Imagine a five-year-old factory with 600 workers and an owner. Let's call the owner Ms X. Ms X gets into an argument with the worker, Mr Y.
Now, if the ordinance by the Uttar Pradesh government abolishing all but three labour laws (abolishment of bonded labour, ex gratia payments in case of work-related diseases and disabilities, and timely wage payments) in the state for the next three years gets implemented, Ms X can terminate the employee as per her whims and fancies. She can choose whether to pay her employees for overtime or not, or give them access to paid holidays, gratuity or maternity benefits or even any compensation for termination.
And, if 300 of her employees decide to form a Union, she can terminate them all and employ others. Given the economy is at its slowest and unemployment is at its peak, the bargaining power of Unions will get significantly weakened because workers will no longer have legal rights to access the court. Hence they cannot challenge these decisions or ask for their rightful pay.
The UP government's ordinance is a blanket suspension of labour laws applicable to all kinds of enterprises, old and new. "The ordinance as cleared by the UP government is extremely vague and wide. It allows enterprises to do what they please and how they please," says Atul Gupta, Partner at law firm Trilegal.
ALSO READ:UP labour law reforms: The big climbdown
Why has the government issued the ordinance, then? The political class believes the move will revive the industry in the state amid coronavirus outbreak. Uttar Pradesh labour minister Swamy Prasad Maurya told India Today TV in an interview, "CM Yogi Adityanath wants to ensure that new and existing businesses and industries flourish and do not get tangled in legal battles. To ensure this, we have decided to temporarily exempt industries and businesses from the purview of some labour laws for 1,000 days. But laws, meant to uphold the rights of the labourers and are in their favour will not be exempted."
Experts feel that the argument of radical labour reforms to benefit the workers is flawed and deceptive, at best. Suspending just labour laws is a unilateral decision that isn't going to revive the economy as argued by the states, they feel.
"The main issue facing the industry now is demand generation and availability of labour. Just changing the labour laws isn't going to help," says Aditya Narayan Mishra, Director and CEO of CIEL HR Services.
"It seems the government is capitalising on the desperate situation of workers during the COVID 19 pandemic," says K R Shyam Sundar, Professor in Human Resource Management at XLRI Jamshedpur. He says since economy is down, government is using this as an opportunity to reduce the bargaining power of trade unions.
Prof Sundar adds, the government is assuming that labour laws are tough and relaxing those can solve all economic problems. Firms in India don't have working capital, they want access to wage subsidies, commercial loans and access to market to sell. "It is an extremely misguided logic that labour law rigidity is the solution for all economic problems. The government needs to think of human development index, infrastructural facilities, literacy rate amongst many other things," he says.
Take the case of states such as Tamil Nadu, Maharashtra, Gujarat that have attracted foreign direct investment not because these states have relaxed labour laws but because they have skill availability, better infrastructure and energy supply, port connectivity, availability of cheap land.
Prof Sundar suggests that the UP government should instead look at a package of sector specific reforms for industry in areas where the state dominates such as leather and footwear. It should offer sops rather than throwing the baby in the bath water by dismantling labour laws. "If you want to strengthen demand, you take both demand and supply side measures," he says.
Amarjeet Kaur, General Secretary, All India Trade Union Congress says this instead will increase exploitation of labour. "There were so many cases when workers worked overtime but were not given their dues. But now without the labour laws, all responsibility and accountability towards the workers will be negated. It will give a free hand to the organisations to treat them at their whims and exploit them. This is the onset of Jungle Raj," she says.
These laws are also in violation of International Labour Organisation (ILO) convention No 144. India is a signatory to it and states are bound by the ratification.
The UP government's ordinance is pending for the approval from the President. Since labour is on the concurrent list of subjects, it can't be done at state level, and has to get approval from the President. But the likelihood of that happening is high since it is a BJP state, says Gupta of Trilegal. However, he adds that chances are high that this ordinance will not sustain judicial scrutiny. It could be argued that it is unconstitutional, and against human rights.
This move is quite contrary to Chief Minister Yogi Adityanath's orders in April where he had directed private enterprises and organisations to not cut salaries of their employees lest they will face strict action.