Legal Information / Articles


Mixed reactions have emerged over the controversial Ordinance passed by the government of Uttar Pradesh to suspend majority labour laws in wake of the economic crisis following the lockdown. This article explores the contents of the ordinance, its basis, and its legality.

1. What does the proposed Ordinance promulgated by the UP Government state?

The Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020 is an ordinance approved by the state of Uttar Pradesh on May 8, 2020 in response to the economy rebuilding needed as a consequence of the COVID-19 led lockdown. The Ordinance exempts various industries in the state from different labour laws for a period of three years, to revive the state’s economic activities. Among these laws are twenty-seven central laws including critical legislations like the Factories Act 1948, Industrial Disputes Act 1947, Minimum Wages Act 1948, Payment of Wages Act 1936 (except Section 5 dealing with timely payment of wages), and the Child Labour (Prohibition and Regulation) Act 1986. Nine state legislations and twenty-four Rules formed under the Central and State legislations are also suspended.

The states of Madhya Pradesh and Gujarat have also made certain relaxations to their labour law regimes to give the economy a boost.

Therefore, the UP Ordinance suspends majority labour laws for the next three years to help the economy recover from the impacts of the COVID lockdown.

2. What was the reason for passing such an ordinance?

There are two prominent reasons for this ordinance having been passed by the state:

Request from Employer Associations: The Ministry of Labour and Employment made a statement that on May 8, 2020, members representing twelve Employers’ Associations and Industry Bodies made a request to the government “to help industry come out of the present crisis” by suspending labour laws for the next 2-3 years. The Labour Minister, Mr. Santosh Kumar Gangwar had sympathized with the employers and promised help.

While this Ordinance was all set to be passed by state government by the time of this interaction, similar demands by employers were known to the government since a while.

Attracting investment: A major reason being attributed to this move is to attract foreign investment to these states by ensuring ease of business through relaxed labour laws, making the venture more affordable and lucrative. A large number of industries currently want to relocate from parts of China, specially Wuhan, and are looking for merging markets in South-East Asia. India could potentially attract a large amount of foreign investment through this move.

Thus, this Ordinance is both a response to the request of employers, as well as an attempt to increase investment in the state.

3. What are the legal implications of such an Ordinance? Is it constitutionally valid?

The Ordinance suspends some of the most essential labour laws of the country including the Factories Act, Industrial Disputes Act, Minimum Wages Act, and the Child Labour (Prohibition and Regulation) Act, as discussed. The Supreme Court has held that non payment of minimum wages is tantamount to ‘forced labour’ prohibited under Article 23 of the Constitution. It has also been held in a case where workmen were employed in famine relief work, that exemption from the Minimum Wages Act is “clearly violative” of Article 23. [See Sanjit Roy Vs. State of Rajasthan, (1983) I SCC 526].

Aside from being a violation of fundamental rights, the Ordinance also contradicts Article 43 of the Constitution, which is a directive principle of state policy. The Supreme Court has held that the restrictions imposed upon the freedom of contract by the fixation of minimum rates of wages though they interfere to some extent with the freedom of trade or business guaranteed under Art. 19(1)(g) of the Constitution are not unreasonable and being imposed in the interest of general public and with a view to carry out one of the Directive Principles of State Policy as embodied in Art. 43 of the Constitution are protected by the terms of clause (6) of Art. 19. [See Bijay Cotton Mills v. State of Ajmer, (1955) 1 S.C.R. 752]. The inconveniences caused to employers as a result of the Act have been held to be irrelevant. [The Edward Mills Co. Ltd. v. The State of Ajmer, [1955] 1 S.C.R. 735; M/s. Crown Aluminium Works v. Their Workmen, [1958] S.C.R. 651].

The Ordinance suspends the Industrial Disputes Act. The Supreme Court had held that the right to life enshrined under Article 21 includes the right to livelihood and therefore termination of the service of a worker without giving him reasonable opportunity of hearing in unjust, arbitrary and illegal. [See (1993) 3 SCC 258].

The main object of the Child Labour (Prohibition and Regulation) Act is to prohibit the engagement of children in certain employments and regulation of condition of work of children in certain other employments. This is among the list of suspended regulations.

This Ordinance has some heavy constitutional challenges ahead of it, as it appears to be violating some of the fundamental rights and principles enshrined in the Constitution of India. However, the Supreme Court had been reluctant to step in to the aid of migrant workers in the recent PIL before it while they were stuck in lockdown, so there is a high possibility that this Ordinance will receive their approval or lack of interference as well.

4. Does this Ordinance appear to be a good step towards helping the economy recover?

The lockdown led to industries coming to a grinding halt in most parts of the country. It is going to be a mammoth task recovering from this setback, particularly when cases of the novel coronavirus continue to rise. The move is controversial because to targets the rights of vulnerable sector that has already suffered immensely as a consequence of the current circumstances. Yet, there exists a view that giving the employers some liberty to be able to extract more work from their labour force on terms favorable to employers may motivate them to keep their businesses going and give industry the boost it needs to recover from this crisis. The idea of drawing foreign investment as a result is also very lucrative and could give the Indian economy the boost it needs.

However, India is a member of the International Labour Organisation and also a signatory to several treaties [there are 47 ILO conventions and 1 protocol ratified by India] whose provisions are in direct conflict this move made by certain state governments.

The Ordinance thus suggests a route to recovery which may or may not be successful, but is highly exploitative of a vulnerable sector of society. There may not just be costs to society but legal impediments in the way.

By Shiv Mangal Sharma & Aishwarya

Advocate Supreme Court