Rajasthan seeks Presidents nod for key labour reforms

Written by Raj Kumar Ray | New Delhi | Updated: Aug 16 2014, 08:10am hrs
While the Centre has started a tripartite dialogue with trade unions and employers on labour reforms and is considering amendments in the Apprentices Act and Factories Act, Rajasthan has gone a step further. The state has sought the President's assent on key labour reform Bills, relying on Article 254(2) of the Constitution regarding legislative bid on items in the concurrent list.

What would pave the way for Rajasthan is the fact that the state is ruled by the BJP which is also in power at the Centre and so, the Union government, itself keen on labour reforms, won't object to the President giving assent to the state law. "It (the amendments) has gone for presidential assent. It's the normal process," Rajasthan labour secretary Rajat Kumar Mishra told FE on telephone.

The labour reforms, being planned by Rajasthan, among other things, include amendments to the Industrial Disputes Act to raise the threshold workforce limit from 100 to 300 workers for a company to compulsorily seek government approval to slash jobs or close a unit. "Labour being part of the concurrent list, a state can make amendments in labour laws provided it gets presidential assent. It should not be too much in variance of the (central) Act," said Sudha Pillai, former labour secretary and member secretary of the Planning Commission.

If Rajasthan gets the presidential assent, it may trigger a competition among states to ease labour laws to woo investment in manufacturing. The rule change assumes importance in the wake of the government's ambitious plan to ramp up manufacturing capacity through initiatives such as industrial corridors and SEZs to accelerate economic growth to over 8-9% in coming years.

Article 254(2) states that where a law made by the Legislature of a State with respect to one of matters enumerated in the concurrent list contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State.

There is a caveat: nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter, including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.

Although all 44 labour legislations are enacted by the Centre, 16 can be enforced both by the Centre and states, including the Industrial Disputes Act, Contract Labour Act, Apprentices Act and Minimum Wages Act. Another 16 laws are enforced specifically by states, including the Factories Act, Trade Unions Act, Employment Exchange Act and Unorganised Workers' Social Security Act. Only 12 laws are enforced exclusively by the Centre, including the EPF Act, ESI Act and Mines Act.

The Rajasthan assembly recently approved amendments in Industrial Disputes Act, Factories Act, Apprentices Act and Contract Labour (Regulation and Abolition) Act.

Minister of State Vishnu Deo Sai said in a written reply to the Lok Sabha recently that "tripartite consultations are being held for amendment in Industrial Disputes Act of 1947 in regard to NIMZ.

He said this to a query on whether the government has any proposal to amend the restrictive labour law for easier retrenchment of workers in NIMZs. He did not give details of what changes are being contemplated.

The states plan

* The reforms being planned by Rajasthan include amendments to the Industrial Disputes Act to raise the threshold workforce limit from 100 to 300 workers for a company to compulsorily seek government approval to slash jobs or close a unit

* If Rajasthan gets the assent, it may trigger competition among states to ease labour laws to draw investment in manufacturing

* What would pave the way for Rajasthan is the fact that the state is ruled by the BJP which is also in power at the Centre and so, the Union government, itself keen on labour reforms, won't object to the President giving assent to the state law

* The Rajasthan assembly recently approved amendments in Industrial Disputes Act, Factories Act, Apprentices Act and Contract Labour (Regulation and Abolition) Act