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surendra pratap (Researcher in labour economics)     14 September 2010

Making labour laws meaningless without amending it

Making labour laws meaningless without amending it

Surendra Pratap, September 14, 2010

With the advent of globalization and liberalization, there was a major policy shift in India from import substitution to export oriented growth; and from mixed economy to corporate led economic growth. The policies of liberalization were meant to remove all barriers in all possible way to exploit nature and human labour and to promote easy transfer and centralization of ownership of natural resources and other means of production in corporate hands. Privatization of the public sector, opening of the economy to foreign capital, liberalization of the trade, transfer of huge amount of agriculture land to the industrialists by uprooting lakhs of people and efforts to amend the labour laws to make hire and fire smooth and easiest; were all parts of the policies of liberalization. The issue of labour law reforms emerged as one of the major focus areas in the corporate agenda. Particularly after 1990, representatives of both national and international capital, pro-liberalization economists, national and global media started crying in chorus against labour laws, as if all the problems of earth are created by the ‘rigid labour laws’. The agenda was for total reforms but major focus was against some crucial sections of the labour laws which provide any kind of service security or ensure any rights of workers at workplace, put any obligation on management to ensure wellbeing of the labour or provide any power to labour for collective bargaining or provide for routine inspections to ensure implementation of labour laws. The labour laws which are major targets can be listed as follows:

1.      Chapter V-B (section 25-K to 25-S) of the Industrial Disputes Act 1948, which makes it compulsory for the units with 100 or more workers, to take prior permission from the government before moving for retrenchment, Lay off or closures. It is to be noted that prior to 1976 this threshold limit was 300 or more workers, and after a long struggle by trade unions, the threshold limit of 100 or more workers was introduced in 1976.

2.      Section 25 B, F and N of the ID act, which provide grounds for the claims of regularisation of the workmen who completed continuous service of 240 working days in the establishment

3.      Section 9-A of the ID Act which makes it compulsory for employers to give 21 days’ notice to the workmen or to their union before effecting any change in conditions of service.

4.      Contract Labour (R&A) Act 1970, which prohibits employment of contract labour in core activities and in jobs which are perennial in nature; and also provides for regularisation of the workers who are employed as contract labour in such jobs

5.      Trade Union Act 1926; which guarantees rights to form trade union and also the rights for collective bargaining. The Act was amended in 2001. The amendment introduced a provision that a trade union can be registered only when 10 percent (subject to minimum of seven) or 100 workers of the unit are its members. Before amendment only 7 members were required to register a union


The policy of special economic zones goes one step further in terms of realizing the corporate agenda of labour law reforms. SEZ rules 2006 directs the state governments to declare all the activities in the enclaves as ‘public utility services’. Under section 22 of the ID Act, 14-days notice is compulsory before employees undertake a strike or the employers a lockout, in any public utility service. The powers of labour commissioner are also delegated to the development commissioners of SEZs. And then a major move starts by the state governments to amend the labour laws (or exempt from crucial provisions) in general and specifically for SEZs.

It is also worth mentioning that the government of India is coming out with a policy for establishing National Manufacturing Industrial Zones (NMIZ) in which labour laws will be more flexible and all NMIZ units will be declared Public Utility Services on permanent basis. For NMIZs following aspects of the labour laws are proposed for review:

1.      Employment of women in three shifts;

2.      Temporary status of employees;

3.      Flexibility to downsize;

4.      Contract Labour Abolition Act will not be applicable to the units in the NMIZ.

5.      Number of hours per shift

6.      Social security scheme for the work force – the SPV may work on a Social Security scheme for all the workers engaged in the NMIZ.

7.      The right to join unions would be confined to workers drawing salary below a certain limit.

The labour law structure proposed for NMIZs is very much similar to the Special Economic Zones. If it goes unopposed, it will have devastating impact on workers and their organizations in Indian economy as a whole; since virtually whole economy will become Special Zone economy and the labour laws will become virtually meaningless.

However, even when there is no major change in labour laws, labour law administration machinery is made almost defunct and a phase of extreme violations of labour laws have started. It is also accompanied with a phase of anti-labour judgments. A series of judgments came with totally different interpretation of labour laws than what was interpreted in earlier phase. Actually many interpretations changed the meaning of labour laws in tune with the agenda of labour law reforms. Either it is a case of retrenchment, closure or issues of contract/casual labour, the workers are in general, not getting any relief. To understand the recent approaches of the judiciary we can cite here one example. One subject that comes up frequently in recent Supreme Court judgements is the status of casual labourers employed both by government undertakings and private concerns. While the workers demand regularisation because of their long service and contribution of work equal to that of the regular employees, the managements deny these claims. The High courts give varying orders on these stands and the Supreme Court has to sort them out ultimately, though not satisfactorily.[1] In a recent Judgment in Uma Devi's case on temporary, contractual, casual, daily wage or adhoc employees/workers ('Secretary State of Karnataka and Others Vs Uma Devi and Others), delivered by the Constitution Bench of the apex court on April, 10, 2006, it is held that the casual, daily rated, adhoc, temporary employees have no right to claim regularization in service.[2]

The situation is so worse that recently apex judiciary made an open self criticism in this regard. Division Bench of Justice G S Singhvi and Justice A K Ganguly, in two separate orders, cautioned judges of the Supreme Court and Constitutional courts that “precarious consequences” will visit the nation if they dilute constitutional imperatives to promote the “so-called trends of globalization”. Further, Justice Singhvi, observed how he had noticed a “visible shift” generally in the courts’ approach in dealing with cases involving the interpretation of social welfare legislation like the Industrial Disputes Act. Justice Singhvi said in his order, “The attractive mantras of globalization and liberalization are fast becoming the raison d’etre of the judicial process and an impression has been created that the constitutional courts are no longer sympathetic towards the plight of industrial and unorganized workers”. Justice Singhvi said a large number of cases end up with the workmen being denied any relief from judges, who readily accept the justification employers give about such “illegal retrenchments.”[3]

In this anti-labour environment, the industries actually do not care for labour laws. Industrialists both local and foreign are virtually creating hell for the workers in the industrial centers all over India. The problems are not only of wages; the workers are virtually treated as slaves, worse even, they are treated as machines. They do not get time to go to toilets or to drink water; they are abused and physically punished for not achieving inhuman work targets. Women workers are verbally and physically harassed. Workers do not get any time for themselves or their family; even if one’s child is ill he/she does not get leave to take him/her to the hospital. In many factories they work 10-12 hours (+ at least two hrs transport time to-and-fro) a day and 7 days a week. They are thrown out again and again without any fault at their end. They keep on moving from one factory to another with intermittent periods of unemployment. Majority of workers are employed through contractors and mostly they have no proof of employment, so their PF/ESI contribution is also looted. Finally after squeezing all the juice from their life, they are thrown out of labour market at the age of 40-45.

This is the general situation. Generally the whole state machinery works in favour of industrialists and against the labour. In these situations only trade unions are able to insure betterment in the working conditions by way of compelling the management to provide space for collective bargaining. Hence, we see a new wave of unionization efforts on the one hand and an all-round attack on trade unions both by the management and the state on the other. The workers who attempt to form the trade union are victimized. Getting a hint of unionization efforts, ‘problem’ workers are thrown out in now time. Many times not only police, but local goons are engaged to suppress the ‘problem workers’. Where ever the workers succeed in organizing themselves to form trade union, the registration of the union is delayed and the management gets time to foil such efforts by victimizing the workers. Many times, managements throw out all leading workers and if a collective protest starts they declare lockout (temporary shutdown of the factory) and then an unimaginable repression is unleashed against the workers.


It is interesting to note that in 2009-10, majority of well publicized cases of workers struggles were centered around only two issues: a) Against victimization and repression for forming trade union; and b) Demand for regularization of casual/contract workers.

Shrinking Legal Boundaries for Trade union action

India has neither ratified ILO convention on Freedom of Association and Protection of the Right to Organize 1948 (C. 87), nor the Right to Organize and Collective Bargaining Convention, 1949 (C. 98). According to the Government, ratification of C.87 and C.98 would involve granting certain rights that are prohibited under the statutory rules for government employees, namely the right to strike and criticize openly government policies, the right to accept freely financial contribution, the right to join freely foreign organizations, etc. Since there is no change in the basic policies, the Government of India was unable to ratify these two Conventions.

Therefore, the Trade Union Laws of India provides right to association only with a limited scope and limited framework. The Police and Armed Forces do not have right to form trade union. It is also not applicable in the state of Sikkim. In the State of Sikkim, registration of trade unions is subject to a police inquiry and then depends upon receiving the permission of the Land Revenue Department of the Government of Sikkim. One negative comment by the police about a member of the union's executive can be ground for refusing registration. Moreover, the objection can also be made by general public against the registration of a particular trade union and it can also prevent the registration.

However, with the above exceptions, the workers of India have got right to form trade unions as provided in Trade Union Act 1926 and to practice collective bargaining in the framework and limitations provided in Industrial Disputes Act 1947.

It is worth mentioning that only when the unions are recognized by the management then only they have the full-fledged rights as bargaining agent on behalf of workers. But both the Trade Union Act 1926 and Industrial Disputes Act 1947 are completely silent on the issue of recognition of trade unions. There is no law for compulsory recognition of trade unions. There is no legal obligation on employers to recognize a union or engage in collective bargaining. As a result, on the one hand, the managements can refuse to recognise a particular union and refuse to engage in collective bargaining with a union or they can choose one union against the other for their own benefit. Managements are at freedom to recognise both minority and majority trade unions as bargaining agents and are free to make collective agreements with their pocket union and impose on the workers. The statutes of only few states like Maharashtra, Gujarat, Madhya Pradesh and Rajasthan have made provisions for recognition of unions with a specific percentage of the workforce.

In India, right to protest is a fundamental right under Article 19 of the Constitution of India; but right to strike is not a fundamental right. Right to strike as also the right to lock out is a legal right governed by Industrial Disputes Act 1947.

Under Industrial Disputes Act 1947, the conditions are laid down for a strike to be legal and justified. These conditions drastically limit the freedom of trade union actions.

1.      Under section 10k of the ID Act, the State Governments, may for securing the public safety or convenience or the maintenance of public order or supplies and services essential to the life of the community or for maintaining employment or maintaining industrial peace, make provisions for prohibiting strikes or Lock-outs

2.      Under section 22 of the ID Act, Strikes and Lockouts in the Public utility services is prohibited in terms of : no worker in these services can go on strike in breach of contract : (a) without giving to the employer notice of strike, within six weeks before striking; or (b) within fourteen days of giving such notice; or (c) before the expiry of the date of strike specified in any such notice as aforesaid; or (d) during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings.

3.      Section 23 gives directions for General Prohibition of Strikes and Lockouts during the pendency of conciliation, arbitration and court proceedings and even few days or few months after conclusion of such proceedings; and also during any period in which a settlement or award is in operation.

4.      Under section 24 of the ID Act, such strike is declared illegal which is commenced or declared in contravention of section 22 or section 23 (above two points); or continued in contravention of an order; or continuance of a strike in pursuance of an industrial dispute, when dispute is referred to a Board, an arbitrator, a Labour Court etc.

In the first schedule of the Industrial Disputes Act 1947, a list of industries is given which can be declared as public utility services. These include, Transport (other than railways) for the carriage of passengers or goods by land or water, Banking, Cement, Coal, Cotton textiles, Foodstuffs, Iron and steel, Defence establishments, Service in hospitals and dispensaries, Fire brigade service, India Government Mints, India Security Press, Copper Mining, Lead Mining, Zinc Mining, Iron Ore Mining, Service in any oil field, Service in uranium industry, Pyrites mining industry, Security Paper Mill, Hoshangabad, Services in Bank Note Press, Dewas, Phosphorite mining, Magnesite Mining, Currency Note Press, Manufacture or production of mineral oil (crude oil), motor and aviation spirit, diesel oil, kerosene oil, fuel oil, diverse hydrocarbon oils and their blends including synthetic fuels, lubricating oils and the like, Service in the International Airports Authority of India, and Industrial establishments manufacturing or producing Nuclear Fuel and Components, Heavy Water and Allied Chemicals & Atomic Energy.

It is clear from the above that wide range of industries (included in the first schedule of the ID Act) are protected from the strike. The compulsory notice period of 14 days and prohibition to go on strike during pendency of conciliation etc. make the weapon of strike toothless.

Amending the Trade union Act

The Trade Unions Act 1926 was amended in 2001 and after the amendment it became more difficult to form the trade unions. In the Act of 1926, only seven members were required to register a trade union, but after amendment at least 10% or 100, whichever is less, subject to a minimum of 7 workmen engaged or employed in the establishment are required to be the members of the union before its registration.

Actually, in practice, in most of the cases, trade unions are formed and applications are sent for registration secretly. Only when the union is registered, it is made public. If any how the information is leaked before registration, the leading workers face worst kind of victimization and all efforts for unionization are foiled by the management. In these situations, it is highly difficult to organize 100 workers before registration of the union, since there is always a fear of loosing the job. The registration process takes almost 2-3 months and therefore there are all chances that management is informed about unionization efforts and victimization follows.

The amendment also introduces a limitation on the number of outsiders among the office bearers: “All office bearers of a registered trade union, except not more than one-third of the total number of office bearers or five, whichever is less, shall be persons actually engaged or employed in the establishment or industry with which the trade union is connected.” It is not going to affect the trade unions in any big way; however, it shows the motive of the state which wants to completely prohibit outsiders in the executive body of the trade unions. It is better expressed in the amendments done/proposed in labour laws by the state governments for SEZs.

Banning the Strikes by using Essential Services and Maintenance Act

After 1980, the state started a major initiative to amend some important labour laws and to protest against such attempts, there were a series of strikes, big demonstrations and rallies of trade unions all over India.  This decade is many times referred as ‘the decade of trade union action’. Therefore, Essential Services Maintenance Act was systematically used to suppress the labour movement. ESMA was enacted in 1957, 1960 and 1968 also, but this time, in 1981, it was enacted with a long term perspective. It was enacted for four years and thereafter extended for up to 1990. Under this act strikes were banned in listed essential services including, any postal, telegraph or telephone service; any railway service or any other transport service for the carriage of passengers or goods by land, water or air with respect to which Parliament has power to make laws; any service connected with the operation or maintenance of aerodromes, or with the operation, repair or maintenance of aircraft ; any service connected with the loading, unloading, movement or storage of goods in any port; any service connected with the clearance of goods or passengers through the Customs or with the prevention of smuggling; any service in any mint or security press; any service in any defence establishment of the Government of India; any service in connection with the affairs of the Union; and any other service connected with matters with respect to which Parliament has the power to make laws and a strike in which, the Central Government feels the public safety or the maintenance of supplies and services will be hit. Moreover, various state governments at different times (e.g. Tamil Nadu in 1979, 1981, Maharashtra in 1981) enacted ESMA. As the protests against the 'new economic policies' grew, the government re-enacted Essential Services Maintenance Act (ESMA) in 1992. ESMA became a handy instrument to suppress strikes and protests by workers and particularly by public employees. The UP Government used ESMA and the National Security Act (NSA) in the UP Electricity Board Workers’ strike in January 2000. Many states including Uttar Pradesh, Andhra Pradesh and Orissa included the health services under ESMA and invoked the act against striking doctors. In 2006, ESMA was imposed against striking airport employees who were opposing the privatization process in Delhi and Mumbai airports.

The most publicized and sensational case of ESMA is that of Tamilnadu. In 2003, after general strike of government and public sector employees ESMA was imposed by Tamilnadu government and 170000 employees were dismissed from the service. Later some relief was granted and lastly number of dismissed employees was reduced to 6074. While granting this relief the court delivered a judgment which made a precedent against the strike. The court clearly opined that the government employees do not have the right to strike. Tamilnadu ESMA is very unique in the sense that the "strike" in the Act not only includes the refusal of employees connected with these "essential services" to "continue to work or to accept work assigned", but also a "refusal to work overtime" and "any other conduct which is likely to result in, or results in, cessation or substantial retardation of work in any essential service." Tamil Nadu Essential Services Maintenance Act prescribes a punishment of up to three years imprisonment and a 5,000 rupee fine for participants in a strike involving essential services. An activist who calls for a strike or instigates workers to go on strike, or anyone who provides financial assistance for the conduct of a strike, risks the same penalties as striking workers under the TESMA. The Tamil Nadu Essential Services Maintenance Act includes a large number of public services within the definition of "essential", including those relating to the supply of water and electricity, passenger and goods transport, firefighting and public health etc.

Recently, only few months back, Gujarat government imposed ESMA on striking nurses of UN Mehta Institute of Cardiology and Research Center, who were demanding implementation of Sixth Pay Commission recommendations.

Judicial Precedents Imposing Further Limitations on TU Actions

Judgments made by the Supreme Courts set legal precedents on the issue and respected as laws unless and until another judgment comes and sets a different precedent. In recent decades, a number of judgments came from the Supreme Court setting precedents against the right to strike. We can here make reference of few judgments which aroused wider concerns:

1.      In a case of general strike by government employees in Tamil Nadu (TR Rangarajan vs Government of Tamil Nadu, AIR 2003 SC 3032), the Supreme court held: "Now, coming to the question of right to strike whether fundamental, statutory or equitable moral right - in our view, no such right exists with the government employees." And that: "Law on this subject is well settled and it has been repeatedly held by this court that the employees have no fundamental right to resort to strike,"

2.      In 1998 Supreme Court of India had upheld the 1997 verdict of the Kerala high court directing that bandhs (general strikes) are illegal and violate the Indian constitution. Kerala High Court had held: "There cannot be any doubt that the fundamental rights of the people as a whole cannot be subservient to the claim of fundamental right of an individual or only a section of the people." And that: "no political party or organisation can claim that it is entitled to paralyse the industry and commerce in the centre, State, nation and is entitled to prevent the citizens not in sympathy with its viewpoints from performing their duties... Such a claim would be unreasonable and could not be accepted as a legitimate exercise of a fundamental right by a political party or those comprising it." The Supreme Court was of the view that bandhs basically interfere with the exercise of the fundamental freedoms of (other) citizens while causing economical loss to the nation. Then again in 2002, the State of Kerala issued an order stating that all general strikes were illegal when they involved a complete close down of all activities. Furthermore, organizers of a general strike who cause a shutdown can also be held financially liable for damages caused to an employer. The Kerala state order was challenged, but it was upheld as legal by the Supreme Court.

3.      In 2004, Shiv Sena was asked to pay a fine for organizing a bandh protesting the Bombay blasts.

4.      In 2004 the Calcutta High Court, in 2006 the Kerala High Court and in 2007 the Supreme Court again reiterated the verdict that these bandhs are illegal and not constitutional.

It is worth mentioning that the opinion of the Supreme Court on right to strike before 1990 was completely different. It was more or less recognized as the fundamental right. Here we can see the precedent set on the issue by Justice Ahmadi in case of BR Sigh vs. Union of India  (1990 AIR 1, 1989 (1) Suppl.SCR 257):

"The right to form associations or unions is a fundamental right under Article 19 (1) (c) of the Constitution. Section 8 of the Trade Unions Act provides for registration of a trade union if all the requirements of the said enactment are fulfilled. The right to form associations and unions and provide for their registration was recognized obviously for conferring certain rights on trade unions. The necessity to form unions is obviously for voicing the demands and grievances of labour. Trade unionists act as mouthpieces of labour. The strength of a trade union depends on its membership. Therefore, trade unions with sufficient membership strength are able to bargain more effectively; reduced if it is not permitted to demonstrate. "Strike in a given situation is only a form of demonstration. There are different modes of demonstrations, e.g., go-slow, sit-in, work-to-rule, absenteeism, etc., and strike is one such mode of demonstration by workers for their rights. The right to demonstrate and, therefore, the right to strike is an important weapon in the armory of the workers. This right has been recognized by almost all democratic countries. Though not raised to the high pedestal of a fundamental right, it is recognised as a mode of redress for resolving the grievances of workers."

Making SEZs and NMIZs Immune to Trade Union Actions

We have already discussed that all the activities in the hundreds of the Special Economic Zones that are coming in the country are declared public utility services under Industrial Disputes Act. More over, the state governments have done/propose major amendments in labour laws including the Trade Union Act for SEZs. It is proposed that outsiders must not be allowed in trade unions in SEZs. Moreover, the entry in the zones is highly restricted and therefore it is becomes highly difficult for outside trade union organizers to organize the SEZ workers.

Now government of India is proposing National Manufacturing Industrial Zones (NMIZ) in line with SEZs. SEZs were for exporting units and NMIZ is proposed for manufacturing units in general. It is proposed that all NMIZ units will be declared Public Utility Services on permanent basis. Not only this, it is also proposed that the right to join unions in NMIZs would be confined to the workers drawing salary below a certain limit.

[1] MJ Antony,   : Utterly Labour Laws; Business Standard, Jan 11, 2006

[2] Ray, Arunendu Sundar (2008) Axing regularization; Combat Law, Vol 7 Issue 6; November - December 2008


[3] Rajagopal, Krishnadas  (2010); Globalisation blinds us to aam aadmi plight: SC; Indian Express; Thursday , Jan 28, 2010



 4 Replies

Elamaran Perumal (Law Officer)     14 September 2010


Hi Surendra,

Wow! what a magnificient article you have presented to all the esteemed members of this forum. Really a thought provoking piece of work. Keep doing the good work. Thanks a lot for a your valuable work.

With regards,


K.Prasad (Development Officer)     03 October 2010

A very deep and informative article. Keep up the good work and post more. Thank you.

H.M.Patnaik (Proprietor)     20 December 2010

Dear Surendraji, This  is a really analytical  and well researched article served to the legal fraternity. Thanx.

There is a great resentment amongst the upcoming entreprenuers that ,the bouquet of labour related laws poses great deal of inconvenience for proper compliance these days. The Report submitted by the Working group recommending maintenance of integrated records covering all applicable labour laws promulgated in India  and filing of integrated returns to do away with maintenance of separate set of records containing identical data in separate formats need to be considered early by Labour Ministry to help entreprenuers to concentrate on their core business in a befitting manner.

sambasivakamasani (Sr Pur and Stores Officer (Rtd) ISRO)     02 April 2012

Well explained. As per the analysis, the trade union activities are being diluted, finally to do away the welfare state approach. This back door method with the help of Hon parliament and members is slowly and firmly, knowingly or unknowingly landing into the hands of private personnel, corporates. Is there any hope to regain the constitutional rights. As is now, workmen are treated as material.

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