The NDA government has begun a fresh review of the country’s labour laws that have remained unchanged since Independence, and tailor them to meet the needs of the National Manufacturing Policy with an aim towards boosting growth in the manufacturing sector.
Accordingly, the labour ministry has proposed changes to the Industrial Disputes Act, 1947, for easier retrenchment of workers in the National Investment and Manufacturing Zones (NIMZs).
Under the proposal, workers in any unit in the NIMZ may be removed without notice or compensation if the employer provides them with alternative employment in the same zone at the same pay and conditions of work.
In case alternative employment is not possible, the employer will have to pay compensation to the worker at the rate of 20 days’ wages for every completed year of continuous service or any part over six months.
This is a significant change from the current law where such a provision is not available for workers in the manufacturing sector. Companies with over 100 workers cannot terminate the services of workers who have been employed for over one year without prior permission of the state government and three months’ notice.
However, a clause in the Industrial Disputes Act, allows workers in mining operations to be retrenched if the mine shuts down due to exhaustion of resources, provided the employer provides them with alternative employment under him from the date of closure, on the same wages and terms of service or compensation, based on the workers’ service period.
“Such a provision is already present in the Act for workers engaged in mines. Based on a recommendation of the department of industrial policy and promotion, we want to extend it to cover the manufacturing sector as well,” said a senior labour ministry official, adding that the objective is not to make retrenchment of workers easier, but to give some flexibility to employers.
The labour ministry has now called a tri-partite meeting with trade union representatives and employers before finalising amendments to the Industrial Disputes Act.
Interestingly, while trade union leaders had opposed the amendments in negotiations held in September 2012, this time around they are willing to provide some flexibility.
“It is in the interest of the country and workers if there is some progress in the manufacturing sector. We are willing to make some compromises, but the government has to ensure that rights of workers are safeguarded,” said a leader with a trade union who has been invited for the consultations with the labour ministry next week.
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