Published on July 22, 2020
In response to COVID-19, several Indian states have suspended or amended labor laws with the stated purpose of facilitating the revitalization of the economy. Many of these suspensions and amendments to the labor code will likely increase the exposure of workers in the country to risks of exploitation and poor working conditions
Situation
- At least ten states in India have amended or suspended labor laws in the wake of the COVID-19 pandemic
- Amendments to the labor laws include the extension of the workweek from 60 to 72 hours, lowering the required thresholds for triggering labor inspections, and softening rules regarding the hiring and firing of employees
- Two states in particular, Uttar Pradesh and Madhya Pradesh, suspended most of their state-level labor laws for a period of 1095 days. In the case of Madhya Pradesh, the suspension of most laws applies to new manufacturing facilities
Below is a list of changes currently either enacted or proposed by several states in India:
Maharashtra
- The new conditions specify that overtime pay should be double the normal wages, as is currently standard. However, work hours can now extend to twelve hours per day and, including a rest period, cannot exceed 13 hours. Total working hours within a week cannot exceed 60 hours. By law, the standard working hours are up to 9 hours per day and 48 per week. With the new amendments, the standard working hours per day and per week have not changed, however, overtime rules have changed. Instead of the previous 75 hour per quarter cap, overtime can be worked up to 115 hours per quarter. In addition, overtime hours can be worked for up to but not more than seven consecutive day
Gujarat, Haryana, Himachal Pradesh, Rajasthan, and Uttar Pradesh
- Manufacturing facilities in Gujarat are not required to pay overtime to laborers.
- Haryana, Himachal Pradesh, and Uttar Pradesh still require overtime to be paid.
- Manufacturing facilities can require laborers to work 72 hours per week, an increase of 24 hours from the previous 48-hour workweek. Each laborer can work up to twelve hours a day on six working days in one week now, up from an earlier schedule of eight hours per day.
- Rajasthan and Uttar Pradesh withdrew their notification to extend working hours
Karnataka
- In Karnataka, the government is amending the Factories Act, Industrial Disputes Act, and Contract Labor Act. These laws increase the burden from an administrative perspective for facilities, requiring facilities to gain certain registrations, respond to industrial disputes, and conduct contract labor management. The amendments allow larger businesses in Karnataka to be treated as smaller businesses and exempt from the requirements of these laws
- Karnataka originally also proposed extending working hours, but withdrew that notification
- Another amendment in Karnataka increases the cap on overtime in factories from 75 hours per quarter to 100
Tamil Nadu
- In Tamil Nadu, a senior official stated that companies requested to modify the existing labor laws by extending working hours per day from eight to twelve and relaxing requirements of other legislation
- Night work is now permitted for women in Tamil Nadu
Analysis
- It is unclear whether the Indian federal government will intervene as states continue to amend labor laws. The International Labour Organization and several trade unions have written to Prime Minister Modi expressing concerns over the changes to the labor laws and the Labour Ministry has stated that changes are not in line with federal guidelines
- More states may consider suspension or amending of existing labor laws in order to compete with other states within the country, and to make them overall more competitive with other countries exporting to key markets
Recommendations from Fred Waelter, BSI Principal Consultant, Sustainable Supply Chains
- Brands, retailers, and vendors should monitor news related to additional deviations from current labor laws in India
- Companies should maintain vigilance with their social compliance programs and, absent the ability to conduct audits, maintain strong communication with suppliers in India
- Organizations with Codes of Conduct should emphasize to suppliers in India that the Code supersedes any labor regulations in the country, if the Code is more stringent, especially regarding working hours, the Code of Conduct should be adhered to over the local laws
- Companies may also refer to language in Codes of Conduct that state that overtime hours should be paid a “premium,” and push for hours beyond the standard 48 hours per week in India to be considered as overtime hours subject to a premium payment; the premium rate should follow what is legally-established as the overtime premium, which is typically double-time (200%) of the regular wage for all overtime hours worked
