States Introduce Reforms For Renewal Of Licenses Under Labour Laws

In order to relieve small industries from excessive compliances, the State of Madhya Pradesh and Puducherry have passed amendments to their respective Factories Rules. Further, the State of Odisha has also introduced amendments to laws governing inter-state migrant labourers. In this post, we will decode the amendments passed by the respective State Governments.

Madhya Pradesh

The State of Madhya Pradesh has been at the forefront of introducing several relaxations in labour laws. Recently, the State Government exercised its powers conferred under Section 6 and Section 112 of the Factories Act, 1948 to amend the Madhya Pradesh Factories Rules, 1962 (“MP Rules”) vide notification dated 16th March 2021. The proposed changes aim to amend Rule 6(2) of the said MP Rules and substitute it with the following:

“register the factory and grant a license online in form No. 3 for a period upto ten years or more as may be prescribed by the State Government”.

The State Government has amended the law keeping in mind the interests of the industry as it eases the burden of renewing the license annually. Henceforth, the license will be issued for a period of 10 (ten) years. This does not in any manner affect the provisions in relation to inspections, etc. This is probably an attempt to bring the said MP Rules in line with the new Code on Occupational Safety, Health and Working Conditions, 2020.

Puducherry

The labour department of Puducherry vide notification dated 26th February 2021 has amended the existing Puducherry Factories Rules, 1964 (“Puducherry Rules”) by issuing the Puducherry Factories (Amendment) Rules, 2020. The proposed change seeks to amend and substitute Rule 6(3A) of the Puducherry Rules, which specifies the tenure for the license issued under the Puducherry Rules:

“Every licence granted or renewed under this rule shall remain valid or be in force for a minimum period of ten years or more as applicable. The Licence so granted or renewed shall remain valid up to 31st December of the applied period. Provided that in case of temporary factories or the nature of activity demands for, the Chief Inspector may issue factory licence for less than ten year validity on an application made in this behalf by an occupier. Provided further that in such cases, the fee payable for grant of or renewal of licence of a factory shall be proportionate to the annual fee as multiplied by number of years for which licence is sought for.”

Further, Rule 6(4) has been amended and substituted to grant auto renewal of license:

“If, the application has been made in accordance with this rule, the licence for the premises shall be deemed to have been automatically renewed for the applied period and an electronic certificate of registration/renewal shall be auto generated and issued after a period of 30 days from the date of submission of the application or until such date as the Chief Inspector may pass orders seeking clarifications on the application for the renewal.”

For ease of understanding, we have explained the amendment below:

• Validity of License

The license shall be valid for a minimum period of ten years or more. However, the license granted/renewed shall be valid upto 31^st December of the applied period. Nonetheless, the Government has carved an exception to the said Rule. Depending upon the nature of activities carried out by a factory and in case of temporary factories, the Chief Inspector may issue a license for less than ten years if an application is made by an occupier in this regard.

Lastly, the fees payable for grant or renewal of license must be proportionate to annual fee multiplied by number of years for the which the license is issued.

• Auto-Renewal of License

As per the proposed amendment, the license for the factory premises shall be deemed to be auto-renewed for the applied period and an electronic certificate for registration/renewal shall be auto-generated within a period of 30 days from the date, an application is submitted or until such date as the Chief Inspector may pass order seeking clarifications on such an application.

Amendment to Inter-State Migrant Workmen (Regulation of Employment and Condition of Service) Odisha Rules, 1980

In order to extend relief to the contractors, the Labour and E.S.I department of Odisha vide notification dated 29^th January, 2021 introduced Inter-State Migrant Workmen (Regulations of Employment and Condition of Service) Odisha Amendment Rules, 2020 (“Rules”). The Rules have been brought into effect in exercise of the powers enumerated under Section 35 of the State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979. According to the proposed amendment, Rule 15(2) of the said Rules shall be substituted as follows:

“(2) The application shall be made in Form IX electronically not less than thirty days before the date on which the license expires and if the application is so made, the license shall be deemed to have been renewed”.

Essentially, the new Rule allows contractors to submit Form IX for renewal in electronic form. Similarly, the State of Gujarat has also previously introduced amendments to inter-state migrant rules by modifying process for renewal of license. Our previous post analyzing the said amendment can be accessed here.

India has actively been introducing several reforms to the extant labour laws. The proposed amendments are a step in right direction and eases the burden of compliances on the factory owners and contractors.

– Archana Balasubramanian (Partner); Vaishnavi Vyas (Associate Trainee)