Industrialists say it was more than three decades after their demand that the Karnataka government decided to promulgate the Industrial Disputes and Certain Other Laws (Karnataka Amendment) Ordinance, 2020, that seeks, among other things, to change Chapter 5 (B) of the Industrial Disputes Act, 1947.
The Chapter 5 (B) of the Act that deals with the government permission required to layoff, retrench or close the industry if the workforce is more than 100 has been changed to increase this threshold to 300.
“This was among the long-pending demands of the industry as capitalists were scared to open big industries since they did not have the flexibility to alter the workforce,” president of the Karnataka Employers’ Association B.C Prabhakar said.
He said the original Act did not have the Chapter 5 (B) at all that set the threshold limit. It was introduced in 1976 by then Prime Minister Indira Gandhi during the Emergency with a threshold of 300, which was reduced to 100 in 1978 only to be quashed by the Supreme Court in 1979. It was reintroduced with a threshold of 100 in 1984.
Similar changes to labour laws have been made in Rajasthan, Gujarat, Punjab, Chhattisgarh, and Maharashtra.
“Since 1984, factories have been demanding removal of the chapter or increase of the threshold to 300 or 1,000. Though this threshold limit is a recommendation of the ILO no other country has adopted it. The increase in the threshold will bring more investors and generate employment as capitalists,” Mr. Prabhakar said.
According to him, the changes are not anti-labour since there were other provisions of the Industrial Disputes Act, and a host of others, including the Minimum Wages Act, Payment of Wages Act, Gratuity Act, Payment of Bonus Act, PF Act, and ESI Act are still applicable.
