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Hire and fire: Maharashtra factory owners with 300 employees can soon sack them without govt nod

The state labour department has finalised the proposal, which could be moved before the state cabinet soon.

mumbai Updated: Nov 10, 2017 23:30 IST
Surendra P Gangan
Surendra P Gangan
Hindustan Times
Maharashtra,Factory,Labour Department
If approved by the state cabinet, 3,426 industrial units in Maharashtra, which employ 100 to 300 workers, will be exempted from the legal bindings of seeking permission from government authorities.

In a move that could boost investment, but is likely to be opposed by trade unions, the state government is all set to amend the Industrial Disputes Act, 1947 to relax the rules related to retrenchment, lay-offs and closure of industrial units.

Under a proposal as part of the government’s ease of doing business initiative, owners of manufacturing units employing up to 300 workers need not take prior permission of relevant authorities to shut down their units or fire employees. The current employee limit for this is 100.

The proposal, aimed at boosting investment, is likely to get a positive response from investors, but will probably be met with strong opposition from trade unions. The state labour department has finalised the proposal, which could be moved before the state cabinet soon.

If approved by the state cabinet, 3,426 industrial units, which employ 100 to 300 workers, will be exempted from the legal bindings of seeking permission from government authorities. This also means the 5.84 lakh workers employed with them will lose protection from lay offs, retrenchments and closure of the units.

Of about 37,000 factories, governed under the Act, 32,000 are with less than 100 workers, while 1,365 are with more than 300 workers.

“The step is an effort in boosting investment by easing out the exit policy for industrial units. This will ultimately give a boost to employment generation,” an official from the labour department said.

The officer said the compensation will be increased to wages equivalent to 45 to 60 days,multiplied by the number of years served. The existing provision of compensation is calculated with 15 days multiplied by the years served.

The amendment is proposed in section 25 (K1) and is expected to be amended during the winter session of the state legislature scheduled to be held next month after a nod by the state cabinet. The industrial units need to take permission of the division commissioner for lay offs and retrenchment, while for closure the proposal is approved by the state government .

Rajesh Kumar, principal secretary, labour department, said the department has proposed a hike in compensation to three times for workers. “The proposal will soon be brought to the cabinet for amendment. Besides the attractive compensation to the workers, they will get a fair chance of permanent jobs. In the existing scenario, the industrial units tend to employ workers on a contract basis if the number exceeds 100 workers. With the rise in the number of the workers, the chances of workers employed on permanent basis go up,” he told HT.

Trade union leaders slammed the government over its continuous attempts in tweaking the laws related to the labour welfare. “This is not the first time that the government is diluting the laws. Earlier, too, the Maharashtra government tweaked the factories act and other laws hampering the interest of the workers. While safeguarding the interest of the industrialists, the government is taking away the fundamental rights of the workers,” said Prakash Reddy, secretary, All India Trade Union Congress.

Anil Ganacharya, Mumbai unit chief of Indian National Trade Union Congress (INTUC), said the proposal will lead to the unemployment.

First Published: Nov 10, 2017 23:29 IST