Rajasthan Reforms

Labour Reforms

A. Amendment in Industrial Dispute Act, 1947

  1. Amendment to increase threshold of applicability of Chapter-VB

    • Section-25K of IDA 1947 stated that industrial units having not less than 100 workers (per working day for preceding 12 months) would be required to obtain prior permission of government before effecting lay off, retrenchment or closure.
    • This provision is perceived as stifling and discourages investment and job creation. Because of this limit of 100, employers try to keep the number of workers at less than 100, thereby discouraging permanent employment in the organized sector.
    • Rajasthan has now brought about an amendment in which the cap of 100 workers has been raised to 300. This will help catalyze more employment of permanent workers.
    • In order to safeguard the interests of workers and prevent misuse /victimization, the state government can apply the provision of seeking of prior permission to industrial units which have 100 to 300 workers.
  2. Amendment of section-25N and 25O

    • Section 25N of IDA 1947 provides that 3 month’s notice OR wages for notice period is to be given to workers before retrenchment.
    • In the Rajasthan amendment the provision to give wages in lieu of notice has been deleted. Thus the employer compulsorily shall have to give a notice of 3 months before retrenchment.
    • Further, in order to provide additional financial security to the workers affected by retrenchment, sub-section-9 has been amended and now compensation at the rate of 15 days salary per completed year of employment has to be paid and the worker receives an amount equivalent to his 3 months average pay.
    • Moreover, a similar provision has been inserted in sub-section (8) of section 25(O) of IDA 1947 providing for payment of an amount equivalent to 3 month’s average pay along with compensation at prescribed rates to workers affected by closure of an establishment.
  3. Amendment to increase threshold limit for making application for registration of Representative Union

    • Section 9(D) of IDA provide that any Union having membership of not less than 15% of total workers employed, may apply for registration as Representative Union.
    • Because of this 15% limit, a maximum of 6 Unions become eligible, thereby leading to industrial discord.
    • In order to make Unions more representative, in Rajasthan, amendments have been made to increase the 15% limit to 30%. It is felt that 3 Unions are sufficient to safeguard worker interest and will be helpful in stabilizing better /healthy industrial relations.
  4. Amendment to prescribed time limit to raise industrial disputes under section-2(A)

    • As per section-2(A) of IDA 1947, no time limit is prescribed for disputes related to discharge, dismissal, retrenchment OR termination of a worker.
    • Often large number of disputes are raised after lapse of many years leading to problems for units.
    • Amendments have been made and now in Rajasthan the time limit for raising such disputes is prescribed to be 3 years. This should bring relief to managements. However, in genuine cases, competent authority may extend this time limit on sufficient grounds.
  5. Amendment of Part-II of Schedule-5 of IDA 1947

    • While the term ‘go slow’ finds mention in paragraph 5 of Part-II of Schedule-5 of the act, it had not been defined.
    • To reduced difficulties in disposal of matters relating to the disruptive practice of ‘go slow’, the term has now been defined.

B. Amendment in Factories Act, 1948

  1. Increasing threshold limits for manufacturing units

    • Small Units are covered by this Act since there is a threshold limit of 10 workers (in manufacturing units using power) and 20 workers (in manufacturing units not using power).
    • As on date manufacturing activities by small units is on the rise and in order to improve the ease of doing business and creating more employment opportunities the threshold limits have been increased in Rajasthan to 20 and 40 respectively.
    • Moreover, Section-85 of the Act has also been amended, thereby allowing the state to impose restrictions on such units, even if they employ a single worker, if dangerous and hazardous manufacturing procedures are used. This will ensure that the safety of workers is not compromised.
  2. Cognizance of offences

    • To maintain uniformity in similar cases and transparency in implementation, Section 105(1) has been amended and now in Rajasthan, cognizance of any offence under the act shall be taken by a Courts on a complaint made by an Inspector after obtaining prior sanction in writing from the State Government. This should allow uniformity of interpretation and implementation of punitive provisions of Factories Act 1948.
  3. Compounding of offences

    • Factories Act 1948 does not provide any instruments that allow compounding of offences and as a consequence, there is a high number of pending prosecution cases.
    • To minimize litigations and to allow speedy disposal, a new provision has been inserted for compounding of all first time offences under the act.

C. Amendment in Contract Labour (R&A) Act 1970

  • This Act becomes applicable if an employer /contractor supplies 20 workers, even for a day in last 12 months. The employer has to be registered and the contractor has to procure a license to do business.
  • Because of such low threshold limits, principal employers and contractors find it difficult to execute contracts while hiring personnel or in procuring commodities from tiny and small entrepreneurs and petty suppliers. At present large manufacturing companies, service providers and exporters split up their requirement among number of small manufacturers /suppliers to execute orders timely and competitively. Small units face problems in obtaining licenses and get bogged down in ensuring formalities. The existing lower limit of 20 is either encouraging non-compliance or leading to employment of less labourers than required, just to avoid departmental interference.
  • In Rajasthan, the threshold limit under Contract Labour Act has been increased from 20 to 50 workers. This should be an encouragement to expand businesses and in the process create more employment.

D. Exemptions from various provisions in Boilers Act 1923

  • In Rajasthan, efforts have been made to reduce ‘Inspector Raj’ associated with Boiler inspection and certification.
  • Now, registration of boiler is a one-time event and yearly renewal has been done away with. Industries can avail services of authorized and gazetted Competent Persons from the private sector for inspection/ certification of Boilers. No prior permission is required to make addition, alteration and repair of Boilers and associated components.
  • It is felt that these exemptions shall help in reducing hardships faced by industry and create an environment that is conducive to investment and job creation.

E. The Apprentices (Rajasthan Amendment) Act 2014

  • Industry has been demanding that they be exempted from bearing recurring cost of basic training given to trade apprentices. Section 9-8(a) has been amendment to enable the state to reimburse to industry in each case of successful competition of training of an apprentice, half of the cost of establishment (in units employing more than 250 workers) and full cost of establishment (employing less than 250 workers).
  • Section 9(L) has been amended to allow third party training provider to conduct practical training of apprentices. Since many industries lac proper training infrastructure, this step should provide relief to both industry and trainees and create an ecosystem for job creation.
  • The State Apprenticeship Council may now prescribe the duration of training courses. This is a welcome change from the rules of 1992 under section (6) which prescribe long and impractical training durations.
  • In case of termination of an apprenticeship contract, either by industry or by apprentice, the State Apprenticeship Council and State Apprenticeship Advisor and now authorized to resolve grievances.
  • State Apprenticeship Council has been authorized to decide the ratio of apprentices in a unit in a particular trade. If a unit seeks a lower number of apprentices in a particular trade the same can be granted up to 50% provided the unit increases commensurately the number of seats in some other trade. The lowest limit for a trade to qualify has also been reduced from 50% to 30%.
  • Section 13 has been amended to ensure that any stipend paid is not less than the notified minimum wage of unskilled workers.
  • The State Apprenticeship Council is no longer mandatorily affiliated to the Central Council to ensure more flexibility at State level for faster decision making related to the apprenticeship /training sector.

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