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Tamil Nadu Government Proceeds Building Consensus On Amendment to Factories Act Earlier Passed by The Assembly!

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Tamil Nadu Government Proceeds Building Consensus On Amendment to Factories Act Earlier Passed by The Assembly!

Will meet representatives of Trade Unions over extended working hours!!

Tamil Nadu has put on hold a contentious legislation allowing 12-hour work-day at factories after talks with labour unions opposing the move, according to reports.

The state assembly had passed the Factories (Amendment) Act 2023 providing flexible working hours for employees, including the option for employers to increase daily working hours to 12 hours from the present eight-hour shift.

The amendment proposed a new Section in the Factories Act, 1948, to enable establishments to have flexible working hours. Broadly, it meant that shifts could be extended to 12 hours and establishments opt for a four-day week with the consent of both employees and employers.


What have been the Objections of the Unions and others:

The changes were, however, seen as “anti-labour and disastrous”

The passage of the bill saw vociferous protests by not just opposition parties in Tamil Nadu but also the allies of the ruling DMK like the CPI, the CPM and the VCK.

Parties and trade unions argued that provisions were open-ended and could be misused by employers, putting employees/workers/labour at disadvantage.

While supporters argue that the change in schedule cannot be forced and that the choice will ultimately be that of employees, those against it question if employees really have any choice or say in such matters,

Most political parties, especially in opposition, are opposed to such moves.


What are the reasons for changes in labour laws?

Experts say States are looking to expand their manufacturing base and take advantage of the current geopolitical situation in the region.

Several MNCs are looking for alternate options to China.

Many domestic manufacturers have also been demanding flexibility in number of hours, days, shifts, holidays etc. in mind the demand-supply and global situation.

Many states are preparing their blueprints to allow flexibilities in shifts and night-time work shifts for women.

In fact, Karnataka became the first state to affect the change in laws to “lure the MNCs”

Karnataka amended its labour laws governing factories to affect changes, including allowing manufacturers to increase shift hours to 12 hours, women to work night shifts and increase in the number of overtime hour, according to reports.

In Tamil Nadu, the ruling DMK may have put on hold the decision in mind of the AIADMK—the ally of the BJP which in the Centre introduced four labour codes pushing labour reforms, leaving it to the states to work on individual rules and regulations.

Labour is in the concurrent list according to the Constitution of India.

The concurrent list consists of subjects of common interest to both the centre and the states.

According to the Economic Survey, labour reforms are progressing steadily and several states have pre-published draft rules for four labour codes on wages, industrial relations, social security and occupation safety, health and working conditions (OSH).

“As on January 11, 2022, 26 states/UTs have also pre-published the draft rules under the Code on Wages, 22 states/UTs under Industrial Relations Code, 20 states/UTs under Code on Social Security, and 17 states/UTs under OSH & WC Code,”

The new laws are in tune with the changing labour market trends and simultaneously accommodating the minimum wage requirement and welfare needs of the unorganised sector workers, according to the survey.


So what are the concerns raised by Trade Unions?

The amendment does not mention specific changes, which are expected to be notified separately.

But in essence, it proposes to extend daily shifts of factory workers to 12 hours — from the existing eight — in case they opt for a four-day work week.

The government has stated that the total working hours in a week will remain unchanged at 48, and that it will provide flexible working hours to workers, especially to women workers.

Trade unions have argued that the provisions of the Bill are open-ended, and can be misused by employers.

“…The provisions of the concerned Bill are aimed at open-endedly to empower the employers to evade all their statutory obligations in respect of working hours in the workplaces through such mass-scale exemption mechanism in respect of almost all provisions of the Factories Act, both directly and indirectly related to regulations of working hours.

“It will be disastrous for the workers in the state besides provoking absolute anarchy in industrial relations management,” the Centre of Indian Trade Unions (CITU) said in a letter to Tamil Nadu Chief Minister M K Stalin.


CONCLUSION –  liberalization of labour laws 

Land, Labour, Enterprise, and Capital are factors of production. If a person needs to set up a manufacturing unit, it will need land to build the facility.  Also, would need money as initial investment for raw material, machinery, salaries etc. And finally, would need skilled/unskilled labour depending on the type of facility.

The State usually provides incentives to investors so that they can set up their facilities easily and gives various tax incentives for some periods so that the companies can concentrate on production and profitability.

Since the government does not engage much in business, it relies on private investors to boost economic activity and growth.

For example, in India, a start-up may apply for tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Start-up can avail tax holiday for three consecutive financial years out of its first ten years since incorporation.

In Telangana, any company applies for a licence and unless rejected within a period, the company automatically gets a licence to operate under the industrial policy of the state.  Reforms in land acquisition, easy availability of credit from Banks and other financial institutions, make it easy for companies to establish their units and contribute to the economic activity. These kinds of measures are taken by governments to increase the “ease of doing business.”

Within this subset of measures to increase the ease of doing business falls the “liberalisation of labour laws.” For example, start-ups, as recognised by the Department for Promotion of Industry and Internal Trade, are allowed to self-certify themselves for compliance of labour laws. They are also exempted from any inspection visits by the labour inspector, unless a credible and verifiable complaint of violation if filed in writing and approved by at least one level senior to the inspecting officer. The intent behind these kinds of provisions is so that the companies can concentrate on production and not worry about compliance.

Additionally, the labour market, especially in India, is a huge one. Labour Market essentially means the pool of labour the companies can choose from. The supply of labour is high, and the demand is not as much, therefore attendant unemployment. Some of the unemployment is also attributable to the lack of skills required. The companies look for cheap labour, as entities for profit do and therefore do not want to be bound with employees they don’t want to employ. For example, if a company gets a huge project it needs to complete this within say, six months, it will need additional labour to meet the deadline and after the deadline, it will not need such additional workforce. In this scenario, if there exists a law saying that no employee shall be fired from a company without giving two months’ pay, the company would be apprehensive of taking up the huge project in the first place since it would incur costs when it must let go of the employees. Or it would use methods like individual contracts with hiring talent to go around (evade) the law and in process, might not give any protection such as insurance etc., to the talent. To make sure the company does not go through this hassle, the newly passed and yet to be implemented Code of Industrial Relations, 2020 regularizes fixed-term employment. Fixed term employment may allow employers the flexibility to hire workers for a fixed duration and for work that may not be permanent in nature.

It is important at this point to note that the boosting of economic activity is important for a nation’s growth. For a developing country like India, especially in the current globalized and capitalist paradigm, investment of capital from private entities-both domestic and foreign-becomes an important way of generating economic activity.

Due to all, these reasons, governments tend to “liberalise labour laws”.

Proprietary blog of Karma Global Tech Management  LLC

This blog has been collated and compiled by the internal staff of Karma Global with the knowledge and expertise that they possess, besides adaptation, illustration, derivation, transformation, collection from various sources, for its monthly newsletter Issue 12 of June 2023 and in case of specific or general information or compliance updates for that matter, kindly reach out to the Marketing Team – Kush@karmamgmt.com / yashika@karmamgmt.com

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