On May 6, the Uttar Pradesh Cabinet decided to suspend 35 of the 38 labour laws in the state for three years. It said that this would attract much-needed investment to an economy battered by Covid-19.
Three laws have been exempted from the ordinance: the Building and Other Construction Workers Act, 1996; the Workmen Compensation Act, 1923, and the Bonded Labour System (Abolition) Act, 1976. Section 5 of the Payment of Wages Act, which relates to timely payment of wages, will also continue to be in force.
This means several key laws will not apply to Uttar Pradesh. These include Central laws such as the Minimum Wages Act, the Payment of Wages Act and the Payment of Bonus Act.
Since labour is on the concurrent list, both the Centre and the states can make laws under this subject. But can a state government completely suspend Central laws?
Uttar Pradesh Chief Secretary R K Tiwari told Business Standard that the ordinance will be sent to the Central government for its approval. This means the state is trying to fulfill the mandate under Article 213 of the Constitution. But experts state that even if the constitutional procedure is followed, it would be embarrassing for the Centre to give its approval given the measures it has adopted to codify and simplify labour laws.
Suspending Central laws
Article 213 (1) of the Constitution has the following provisions:
“(a) a Bill containing the same provisions would under this Constitution have required the previous sanction of the President for the introduction thereof into the Legislature; or
(b) he would have deemed it necessary to reserve a Bill containing the same provisions for the consideration of the President; or
(c) an Act of the Legislature of the State containing the same provisions would under this Constitution have been invalid unless, having been reserved for the consideration of the President, it had received the assent of the President.”
An ordinance is passed when the state government considers the matter so urgent that it cannot wait for the state Assembly to meet in normal course. An ordinance has the same effect as a law passed in the legislature. However, all ordinances have to be placed before the Assembly within six months for its consideration.
According to Article 254 (2), any Bill relating to a subject in the concurrent list, which may be repugnant to a Union law, needs the approval of the President for its enforcement. This means that it has to be cleared by the Centre, which would advise the President to give his assent. This applies to an ordinance as well due to Article 213 (1).
Most Central labour laws have provisions that delegate certain powers to the state government. While the states may have the powers to exempt these provisions from enforcement, in matters where the Centre holds the field, the state cannot directly move to make exemptions.
The fact that the Uttar Pradesh government has now sent the ordinance to the Centre for approval suggests that it anticipates a claim of repugnancy as it is probably choosing to suspend entire laws and not just those sections delegated to it. The text of the ordinance was not available in the public domain till 7 pm on Friday.
With regards to state laws, suspension rather repealing them also seems to be a calculated move as a Central law in force on the particular subject will immediately kick in if Uttar Pradesh abolished the state law entirely.
Under normal circumstances, this should put the Centre in a fix. A state government seeking to suspend a gamut of Central laws at one shot is an extraordinary situation. However, given that Uttar Pradesh is also ruled by the Bharatiya Janata Party, it could be assumed that prior consultations would have taken place before the state Cabinet approved this decision.
But even so, experts believe the situation would put the Centre in a tight position if the ordinance is challenged in the courts. According to former Madras High Court judge K Chandru, who is also an expert in labour law, suspension of almost all labour laws would be a serious violation of fundamental rights and the directive principles of state policy in the Constitution.
Chandru said even otherwise, suspending some of the laws runs counter to the recent attempts by the Centre to consolidate and codify these laws.
For example, the Code of Wages, 2019 received presidential assent in August. A Central law, it subsumed four important legislation relating to wages: The Equal Remuneration Act; The Payment of Wages Act; The Payment of Bonus Act; and the Minimum Wages Act.
“Once this code was passed, the application of the four laws subsumed ceased to exist in all states,” Justice Chandru said.
However, the four laws continue to function as the Centre is yet to notify the rules for the Code of Wages, despite publishing the draft rules in August last year. “The Centre dragging its feet on the Code of Wages is enabling the UP government to seek suspension of these laws that in the first place should not exist anymore,” he said.
Chandru added the Centre’s approval, if it does come, would only show the desperation of the governments to use the Covid-19 pandemic situation to weaken labour laws.