The UP ordinance on exemption from labour laws is unconstitutional

On 8 May 2020, the Governor of Uttar Pradesh promulgated an Ordinance known as “The Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020”. The ordinance was promulgated in order to attract more investment to firm up the economy owing to the ongoing recession-like phase arising out of the COVID-19 triggered lockdown. There are many opinions going around and there are serious question marks on its legality, apart from whether it is constitutionally sustainable. This Article attempts to explain certain facets of the ordinance in the backdrop of the current set of laws governing the present labour ecosystem.

At the outset, let me lay down the defects off the top of my head. For starters, it is extremely vague and does not convey any definite meaning. The said ordinance exempts certain factories and industrial establishments from the ambit of labour laws for a period of 3 years. The ordinance is silent on the laws from which exemption is sought to be granted. Moreover, there is absolutely no clarity on which category of factories and/or manufacturing establishments are exempted. There is no attempt to explain this. And therefore I say that that this ordinance does not evoke enough confidence in the minds of investors, facilitating them to invest, and hence I do not think that it would serve its purpose of attracting investments and getting factories running.

Now coming to the constitutional challenges, the first defect is the power of the State Govt. to legislate. Article 245 (1) empowers the Parliament to make laws for the whole or any part of any territory of India, and the State Legislature for the whole or any part of the State. No doubt that the State legislature has ample power under Entry 24 of List 2 to do so, and also in respect of industries not covered by Entry 7 and Entry 52 of List 1, but that does not mean that Central Laws relating to industrial disputes (generally falling under Entry 22 of List 3) cease to have any application to industries covered by Entry 24 of List 2. There are similar such examples like Entries 22, 23, and 24 of List 3 wherein both the Parliament as well as the State Legislatures are well and truly empowered to legislate on this subject, but that does not mean that an enactment by the State would automatically supersede all Central Enactments.

Part III of the Constitution guarantees certain fundamental rights to citizens. Article 14 guarantees equality before law or equal protection of laws whereas Article 21 provides protection of life and personal liberty. The social and economic upliftment of labour is important for securing industrial peace which is essential to increasing the national productivity. Part IV of the Constitution ensures the goals and values to be secured by the Republic of India as a welfare state, where Article 16 provides the link between parts III and IV. In other words, though these principles are not enforceable in a court of law, surely they have not been introduced in the Constitution as merely a pious declaration, but rather with a view to ensure that both the Legislature and the Executive do not pay mere lip service to these principles.

It is rightly said that: “To win the marketplace, you must first win the workplace.” However, there is strong reason to believe that the said ordinance is a step in the wrong direction. It will create insecurity in the minds of the workers, which is never beneficial to the growth of any industry.

There is also the issue of repugnancy. Article 254 (1) further provides that if any provision of any State law is repugnant to any provisions of any Central enactment, with respect to any of the matter enumerated in the Concurrent List, the Central Enactment – whether before or after such State enactment – shall prevail, and the law made by the State Legislature, to the extent of the repugnancy, shall be void. It is very early to say and suggest that the present ordinance is repugnant to the provisions of the Industrial Disputes Act, 1947, and other Parliamentary labour laws, but the provisions of Article 254 need to be kept in mind going further. In this context, the observations of Hon’ble Chief Justice Rajnnar are very much relevant in the present case:

The essential object of all recent labour legislation has been not so much to lay down categorically the mutual rights and liabilties of employees, as to provide a recourse to a given form of procedure for the settlement of disputes, in the interest of the maintenance of peaceful relations between the parties, without apparent conflicts, such as are likely to interrupt production and entail other dangers.

Let us assume for once that this ordinance is a valid exercise of power under Article 213 (1) of the Constitution. Even so it does not explain the source of power of the State Executive to grant exemption in favour of factories and manufacturing establishments, of whom the Appropriate Government is the Central Government – and to that extent, the ordinance is vague and cannot be given effect to.

It appears that the State Executive has overlooked the most vital and important facet of service conditions of those industrial workers who are employed in factories and other manufacturing establishments, which are more or less governed by way of either negotiations, collective bargaining, adjudications or by way of settlements and awards. Therefore, whether service conditions already fixed or determined by way of aforesaid methods would stand suspended for 3 years; assuming that the prevailing service conditions stand modified, altered or amended as provided under the ordinance. Another moot question arises regarding the restoration of the service conditions of the workmen after the expiry of operation of the said ordinance.

One more point merits attention, i.e. Non-application of mind. In the facts of the present case, it is open to say and suggest that the State Executives have not applied their mind carefully as, under the said ordinance, factories and manufacturing establishments are exempted but their administrative and other offices have not been exempted and, therefore, that leads to a direct discrimination in terms of the service conditions between the workers employed in factories and the workers employed in their administrative offices. On this ground alone, this ordinance needs to be quashed and set aside.

Then arises the issues regarding the application of the International Labour Organization Convention ratified by India, as also the Law Commissions which cover a wide gamut of both social and labour issues including basic human rights, minimum wages, industrial relations, employment policy, social dialogue, social security and other issues. The recommendations which have been accepted by the Central Govt. have a binding effect on the State Govt and cannot be overwritten by way of an ordinance.

Another interesting aspect to the discussion is the necessity of the ordinance during present times. Presently, the entire country is caught in the aftermath of COVID-19. The Central Govt. by invoking the provisions of the Disaster Management Act, 2005, has issued a notification on 29 March 2020, directing all concerned not to alter the service conditions of their employees to the extent of payment of wages and their removal from service. Section 72 of the Disaster Management Act, 2005, has an overriding effect over the provisions of all other Acts, Ordinances, Notifications etc. In other words, during operation of the said Notification, the provisions of the said ordinance to the extent of payment of wages and removal of services cannot be given effect to. And therefore, one fails to understand the feasibility and/or the emergent situation, requiring an immediate promulgation of the ordinance.

The present ordinance is violative of Articles 14, 16 & 21 of the Constitution of India. Several of its provisions are in direct conflict with the Central Enactments. It is vague and cannot be given effect to. The State Executives have transgressed their constitutional limitations while doing so. And therefore, to conclude, I say that this ordinance will not stand the scrutiny in a court of law, if challenged.

Suresh S. Pakale is a practicing Advocate in Bombay High Court.

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