Home >News >India >Odisha labour reform: Exempts small firms from Factories Act, hikes firing limit
Odisha chief minister Naveen Patnaik.  (PTI)
Odisha chief minister Naveen Patnaik. (PTI)

Odisha labour reform: Exempts small firms from Factories Act, hikes firing limit

  • The state has allowed companies with up to 300 workers to fire people or close down units without prior approval of the government, a threefold increase from the current threshold in the Industrial Dispute Act

NEW DELHI: Odisha has amended its key labour laws, exempting a sizable portion of small factories from the purview of Factories Act, 1948, and has allowed companies with up to 300 workers to fire people or close down units without prior approval of the government, a threefold increase from the current threshold in the Industrial Dispute Act, 1947.

The state has also exempted small companies employing up to 50 workers from complying with the Factories Act.

Currently, the Act covers all factories using electricity and having 10 workers and all factories without using electricity and having 20 workers. This among other things will end inspection and verification of premises of all factories with a headcount of less than 50 and ease rules related to wages and penalties.

“The state government has brought an amendment in the Industrial Disputes Act to increase the threshold from 100 to 300," the state said, underlining that the move will facilitate attracting investments and creating employment generation. Increasing the threshold allows companies with upto 300 workers now to sack employees without seeking the prior approval of the government.

“In order to facilitate investment, generation of employment and counter the hardships caused to MSMEs (micro, small and medium enterprises) due to covid-19 pandemic by way of creating a more conducive and business friendly atmosphere, while keeping in mind the welfare of the workers, the state government has made some amendments in the Factories Act."

The move, though will cheer industries, and more so at a time when businesses have been hit due to the coronavirus-related lockdown, the decision may invite criticism as it promotes hiring and firing at a time unemployment rate is at a high and may attract attention of the International Labour Organisation (ILO).

ILO has already expressed “deep concern" and urged Indian Prime Minister Narendra Modi to interfere in states labour reform process, and make sure that the country follows its international commitments on labour issues and honour ILO conventions to which it is a signatory.

Odisha said its labour reform has a focus on welfare and to mitigate the hardships faced by MSMEs due to the pandemic.

Besides, the exemption of small factories from Factories Act, and increasing the threshold under the Industrial Dispute Act, the state said it has now increased the overtime limit from 75 hours per quarter earlier to 115 hours quarter. It has also allowed engagement of women in factories with their consent between 6 am and 7 pm and has fixed the responsibility on factories to provide them safety and security.

As a welfare measure for workers, Odisha has now entitled factory workers to get paid leave after they complete 180 days of work instead of 240 days work prescribed earlier.

The state, earlier this month, had joined Haryana, Himachal Pradesh, Rajasthan and Assam to increase working hours to 12 hours per day for three months.

Rajasthan and Uttar Pradesh have now withdrawn the order to extend the working hours, limiting it to eight hours a day. However, Uttar Pradesh, Madhya Pradesh and Gujarat has announced sweeping amendments or exemptions to laws for three years and have received wide criticism from sections of labour economists and trade unions across political party affiliations.

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