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Covid 19: Impact On Employment And Labour Law


Labour laws in India have a wide scope as it is not just one Act but a compilation of different Acts. Conditions of work are protected under Factories Act 1948, The Contract Labour( Regulation and Abolition) Act 1970 and Shops and Commercial Establishment Act. Wages and remunerations are given according to the guidelines in The Minimum Wages Act 1948 and Payment of Wages Act 1936. Employment security and industrial disputes are taken care under the provisions of The Industrial Dispute Act 1947 and Industrial Establishment (standing orders) Act 1946. There are other laws that give social security to the employees working in a particular organisation. Due to the pandemic, some of the States have suspended labour laws as it is in the concurrent list, giving power to the states to make reasonable changes or suspension of provision of the Acts. Some of these states include Uttar Pradesh, Madhya Pradesh, Gujarat, and Rajasthan.

Relaxations made by Different State Governments

Many states took intrepid steps to overcome the hurdles faced by the employers and the employees during the pandemic. Different steps were taken according to the objectives they wanted to achieve by changing the laws for a considerable period of time. Some of the states that we will discuss are Madhya Pradesh, Uttar Pradesh and Gujarat.

Madhya Pradesh (MP)[1]

  • Easy fire and hire policy:  Because of relaxation in the employment laws in MP, the employers fired many workers, due to which people are losing jobs, thus increasing the pressure on the economy. One of the reasons why many people are fired are companies or the employers do not have enough profits thus firing will reduce their burden as they don’t have to pay salaries and wages.
  • Increase in the maximum working hour: The government has increased maximum daily hours to 12 hours and weekly hours to 72 hours for a period of three months.
  • Exemptions: The ordinance exempts establishments with less than 100 workers from adhering to the Madhya Pradesh Industrial Employment (Standing Orders) Act, 1961, which regulates the conditions of employees. It also exempts any establishment or class of establishments from the Madhya Pradesh Shram Kalyan Nidhi Adhiniyam, 1982, which provides welfare funds for labor by employers. New factories and existing factories were exempted from Industrial Dispute Act for the next 1000 days. Under the provisions of Factories Act, layoffs and retrenchment of employees and also closure of establishment were not exempted. Existing establishments, recognition of trade unions and employer bodies for collective bargaining are prohibited.
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Uttar Pradesh (UP)[2]

  • Exemption: UP government has exempted all companies from almost all labour laws for 3 years. The companies have to fulfil the conditions to avail such an exemption.
  • Payment: It is clearly stated that employers should give minimum wages to employees working and it should adhere to the timeline given in the Payment of Wages Act. Payment should not be given as cash; it should be made in account.
  • Provision and acts that subsists: Provisions relating to health and safety, compensation, employment of women and children will remain in effect.
  • Increase in maximum working hours: Maximum daily working hours are increased to 12 hours and weekly working hours increased to 72 hours.


Gujarat has followed the UP model with slight differences.

  • Exemption:  The duration of labour legislation exemption in the state of UP is 3 years under all divisions. It has excluded the new industrial units from the ordinance of the existing framework of legislations for a period of 1200 days for new companies as well as companies set up in the last 1 year. Welfare and safety legislations need abidance by the employer and the employee. 
  • Online approval procedures: The ordinance states that online approval procedures will be initiated by the government for new industrial establishments in support of social distancing. The approval will be given within 15 days.
  • Wages and payment: The wages and payment to the workers in factories will be given according to the The Payment of Wages Act.
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Effect of Amendment on the labour legislation

The rationale of the state government behind making these amendments were that it would encourage industrial activities and attract investments which will boost the economy. Because of the lockdown, many companies and organizations have faced losses and have dissolved, thus these amendments can help these industrial units to repossess what they lost. The relaxations of laws have reduced the burden on the industries as they were affixed by the law and government paperwork.

Some of the drawbacks that can be observed are:

  • Workers are expoited, as working hours have been increased and shifts are flexible. Employees are fired by the organizations and new employees are hired for lower salary. Same goes with the labourer. If all the labour laws are removed then there will be informal employment thus bringing down the wage rate.
  • Reduced Wages, lowered the earnings capacity (particularly of low wage workers) and reduced consumer demand as many people won’t have the income to consume goods and services.
  • These changes are mostly employer oriented thus it doesn’t benefit the employee. Many employers have reduced salaries thus causing huge problems to maintain the standard of living or even fulfill the basic needs of the family.


Labour legislation has become more flexible due to the amendments made during the pandemic. These regulations and guidelines will have a better impact on the economy of the country. The government should scrutinize these amendments so that it is beneficial for both employer and employee. Many other states other than UP, MP and Gujarat have taken steps to amend their labour and employment. There is a need for the Centre to take decisions regarding the labour laws so that there is uniformity in understanding the laws. This will also reduce the burden of the states in conveying the rules and regulations as there will be no ambiguity for migrants and residents of India.

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[1] The Madhya Pradesh Labour Laws (Amendment) Ordinance, 2020; Notification No. 247-2020-A-XVI, Labour Department, Government of Madhya Pradesh, April 22, 2020; The Madhya Pradesh Labour Laws (Amendment) Ordinance, 2020, Madhya Pradesh Gazette, May 6, 2020.

[2]  Notification No. 13/2020/502/36-03-2020-30(Sa.)/2020TC, Labour Department, Government of Uttar Pradesh,   May 8, 2020; Notification No. 15/2020/511/36-03-2020-30(Sa.)/2020TC, Labour Department, Government of Uttar Pradesh, May 15, 2020; Uttar Pradesh Labour law ordinance 2020, ( last visited 21st august 2020).     

[3]  Notification No. GHR/2020/56/FAC/142020/346/M3, Labour and Employment Department, Government of Gujarat, April 17, 2020; Simplilance , visited 21st august 2020)

Cite this article (The Bluebook 20th ed.)-

Surya Sunilkumar, Covid 19: Impact On Employment And Labour Law, Ex Gratia Law Journal, (September 10, 2020),

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Surya Sunilkumar
Student - Ramaiah Institute of Legal Studies