Reading time : 10 minutes


The employer-employee relationship depends on the way that a laborer consents to give her work/labour to the employer as a byproduct of which the employer consents to repay her with cash/benefits/different contemplations. Such cash/advantage/other thought is alluded to as Wages. The Industrial Disputes Act stipulates that wages means any remuneration paid to the workman by the employer, for the work she performs for the employer.[1]It includes benefits and allowances such as dearness allowance or the value of any housing or the supply of light, water, electricity etc. It does not, however, include bonuses, gratuity or any contribution to the pension or provident fund.[2]

The rule of ‘No Work No Compensation’ is cherished in the connection between an employer and employee. Where an employee refuses to work as a result of a strike or absence from work or various other reasons, the employer has no obligation to pay any wages.[3]

The rule of ‘No Work No Compensation’ is revered in the connection between an employer and employee.[4] Absence from duty means the absence of an employed person from the place or places at which she is required to work as per the terms of employment for the whole or any part of the period during which she is supposed to work.[5]Such deduction of wage, however, must in no instance be disproportionate to the period of absence from work.[6]

Absence from work is not limited to the physical presence of the employee in the place of work. A refusal to work in pursuance of a stay in strike or for any other cause which is not reasonable would make the employee who refuses liable for deduction of a proportional amount from her wages.[7] The guideline of ‘no work no compensation’ is of most extreme pertinence as to the circumstance of strike. In this paper, the researcher  plans to investigate the different sorts of strikes and the pertinence of the previously mentioned guideline to such circumstances. Advancement of the doctrine.

Right to strike

The presence of a right to strike has involved an extraordinary question. Huge jurisprudence has been made on the issue coming full circle with the risky judgment in the T.K. Rangarajan case.8

Statutory Right

Before digging into the judicial decisions on the issue, it is relevant to comprehend the statutory arrangements that are included. The Announcement of Articles and Reasons of the Mechanical Debates Act itself gives us a thought of the aim of the designers with respect to strike. The announcement peruses:

“The power to refer disputes to Industrial Tribunals and enforce their awards is an essential corollary to the obligation that lies on the Government to secure conclusive determination of the disputes with a view to redressing the legitimate grievances of the parties thereto, such obligation arising from the imposition of restraints on the rights of strike and lock-out, which must remain inviolate, except where considerations of public interest override such right”.[8]

Right to strike as a method of review of authentic complaints of the laborers against the employers is perceived under the plan of the ID Demonstration. Besides, s.24 separated among legitimate and unlawful strikes (those which don’t meet the arrangements set down in the ID Demonstration.) Sections 22,23 and 24 of the Demonstration suggest a right to strike for laborers and the associative right of lockout for the employer. This was explained on by Equity Gajendragadkar who said the weapon of strike is accessible to the laborer as is the weapon of the lockout to the employer.

Other than the ID Demonstration, the Worker’s organizations Demonstration likewise perceives the right to strike. Sections 18 (xiii) and 19 (xiv) of the Act confer immunity upon trade unions on strike from civil liability.

Fundamental and Legal Right

The working class has earned the right to strike after a lengthy and arduous struggle.[9] Strikes are integral to the process of bargaining in an industry.[10]A worker has few other means of defending her wage other than seeking an increase in money wage. If a capitalist does not grant the requested increase, she can be brought to the negotiating table by workers going on strike. The same applies to government servants as well but it is not merely the authorities but also the general public which suffers a loss. This places considerable pressure on the relevant to authority to negotiate.[11]

The right to strike shares deep links with the practice of collective bargaining.[12]  The Supreme Court has held that the ability of trade unions to bargain with the employers will be substantially affected if they are unable to demonstrate by adopting methods such as strike, go-slow or sit down strike.[13]

As far as the right to strike being a fundamental right, the Supreme Court has held that even a liberal interpretation of Article 19(1)(c) cannot lead to the conclusion that it is a fundamental right.[14]

These issues were finally decided by the Supreme Court in its decision in the T.K Rangarajan Case.[15]The Court dealt with the contention, raised in the All India Bank Employees’ Association case[16],that the freedom to form an association under Article 19(1)(c) of the Constitution carried with it the right to strike by saying that interpreting the constitution in such a manner would lead to a never ending circle where rights concomitant to concomitant rights would also have to recognized.

While it is acceptable that the right to strike cannot be seen as a fundamental right, the manner in which the Court dealt with the issue of there being a legal right to strike was shocking. The Court categorically held that Government Employees have no “legal, moral or equitable right” to go on strike. This decision seems to go against both statutory provisions as well as previously decided cases. Furthermore, the bench in this case was smaller than the 3 Judge Bench in the Gujarat Steel Tubes case and could not overrule that decision.

Strike and ‘no work no pay’

The remuneration or salary earned by a worker depends on the performance of work in accordance with the contract of employment. No part of the remuneration can be claimed unless the service is completely performed in a situation where the contract provides for payment on the completion of a period of service or a piece of work. The employer may deduct the salary of the entire day if the worker absents even for a period of a few hours.[17]

In the event that the employee absents from work without admirable motivation, she submits a break of the terms of agreement. The legitimate position is that an employee relinquishes compensation when she doesn’t release her obligation as in the circumstance of a strike.[18]

A strike expects laborers to stop accomplishing work or work in a moderate way to decrease creation. The inquiry that will be addressed is whether the wages of laborers can be deducted for the periods when they were on strike. It is relevant in this setting to comprehend that strikes might be lawful or unlawful and defended or unjustified.[19]

The subject of whether the wages of laborers could be deducted for the time of strike originally came up in the Churakulam Tea Estate[20] case. The case included a contest with respect to non-installment of reward for an extensive timeframe. After the disappointment of assuagement procedures, almost 27 laborers struck work. The administration from that point declined to pay wages for the time of the strike. The issue was alluded to the Industrial Tribunal which held that in the conditions of the strike was both lawful and defended and guided the administration to pay wages for the day of the strike.

The judgement delivered in the Crompton Greaves[21]case. The Calcutta branch of Crompton Greaves was planning on laying off a considerable number of workers as a result of economic recession. In order to negotiate a middle path, a few meetings were held between both the parties. However, the differences remained and the Management chose to retrench 93 workers. The workers saw this as a serious step and resorted to strike after giving required notice to the Management and Labour Commissioner.[22]

The Court stated the well settled principle of law that in order to be entitled to wages for the period of strike, the strike must be both legal and justified and that a strike cannot be said to be unjustified unless the reasons for it are unreasonable or perverse.[23] The Court in the long run concurred with the choice of the Tribunal in the present case and allowed wages to the laborers for an impressive segment of the time of the strike. Both these cases mirror the position that up to a strike is both legitimate and advocated, the guideline of no work no compensation can’t be applied and laborers are qualified for wages for the previously mentioned period.

However, in the T.S. Kelawala[24] case, the Supreme Court observed that in a situation where the contract, standing orders or service rules are silent, the management can deduct wages for the period of absence when such absence is not disputed and is the result of a concerted action on part of the workers.[25]

Subsequently, while holding that laborers apparently reserve an option to strike, the Court expressed that no wages could be paid for the time of the strike regardless of whether the strike was lawful or illicit. This declaration made a contention with the two choice talked about already.

On the issue of a workman’s privilege to wages during a strike, paying little heed to its lawfulness, the Preeminent Court was confronted with a contention in itself – Churakulam and Crompton Greaves underlined on the legitimateness of the strike by saying that just during lawful and legitimized strikes will a worker be qualified for wages while the instance of Kelawala opined that a laborer isn’t qualified for wages during a strike independent of it being lawful or illicit.

To comprehend this division, the Constitution Seat of the SC took up the instance of Umesh Nayak . Here, the Seat separated the different sides to explicitly bring up that Kelawala never tended to the issue of privilege to wages during an advocated strike since it didn’t address the issue of whether the strike being referred to (for the situation) was defended or not. It further separated the different sides by worrying on how the two instances of Chitrakulam and Crompton Greaves were not refered to in Kelawala which prompts the end that no clear clash emerges between them – and consequently, these two cases shouldn’t\’t have been considered in Kelwala.

It explained the substitute the two choices of Churakulam and Greaves – that regardless of whether the strike is legitimate however is unjustified, the laborer would not be qualified for her wages; and if the strike is unlawful yet supported, she would in any case not be entitled subsequently worrying on the requirement for a lawful and advocated strike.

In realities relating to Umesh Nayak, the SC followed this equivalent line of thinking – it requested a legitimate and advocated strike for the laborer to interest for her wages (during the time of the strike). On the meaningful inquiry of whether a strike is lawful or supported, the Preeminent Court arranged it to be inquiries of realities that must be chosen by the modern adjudicator dependent on the proof she gets. However, the Court gave its supposition on the best way to distinguish legitimateness and reasonability of a strike – a strike is legal if it is carried out in accordance with the Industrial Disputes Act and a strike is justified based on examining factors which pushed for the strike such as the nature of demands sought, its causes and urgency, conditions of service, reasons for avoiding the mechanisms under the Act et al.

Conclusions and Recommendations

All in all it must be said that the rights of laborers have not been maintained by the courts as they ought to have.

Initially, the right to strike is an all around perceived right. Article 8 of the Global Agreement on Financial Social and Social Rights (ICESCR) perceives a right to strike. India being an individual from the Pledge will undoubtedly give such a right to its laborers. While statutory arrangements, for example, those contained in the ID Demonstration or the Worker’s guilds Demonstration give some acknowledgment to the right, ongoing judicial decision have a struck a sledge blow. The previous decisions, for example, Gujarat Steels[26] were in consonance with the existence of the right. However, the Supreme Court’s decision in T.K. Rangarajan[27] has virtually negated the existence of the right for employees. In this way, as for the right to strike, it is suggested that the choice in the Rangarajan case be thought of. An enactment or revision to existing Acts to explicitly perceive the right to strike would go far in securing the interests of laborers. Given that the level of influence is supportive of the Administration, it is important to ensure weapons, for example, a strike which the laborer may use to have her requests heard and followed up on.

Concerning the rule of no work no compensation, it is presented that the judgment in the T.S. Kelawala[28] is erroneous in so far as it does not consider the decisions in Crompton Greaves[29] and Churakulam Tea Estate[30]. Laborers must be qualified for wages for strikes which are defended and legitimate. Legitimateness includes following the method set down in different arrangements while support requires the nonattendance of unreasonable reasons. Both must be learned on a case to case premise. Consequently, the choice of the Incomparable Court in the Syndicate Bank[31]case is accurate and embraces the field as far as the principle of “no work no pay” in thought.

[1] s. 2(rr), Industrial Disputes Act, 1947.

[2] Ibid.

[3] C. Krishnamurthi, Dies Non (no Work No Pay) in Banking Industry, Serial Publications, 01 Jan 2009.

[4] s. 7(2)(b), Payment of Wages Act, 1936.

[5] s. 9(1), Payment of Wages Act, 1936.

[6] s. 9(2), Payment of Wages Act, 1936.

[7] Explanation to s. 9, Payment of Wages Act, 1936

[8] Statement of Objects and Reasons, Industrial Disputes Act, 1947.

[9] Bank of India v. T.S. Kelawala, 1990 (4) SCC 744.

[10] Supra, note 14.

[11] R. J. Kochar. Right to Strike: Has Supreme Court Moved Backward? Economic and Political Weekly 25.29 (1990): 1564-566.

[12] Gujarat Steel Tubes v. Its Mazdoor Sabha, AIR 1980 SC 1896

[13] B.R. Singh v. Union of India,[1990] Lab I.C. 389 (396) (S.C.)

[14] Kameshwar Prasad v. State of Bihar, (1962) Supp 3 SCR 369

[15] Supra, note 11.

[16] All India Bank Employees ‘Association v. National Industrial Tribunal, AIR 1962 SC 171.

[17] Dharam Singh Rajput v. Bank of India, [1979]12 LIC 1079.

[18] Vikram Thamskar v. Steel Authority of India. 1982 II LLN 319 (M.P.)

[19] Panyam Cements & Minerals Industries v. Deccan Wire Employees Association, 1998 II CLR 923 (Karn.H.C.).

[20] Management of Churakulam Tea Estate v. Its Workmen and Anr, AIR 1969 SC 998

[21] Crompton Greaves Ltd. v. Its Workmen, AIR 1978 SC 1489.

[22] Id, 2.

[23] Id, 3.

[24] Supra, note 17.

[25] Id, 11.

[26] Supra, note 20.

[27] Supra, note 11.

[28] Supra, note 17.

[29] Supra, note 33.

[30] Supra, note 28.

[31] Supra, note 39.

Author: Vaishanavi Krupakaran

Editor: Kanishka VaishSenior Editor, LexLife India.


Analysis: Labour law changes in India

Reading time: 8-10 minutes.

The International Labour Organization (ILO), answering to the extensive alterations in labour laws proposed by state governments, has asked the authorities to confirm that all such moderations adhere to global standards and are effected after suitable discussion. The ILO added that labour laws safeguard the welfare of both owners and employees and called for “united hard work and harmony between the government, employers and employees”. “They (labour laws) are a vital way to spread social justice and endorse decent work for all,” The ILO instructed that any strategy response should confirm regaining through economic and pecuniary drive actions, backing to innovativeness, careers and income through social security, preservation and economic help to companies along with confirming that workers’ requirements be protected by consolidating   work-related safety and health measures. It further said the most important element was “to reinforce the social discourse, collective negotiation, labour relation institutions and procedure for effecting resolutions”.


Certain states in India are heading towards relaxing labour laws in order to regenerate the economy from the effect of Covid-19. Such modifications ought to derive from tripartite consultation involving the government, the workers’ and the employers’ association and be compatible with the international labour standards, including the Fundamental Principles and Rights at Work (FPRW). These reforms are being brought about to generate economic activity in the respective states. It can bring enhancement in application of labour relations act and basic conditions of employment act and also can ensure active position of laws in the changing labour market atmosphere in this pandemic situation.

Changes made in India

The Uttar Pradesh Temporarily Exempted Certain Labor Laws Ordinance, 2020 suspends the activity of all work laws in the state for the following three years, except for the Bonded Labor System (Abolition) Act 1976, Section 5 of the Payment of Wages Act 1936 (which identifies with the convenient installment of wages) and the Employees Compensation Act 1923. Provisions of the Factories Act and the Building and Other Construction Workers Act 1996, ascertaining the wellbeing and security of laborers have been reserved. Laws identifying with ladies and kids have likewise been held yet the mandate doesn’t indicate which these are.

Madhya Pradesh has done well to let shops remain open from 6 am to 12 PM. If the shops remain open longer then it is the best way to forestall swarming of customers. A 12-hour move is brutal, and it may be more practical for administrations to stay away from expensive extra time installments on a normal premise and send laborers in two movements. It had made comprehensive changes in significant acts including Industrial Dispute Act, and Factories Act, Migrant workers and diminished the administrative work for organizations to assist them with recouping quicker from the Covid-19 emergency and restart their organizations.

According to the announcement by the state government on May 5, as many as 11 sets of industries will be discharged from the Madhya Pradesh Industrial Relations (MPIR) Act of 1961. This includes textile, leather, cement, iron and steel, electrical goods, sugar, electricity, public motor transport, engineering including manufacture of motor vehicles, among others.

The state government has declared that “the legitimacy of license will be for the period as applied for” under the Contract Labor (Regulation and Abolition) (Madhya Pradesh) Rules, 1973. At this moment, contractual workers, who assist organizations with getting contract laborers, need to acquire numerous licenses for various firms inside a state. This license is pertinent for a time of one year and contractual workers need to pay a charge without fail, as per the quantity of laborers utilized. While companies will have the option to take a license for recruiting contract laborers for a more extended length, acknowledgment of trade union for aggregate bartering will not, at this point be feasible for key mechanical segments, including vehicle and materials, in Madhya Pradesh.

The Madhya Pradesh government has handicapped the appropriateness of a maximum part of provisions of the Industrial Disputes Act, 1947 for new assembling units that will come up in the following 1,000 days. Such companies will never again be required to look for consent of the administration to lay-off laborers, yet will at present be required to do as such for conservation and giving conservation pay to laborers, failure which will draw in punishment.

The Gujarat government reported that it will permit new modern units to not agree to labour laws, aside from three fundamental acts, for 1,200 days. The state chief minister Vijay Rupani declared that his government has additionally chosen to make the endorsement procedure for setting up new enterprises totally on the web and they will be designated land inside seven days and all fundamental government endorsement inside 15 days.

Reasoning behind the changes

The current change must be viewed as a sincere legislative exertion to recoup the economy and inhale some life into the creature spirits that have collapsed. Be that as it may, a few provisos are all together. Labour is a concurrent subject, where the Center and the states can make laws. Where there is any clash between a central law and a state law on a similar subject, the central law will prevail. On the off chance that a portion of the laws tried to be suspended have a central counterpart, the suspension is available to lawful test. While Uttar Pradesh has held remuneration for inability caused at work, the Vizag gas spill shows word related wellbeing streams no trade off. It is conceivable to produce greater work in a market with less work guidelines. In any case, as the experience of states that have loosened up labour laws in the past proposes, destroying specialist insurance laws have neglected to draw in ventures and increment business, while not causing any expansion in laborer misuse or disintegration of working conditions.

Critical analysis

It is proverbial that these corrections must be in consonance with the fundamental rights ensured to work, as additionally the Directive Principles of State Policy which order the state to assist the interests of labour in its approaches. Any lawful changes will definitely be tested in court and should fulfill established guidelines to endure such a test.

One part of the emergency is that the work net-bringing in states have seen a work lack, driving up compensation. This incited a few states to find a way to limit migrant labour from going back home. Article 19(1)(d) of the Constitution ensures the option to move openly all through the region of India. In PUDR Vs. Union of India (1982), the Supreme Court held that laws securing provisional work and between state vagrant laborers were expected to guarantee essential human nobility; damaging these laws would disregard the privilege to life under Article 21. Further, the Court held that “constrained work”, precluded by Article 23, included physical power as well as the danger of detainment or fine. Ravi Srivastava, Director, Center for Employment Studies at the Institute of Human Development, said business will not increment, on account of a few reasons. In the first place, there is as of now an excessive amount of unused limit.

Firms are shaving off salaries up to 40% and making work cuts. The general interest has fallen. Kaur said that on the off chance that the goal was to guarantee more individuals have employments, at that point states ought not have expanded the move length from 8 hours to 12 hours. They ought to have permitted two movements of 8-hours each rather, she stated, with the goal that more individuals can find a new line of work.


The ILO’s declaration on the Fundamental Principles and Rights at Work was embraced by India in 1998. All individuals of the ILO have to “respect and promote” the “freedom of association and the effective recognition of the right to collective bargaining, the elimination of forced or compulsory labour, the abolition of child labour and the elimination of discrimination in respect of employment and occupation”.

Rather than making unfair conditions for the laborers, the legislature ought to have — as most governments have done over the world — banded together with the business and distributed 3% or 5% of the GDP towards sharing the wage trouble and guaranteeing the safety of the workers “provided that Covid hits them, the entire nation would be sunk”. Besides, past work guidelines, firms face a ton of different obstacles like the lack of talented workers and the powerless requirement of agreements and so on Central trade unions in India had named states’ progressions a “barbaric wrongdoing”, which they said was in “net infringement” of the ILO’s shows, remembering that for holding tripartite discoursed. The associations said that they were “genuinely” thinking about lodging an objection with the ILO. Central trade unions have said the ILO has the ability to force endorses on a nation for infringement of its shows.

Author: Shreya Chatterjee from Adamas University.

Editor: Anmol Mathur from Symbiosis Law School, NOIDA.

Labour law: Working hours in a factory

Madhya Pradesh declared Thursday, in the midst of the battle against Covid-19, a slew of amendments in labour laws to allow workers more freedom to work. Which include improving contract labour standards, requiring checks by third parties, encouraging workers to work up to 72 hours a week if they are willing and paid overtime, and implementing compounding clauses to eliminate workplace disputes.

Chief Minister Shivraj Singh Chouhan said by establishing a positive investment climate, the reforms will attract new industries; build employment for youth and the unemployed. He said that MP was the first state to initiate this change by amending laws within its framework.

Registration and licensing for, amongst others, businesses, shops and bidi manufacturers will now be issued in just one day against the current 30-day requirement. The state has already informed amendments to the Public Services Delivery Assurance Act that will impose a fine on the registration and licensing authority responsible for these services. The claimant receives the fine as compensation.

Factory license will be required from now on to be renewed once in ten years instead of annual renewal. Under the Contract Labour Act, the state will now give a license rather than a calendar year for the entire duration of the contract.

Contractors with less than 20 employees are not expected to register for registration. The state has suggested increasing the number of employees to 50 to offer more flexibility to the contractors. Enrolment will also be given online. It sends the Centre a request to make punishable offences compoundable under the Contract Labour Act.

With the exception of the clause dealing with workers ‘ safety, the MP government has for the next three months given relaxation in all provisions of the Factory Act. Chouhan said the state has done what it could within its domain, but it wants to extend similar relaxations for the next 1,000 days for which it has submitted a proposal to the Centre.

The state has relaxed all other laws, with the exception of Section 25 of the Industrial Disputes Act, to allow business owners to hire employees as they please. Industries with less than 100 employees were exempted from the provisions of the MP Industrial Employment Act (Permanent Order).

MSMEs will now be able to employ labourers to maximize productivity according to their requirements. The Industrial Employment Act which applied to establishments with more than 50 employees will now apply if the number of employees is 100 or more.

Units operating on power currently require registration under the Factory Act, if they hire 10 employees. The state has given the Centre a plan to raise the number of employees to 50 The state has argued that it would exempt these units from the Factory Act provisions, and they will be able to raise production to their maximum potential. Industries which are not operating on electricity must also be registered if they hire 20 employees. The state has requested that the cap be withdrawn from the Centre.

The state has already released a notice requiring shops and restaurants to stay open between 6 a.m. and 12 p.m. on the grounds that it would generate more employment on the one side and on the other it will avoid crowding.

Citing the conditions produced by the COVID 19 pandemic, the state has allowed industries to increase the shifts of employees from eight hours to 12. Employees will be able to work up to 72 hours a week if they are willing to do so, and they will be paid more for putting in more effort.

Specific labour laws allow industry to hold 61 registers and to file 13 returns. Now they will have to hold just one register and file one return, and consider self-certification as appropriate.

Significance of these amendments

The implementation of economic change needs a recession and Covid is an excellent opportunity to make our economy competitive internationally in the long term. UP and MP have made their states more attractive to investors and have sent other states a strong signal to follow.

The archaic labour laws of India are a key reason why it is not a successful exporting nation. Sensitive countries, including those in Scandinavia, provide employers with the right to recruit and lay-off workers based on market dynamism. We support employees who lose jobs through a well-designed unemployment compensation and retraining safety net.

India’s labour laws do the opposite — they protect jobs, not employees, and don’t provide flexibility for employers in a downturn to lay off staff. Indian businesses thus stop recruiting permanent staff and 90% of Indian jobs ended up in the informal sector without a safety net.

It is one of the reasons why the manufacturing sector in India has not become a mass-employment driver, as it has in the Far East. During the Covid crisis the plight of daily wage migrant workers has shocked the nation’s conscience. Though reforming its nonsensical labour laws, India needs to set up a social welfare fund (with employers and government contributions) to support temporary unemployment and retraining. By doing so, India will become a successful export centre, creating numerous formal jobs, as well as protecting the interests of the unemployed and the informal.

The reforms being mooted by the governments of Madhya Pradesh and Uttar Pradesh are large in nature and will have serious implications for the welfare of workers. They seem to be targeted less at wooing investors and more at harnessing the opening of the Covid-19 crisis in policy ‘agendas.’ The anxiety is due to three factors.

Three, such changes are timing. The two governments failed to curb the spread of the coronavirus pandemic even as they are nascent to push migrant workers back home in their states. Whether certain states are in a true post-lockdown situation is uncertain.

Two, the way such laws were applied were undemocratic. Any reform with these consequences in a democratic polity — such as exempting new industrial units from registering child workers in MP — needs public consultation, especially with immediate stakeholders or their representatives. While this has been an unfortunate phenomenon since 1991, the changes have not come through any such process.

Third, the success of these measures in achieving their policy goals is questionable. If the basic workplace safety guarantee is withdrawn, as is the case with both MPs, prospective employees may be more reluctant to enter or resume work. The assumption that labour-dilution laws, which have been implemented half-heartedly anyways, will woo investors once the lockdown ends is also open to question empirically.

Legality of the amendments

Now inspection would only be possible on the basis of complaints, with the approval of the Labour Commissioner. Additionally, the provisions of the Madhya Pradesh Industrial Relations Act were relaxed. Trade unions and plant managers should now be able to settle conflicts in factories according to their convenience. For settle conflicts, they won’t have to go to the Labour Court. Exemptions from provisions of the Madhya Pradesh Industrial Jobs (Permanent Order) Act were given in industries with less than 100 labourers

 Until now, the Industrial Jobs Law was applied to institutions of over 100 workers. The state government has submitted for consideration a number of recommendations to the Centre. One of them linked to the Factory Act, according to which power units had to be licensed for 10 employees in the past applicable to businesses of more than 50 (but less than 100) employees.

Similarly, units operating without power in the past had to be registered on hiring 20 labourers under the Factory Act. Now a plan to eliminate the cap on the number of staff has been submitted to the centre. Under the Contract Labour Act, so far, contractors have had to register to hire 20 labourers. They will now only be required to register after having employed 50 staff or more.

Legally these changes are within limits but can be twisted and turned to exploit the labours as they leave them more exposed to such instances.

According to the Minimum Wages (Central) Rules, 1950 from Ministry of Labour and Employment

24. Number of hours of work which shall constitute a normal working day

(1) The number of hours which shall constitute a normal working day, shall be –

(a) In the case of an adult – 9 hours;

(b) In the case of a child – 4 &1/2 hours.

If a 7 day working week is considered it will amount to 63 hours for the labourers hence and additional 9 hours exceeds the limits of this act. But, these amendments ensure that the Labourers consent is the primary factor and upon their willingness only can work for an overtime.

Landmark judgements

“For closure under chapter VB of I. D. Act, to decide the strength of workers, employees working as supervisors or managers would be excluded while counting 100 numbers of workmen”.

National Kamgar Union vs. Kran Rader Pvt. Ltd. & Ors. 2018 LLR 159 (S.C.)

“Once the departmental enquiry was held legal and proper, interference in punishment by the labour court by setting aside the same is not justified.”

Management of Bharat Heavy Electricals Ltd. vs. M. Mani & Anr. 2018 LLR 2 (S.C.)

“Labour Court has to frame preliminary issue on fairness and validity of the inquiry.”

Kurukshetra University vs. Prithvi Singh. 2018 LLR 371 (S.C.)

“The labour court award granting reinstatement with 50% back-wages will not hold good when the labour court first failed to decide the validity and legality of the enquiry, second, labour court called the parties to lead evidence on all issues including the charge of misconduct, third the labour court examined the findings of the enquiry officer without coming to conclusion that the enquiry was vitiated”.

M.L. Singla vs. Punjab National Bank. 2018 III CLR 668 (S.C.)

“Payment on piece rate basis made to the workmen is ‘wages’ covered under the definition of Section 2(22) of the Act”.

Employees’ State Insurance Corporation vs. Hindustan Milkfood Manugacturers Ltd. and Others. 2018 LLR 119 (S.C.)

“Contract employee has no legal right either to get his/her contractual period renewed/extended or to get regularized his services.”

Yogesh Mahajan vs. Prof. R.C. Deka, Director, All India Insutitute of Medical Sciences. 2018 LLR 366 (S.C.)


In the case of Uttar Pradesh, where all labour laws (except three on construction workers, bonded labour, and wage pay) are suspended for three years, this is an ‘attempt’ to woo investors. In Madhya Pradesh the suspension at face value is less severe.

But consumers are never drawn to simpler labour laws. Surveys by the World Bank have shown that labour law is just the fifth biggest issue facing employers. MP and UP are also states with lower resources and human capital which are traditionally poorly governed.

There are 35 central labour laws, plus over 100 state labour laws, most of which were poorly enforced by state governments, partially because India’s total number of labour inspectors does not exceed 6000. They are either not applicable or ignored in the unorganised sector. Madhya Pradesh and Uttar Pradesh’s acts are not being thought about, and risk being challenged in court.

Suddenly, FDIs do not flood into Uttar Pradesh and Madhya Pradesh merely because of relaxation of labour rule. If domestic investment went up slowly pre-Covid, then with the demand collapse after Covid, don’t expect sudden growth.

Authors:G Shashank Rao from Symbiosis Law School, Hyderabad.

Editor: Akshat Mehta from Institute of Law, Nirma University.

Analysis: Relaxation on labour laws

Reading time: 8-10 minutes.

In the wake of the pandemic, the world economy is undergoing huge shifts. As a developing country that aims to become a super-power soon, India cannot ignore the effect of the lockdown on its businesses. The aim is to “revive the economy”, that has led states such as Uttar Pradesh and Madhya Pradesh to amend various labour laws, to keep the industries continue working through the lockdown period.

The government of Uttar Pradesh has recently passed ordinances that suspend all but four labour laws for the next three years, to attract itself to the investment of new companies amidst the Covid pandemic. Following suit, there are now ten states that have now done so.

Labour is a concurrent subject under the Indian Constitution; therefore, each state can frame their own labour laws, which will then be subject to the approval of the Centre. The Parliamentary Standing Committee on Labour has sought clarification from these states in the matter of their dilution of labour laws. The panel has given them a period of two weeks to justify their actions and to clarify whether they adhere to the proposed codes of the Union Government.

Significance of this development

The lockdown is a huge challenge to the world economy. India undoubtedly has a lot to lose if effective laws are not implemented. The relaxation and simplification of labour laws is the need of the hour. The significance of the effective action it holds, can be elaborated in the following 4-pronged approach:

  • Challenges as a developing nation

The Indian economy had been going through a steady decline even before the pandemic. If no effective measures are taken, India could be on the brink of an economic crash. As one of the most heavily populated countries in the world, the concept of social distancing is fairly new in the Indian lexicon. Imposing such rules and providing for safety gear will take a large chunk off its monetary vault. This brings in a further need for the continuance of industrial work just so India can afford a healthier workplace for its labourers.

  • Rising unemployment

The Centre for Monitoring Indian Economy states that since April 2020, nearly 9.13 crore small traders and labourers have lost employment, bringing the unemployment rate in the country near 25%. The hiring of more labourers must ensure labour costs and timely wages. The relaxation of laws has led to a mass criticism of the suspension of minimum wages and trade union dispute settlement. However, we must realise that it is a time of crisis, and that we must solve the issues at hand, to avoid a looming, dire future of financial instability.

  • India’s economic revival

China has been facing a lot of heat for the pandemic. As countries shift away from China, India is prepping itself to become the next manufacturing behemoth with the continuance of industrial work in many states. The government backing the Micro Small and Medium Enterprises (MSMEs) Development, ushers India to become increasingly self-reliant. The pandemic has restricted access of the public to many foreign businesses. The greenlight given to these MSMEs could replace these industries, leading to an industrial boom to businesses that have been over-looked for a long time.

  • Simplifying Indian labour laws

The relaxation of labour laws, with the exception of four laws, will lead to a more simplified approach to industries. At the need of the hour, the numerosity of laws will only be counter-productive to the Indian agenda of economic revival. Further, the simplicity of laws and the suspension of all but the essential four laws will be seen as an incentive to new investors.

Which laws have been relaxed?

The following is a state-by-state guide on the relaxation of laws:

  • Uttar Pradesh

The Uttar Pradesh Cabinet has recently approved of the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020, thereby exempting all factories and establishments from labour laws for the next three years, subject to the fulfilment of certain conditions, as follows:

  1. There must be a minimum wage and the workers cannot be paid below the wage amount.
  2. The workers must be paid within the time limit that has been established under the Payment of Wages Act, 1936
  3. The health and safety conditions under the Building and Other Construction Workers Act, 1936 and the Factories Act, 1948, must continue to be adhered to.
  4. The workers must not be compelled to work more than 11 hours a day and the spread of work must not be more than 12 hours a day.
  5. The Employees Compensation Act, 1923 will still be adhered to, providing compensation in case of work-related accidents.
  6. The Bonded Labour System (Abolition) Act, 1976 will continue to remain in force.
  7. Labour Law provisions relating to the employment of women and children will continue to remain in force.
  • Madhya Pradesh

The Madhya Pradesh Labour Laws (Amendment) Ordinance, 2020 amends the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961 and the Madhya Pradesh Shram Kalyan Nidhi Adhiniyam, 1982.

  1. The amendment now brings upon the constitution of a Fund that will finance welfare labour activities.
  2. Any establishment can now be exempted from the provisions of the Kalyan Nidhi Adhiniyam Act, via a notification.
  3. Provisions of the Industrial Disputes Act, 1947 related to industrial dispute resolution, strikes, lockouts and trade unions will not be in effect, for the next 1,000 days.
  • Rajasthan, Gujarat, Punjab, and Himachal Pradesh

These states have addressed the need for relaxations that will help the country undergo an industrial recovery and have amended their respective Factories Acts to allow for an extended, 72-hour work week, from the previous, 48-hour work week.

Legal basis

Since Labour falls under the Concurrent List in the Indian Constitution, the Parliament as well as the State Legislatures have the power to regulate laws under this subject. This has led to the formation of a large number of labour laws that have made this area rather inflexible. To simplify the process of codifying the numerous labour laws as the Labour Code on Industrial Relations, Labour Code on Wages, Labour Code on Social Security and Labour Code on Occupational Health Safety and Working Conditions.

The regulation of these laws take place, on the state level, via the state, that passes it own labour laws or amends the Centre’s labour laws, according to the requirements of the state. In an event where the state’s laws are incompatible to the Centre’s, it is the Centre that prevails. The state’s law in question, will be void, unless it gets the approval of the President.

The need of the hour calls for effective action. As the pandemic causes great destruction, there is a silver lining that can be created, if India can successfully implement a relaxation of its labour laws that help the country attain its dream of becoming a manufacturing behemoth.

Crtical analysis

The relaxation of such laws is a huge and a rather risky legislative move, especially when India is already on its way to codify the labour laws that are in existence. A critical approach to this topic would bring in the following issues:

  • Has there been a Tripartite Consultation Involved?

In the wake of numerous legislative amendments throughout the country, there must be a tripartite consultation that involves the government, the working class, and the employers of the organisations. Anything that does not adhere to the full consent of these three parties will be considered arbitrary.

  • Labourer Representation

The exemption of Trade Unions, and industrial dispute resolution mechanism has by far been the biggest factor of criticism, along with the abhorrent increase in working hours. Central Trade Unions in the country has termed the action of the states as an “inhuman crime”.

  • Violation of ILO Guidelines

India is one of the founding members of the International Labour Organisation (ILO). The Fundamental Principles and Rights at Work was adopted by India that states that all members of the ILO have to “respect and promote the freedom of association and the effective recognition of the right to collective bargaining”.

Clearly, these amendments that eliminate Trade Unions will be a gross violation to these rules. The absence of a workers association will leave open a large possibility of the abuse of the rights of the workers.


The rationale behind the relaxation of labour laws has been to not only revive the economy but to bring about a transparency of laws: a codified, concise amount of laws will be easier to regulate. Further, it answers a distress call of the various labourers at risk of unemployment. However, these decisions must be taken with great responsibility since the relaxation of laws during these difficult times can also lead to desperate working conditions for labourers. India, as a party to the International Labour Organisation must adhere to the guidelines set down by them, and ensure solidarity between the government, the employers, and the workers.

Author: Anjali Roy from Alliance School of Law, Alliance University, Bengaluru.

Editor: Avani Laad from Symbiosis Law School, Pune.

Bonded Labour Law in India

Reading time: 6-8 minutes.

India is a country dealing with situational ironies, where on one hand, we provide a democratic status to the country with equality for all citizens but the reality is heart wrenching. There are still certain sections of the society that face discrimination and are engulfed in a vicious circle of unemployment and poverty coupled with illiteracy. 

Such economic and social inequalities lead to various deeply encapsulated ill-practices, one of which is extremely rampant, that is, bonded labour which affects the whole family structure where generations over generations are involved in the system. 

The practice which started centuries ago continues to plague Indian society till date. International Labour Organization claims that there were around 1.17 crores bonded labourers in 2014. Global slavery index says that nearly 8 million people are living in “modern slavery” in India in 2016.  

This article deals with the concept of bonded labour and the laws that abolish this practice. Further, this article discusses the possible causes of the continuance of this practice in India.

What is bonded labour?

Bonded labour is a form of slavery where a person and his successors are made to work for the creditor against lending of a loan, in case of failure to pay back, until the loan is repaid. The people engaged in the system are made to work hard at unreasonable wages. This system is commonly known as Bandhua Mazdoori.

The system is characterised by unfair practices where employers charge high interest on loans along with payment of short wages. Bonded labour has been associated with rural economies where peasants from economically disadvantaged communities are bound to work for the landlords who exploit them a lot.

It is also found in urban pockets but at a lesser lever in unorganized industries such as brick kilns, stone quarries, and coal mining etc. There is no defined time period for this arrangement. This agreement of indefinite bonded labour results into undeniable loss of freedom and curtailment of rights of the debtor.

The provisions in law prohibiting the same are found in the form of various Acts and regulations. The main Act prohibiting bonded labour is Bonded Labour System (Abolition) Act, 1976 which is an extension of Article 23 (Fundamental Rights) of The Constitution of India prohibiting forced labour.

Bonded Labour System (Abolition) Act, 1976

Bonded labour, after being institutionalised as a stringent system in Indian society for various centuries, was abolished in India by an Ordinance passed in 1975 which later became the Bonded Labour System (Abolition) Act in 1976.  Before the formulation of the Act, the efforts to fight bonded labour were only at regional level with legislation Acts found in states like Bihar, Orissa, Madras and Rajasthan.

According to a report formulated by Commission of SC and SR, these legislations were a great failure and finally in 1975, a twenty point programme was promulgated to abolish the system of bonded labour which came into force in 1976. The Act anticipates freeing all bonded labourers, annulling their debts, finding rehabilitative measures and punishing the offenders

Salient features

  • The Act came into force on 25 October, 1975 and extends to whole of India and is implemented by respective states according to their discretion. It comprises of 10 sections.
  • It has been established with an objective to provide for the abolition of bonded labour system and prevent economic and physical exploitation of the weaker sections.
  • The Act has overriding effect and anything inconsistent with this Act does not have enforcing effect and shall be abolished.
  • According to Sections 4 and 5, bonded labour is strictly abolished and any custom or agreement related to the same has been made void and inoperative.
  • Every labourer is free from his liability to pay debt and is discharged of all his obligations to render bonded labour. No person can institute any proceeding in any court to recovery of debt. No creditor can accept payment against extinguished debt.
  • If the creditor took any property under the system, the same has to be restored to the possessor from whom it was seized. Property of the bonded labourer to be freed from mortgage, etc.
  • Every bonded labour who has been detained under the system has to be released.
  • Under Section 10 of the Act, the state government have been conferred with powers to impose duty on magistrate of the district to ensure the enforcement of the Act. The Act provides for an institutional mechanism in the form of Vigilance Committees which guide the District Magistrate.

The Supreme Court too, in the case of Neerja Chaudhury v. State of Madhya Pradesh, observed that bonded labourers must be identified and released and suitably rehabilitated.

Progress under the Act


  • The Act has freed a lot of people from the clutches of this draconian system which is exploitative in nature.
  • The Act has helped to lift and improve the economic condition of people who were burdened with the loans and unfair practices by creditor.
  • The Act has led to successful integration of rescued labourers back into mainstream society, and helped them in relocation.


  • Bonded labour continues to be a significant problem in India due to poor implementation of Acts and policies.
    • The district-level Vigilance Committees do not take their duties seriously enough and there are various lacunas in their functioning.
    • There is lack of required awareness among people especially in rural areas who are still entrapped in this vicious system.
    • The rescue and rehabilitation of workers in not very effective due to lack of adequate services and facilities.
    • The Act does not take into consideration children and their rights.

Critical Analysis

Merely making laws is not enough; they have to be sufficiently enforced. Bonded labour is violative of basic human rights of labourers, which as a system need to be tackled and eliminated vigorously and efficaciously.

Though a lot of progress has been made under the Act, there has to be more vigilance to eradicate the system from Indian society. The loopholes and negligence present have to be completely removed.

Moreover measures have to be taken to improve the implementation of the Bonded Labour Abolition Act. Further, bonded labour cases should be tackled in fast track courts and justice should be provided to the labourers.


Bonded labour in India is a result of social and economic factors. In spite of the fact that enactments were confined and established assurances in form of constitutional provisions are allowed against this draconian framework, it can be only  helpful when there is a powerful implementation of the laws, end of class based partialities and open mindfulness. Till the point a law doesn’t instil its presence at the lowest levels of society, it is regarded to be insufficient, in spite of having got statutory acknowledgment.

Henceforth reformative and preventive methodology ought to be followed. This can be done by keeping a well maintained record of bonded labourers and taking necessary steps to eliminate the system right from the grass-root levels. This system should be severely condemned and punished. Proper implementation of rules and regulations could do wonders and make Indian society completely free of such oppressive systems.

Author: Sakshi Sethi from Rajiv Gandhi National University Of Law, Patiala.

Editor: Ismat Hena from Faculty of Law, Jamia Millia Islamia.