With labour laws in UP, MP being suspended, here is how the hire and fire policy works

New Delhi, May 11: The states of Uttar Pradesh and Madhya Pradesh have frozen major labour laws, except the basic ones with the hope that businesses will recouple from the blow that the coronavirus has dealt.

These changes give the industries more flexibility to hire and fire employees. It also gives them more flexibility in determining wages and reduce liabilities in terms of providing employee benefits.

It has been argued that this would clear the structural bottlenecks and this in turn would lead to greater investment and also create employment opportunities for migrant workers who are returning home.

The question now is who does this apply to. It would not be applicable to 90 per cent of the work force, which is employed in the informal sector. These changes would however be applicable to those part of the organised workforce and registered firms.

In UP, key labour laws have been suspended for 3 years and MP too did the same. UP passed the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance 2020. This exempts businesses, the manufacturing sector mostly for three years from labour laws barring four: Building and Other Construction Workers Act; Workmen Compensation Act; Bonded Labour System (Abolition) Act; and section 5 of the Payment of Wages Act, which says that timely wages have to be paid and the Maternity Benefits Act.

This means that several laws would not be applicable. These are the Factories Act, which speaks about the work hours provisions. This means that the employers need not abide by it any more.

Now coming to the key point with regard to hire and fire. The Industrial Disputes Act in UP and MP remains suspended. In UP, this act covers 12 sectors that amount for four-fifths of manufacturing output. The law says that a 30 to 90 day notice period is required before firing workmen. It also says that in the case of manufacturing units, plantations and mines with 100 or more persons, lay offs require the approval of the government.

However, with the law remaining suspended the approvals would no longer be required.