Saturday 10 April 2021
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EconomyCompanies with fewer than 300 workers can hire and fire

Companies with fewer than 300 workers can hire and fire

Rajasthan, which had revised the threshold for companies upward to a minimum of 300 employees, has seen an increase in employment and a decrease in retrenchment

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The Narendra Modi government will soon allow companies with fewer than 300 workers to recruit and sack employees without seeking prior state permission. The labour ministry has proposed changes to rules in a bill introduced in Lok Sabha on Saturday.

The proposal, which was the bone of contention between the ministry and trade unions, is part of the Industrial Relation Code Bill 2020, aimed at improving the status of ease of doing business in the country.

As of now, the government allows only such companies that have fewer than 100 employees to hire and fire their staff without the labour ministry’s permission.

Labour Minister Santosh Gangwar introduced the bill today amid opposition from the Indian National Congress (INC) and few other parties.

The treasury benches had introduced the Industrial Relation Code Bill 2019 in Lok Sabha last year. It subsequently sent the bill to the Parliamentary Standing Committee on Labour. The government withdrew that bill today.

A previous draft bill that the labour ministry had circulated for discussion had proposed the criterion that companies having not fewer than 300 employees could hire and fire without government permission. However, this provision faced stiff opposition from trade unions and was not included in the 2019 bill.

Earlier this year, the parliamentary committee had made a case of letting companies with fewer than 300 workers go for retrenchment of staff or closure without government permission.

States like Rajasthan have increased the threshold to 300 workers already. This, according to the labour ministry, has resulted in an increase in employment and a decrease in retrenchment, the committee had pointed out in its report.

With regard to the threshold, the government has proposed Section 77(1) in the The Industrial Relation Code 2020.

According to the section, the provisions of “this Chapter (lay-off, retrenchment and closure in a certain establishment) shall apply to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than (sic) three hundred workers, or such higher number of workers as may be notified by the appropriate Government, were employed on an average per working day in the preceding twelve months”.

Apart from this code, two others — Occupational Safety, Health And Working Conditions Code, 2020 and the Code On Social Security, 2020 — were introduced by the minister in Lok Sabha.

Among others, INC leaders Manish Tewari and Shashi Tharoor opposed the introduction of the three bills.

Tewari noted these three bills were fundamentally changed versions of their earlier forms. He urged the minister to withdraw them and hold wider consultations before introducing them. These bills are a blow to the rights of workers, he argued.

With respect to the industrial relations code, Tharoor said it severely restricted the right of workers to strike and also allows state or central governments to amend the threshold for applicability relating to layoffs and retrenchment.

In Lok Sabha, Gangwar said that over 29 labour laws had been merged into four codes. He said that one of them had been passed already.

The Code on Wages Bill, 2019 became a law last year.

Gangwar noted that the government had engaged in wider consultations over these bills with various stakeholders. He said that the government had received more than 6,000 comments online on the bills.

The government sent these bills later to a standing committee and accepted 174 of its 233 recommendations, the minister added.

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