MyLawman Socio Legal Review • Inaugural Issue

Uttar Pradesh Temporary

Exemption of Certain
Labour Laws Ordinance,
2020
Divyam Verma

Published on: Nov 27, 2020

License: Creative Commons Attribution 4.0 International License (CC-BY 4.0)
MyLawman Socio Legal Review • Inaugural Issue Uttar Pradesh Temporary Exemption of Certain Labour Laws Ordinance, 2020

ABSTRACT

COVID-19 was declared as a pandemic by the Director-General of the World Health Organization on
11th March 2020. The crisis has not only had a significant and catastrophic effect on the lives of individuals
all over the world but also continues to have an apparent and profound influence on all the industries.
Labour and employees play a major role in the industries. The Indian Labour laws exist so that the workers
are treated well in such work environments and help protect their rights including timely wages, necessary
compensations and bonuses, and health care facilities, etc. But with an outbreak of this scale, even the
automated industries are at the hinge, leading them to consider cost-cutting, salary/wage reduction, or even
layoffs. At the same time, there is also a need to ensure the protection of these workmen/labourers during
such time while parallelly harmonizing the interests of the company/ industries and the employees. The
Central and State governments have already taken various measures for safeguarding the interest of both
labourers and industries. However, states like Uttar Pradesh, Madhya Pradesh, Rajasthan, and Gujarat have
brought ordinances to amend the existing labour laws particularly imposing a blanket ban on the labour
laws. However, the Uttar Pradesh government has approved of an ordinance to exempt all establishments,
factories, and businesses from the purview of all but four labour laws, for three years. In this article, the
authors will discuss the ordinance, its advantages and disadvantages, and the constitutional validity of such
ordinance will also be examined.

Keywords: COVID-19, WHO, Labour, industries, protection

THE ORDINANCE
This Ordinance was passed with a broader objective of halting certain provisions of labour laws from
their application. In simple words it is temporary exemption available to the manufacturers from
some labour laws for a period of three years. However, it is to be noticed here that exemption doesn’t
mean complete reversal of the existing labour laws but only temporary relief to the manufacturers
keeping in view the current situation i.e. Covid-19 pandemic. The move certainly was politically
motivated and claimed to be taken only to pacify the business community against a previous order
issued by the government. The order was not just heavily criticized but it also bought the business
community (i.e. employers, manufacturers, etc.) together, who stood against the government of Uttar
Pradesh as a pressure group.

BALANCE OF LAISSEZ FAIRE & SOCIAL WELFARE

Adam Smith (1723-1790) the Scottish philosopher-economist and a professor at University of Glasgow
in his book “Wealth of Nations (1976)” insisted upon a “Free Market Economy”. His proposition was
that the ‘invisible hands’ of the ‘market forces’ will bring the equilibrium in the economy and a general

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MyLawman Socio Legal Review • Inaugural Issue Uttar Pradesh Temporary Exemption of Certain Labour Laws Ordinance, 2020

well-being to the countrymen1 . His writings formed the basis of classical economics which resulted
into capitalist economy. He is also known as f ather of classical economics. His theory was adopted

in the form of liberal policies to recover from the “Great Depression” of 19292. We should remember
that in an era of LPG (liberalization, privatization and globalization) i.e. post 1991 since when the
Indian economy opened for the world it has become easier for India to benefit from the global trade.
This was only possible partially due to IMF (International Monetary Fund) recommendations and
partially by the efforts of the Indian Government which over the years since 1991 has put in lot of
efforts in making economic growth and in turn resulted in the prosperity of Indian masses in general.
Least to say business class had been since the most benefitting class from these liberal policies adopted
by the government. Keeping view of these long drawn strategies from the past and taking a complete
u-turn now by ignoring them would not just prove detrimental for the economy but would also create
immense distrust in the business community in totality. So far now we’ve remained a mixed economy
since 1991 i.e. partially socialistic and partially capitalistic. Making policies with only socialistic
approach now would mean going back to pre-1991 era wherein the interest of the business community
is ignored completely to give preference to social welfare. In our case this particular Ordinance i.e.
“Uttar Pradesh Temporary Exemption from Certain Labour Laws” seeks to balance the two clashing
interests of the capitalist class and the labour class which will be discussed in the next sections.

CONSTITUTIONALITY OFTHE ORDINANCE

Ordinance3 came on 08.05.2020 as a necessity to rectify the mistake of the past by the Uttar Pradesh
Government. Earlier before this Ordinance came into effect an order was issued by way of a
notification by the Principal Secretary (Labour) that workmen must be paid all the wages with
holidays during the lockdown period. This was not to the liking of the business owners across the
state. Through its Section-3 it provides for exemption from all labour laws for three years which will
be available to all the factories and establishments engaged in manufacturing. According to Justice V

Gopala Gowda, one of the critiques, this move by the state is unconstitutional4 as in his views it goes
against the meaning of public emergency in Section-5 of the Factories Act, 1948. He terms Covid-19 as
the most devastating pandemic but also quotes that it doesn’t qualify as public emergency within the

meaning of Section-5 of the Factories Act5. The critique is true as the meaning of Section-5 does not
cover a pandemic like Covid-19 but we should also not forget it is “The Pandemic” which has pulled the
brakes on pace of development around the globe and not just India. India’s GDP (Gross Domestic

Product) growth6 least to say has been badly hit by this pandemic to worsen off the situation.

We should also not forget that the move was welcomed by large organizations such as FICCI. This
means that the Ordinance had the positive impact on the targets it was meant for. So, do the
arguments of the critiques hold any ground? We all know that in a nation which is governed through
the Constitution it’s the responsibility of the State to not just safeguard the interests of the weaker or

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people in general but it also has to protect its geographical boundaries. With reference to this
Ordinance what the critiques overlooked was the national security. Sometimes, the national security is
not directly in threat but indirectly linked to internal issues, and economics has a major role to play in
it. We can safely say this because we know that a major chunk of government expenditure and
spending is driven by the taxes which they levy on businesses directly and indirectly. To disappoint
this sector would not only upset the economy in general but also the government spending in key
infrastructures esp. defense infrastructure. Whereas, none can deny that for government the
workmen are also an important class of citizens for the industrial works in an indirect way. But, if we
compare the taxes paid by the workmen to that of the business community then we can better
understand the actions of the government in the forms of Ordinances like this.

Therefore, there is no denying of the fact that the Ordinance is a little bit lopsided and favors the
business community a little more as compared to the labour class. It’s also justified as most of the
defense acquisitions are through the taxes. So where on one hand Section-5 of the Factories Act, 1948
gives in its explanation that public emergency is “grave emergency whereby security of India is
threatened” and it certainly leaves us to think in our imagination that the “Threat” must be direct and
tangible. However it’s not so, the constitution makers never wanted us to stick to rigid laws. If that had

been the case then there was no purpose for including Article 368 in the Constitution of India7. It is
included purposely to amend laws as per the needs and requirements of the present generation and
the generations to come. Keeping in view of the global politics, when we closely look on the actions of
the two of our notorious neighboring countries i.e. China and Pakistan, then we can easily conclude
that we have very less defense acquisition as to what it actually should be. Threat becomes more
imminent when not just one of them but both of them are adopting aggressive postures and policies
towards us. If we look at the past few months then it wouldn’t be wise for us to let our guard down. For
doing so government needs revenue which largely comes from the businesses paying taxes directly to
the government. So to say that Ordinance was unconstitutional and not in accordance with the Section-
5 of the Factories Act, 1948 would not be wise thing to do, that too without taking into account the
broader implications. While looking into the meaning of the “Explanation” given under Section-5 if we
infer to its direct meaning then we would certainly be limiting ourselves to a parochial and a narrow
approach towards it, which will limit us to achieve the larger and greater goal of nation development.
A nation sometimes faces direct threats and the other times it faces indirect (causative) threats.
Ignoring either of them would go against the principles of the Constitution.

FEATURES OF THE ORDINANCE

The Ordinance u/s. 3(a) provides for the electronic entry of the attendance on the attendance register
and in a manner as prescribed in Section-62 of the Factories Act, 1948. It should contain the name
together with the details of all the workers employed in a factory/establishment. In the very next

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clause i.e. u/s 3(b) it has mandated that all the workers employed shall not be paid less than the
minimum wage prescribed by the UP Government. Further, through S. 3(c) it has mandated for the
payment of wages to be done within the time limits prescribed u/s. 5 of the Payment of Wages Act,
1936. Under Section-5 of the Payment of Wages Act, 1936 it has been laid that the wages must be paid

to the workmen before 7th days after the expiry of the wage period8 e.g. if the wage period is from

March 1st to March 30th then the wage must be paid before 7th of April. This time has been fixed for
the payment of wages in the case of establishments with less than one thousand workmen. In the
establishments where the number of workmen is more than one thousand, the time limit has been

fixed to be before the 10th day after the expiry of the wage period. So, we can see that provisions
which are based on humanitarian principles are still in application with respect to the labour laws.
Ordinance u/s. 3(d) seeks for the payment to be made only to the bank accounts of the workmen. This
provision is ambiguous as in many cases the payments are made in cash. With Section-3(e), the
Ordinance ensures the safety and security of the workmen as it is another condition which is a
prerequisite for the application of the Ordinance. It makes sure that the provisions of the Factories
Act, 1948 and Building and Other Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996 remain applicable.

The Ordinance has provisions which tried to take as much humanitarian principles into account as it
could. The next is Section-3(f), which has fixed the time limit per day at 11 hours/day for which
workmen can be made to work. The spread over of work time has been fixed at 12 hours which mean
that they cannot be made to work for more than 12 hours in a day. Next in Section-3(g) it provides that
the Employees Compensation Act, 1923 shall remain into effect. It therefore means that any death or
disability being caused during the course of employment or by any accident arising out of it shall be
liable to be compensated in accordance with Employees Compensation Act, 1923. The provisions
relating to the employment of women and children will continue to remain applicable as has been
stated u/s. 3(h) of the Ordinance. Lastly, the provisions of the most important legislation i.e. Bonded

Labour System (Abolition) Act, 19969 has also been included as an exception to the exemptions of
the Ordinance. These are the most important provision on the legislation to protect the laborers’ from
the exploitation by the industrialist. Exemption from any of the provisions would have been akin to
touching a hot coal as it could have led to a lot of political turmoil for the already troubled government
in the times of Covid-19. The government cautiously included it in the exceptions from the exemptions
and it was the wisest thing it could do wherein lot of unwelcoming critic had already been drawn for
its previous orders issued earlier by the Principal Secretary (Labour).

WAY FORWARD
The mistakes done in this case i.e. issuance of a flawed order which was made hurriedly by the
executive machinery of the State of Uttar Pradesh should be avoided as it sometimes leaves no room

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for any further correction immediately. It almost took two months for the government to come up with
a working Ordinance and nullify its previous order. All this gave a bitter experience to the State
government for the future and hopefully they do not repeat such mistakes wherein the executive
makes lopsided orders with the potential of badly impacting a section of the society. It cannot be
denied that the government took a socialistic stance initially but it soon realized that it had been
projecting itself as anti-capitalist. This surely isn’t good for a growing economy esp. a tiger economy.
We as Indians cannot afford any impediment in the path of our growth and development at this stage
where we’re still hoping for a larger FDI (Foreign Direct Investment) inflow. Projecting any wrong
image of ourselves in front of the outer world would only cost us heavily as it would not just have
direct effect on FDI inflows but also the domestic production. As a developing economy we must ensure
a conducive environment for the businesses to grow and inflow of businesses from outside of the
country. Our governments through their executive machinery should make sure that they use policies
which are best in the interest of the economic growth and social well-being of its citizens. Although
corrected within two times as a knee jerk reaction, it had merely created an image of the UP
Government as more socialistic which was not to the liking of the capitalist class. A balanced approach
is always desired in a mixed economy like India and striking a balance between the interests of
different sections of the society is the key for a successful democracy to prosper.

Footnotes
. Ramesh Singh, Indian Economy 1.5-1.6 (7h ed. 2015). ↩
. Christina D. Romer, Great Depression, Britannica, https://www.britannica.com/event/Great-
Depression. ↩
. Apoorva Mandhani, UP suspends labour laws: What stays, what goes and why it is a step in right
direction, The Print (May. 8, 2020, 4:59 PM), https://theprint.in/india/governance/up-suspends-
labour-laws-what-stays-what-goes-and-why-it-is-a-step-in-right-direction/417186/. ↩
. V Gopala Gowda J, Dilution of labour laws is unconstitutional, The New Indian Express (June 20,
2020, 04:00 AM), https://www.newindianexpress.com/opinions/2020/jun/20/dilution-of-labour-
laws-is-unconstitutional-2158931.html. ↩
. The Factories Act, 1948, No. 60, Acts of Parliament, 1948 (India). ↩
. The World Bank & OECD. ↩
. INDIA CONST. art. 368, cl.1. ↩
. Payment Of Wages Act, 1936, No. 4, Acts of Parliament, 1936 (India). ↩

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. Bonded Labour System (Abolition) Act, 1976, No. 19, Acts of Parliament, 1976 (India). ↩