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  • Writer's pictureNyayshastram

Is it Equitable to Prejudice the Rights of the Labourers to Revive the Economy?

Shashwat Baranwal & Shiwansh Tripathi, Students, West Bengal National University of Juridical Sciences


Like any other crisis which humanity has witnessed, COVID-19 has also hit the poor and underprivileged community the most. The government still has to find a way to tackle the migrant workers' crisis. What lies ahead is even more difficult policy decisions to be taken by the different state governments. Instead of managing the after-effects of the crisis, state governments have started making changes in labour laws to facilitate the manufacturing in their respective states. For revamping the staggering economy, the governments feel that these modifications in labour law are indispensable to attract more investment from the companies. The governments of UP, MP, Gujarat, and a few other states have decided to revoke most of the labour laws for approximately three years.[1] The article has been divided into various parts. The first part of the article talks about the emanation of the idea of labour laws. The second part deals with the steps taken by the state governments. In the next part, the author has portrayed how the suspension of labour laws can bring a conflict similar to what has been talked about in the Social Conflict Theory. The next part lays down the various issues pertaining to this suspension. And the last part is the conclusion.

The Labour Laws

After the cessation of the First World War, the leaders of different countries came together to form the International Labour Organization (ILO) in 1919.[2] India, then a British colony, was one of the founding members.[3] India, post-independence, remained a part of the ILO and has retained the idea of labour rights. Our Constitution makers had dreamed of making India a socialist state. The parliament, through the 42nd amendment, added the term ‘socialist’ in the preamble.[4] The notion of labour laws can be traced back through the Articles 21, 23, 24, 39(a), 39(d),41, 42, and 43 of the Constitution.[5] The Constitution was made to protect the rights of every citizen, including the marginalized communities. It allows the states to make special laws for the upliftment of these communities. However, taking away the laws made for the labourers can be seen as turning the laws in favour of the employers. Is it in consonance with the spirit of the Constitution?

What is the current scenario?

Uttar Pradesh's government, through an ordinance, has decided to abolish all but three labour laws in state for 1000 days. Before going into the matter, the author would like to analyze the law-making power through an ordinance by the state. Article 213 of the Constitution allows the state governments to make laws when the assembly is not in session.[6] This ordinance is only valid for six weeks after the commencement of assembly. However, this time there is something unusual; for the first time, a state is using an ordinance to repeal a pre-existing central law. An ordinance is an emergency provision and should be used during unusual circumstances to make laws. This ordinance is controversial as an ordinance is used to make laws for temporary periods (6 weeks) and not for more extended periods. Another concern that can be raised here is that how can a state government suspend a law made by the central government through a state ordinance?

In India, there are at least 44 central approved labour laws.[7] The Uttar Pradesh government has decided to repeal most of the labour laws except Building and Other Construction Workers Act, 1996, Workmen Compensation Act, 1923, and the Bonded Labour Act, 1976, Section 5 of the Payment of Wages Act, 1936.[8] Now, the government will not intervene in any dispute between the employer and the employee. The abolition of labour unions and non-interference of government in disputes will give unconscionable power to the employers. ILO Convention No. 144, which has been rectified by the centre, requires tripartite consultation between trade unions, employers, and employees.[9] The ordinance violates the convention as the government revoked the laws without consulting the trade unions and labourers. The Maternity Benefit Act, The Equal Remuneration Act, are also included in the list of revoked laws. This revocation might directly affect the women workers as they would be forced to work on low wages, which will be contradictory to the spirit of Article 39(d). However, one cannot conclude whether this step will have a positive impact on the economy, but it can definitely be used as a tool of oppression of poor labours by their employers.

How is this situation similar to what the Social Conflict Theory portrayed?

‘Exploitation of the labourers by their employers’, this situation is exactly what Karl Marx pointed out in his ‘Social Conflict Theory’.[10] Karl Marx talked about how the bourgeoisie (people having the power, capital and resources) will go on exploiting the proletariat (people who can only sell their labour) for gaining profits. One can say that as the social conflict theory is grounded on the fact that individuals in a society interact with each other due to conflicts and not due to consensus, therefore an employer and an employee can never be in a harmonious relationship. However, when the economy needs to be boosted, the suspension of labour laws is putting the interests of the labourers at stake as the industrialists will aim to maximize the profits. Furthermore, this might lead to the exploitation of the labourers. The ordinance is based on the assumption that an employer will work in favour of the labourers and will not violate their rights. However, the aforementioned assumption is puerile.

Why is the suspension of labour laws problematic?

If the state government blindly trust the employers, then there is no need to retain the remaining three laws. History has witnessed the draconian behaviour that the industrialists have in the absence of any regulatory authority. These laws have evolved in 150 years. The states’ decision to revoke these laws through an ordinance might be counterproductive. A crisis that has exposed the perils of workers, a better step would have been the catering of the loopholes of the Interstate Migrant Workers Act. However, the governments are taking it as an opportunity to pass the laws which may further dilapidate the situation of workers when this lockdown comes to an end. It is believed that strict labour laws act as a hindrance in the development of the Indian economy. However, there is no basis for this belief. Adequate infrastructure, skilful workers, macroeconomic stability, the degree of openness of the market, investment incentives are some of the other factors that allure the investors.[11] In a country where 90% of the workers are unorganized, it is difficult to understand how these laws are acting as an impediment to the economic progress of the country.

Instead of providing better incentives to labourers, the states are attacking the fundamental rights that they have. Repealing the system of inspection under the Factories Act was utterly uncalled as it had nothing to do with the economical working of industries. It was enacted to ensure the necessary facilities of human decency to the workers. Section 19 of the Shops and Establishment Acts 1962 deals with the discharge of employee by his employer. It specifies that an employer can fire an employee if the employee was unable to discharge the services for which he was hired.

Additionally, a notice before 30 days has to be provided with the cause mentioned. Revocation of this act, along with the revocation of the Minimum Wage Act during this pandemic, will make things worse for the poor labourers. Furthermore, the cap of minimum working hours is removed now. So, the workers might be forced to work more for fewer wages.

In India, we have both labour laws made by the centre and labour laws made by the state. The subject matter of many of the laws is intertwined. It is almost impossible to interpret an act in isolation. It is unclear at this phase how this ordinance will be implemented as the Bonded Labour Act is retained, but the Minimum Wage Act is revoked. The two acts are interrelated. The same goes for other acts. The ordinance is still waiting for the President’s approval, and then it will be interesting to see will it pass the test of Constitutionality in judicial scrutiny.

One cannot deny that COVID19 will leave an indelible scar of unemployment on the Indian economy, which cannot be removed easily. India has been witnessing unemployment for quite some time. States need to take steps to revive the economy and generate employment, and for that reforms are needed. However, these reforms should be equitable, and in synergy with the fundamental rights and human rights. There is no study present to back the claim that extinguishing labour laws will briskly revive the economy. On the other hand, the efficiency wage theory clearly states that higher wages and benefits to labours tend to increase production as they are motivated to work.[12] It is fundamentally valid that satisfied labour is vital for the growth of industries.


There is a lot to consider when we talk about ordinance like these whose issues are unprecedented and attracts a variety of questions on crucial aspects like Fundamental Rights, International Law, the ordinance making powers of a state government. In these calling circumstances when the whole nation is struggling against the pandemic; the migrant workers are walking barefoot in scorching heat to return to their homes as they neither have the money nor they have any means of transport, the governments should help them out. However, in the name of giving work, the government has set up a system that supports the industrialists and exploits the labourers.

Extraordinary circumstances indeed call for extraordinary measures. The governments would have been justified in making the laws more flexible for a shorter duration. Before suspending these laws, consultation should have taken between the people concerned, viz. the workers, the employers and the government. These suspensions have grossly violated the ILO conventions and are a threat to the labourers’ rights. The governments have been able to use the ordinance making power because of COVID-19. However, instead of creating a system for the benefit of the labourers, the government is using this health emergency as an opportunity to digress from a socialist to a capitalist economy. Also, the state governments can slightly modify the central laws as per the circumstances, but that does not give them the power to suspend the central laws outrightly. The Preamble of the Constitution of India refers to India as a socialist state, but these drastic reforms made for benefitting the industrialists portrays that the nation is supporting capitalism. Whether this move is good or bad, the future will tell.


[1] Hindustan Times, Some states put freeze on labour laws to get business going, May 09, 2020, available at (Last visited May 17, 2020). [2] International Labour Organization, History of the ILO, available at (Last visited May 17, 2020). [3] International Labour Organization, ILO in India, available at (Last visited May 17, 2020). [4] The Constitution of India, 1950, Preamble (Justice, social, economic and political). [5] The Constitution of India, 1950. [6] The Constitution of India, 1950, Art. 213. [7] The Economic Times, Govt introduces Labour Code on Industrial Relations bill in Lok Sabha, November 28, 2019, available at (Last visited May 17, 2020). [8] Supra note 1. [9] International Labour Organization, C144-Tripartite Consultation (International Labour Standards) Convention, 1976 (No. 144), available at (Last visited May 17, 2020). [10] Jorg Rossel, Conflict Theory, October 29, 2013, available at (Last visited May 17, 2020). [11] Bishnu Kumar Adhikary & Alemu Aye Mengistu, Factors influencing Foreign Direct Investment (FDI) in South and Southeast Asian Economies, (2008) Journal of World Investment & Trade, vol. 9, no. 5, HeinOnline. [12] Economics Help, Efficiency Wage Theory, available at (Last visited May 17, 2020).

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