Gujarat’s amendment to the Industrial Disputes Act that seeks to increase ease of business by reducing the compliance burden on industries in terms of layoffs, retrenchment and compensation has received the assent of President Ram Nath Kovind, an official said on Saturday.
The Industrial Disputes (Gujarat Amendment) Bill, 2020, which was passed in the state Assembly on September 22 last year, received the presidential assent on January 1, he said.
Vipul Mittra, Additional Chief Secretary, state Labour and Employment department, said the amendment aims at reforms to increase ease of doing business, and was carried out on the instructions of Chief Minister Vijay Rupani as per the vision of Prime Minister Narendra Modi.
As per Industrial Disputes Act 1947, establishments having 100 or more workers are required to seek prior permission of the state government before effecting layoff, retrenchment, or closure, while the amendment has raised the employee limit to 300.
Similarly, in case of layoffs, workers were, so far, required to be paid compensation amounting to 15 days salary for every year of service. Now, workers will also get an amount equivalent to the average pay of the last three months as compensation, a state government release said.
Earlier, workers needed to be given three months’ notice or wages for the notice period before retrenchment, while, as per the amendment, workers can be retrenched after giving them three months’ notice only.
Mittra said the exemptions are aimed at reducing the compliance burden on industries, which in turn will help the state attract new industries and investments to create more employment opportunities.
“The Covid-19 pandemic has adversely impacted industries and, thereby, economic growth. The government is trying to play the role of a facilitator to put growth back on track,” Mittra said.
“These labour reforms, coupled with industry-friendly policies, quick decision-making, and availability of skilled manpower, will help Gujarat attract new industries. However, we are ensuring that interests of workers are protected,” he added.
Since the Industrial Disputes Act is a Central law, any change that states want to make must get the approval of the president.
The Gujarat government has planned a series of measures to boost industrial activity, while also protecting workers’ interests, an official release said.
More ordinances were passed in the Assembly on the Contract Labour Act, Factory Act and Child act, and they are also expected to be approved soon, said the government release.
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