification to incentivize the factories and boost economic activity. The Courts clearly stated that even if the pandemic was to be accepted as a public emergency, which it is not, the economic slowdown as a result of the pandemic could not be considered as a grave enough threat to the security of India. The Court stated further that the pandemic has significantly affected major mechanisms of the country like the economy and the public health infrastructure. This effect of the pandemic has forced the central government to use provisions of the Disaster Management Act, 2005, but the effect cannot be constituted as a threat to the security or a part of the territory as it does not disturb the peace and integrity of India.

The Court did agree to the fact that the effects of the Covid-19 pandemic on the economy have been profound but it also stated that such issues need to be tackled by the state governments in coordination with the central government. Emergency powers that are to be used sparingly should not be invoked until and unless the condition of the economy becomes so severe that it leads to public unrest and disruption of public order which threatens the security or territory of the country. The Court also observed that the notification did not serve any positive purpose, it only sought to reduce the overhead costs of the factories without any regard or consideration to the kind of production activities or goods produced. Another important observation made by the Court was that Section 5 of the abovementioned Act does not enable the state governments to issue blanket notifications that would exempt all factories, but rather the provision provides power to exempt only certain categories of factories. The exemption of factories that produce essential commodities like sanitisers and masks under Section 65(2) while compensating the workers for their work during this crisis is fathomable.

Judgment of the court

The Court stated that the Factories Act constitutes an important element of the social and economic democracy envisioned in the Constitution of India. Labour welfare is an important aspect of social and economic democracy and hence, the balance between labour welfare and public health crisis should be carefully calculated. A statutory exemption needs to be scrupulously interpreted and the state is not enabled to eliminate provisions guaranteeing equity and dignity in the workplace. Such exemptions cannot be allowed unless they bear a direct nexus to a grave threat that endangers the security or territory of the country. The notification that exempts factories from paying workers for their overtime and ensuring human working conditions is an affront to the right to life and right against forced labour enshrined under Articles 21 and 23 of the Constitution. The three-judge bench of J. Indu Malhotra, J. KM Joseph, and J. D.Y. Chandrachud laid special emphasis to the Directive Principles of State Policy, stating that the Factories Act is an essential element of Articles 38, 39, 42, and 43 which grant that the state shall secure a social order for the welfare of people and certain principles of the policy are to be followed by the state, and provide for just and humane conditions for the worker, like maternity leave and also that of a living wage, etc.

The Court further stated that the purpose of the notification can be interpreted to be legitimizing the factories’ subjection of workers to onerous conditions to ameliorate the financial exigencies. But such actions cannot be done at the cost of the workers’ welfare who are the backbone of the economy and whose bargaining powers have significantly decreased due to the pandemic. Section 5 of the above-mentioned Act cannot be invoked as a blanket notification to exempt factories from complying with the provisions that ensure humane and equitable working conditions for the workers. And there was no identifiable grave emergency that would constitute a public emergency enabling the state government to issue the notification under Section 5 of the abovementioned Act. In any case, any exemption that exempts the compliance of humane working conditions and overtime compensation cannot be allowed as it violates the fundamental rights of the workers. Therefore, the writ petition submitted by the Gujarat Mazdoor Sabha and the Trade Union Centre of India under Article 32 was accepted and the notification of the Gujarat Government was quashed.

Conclusion

The Court quashed the Department of Labour and Employment issued a notification under Section 5 in Gujarat as it was decided that the Section does not enable the state government to issue blanket notifications. Factories cannot be exempted from provisions that provide for humane and equitable working conditions for the workers in any situation, especially not a situation that is not a public crisis. The State cannot be allowed to exploit the workers’ rights to boost the economy and therefore, the Court upheld the labourers’ welfare as a part of the social and economic democracy as enshrined in the Constitution.

References


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