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This article is written by Darshit Vora, from SVKM Narsee Monjee Institute of Management Studies/ This article analyses the action taken by various states to relax various labour laws during the COVID-19 pandemic.   


During the period of the pandemic, the sector that has been most affected is the manufacturing sector due to the imposition of lockdown leading to the stoppage of the production. Due to this, many labourers who were working have lost their jobs and many are receiving a pay cut. To generate more employment opportunities, an ordinance is being passed by various states. The concept of labour comes under the concurrent which provides both State as well as the Centre to make changes. There are about 100 state laws and 40 central laws passed in the interest of labours.

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The motive behind the relaxations of labour laws 

  • The intention behind easing of labour norms is that states want to attract more investment so that they can generate employment opportunities for people living in their states. 
  • India is facing the problem of migrant issues where people are returning to their homes from various cities during this crisis due to this it leads to a lot of people unemployed, especially in states like Uttar Pradesh, Madhya Pradesh, etc. By easing labour restriction, it would help to generate employment for those migrant people. 
  • During the period of coronavirus where industries were kept closed in the initial lockdowns, it had gone through a lot of losses to generate revenue easing of labour laws that can be one of the effective ways. 
  • China is a place where 90% of products get manufactured, one of the major reasons being no restriction of labour laws, for India to increase the manufacturing share contribution it is one of the most effective ways, in turn, it would generate a lot of foreign investment this measure was demanded by industries for the longest time.  
  • One of the prominent factors that pulled industrial growth was the labour welfare by easing these norms. It would help the industries to focus on making a profit rather than thinking that no provision of labour law is going to get breached. 
  • India is currently witnessing an economic slowdown even before the Covid-19, India was under trouble economically by introducing this measure which would lead to a generation of a lot of investment.  

Issues related to the relation of these labour laws 

Issue of social security

One of the prominent issues that raise is the issue of social security through the suspension of various labour laws, which provided social security measures to the workers, it would lead to a fall in growth of formalization all employees would be treated as informal workers because they would not get any social security benefits. 

Impact on the demand

One of the ways to revive the economy which is being said by various economists is reviving the demand through the action taken would lead to employment. The salary that they would earn would be less to the necessary skills that they possess. Due to the lower earnings, it would lead to a reduction in the demand which would hamper the economy significantly. 

The Exploitation of workers 

The government after the passage of this current ordinance will lead to an environment of exploitation. The workers would be forced to work in an inhuman environment and would be receiving a low wage rate and there would be no grievance mechanism to avoid this situation. It would become very easy for the employer to fire his employees.

Spur on economic growth

This effort is taken by the government to reduce the unemployment rate but previously various states have tried to use this technique to attract foreign investment but have failed miserably. 

Current Status

  • A PIL filed in the Allahabad High Court challenged the ordinance passed by the Uttar Pradesh Government. Allahabad High Court disposed of the petition on the ground of infructuous. 
  • A PIL has been filed in the Supreme Court by Pankaj Kumar Yadav through advocate Nirmal Kumar in the Supreme Court challenging the validity of the ordinance passed by various states. It is being filmed on the grounds of dilution of labour laws in states like Madhya Pradesh and Gujarat. The PIL mentions that workers can’t bear the ill effects of slow economic growth. It also mentions that exemptions passed by these three states defect the objects of legislation enacted to look after the welfare and safety of the labourers It is against the fundamental rights of the labourers and therefore should be quashed.
  • Another PIL has been filed in the Supreme Court by a law student through advocate Nishe Rajan contends that central laws cannot be abridged the state laws. These laws are passed under a public emergency; the current situation doesn’t qualify for a public emergency. The notifications passed by the state are arbitrary, unjust, and illegal abridges the fundamental rights. It also violates various International Covenants related to labour rights.

Presidential Assent

For any ordinance to come to effect it must receive presidential assent. In none of the ordinance till now the president has given his assent. 

There is a high probability that the Supreme Court would combine both the petitions because both the petitions deal with similar issues. 

Possible scenarios

  • Declaring the ordinance invalid and against the labour rights and the ordinance breaches the DPSP and the Fundamental Rights. 
  • The Court would dismiss the petitions on the ground that they are infructuous similar to that of the Allahabad High Court. 
  • The Supreme Court can recommend making certain changes it won’t hold; the entire ordinance unconstitutional would suggest a repeal to provisions which are against the fundamental right of the labourers.

Various labour laws existing in India

In India, there has been the passage of various labour laws some of them are follows

  • The Minimum Wages Act, 1948: According to this, wages were fixed by the central or by the state government. The major objectives of passing the act are to the exploitation of workers and fixing hours of work. 
  • Industrial Disputes, Act 1947: This provision was enacted to settle disputes and safeguard the interest of the workers. This act provides clear guidelines about trade unions, workers lay off, or retrenchment. 
  • Factories Act, 1948: This Act was introduced to promote the safety measures for the employees. It covers all factories and manufacturing units. It includes various provisions like factories should be kept clean, there should not be any disposal of the affluents, dust and fumes should be controlled, etc.  
  • Child Labour (Prohibition and Regulation) Act, 1986:  This law was introduced to avoid the participation of children in hazardous activities. This act lists down hours, holidays, and safety of the children. It also imposes a penalty on factories not complying with the provision. 
  • Sexual Harassment at workplace Act, 2013: This act was passed after the issuance of the guideline by the Supreme Court in Vishaka Judgement. This act complies with Article 21 of the Indian Constitution. 

States that have relaxed the labour laws

The matter of labour laws comes under a concurrent list where both state and centre can make changes. 

Uttar Pradesh

The cabinet of Uttar Pradesh approved temporary exemption of certain labour laws the ordinance tries to exempt all factories engaged in manufacturing processes. These provisions are suspended for 3 years. There has been a suspension of various acts few major ones are as follows:

There are various exemptions made some of them are as follows:

  • No worker should be paid less than a minimum wage rate. The wages of the workers should be within the prescribed time frame. 
  • Wages of the workers should be paid directly to their bank accounts.
  • On death or disability of an accident arising out of course should be compliance with the Employee Compensation Act, 1923. 
  • Bonded labour prohibition act, 1976 would be applicable. 
  • Child labour prohibition Act,1986 would still be in the appliance. 

Madhya Pradesh

On 6th March, Madhya Pradesh passed the labour Amendment Act. It includes various provisions for new factories certain provisions of the Industrial Disputes Act,  1947 would not apply. The government has allowed overtime of 72 hours and the period of the working shift has increased from 8 hours to 112 hours. There is no inspection of firms having less than 50 workers. 


In Rajasthan, the state government to attract the investment they have increased the daily working hours from 8 to 12 hours. They have also increased the retrenchment of lay-offs to 300 from 100. 

Punjab, Uttar Pradesh, and Haryana 

To lure the investors’, they have amended the Factories Act and increased the minimum hours of working from 12 hours every day and 72 hours a week from 8 hours and 48 hours respectively. These provisions apply for a period of three in the states.   

The constitutional validity of this action

There are various fundamental rights, and directive principles concerning the interest of the labours they rights are as follows:

Freedom to form association:

Article 19(C) of the Indian Constitution grants the right to the labourers to form an association without the imposition of any liability. Due to this action, the right to form an association of labours is being taken away. In Article 19(4), there are restrictions provided there is a need to strike a balance between rights and the bargaining power. 

Right to life

This is a fundamental right mentioned under article 21 of the Indian Constitution. In compliance with these statues, various acts have been passed like Industrial Disputes Act, 1947, Factories Act, 1948 and Minimum Wage Act, 1948 due to the relation of labour laws it suspends all those acts which leads to no fixed wages for the workers, no attention no safety measures, etc. This action of the government is against the right to a dignified life, and right to livelihood. 

Right to protection from exploitation 

It is a right that protects labours from exploitation like getting wages below the minimum wage rate, working in inhuman conditions, etc. Due to the suspension of various Minimum Wages Act, 1949, Factories Act, 1948. Would lead to an increase in the exploitation of labours. 

Under the directive principles it possesses various articles in the interest of the labours in Article 38 it grants social and economic justice, in article equitable distribution of income, in Article 41 the state shall secure citizens right to work, in Article 43 states are supposed to provide workers with a decent standard of living. Through the suspension of the rights of the labourers, it negatively impacts the job securities and a dream to have a decent standard of living. 


The ordinance passed by various states is a bold step to create employment opportunities especially when various companies that are planning to move out of China, India can be the next preferred destination. Due to the easing of the labour norms, it would generate more foreign investment and in turn help the country to become a manufacturing hub. Though various provisions abridge rights of the labours like no inspection by officers in factories where workers are less than 10, No inspection of factories for 3 months. etc. Due to these provisions, there are probabilities that there would be an increase in unlawful practice in the factories and their provision should be amended. It is necessary that the Supreme Court while passing the decision should consider these aspects. The Supreme Court in their decision to inspect should ask from the monthly report of every factory across the State. Along with these provisions, the government can also introduce various changes.

Two Shifts 

The government should encourage the factories to follow the principle of two shifts where it would hire more employees and in turn strengthen the growth of the economy. It would also increase production. Many companies willing to invest would consider India as a preferred destination.   

Developing infrastructure

It is necessary that there should be an efficient development of infrastructure without the development of proper infrastructure there are very limited chances of receiving foreign investment. There should be special economic zones, allocation of proper land facilities, transport facilities should be provided. These measures would attract foreign investors to invest money in India. 

Education the workers

One of the major issues which India is facing is the problem of unskilled labourers as compared to China who has more population than India it still has more skilled workers than India. Therefore to attract various foreign investment it should be a primary objective to provide necessary skills to the workers. 

Partner with industries

The government should with various Industries in turn impact on the GDP growth positively. 


Passing of this ordinance by various states is a significant step in generating foreign investment but this should not be the end of efforts should be taken by the central government to make India a favourable investment destination for foreign investors. It is also equally essential that for generating economic growth basic human rights of the labourers are not compromised there should be efforts in creating a balance between both. 


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