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The Lok Sabha has passed the bill to revise the salary of members of parliament. Much of the debate in the media has been on the wealth of current MPs and the lack of accountability. It is important to focus as well on structural issues related to remunerating legislators. Under the bill, the base salary of MPs is being raised to Rs.50,000 from Rs.16,000 per month. The daily allowance paid to MPs when they attend parliament is being hiked to Rs.2,000 from Rs.1,000. The constituency allowance is being increased to Rs.45,000 per month from Rs.20,000 and office expenses (for staff, stationery and postage) to Rs.45,000 per month from Rs.20,000. Pension for former MPs will be Rs.20,000 per month instead of the present Rs.8,000. Other than these, MPs get accommodation in Delhi, which varies from a hostel in Vitthalbhai Patel House to two-bedroom flats and bungalows, all in central Delhi. MPs get reimbursement of electricity, water, telephone and internet charges. They (and their family) are also reimbursed for 34 one-way air tickets from their constituency to Delhi. In a parliamentary democracy, compensation for legislators should be sufficient to ensure their independence and autonomy. It should attract professionals who can devote their full time to legislative work. There should be a sufficient support system to enable legislators perform their duties effectively. There are mainly three issues that need to be resolved while fixing the compensation package for legislators. First, MPs fix their own salaries and allowances, which results in a conflict of interest. Second, every time the salary is revised upwards, there is an adverse media and public reaction. The outcome is that MPs' salaries are significantly lower than that for any other position of similar responsibility in the public or private sector. The low salaries may deter honest persons, without other income sources, from contesting elections. Third, reimbursements of office expenses are classified as 'allowances'. Thus, expenses for office staff, telephone charges, etc. are often seen as part of their compensation. Contrast this with the treatment for government or private sector employees. The costs of office support staff, rental, communication and travel costs are not counted as their salary or perks. The process in India is similar to that in some countries. The US Congress and the German Bundestag determine their own salaries. There are two alternative approaches seen in some other democracies. Some countries appoint an independent authority to determine salaries. Some others peg the salary to that of public officials. For example, New Zealand has a remuneration tribunal which is tasked to fix salaries based on being (a) fair relative to levels of remuneration elsewhere; (b) fair to person being remunerated and the taxpayer; (c) adequate to recruit and retain competent persons. In Canada, a commission is appointed after every general election and salaries are then indexed to the federal government's annual wage rate index. Australia has a remuneration authority that links the salary to that in the Principal Executive Office. In the UK, the Senior Salaries Review Board determines salaries, which are then voted upon by parliament. The Scottish parliament indexes its salaries to that of British MPs. In France, the salary of the legislator is the average of the highest and lowest paid official in the seniormost level of the government. There were two distinct themes during last week's Lok Sabha debate. Several MPs discussed structural issues. Some MPs - L.K. Advani, Ramachandra Dome, Sanjay Nirupam, Shailendra Singh and Pinaki Misra - suggested that the government establish an independent commission for determining salaries. Advani pointed out that a decision to that effect had been taken in an all-party meeting held by the Speaker in may 2005 and demanded that the government announce the formation of such a commission before the end of the current session of parliament. Some MPs - Dhananjay Singh, Sanjay Nirupam and Shailendra Kumar -- focussed on the need for support structures such as office space, research staff and assistants in the constituency. They felt that these would help MPs examine proposed laws and rules and monitor the work of the government. Nirupam and Misra suggested that MPs' salaries be linked to performance; salaries should be cut for any time lost due to disruption. Some MPs highlighted the need for pension and accommodation for former MPs. Sharad Yadav, Raghuvansh Prasad Singh and Sansuma Khunggur Bwiswmuthiary requested that the pension be raised to Rs 25,000 per month. Yadav and Bwiswmuthiary also said that former MPs be allocated residential accommodation in Delhi. The bill will next be discussed in the Rajya Sabha. The government agreed that there is merit in forming an independent commission. It is however uncertain whether the government will accede to Advani's demand that the commission be announced in the next couple of days. - M.R. Madhavan This column has been published by IANS today.
To contain the spread of COVID-19 in India, the central government imposed a nation-wide lockdown on March 24, 2020. Under the lockdown most economic activities, other than those classified as essential activities, were suspended. States have noted that this loss of economic activity has resulted in a loss of income for many individuals and businesses. To allow some economic activities to start, some states have provided relaxations to establishments from their existing labour laws. This blog explains the manner in which labour is regulated in India, and the various relaxations in labour laws that are being announced by various states.
How is labour regulated in India?
Labour falls under the Concurrent List of the Constitution. Therefore, both Parliament and State Legislatures can make laws regulating labour. Currently, there are over 100 state laws and 40 central laws regulating various aspects of labour such as resolution of industrial disputes, working conditions, social security, and wages. To improve ease of compliance and ensure uniformity in central level labour laws, the central government is in the process of codifying various labour laws under four Codes on (i) industrial relations, (ii) occupational safety, health and working conditions, (iii) wages, and (iv) social security. These Codes subsume laws such as the Industrial Disputes Act, 1947, the Factories Act, 1948, and the Payment of Wages Act, 1936.
How do state governments regulate labour?
A state may regulate labour by: (i) passing its own labour laws, or (ii) amending the central level labour laws, as applicable to the state. In cases where central and state laws are incompatible, central laws will prevail and the state laws will be void. However, a state law that is incompatible with central laws may prevail in that state if it has received the assent of the President. For example: In 2014, Rajasthan amended the Industrial Disputes Act, 1947. Under the Act, certain special provisions with regard to retrenchment, lay-off and closure of establishments applied to establishments with 100 or more workers. For example, an employer in an establishment with 100 or more workers required permission from the central or state government prior to retrenchment of workers. Rajasthan amended the Act to increase the threshold for the application of these special provisions to establishments with 300 workers. This amendment to the central law prevailed in Rajasthan as it received the assent of the President.
Which states have passed relaxations to labour laws?
The Uttar Pradesh Cabinet has approved an ordinance, and Madhya Pradesh has promulgated an ordinance, to relax certain aspects of existing labour laws. Further, Gujarat, Rajasthan, Haryana, Uttarakhand, Himachal Pradesh, Assam, Goa, Uttar Pradesh, and Madhya Pradesh have notified relaxations to labour laws through rules.
Madhya Pradesh: On May 6, 2020, the Madhya Pradesh government promulgated the Madhya Pradesh Labour Laws (Amendment) Ordinance, 2020. The Ordinance amends two state laws: the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961, and the Madhya Pradesh Shram Kalyan Nidhi Adhiniyam, 1982. The 1961 Act regulates the conditions of employment of workers and applies to all establishments with 50 or more workers. The Ordinance increases this threshold to 100 or more workers. Therefore, the Act will no longer apply to establishments with between 50 and 100 workers that were previously regulated. The 1982 Act provides for the constitution of a Fund that will finance activities related to welfare of labour. The Ordinance amends the Act to allow the state government to exempt any establishment or class of establishments from the provisions of the Act through a notification. These provisions include payment of contributions into the Fund by employers at the rate of three rupees every six months.
Further, the Madhya Pradesh government has exempted all new factories from certain provisions of the Industrial Disputes Act, 1947. Provisions related to lay-off and retrenchment of workers, and closure of establishments will continue to apply. However, the other provisions of the Act such as those related to industrial dispute resolution, strikes and lockouts, and trade unions, will not apply. This exemption will remain in place for the next 1,000 days (33 months). Note that the Industrial Disputes Act, 1947 allows the state government to exempt certain establishments from the provisions of the Act as long as it is satisfied that a mechanism is in place for the settlement and investigation of industrial disputes.
Uttar Pradesh
The Uttar Pradesh Cabinet has approved the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020. According to news reports, the Ordinance seeks to exempt all factories and establishments engaged in manufacturing processes from all labour laws for a period of three years, subject to the fulfilment of certain conditions. These conditions include:
Wages: The Ordinance specifies that workers cannot be paid below minimum wage. Further, workers must be paid within the time limit prescribed in the Payment of Wages Act, 1936. The Act specifies that: (i) establishments with less than 1,000 workers must pay wages before the seventh day after the last day of the wage period and (ii) all other establishments must pay wages before the tenth day after the last day of the wage period. Wages must be paid into the bank accounts of workers.
Health and safety: The Ordinance states that provisions of health and safety specified in the Building and Other Construction Workers Act, 1996 and Factories Act, 1948 will continue to apply. These provisions regulate the usage of dangerous machinery, inspections, and maintenance of factories, amongst others.
Work Hours: Workers cannot be required to work more than eleven hours a day and the spread of work may not be more than 12 hours a day.
Compensation: In the case of accidents leading to death or disability, workers will be compensated as per the Employees Compensation Act, 1923.
Bonded Labour: The Bonded Labour System (Abolition) Act, 1976 will continue to remain in force. It provides for the abolition of the bonded labour system. Bonded labour refers to the system of forced labour where a debtor enters into an agreement with the creditor under certain conditions such as to repay his or a family members debt, due to his caste or community, or due to a social obligation.
Women and children: Provisions of labour laws relating to the employment of women and children will continue to apply.
It is unclear if labour laws providing for social security, industrial dispute resolution, trade unions, strikes, amongst others, will continue to apply to businesses in Uttar Pradesh for the period of three years specified in the Ordinance. Since the Ordinance is restricting the application of central level labour laws, it requires the assent of the President to come into effect.
Changes in work hours
The Factories Act, 1948 allows state governments to exempt factories from provisions related to work hours for a period of three months if factories are dealing with an exceptional amount of work. Further, state governments may exempt factories from all provisions of the Act in the case of public emergencies. The Gujarat, Himachal Pradesh, Rajasthan, Haryana, Uttar Pradesh, Goa, Assam and Uttarakhand governments passed notifications to increase maximum weekly work hours from 48 hours to 72 hours and daily work hours from 9 hours to 12 hours for certain factories using this provision. Further, Madhya Pradesh has exempted all factories from the provisions of the Factories Act, 1948 that regulate work hours. These state governments have noted that an increase in work hours would help address the shortage of workers caused by the lockdown and longer shifts would ensure fewer number of workers in factories allowing for social distancing to be maintained. Table 1 shows the state-wise increase in maximum work hours.
Table 1: State-wise changes to work hours
|
State |
Establishments |
Maximum weekly work hours |
Maximum daily work hours |
Overtime Pay (2x ordinary wages) |
Time period |
|
All factories |
Increased from 48 hours to 72 hours |
Increased from 9 hours to 12 hours |
Not required |
Three months |
|
|
All factories |
Increased from 48 hours to 72 hours |
Increased from 9 hours to 12 hours |
Required |
Three months |
|
|
All factories distributing essential goods and manufacturing essential goods and food |
Increased from 48 hours to 72 hours |
Increased from 9 hours to 12 hours |
Required |
Three months |
|
|
All factories |
Not specified |
Increased from 9 hours to 12 hours |
Required |
Two months |
|
|
All factories |
Increased from 48 hours to 72 hours |
Increased from 9 hours to 12 hours |
Not required |
Three months* |
|
|
All factories and continuous process industries that are allowed to function by government |
Maximum 6 days of work a week |
Two shifts of 12 hours each. |
Required |
Three months |
|
|
All factories |
Not specified |
Increased from 9 hours to 12 hours |
Required |
Three months |
|
|
Goa |
All factories |
Not specified |
Increased from 9 hours to 12 hours |
Required |
Approximately three months |
|
All factories |
Not specified |
Not specified |
Not specified |
Three months |
Note: *The Uttar Pradesh notification was withdrawn
