Govt proposes major overhaul of labour laws

In the biggest overhaul of labour laws, the government proposes to loosen strict hire-and-fire rules, make it tougher for workers to form unions as well as raise by three times the severance package to protect employee interest, Labour Minister Bandaru Dattatreya has said.

As part of plan to make it easier to do business in the country and create jobs, the Labour Ministry has drafted a bill to integrate three laws -- Trade Unions Act, Industrial Disputes Act and Industrial Employment (Standing Orders) Act -- into a single code for industrial relations, the minister told PTI in an interview here.

"Labour reforms are needed in the present context to make conducive environment for business to flourish and create harmonious atmosphere between industry and workers because our main purpose is that employability should be increased," he said.

Labour laws, he said, need to be looked with a new perspective. "For that you need to have simplification and rationalisation of laws. But that will not be at the cost of workers' interest. Workers' right will be protected. But at the same time for increasing employability, ease of doing business in necessary," he said.

The draft allows companies hiring up to 300 workers to lay them off without seeking official sanction. At present, industries hiring up to 100 workers are allowed to lay off without permission.

But to protect worker interest, the notice period for establishments to fire employees or shut down a unit has been proposed to be raised to three months from one month now, he said. Also, retrenched workers will be paid an average salary of 45 days, three times the current 15 day limit.

Besides, a worker will be allowed to object to being laid off within three years, against no clear period specified in the law now.

Dattatreya said that to take labour unions on board, tripartite consultations are on and the Prime Minister has formed a ministerial committee headed by Finance Minister Arun Jaitley to address issues raised by them.

The Bill is not slated to come in the ensuing monsoon session of Parliament next month as more consultations are needed, he said.

Major trade unions, meanwhile, are unhappy with the proposals and have called for a day-long on September 2.

Unions are also opposed to Small Factories bill which proposes to keep units employing less than 40 workers out of the purview of 14 labour laws including EPF & MP Act 1951, ESI Act 1948 and Industrial Dispute Act 1947.