Congress Follows in BJP’s Footsteps, Eases Retrenchment Norms in Punjab

New Delhi: In a bid to jump the ranks of ‘ease of doing business’, the Congress–led Punjab Government has approved several amendments to the Industrial Disputes Act, 1947, including easing retrenchment norms in the state.

Interestingly, decision coincides with the 2019 edition of the Progressive Punjab Investors’ Summit that’s underway in Mohali from December 5-6.

The state government has amended Section 25K of the Act, allowing factories with up to 300 workers to retrench, lay off or close down the unit without seeking the government's permission. Earlier, only factories with up to 100 workers could do so.

This is exactly what Congress’s rival, Bharatiya Janata Party–led governments did in the past few years in Rajasthan, Madhya Pradesh, Maharashtra, Jharkhand, Assam, Haryana and Gujarat, among others – all in the name of ‘business-friendly labour reforms’ while making the livelihoods of the workers more insecure than ever.

The Punjab cabinet, headed by Chief Minister Captain Amarinder Singh, in addition to easing retrenchment norms, also gave its nod to amend Sections 2A, 25K, 25N and 25-O of the 1947 ID Act.

Race to the Bottom in Labour Standards

Apart from establishing, once again, the similarities in the economic agenda that the two national parties champion, the labour amendments in Punjab also present an underlying concern for the labour force in the entire country.

On November 28, the Narendra Modi government presented a new draft Industrial Relations Code, 2019 – the third one out of the four labour codes – in the Lok Sabha. The code subsumes three key existing central labour laws – Industrial Disputes Act, 1947; Industrial Employment (Standing Orders) Act, 1946; and the Trade Unions Act, 1926.

Though, in the code, the Central government has withdrawn the proposal of giving flexibility to the establishments to retrench the workers, it has proposed to allow the state governments to ease retrenchment norms. This is so because labour is a concurrent subject and, states can bring in their own amendments.

After drawing flak from trade unions on the earlier proposal, the 2019 draft IRC retains the present threshold of 100 workers, above which an establishment is mandated to seek government nod prior to retrenching, laying off or shutting down a unit. However, a provision is included in the code to safeguard the amendments brought in by the state governments, easing the norms.

What this means is that even though the code does not appear lax with regard to labour standards, it sets the legal grounds for the respective states to race towards too much labour flexibility, in order to woo industry and pave way for investments in the state. The Punjab government is latest to follow suit.

What’s more, the Bill also proposes to ensure that both Centre and state governments do not have to go through Parliament or legislative Assemblies, respectively, to increase or decrease the threshold for providing flexibility to employers, as reported by Business Standard.

Reacting to recent changes in labour law, A K Padmanabhan, former President of Centre of Indian Trade Unions (CITU), termed it as “notification raj” under the Narendra Modi-led Bharatiya Janata Party government where every law can be “tweaked” through a notification.

“The present form of IRC is prepared in a manner that neither parliamentary review nor any consultation with a stakeholder will be required to bring changes to the labour standards,” Padmanabhan told NewsClick.

Calling Congress as “representing the same people”, Padmanabhan said, “both the national parties have always stood together when it comes to curbing the rights of the workers,” adding that there is “no difference” between the two in terms of their labour policies.