January 17, 2022

Labour Law reforms in India – An attempt at Labour Exploitation?


As the nation is struggling to recover from the ongoing COVID-19 pandemic and the economy is being disrupted due to the lockdown prevailing in the country, thousands of businesses, industries and other economic activities have been impacted severely. Furthermore, the workers engaged in it have been hit hard due to this economic fallout.

Meanwhile, the Uttar Pradesh government has approved an ordinance namely ‘Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020’ which exempts all businesses, factories from the purview of almost all labour laws for the next coming three years followed by the Madhya Pradesh government which took a similar decision. Their foremost motive behind introducing the ordinances is to give flexibility to the industry and boost the investment in the state. However, on the other hand, this has created indignation among the trade unions as it is believed that the ordinance will result in the contravention of most important rights of the labourers, which is unjustified.

The UP and MP government ordinance regarding labour laws

The BJP ruled states – Uttar Pradesh and Madhya Pradesh have passed an ordinance which has frozen major labour laws except for the ones which are necessarily required by the workers. [i]

The ordinance passed by the Uttar Pradesh government exempts establishments from the scope of most of the labour laws for the next three years. The laws that will still prevail are – The Building and Other Construction Workers Act, Section 5 of Payment of Wages Act, Workmen Compensation Act and Bonded Labour Act.[ii]

Similarly, Madhya Pradesh also made specific changes to labour laws. It has amended certain acts and exempted 11 industries including textile, steel and public motor transport from Madhya Pradesh Industrial Relations Act, 1961. Moreover, it has disabled specific provisions of the Industrial Dispute Act, 1947 for the new manufacturing units, which will be set up in the next 1,000 days. Such companies will not be required to seek permission from the government to suspend the workers. However, it may need to seek permission in case of removal from the job.

Are the ordinances issued by the UP and MP government justified?

[iii]The Delhi-based labour lawyer Sanjay Ghose calls the UP ordinance as a disregard of workers’ rights. According to him our population, including the formal sector consist of several lakh workers who will be profoundly affected by this ordinance. He further added that this ordinance will end up in terminating all the services of permanent employees as they will be replaced by contract workers, and hence, this legislation is completely atrocious.

According to Urvi Mohan, another Delhi-based lawyer, the act has taken away all the basic rights of labours that were initially protected under the labour laws. Thus, this is an injustice done on their part as they could earlier enjoy the benefits provided under the labour laws but now will be unable to do so.

Contrary to this, major economists feel that the archaic labour laws have been an issue from a very long time and COVID-19 crisis is a wonderful opportunity to make radical changes to it which will benefit the nation in its long run. Moreover, the labour law reforms can help in enhancing investment attractiveness and will also help the industries in adapting to the changing scenario due to the COVID pandemic. Thus, many of them took a stand for the action taken by both the state governments as they took the lead in the labour law reforms.

If comparing both the ordinances that of Madhya Pradesh and Uttar Pradesh government, the former has a more balanced approach towards the labour law reforms. It has amended only some industrial acts for incentivising new factories and tried not to compromise with the rights of the labours.

Are the reforms taking place at the cost of labour rights?

[iv]The biggest concern that has been expressed due to the approval of these state ordinances is the exploitation of labours. Since the labour laws are temporarily frozen, there are high chances of exploitation of labour rights. The firms that used to pay low wages and salaries to their contract labours may continue to do so and thus; the workers will end up in being exploited due to no labour laws being in effect.

At this moment, when the rate of unemployment has increased, and the economy has been disrupted; abolition of the labour laws is an unnecessary stand. Furthermore, the labour reforms have taken place at the cost of labour’s interest. One of the changed laws allows the industries to increase the working hours up to 50 per cent without paying them for their extra labour. As the labours are already suffering from financial problems due to the COVID -19 lockdown, especially the low-wage earning labours, increase in their working hours and non-payment of the overtime will result into gross violation of their rights.

The exploitation of workers by the companies for their gains has been taken place from decades as of now. Thus, this relaxation in-laws may give a chance to the companies to continue doing the same.

Legal Aspect

As the subject of labour laws falls under the concurrent list, the government when, passed the ordinance has overridden some of the Central laws and hence required President’s assent or Central government’s assent. [v]As per our Indian Constitution, both Centre and State are permitted to frame laws through issuance of the ordinance when the legislature is not in session. When the next session of the legislature begins, it needs to ratify the law within the span of six weeks. The UP and MP government have used this procedure.


Though the ordinance issued by the state governments is legal in the eyes of the law yet, it may not be appropriate. The purpose behind the issuance of these ordinances can be rejuvenating the economy and increasing employment opportunities with a prime focus on ease of doing business but, some provisions which are against the interests and rights of employees cannot be ignored. These provisions led to sharp criticism by the trade unions and other employee organisations who expressed their concern regarding the dilution of their rights because of the reforms in the law. Now the question arises that whether these reforms can play a key role in revivifying the economy or will prove out to be an attempt to curtail the rights of the workers.


[i] Zia Haq, Saubhadra Chatterji, Smriti Kak Ramachandran, Some states put freeze on labour laws to get business going (May. 9,2020), https://www.hindustantimes.com/india-news/some-states-freeze-labour-laws/story-6JMELEPdIugsHt8YjQT5vN.html.

[ii] Sonal Khetarpal, Coronavirus Crisis: Why MP’s labour law changes are more balanced than UP, (May 13, 2020, 10:44 AM), https://www.businesstoday.in/current/economy-politics/coronavirus-crisis-why-labour-law-changes-by-mp-are-more-balanced-than-up/story/403669.html

[iii] Apoorva Mandhani, UP suspends labour laws: what stays, what goes and why ‘it is a step in right direction’, (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/

[iv] Why some labour reforms may lead to slave-like conditions in workplaces, (May 13,2020, 5:20 AM), https://www.financialexpress.com/opinion/why-some-labour-reforms-may-lead-to-slave-like-conditions-in-workplaces/1957008/

[v] M.R Madhavan, Legal but not appropriate, (May 12, 2020, 12:15 A.M), https://www.thehindu.com/opinion/op-ed/legal-but-not-appropriate/article31560223.ece

Author Details: Anshika Gubrele (Bharati Vidyapeeth, New Law College, Pune)

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