Gujarat govt makes labour law flexible for industries with less than 300 workmen to 'hire and fire' without permission

Claiming to maintain a "striking balance" between industries and workmen, the Gujarat government has amended a labour law giving flexibility to industrial units, having 300 or less employees, to "hire and fire" their employees. The new provision has given power to employers for retrenchment, lay-off or closing down their units without seeking prior permission from the government. Earlier, this cap was restricted to 100 as prescribed under section 25K of the Industrial Disputes Act, 1947.

The state government has amended section 25K of the act by way of an ordinance which has been assented by the President of India and subsequently by governor Acharya Devvrat. Additional Chief Secretary to state government Vipul Mitra while confirming the development told DH that the amended act has been notified for implementation. He said that there has been a demand from the industries and also suggested by former finance secretary Hansmukh Adhia panel for economic revival in view of lockdown due to the coronavirus pandemic.

Existing provision of section 25K of the Industrial Disputes Act, 1947 provides for applicability of Chapter VB to such industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than one hundred workmen were employed on an average per working day for the preceding twelve months. In such establishments, prior permission of the State Government is to be required for the employer before effecting lay off, retrenchment or closure.

The state government has amended this section on the ground that "It is considered necessary to have provision which would help and encourage the employers to employ more number of workers in the establishment and therefore, said section 25K is amended so as to increase the number of workmen from one hundred to three hundred." Section 5N of the act has also been modified that has provision of three months' notice or wages for the notice period. The government has done away with wage for the notice period. The ordinance states, "To provide additional financial security to the workman affected by such retrenchment, it considered necessary to amend sub-section (9) to the effect that in addition of that compensation, as prescribed in the said sub-section, the workman is paid an amount equivalent to his last three months average pay."

This decision is going to benefit nearly 40 to 50% of the industrial units, a senior official said while adding that there are over 40,000 units in the state. A statement in the ordinance claims that since inception Gujarat has been an "industrially progressive state" and in the "last decade, it has become an industrial hub and growth engine of the country." It says that the state has a record of "cordial relations" between industry and workers and there have been "hard any occasion of strikes or lock-outs."

It goes on to say that since "more and more industries are being established, the state government has considered it necessary to strike the balance of interests between the industries and the workers and create an environment which is conducive to both, the industry and the workers."