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India: Labour law reforms in the States of Punjab, Madhya Pradesh and Himachal Pradesh

In order to facilitate and boost ease of doing business, the State Governments of Punjab, Madhya Pradesh and Himachal Pradesh by way of ordinances have amended certain provisions of the Industrial Disputes Act, 1947 (“IDA”), the Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”) and the Factories Act, 1948 (“FA”).

a) State of Punjab

• The Government of Punjab has promulgated the Industrial Disputes and Certain Other Laws (Punjab Amendment) Ordinance, 2020. It brings in certain noteworthy changes to certain provisions of the IDA and CLRA.

• Chapter V of IDA which relates to the provisions of layoffs, retrenchment, closure of the certain establishment, under Section 25K of IDA has been made applicable to an industrial establishment where the number of workmen employed is not less than 300 workmen instead of the existing provision of 100 workmen.

• It has also inserted section 2A (4) in IDA which specifies that no dispute between the workmen and employer related to dismissal, retrenchment, termination or discharge can be deemed as in an industrial dispute if it is not raised within a period of 3 years.

• In addition to the above, as per the provisions relating to the conditions of retrenchment, the existing compensation which shall be equivalent to fifteen days’ average pay for every completed year of continuous service or any part thereof in excess of six months, an additional condition which will be an amount equivalent to last three months average pay has been introduced.

• Lastly, the applicability of CLRA for establishments in the State of Punjab has been increased from 20 or more workmen to 50 or more workmen.

b) State of Madhya Pradesh

• The Government of Madhya Pradesh has promulgated the Labour Laws (Madhya Pradesh Amendment) Ordinance, 2020, wherein the applicability of the FA for factories operating with the aid of power in the State of Madhya Pradesh has been increased from 10 or more workmen to 50 or more workmen. Further, the CLRA will now be applicable to establishment having 50 or more workmen (earlier CLRA was applicable to establishment having 20 or more workmen)

c) State of Himachal Pradesh

• The Government of Himachal Pradesh vide notification dated August 13, 2020 has extend the notification dated April 21, 2020 which exempted all factories situated in Himachal Pradesh from the provisions of Section 51 (Weekly hours of work), Section 54 (Daily hours of work), Section 55 (Interval of rest), Section 56 (Spread hours) under the FA for further 3 months subject to the following conditions as mentioned below.

  • i. No adult workers shall be allowed or required to work in the factory more than 12 hours in any day and 72 hours in any week.
  • ii. The periods of work of adult workers in a factory each day shall be so fixed that no period shall exceed 6 hours and that no workers shall work for more than 6 hours before he has had an interval for rest at least half an hour.
  • iii. Wages in respect of increased working hour as a result of this exemption shall be in proportion to the existing Minimum Wage fixed by the Government of Himachal Pradesh under Minimum Wage Act 1948.
  • iv. Section 59 of the FA relating to overtime payments shall continue to be applicable without any change.

• Additionally, the Government of Himachal Pradesh has amended the FA and introduced the Factories (Himachal Pradesh Amendment) Act, 2020 on September 9, 2020 which stands effective from July 9, 2020. The amendment has repealed the Factories (Himachal Pradesh Amendment) Ordinance, 2020 published on 9th July 2020 and changed the total number of hours for overtime to 115 instead of 75 hours subject to the condition that overtime shall have to be paid twice the rate of ordinary wages. Lastly, it has also increased the applicability of factories to the FA from 10 or more workers to 20 or more workers for factories operating with the aid of power and from 20 or more workers to 40 or more workers for factories operating without the aid of power.


For more information on these articles or any other issues involving labour and employment matters in India, please contact Avik Biswas (Partner) of IndusLaw at avik.biswas@induslaw.com or visit www.induslaw.com.

For more information please contact Joseph Granato, Communications Manager at L&E Global at joseph.granato@leglobal.org.