Aayush Agrawal, I-year student at National Law Institute University, Bhopal.
Introduction
On 20th December 2022, the Assam government led by Dr Himanta Biswa Sarma introduced 10 labour law amendments.[1] This action was taken with the aim to decriminalize labour laws in Assam. Labour welfare minister Sanjay Kishan presented the Bill in the Assam Assembly and said, “The rationale behind decriminalization is that imprisonment is too severe a consequence for economic offences that do not involve mala-fide”.[2]
The tabled Bills are: [3]
– The Minimum Wages (Assam Amendment) Bill, 2022 The Plantations Labour (Assam Amendment) Bill, 2022
– The Industrial Disputes (Assam Amendment) Bill, 2022
– The Equal Remuneration (Assam Amendment) Bill, 2022
– The Payment of Gratuity (Assam Amendment) Bill, 2022
– The Contract Labour (Regulation and Abolition) (Assam Amendment) Bill, 2022
– The Beedi and Cigar Workers (Conditions of Employment) (Assam Amendment) Bill, 2022
– The Building and Other Construction Workers Welfare Cess (Assam Amendment) Bill, 2022
– The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Services) (Assam Amendment) Bill, 2022
– The Building and Other Construction Workers (Regulation of Employment and Condition of Service) (Assam Amendment) Bill, 2022
The basis on which it is proposed is to improve the “ease of doing business”. Criminal penalties involving imprisonment are often the result of unintended offence and it increases the apprehension of employers, which may become a cause of low business investment. One of the Bill seeks to amend the Minimum Wages Act, 1948 related to private sector employees by bringing civil penalties. It proposes to amend penalties for certain offences under Section 22 of Minimum Wages Act, 1948 and the insertion of a new Section 22A compounding of offences. In all the Bills, the punitive measure of imprisonment has been removed but the amount of fine has been hiked several times. Employers will be compelled to structure internal procedures to ensure there are no failures to comply with the rules set as failure would result in heavy fines.
The onset of COVID-19 affected every state especially small businessmen and investment also declined. In the ease of doing business ranking Assam’s rank fall to 20th from 17th which is also a reason to bring employer-friendly provisions to the state. In this article, the author tries to analyze the decriminalize move taken by the Assam government. The author intends to analyze how far this move is justified to improve Assam’s ranking in ease of doing business and to bring more investment. It is even more important to bring amendments since Assam is a strategic location that connects North-east India with the whole country and also connects internationally to Bhutan and Bangladesh.
The need for an Amendment
When there is no presence of wrong intention but there is economic wrongdoing, imprisonment regardless of its severity is too severe a consequence. Ordinarily citizens of India including employers find involvement of the law in business as burdensome. This is especially true when there is a likelihood of imprisonment for a wrong that was not intentional. They are not able to maximize their business potential. By decriminalizing laws, they will feel significantly less in fear and will be able to conduct their business smoothly. This, in turn, will also promote ease of doing business for the state.
One of the primary objectives of decriminalization is to have smoother business with the needs of workers and society at large. While decriminalizing the laws to promote moral and ethical businesses workers’ interested is kept in focus in labour laws. It also relieves agitation among business entities to conduct business in the state. Decriminalization is a step in a positive direction in not-so-grave offenses or minor offenses because criminal penalties due to too many laws, rules, and regulation compliances or poor understanding of laws will not be the situation now. The other reason for appreciation of the step taken by the Assam government to decriminalize is that it will help the judiciary in improving its efficiency for the reason it reduces the prosecutions brought before the court.
Although decriminalization has a positive impact it is often argued that the monetary penalties imposed on them may not have a serious difference as criminal penalties have and corporate entities with high turnover can have an advantage. To solve this dilemma of unfair advantage we have Industrial Dispute Act, of 1947 which clearly specifies in its schedule V that unfair labour practice will not be condoned. Some of the examples of unfair labour practice by employer are given below:
– The employer imposing any penalty or giving threats to dismiss from the service.
– Firing any employee on false allegations, and little mistakes made by the workers.
– Assigning work to contractors instead of workmen.
– Maliciously transferring workers.– Appointing contract workers to cut down on the wages and compensation that permanent workers must receive.
– Paying fewer wages concerning the work assigned to workmen.
It is pertinent to note that Assam had slipped three places from 17th to 20th rank in the ‘Ease Of Doing Business’ index in India. However, Assam was also one of the seven states in the ‘The Aspires’ category as per a list released by the government in the EoDB rankings 2022. Hence, this move may be seen as a measure to reduce the compliance burden on citizens and businesses, thereby improving Ease of Doing Business.
Section 22 of the Minimum Wages Act, 1948 deals with penalties for certain offences which primarily include violation of the minimum wages or working hours, or may include violation of any rule or order by the employers. These are punishable by either penalty which may extend up to INR 500 or imprisonment for a term which may extend up to six months. Section 22A of the Minimum Wages Act,1948 (hereinafter this Act) provides general provision for punishment of other offences that encompasses employer violating any provision of this Act or any rule or order made under this Act for which no penalty is given under this Act shall be fined with an amount which may extend up to INR 500.
The amendments in these bills also intend to increase the maximum penalties that can be imposed. If an organization does not comply with the act, the increase in penalties will create a deterrent effect for which they exist. The authorities will then have the discretion to impose penalties up to and including the new maximum. Earlier the punishment for a person/employer who refuses to cooperate with the police inspector or who tries to obstruct the inspector in any way (such as not cooperating with the inspector, failing to produce documents, failing to show up for questioning) was punished with an imprisonment up to 3 months or fine of rupees thousand or both. While more serious offences such as not following directions issued by the government committees or defaulting to comply with this Act, like fixing hours for normal day/ equal pay for equal work, then the punishment of imprisonment up to 6 month or fine of Rs.5000 or both can be given. Some of the effects of the amendments to the bills are that people failing to comply will have to pay a fine several times higher than they have to currently pay. However, there will be no prison time for them.
The situation at the Centre and in other states relating to decriminalization in labour laws
AT THE CENTRE:
It is pertinent to note that both the parliament and the state legislature are competent to make laws on labour. This is because labour is a subject matter which comes under the concurrent list of the Constitution. The states can form their own law on labour and pass them or amend central laws on labour but when there is a conflict between the application of central or state laws, the central law will prevail. However, the state law may prevail over the Central law upon receiving assent of the President, by virtue of Article 254 of Indian Constitution. The Second National Commission on Labour (2002) observed that the present labour laws are complex and out dated since some of them were written pre-independence and need amendments to counter the requirements of contemporary young business investors.
In March 2020, the Government of India imposed nationwide lockdown and other effective measures to curb the spread of COVID-19. A large number of economic activities were suspended, and certain businesses suffered huge losses that negatively affected the state’s income. With the purpose to encourage economic activity and attract capital investment, the Centre established four labour codes with an emphasis on decriminalization. In addition, it allowed states to relax their labour laws. A primary reason for criminalization in labour law is the presence of general penalties for offences in most legislations.
Employers have an advantage after the passing of the labour codes because the labour ministry has decriminalized imprisonment provisions under various sections of existing labour laws. It has also introduced compounding of offenses for the first time except for grievous offences. The old labour laws included imprisonment between 3 months and 1 year for not maintaining records of whitewash in canteens or between 1 and 3 years for not furnishing an annual return of holidays to the Inspector under the Factories Act, 1948 or between 3 months and 1 year for not-displaying Notice showing date of payment of wages under the Payment of Wages Act, 1936 etc. Under the new codes if any offence is punishable by imprisonment up to one year, and such crimes are committed for the first time they can be compounded by an authorized officer under the revised labour codes. Compounding of repeat offences is also possible after a 3-5 years gap. Procedures for compounding the crimes have been made simple.
The Labour and Employment Ministry, introduced provisions with hefty fines under the labour codes. This was done to ensure that there are no breakdowns in compliance by imposing severe deterrent provisions and fines for internal operational processes. Decriminalization makes compliance easier and provides records under the new Labour Codes. Through these legislative decriminalization initiatives, barriers-creating penal restrictions will be removed, fostering trust in conducting business.
MAHARASHTRA
Similarly, Maharashtra amended this Act in 1963 by adding a provision that penalties for obstructing inspectors will result in a fine of up to 500 rupees. It does not include any provision of imprisonment for obstructing inspector in his duties. Recently, in order to create a more business-friendly environment the legislature has accepted amendments to various labour laws to decriminalize them and increase fines. Additional Chief Secretary (industries) headed a committee for decriminalization of certain offences required under various state Acts. The committee was directed to review the provisions of criminal punishment and accordingly, Sections 131(b)(2), 90(c) and 118 of the Maharashtra Police Act, 1951 as well as Sections 7(1) and 9 (3) of the Maharashtra Cinema (Regulation) Act, 1953 have been approved for amendment.
Criticism of the Bills
One of the main criticism of the opposition was that these bills should not completely decriminalize the acts. This is because the cooperating heads can simply pay the fines and move on. These amendments in the favour of the rich (employers) as the penalties will be problematic for the employers with lower levels of resources as their income has not increased in the same proportion as the fines are being raised. It was argued that jail terms correct a person and also serve as a greater deterrent against breaking any law than imposing a monetary penalty alone.
The other criticism of the bills was that the bills were passed by voice vote without even referring a single bill to the House select committee for further analysis of the bills. Any amendment to a law is a long process and a thorough review is necessary when so many bills are brought together by the government. The State should work to prevent the concentration of wealth and means of production in a few hands, with an objective that worker’s exploitation be prevented and it should also try to ensure that the guidelines given under the Directive Principles of State Policy of India have been adhered to while framing laws to establish a just and fair society in the country. Article 39 of the Constitution states that the state will make sure that they provide sufficient sources of subsistence to all people. In particular Article 39(b) states that the resources and the ownership of those resources and materials shall be distributed in such a way that it fulfills the common goal and Article 39(c) which talks about the economic system shall be executed so that the concentration of wealth and means of production shall not result in a common detriment.
In a landmark Supreme Court judgment of the State of Bihar v. Kameshwar Singh, the Hon’ble Court explicitly held that any legislation that aims to reduce the accumulation of wealth in the pockets of a few and promotes an egalitarian approach would benefit society as a whole, encouraging inclusive development that would further the cause enumerated in Article 39(b) and (c) of the Indian Constitution.
The common goal of the state is the welfare of the people. Presenting new legislative bills will benefit the employer, but how it will be helpful to employees is still a question that the government has not answered. There is a possibility that Assam’s new legislation if bought into force it may lead to a rise of riches and means of production at the expense of the labourers working over there.
Analysis
The main work force (persons who work for 6 months or more during the reference year) in Assam has declined from 74.6 percent in 2001 to 72.6 percent in 2011. This is hinting at the growing number of workers migrating from the state in search of better jobs elsewhere in the country. Total work force in Assam stood at 119.69 lakhs distributed among cultivators, agricultural labourers, household industries workers.
Demand for a House standing committee review of the bill is valid and reasonable as the ‘Vidhan Sabha’ may not efficiently discuss all the issues at length. Further, it lacks a broad understanding of all the matters that confront it. Therefore, it is essential to form a committee to discuss its pros and cons. There is no use in making laws without carefully considering how they will affect the people who will be impacted by them, and therefore this committee should submit its findings to the House. This is because it could have an adverse effect of what was intended. Additionally, the committee report adds value to the bill by recommending necessary amendments to it.
Conclusion
According to official figures, Assam has received an average of 150 crore INR foreign direct investment quarterly for the past 3 years.” These bills are claimed to be a step to bring more capital to Assam. All the data present in the public domain related to the bill shows that the government has a genuine belief that decriminalization will help the state in improving its ranking in Ease of Doing Business by bringing more investment to the state. These bills are in favor of the development of Assam as an economic power.
Workers migrated from villages to cities. They were attracted by higher wages, comforts and recreation of city life; but they can be exposed to bad working conditions, long hours of work, low wages, health hazards among other things because of decriminalization since they will not be in any kind of apprehension of criminal penalty. Taking responsibility for the well-being of labor by companies, unions, governmental and non-governmental organizations and organizations is referred to as labour welfare. Anything done for an employee’s comfort and improvement that is supplied in addition to their pay is referred to as welfare.
The idea of labour welfare has changed significantly. Every community has its own standards of morality and behaviour. A worker must uphold the company’s ethical standards. There are social do’s and don’ts. Social and economic development of the Assam has to be towards the enactment of labour welfare and labour protective legislations. Government should take responsibility of workers’ welfare or to enforce legal measures to protect the interest of the workers but the new legislation presented in the form of the bill is in the favor of employers and not employees. The objective of labour laws is ease of labour and without it no state can improve its industrialization or grow to its full potential. Therefore, the bills, require a reconsideration before they become the act.
Endnotes[1] Bikash Singh, ‘Assam tables bill to decriminalize labour law’ (Economic Times Dec 21, 2022 ) – https://economictimes.indiatimes.com/news/india/assam-tables-bill-to-decriminalise-labour-law/articleshow/96379980.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst – accessed on December 26,2022[2], [3] & [4] Sahithi Reddy, ‘Assam Tables Bill To Decriminalize Labour Law’ (lawyersclubindia Dec. 23, 2022) – https://www.lawyersclubindia.com/news/assam-tables-bill-to-decriminalize-labour-law-20527.asp – accessed on December 26,2022[5] GPlusNews, ‘Assam Slips Three Places to 20th in Ease of Doing Business’ (Guwahati Plus Sept. 7, 2022) – https://www.guwahatiplus.com/guwahati/assam-slips-three-places-to-20th-in-ease-of-doing-business – accessed on December 28, 2022[6] PTI, ‘Seven states among top achievers in ease of doing business ranking of states, UT’s’ (Times of India June 30, 2022) – http://timesofindia.indiatimes.com/articleshow/92570898.cms – accessed on December 27, 2022[7] & [8] Minimum Wages Act, 1948 (11 of 1948) S. 22[9] The Constitution of India, 1950 (Article 246)[10] The Constitution of India, 1950 (Article 254)[11] Bhupender Yadav, ‘Decriminalization of existing Labour Laws, securing Shram Yogis’ (State Times June 5, 2022) – https://web.statetimes.in/decriminalization-of-existing-labour-laws-securing-shram-yogis/ – accessed on December 28, 2022[12] Minimum Wages Act, 1948 (11 of 1948) S.22[13] Priyanka Kakodkar, ‘Maharashtra cabinet OKs amendments decriminalizing labour laws’ (Economic Times Dec. 14, 2022) – https://timesofindia.indiatimes.com/city/mumbai/maharashtra-cabinet-oks-amendments-decriminalising-labour-laws/articleshow/96211932.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst – accessed on December 28, 2022[14] State of Bihar v. Kameshwar Singh (1952) 1 SCR 889[15] & [16] Bikash Singh, ‘Main work force in Assam declines’ (Economic Times May 24, 2013) – https://economictimes.indiatimes.com/news/politics-and-nation/main-work-force-in-assam declines/articleshow/20248389.cms – accessed on December 28, 2022[17] Department for promotion of industry and internal trade, “Foreign Direct Investment: Inflow: INR: Assam” – https://www.ceicdata.com/en/india/foreign-direct-investment-inflow-by-state-inr/foreign-direct-investment-inflow-inr-assam – accessed on December 28, 2022
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