“Financial losses cannot be offset on the weary shoulders of the laboring worker”; SC quashes Gujarat Notification permitting factories to extend work hours & cut overtime

“A worker’s right to life cannot be deemed contingent on the mercy of their employer or the State.”

Supreme Court: The 3-judge bench of Dr. DY Chandrachud. Indu Malhora and KM Joseph, JJ quashed the Notification dated July 20, 2020 issued by the Labour and Employment Department of State of Gujarat under Section 5 of the Factories Act to exempt all factories registered under the Act “from various provisions relating to weekly hours, daily hours, intervals for rest etc. for adult workers” under Sections 51, 54, 55 and 56 till October 19, 2020.

“This Court is cognizant that the State of Gujarat aimed to ameliorate the financial exigencies that were caused due to the pandemic and the subsequent lockdown. However, financial losses cannot be offset on the weary shoulders of the laboring worker, who provides the backbone of the economy.”

The Court, hence, directed that overtime wages shall be paid, in accordance with the provisions of Section 59 of the Factories Act to all eligible workers who have been working since the issuance of the notifications.


NOTIFICATION

On 17 April 2020, the Labour and Employment Department of the State of Gujarat issued a notification with the aim to provide “certain relaxations for industrial and commercial activities” from 20 April 2020 till 19 July 2020. On its lapse by the efflux of time, the State government issued another notification on 20 July 2020 . Similar in content, the new notification extended the exemption granted to factories from 20 July 2020 till 19 October 2020.


POWER UNDER SECTION 5 OF THE FACTORIES ACT, 1962 AND THE PRE-REQUISITE OF ‘PUBLIC EMERGENCY’

NOTE: Section 5 of the Factories Act provides that in a public emergency, the State Government can exempt any factory or class or description of factories from all or any of the provisions of the Act, except Section 67.

The Court noticed that the existence of a public emergency is a pre-requisite to the exercise of the power. Whether there exists a public emergency is not left to the subjective satisfaction of the state government. The absence of the expression “subjective satisfaction” in Section 5 is crucial.

“The existence of a public emergency must hence be demonstrated as an objective fact, when its existence is questioned in a challenge to the exercise of the power. Left to itself, the expression ‘public emergency’ may have a wide and, as we say in law, an elastic meaning.”

Under Section 5 a situation can qualify as a public emergency’, only if the following elements are satisfied:

  • there must exist a “grave emergency”;
  • the security of India or of any part of its territory must be “threatened” by such an emergency; and
  • the cause of the threat must be war, external aggression or internal disturbance.

It was, hence, noticed,

“The co-relationship between the cause and effect must exist. Implicitly therefore, the statutory provision incorporates the principle of proportionality.”


PRECEDENT ON ‘PUBLIC EMERGENCY’ AND ‘SECURITY OF THE STATE’

The power under Section 5 of the Factories Act can be exercised in a “public emergency”. The explanation states that to constitute a public emergency, there must be a grave emergency. The emergency must be of such a nature as to threaten the security of India or a part of its territory. The threat to the security of India or a part of the territory must be caused by war, external aggression or an internal disturbance. The expression ‘internal disturbance’ cannot be divorced from its context or be read in a manner divorced from the other two expressions which precede it. They are indicative of the gravity of the cause which threatens the security of India or a part of its territory. An internal disturbance must be of a similar gravity.

“… it is necessary to evaluate whether a situation of internal disturbance threatens the security of India, or a part of its territory to qualify as a ‘public emergency’. In the absence of any one or more of the constituent elements, the conditions requisite for the exercise of statutory power will not exist.”


IS COVID-19 A ‘PUBLIC EMERGENCY’IN TERMS OF SECTION 5 OF THE FACTORIES ACT, 1962?

“The brunt of the pandemic and of the lockdown has been borne by the working class and by the poorest of the poor. Bereft of social security, they have no fall back options.”

The Court noticed that global pandemic caused by COVID-19 is an unprecedented situation with which countries all over the world are grappling. In India, when the Central Government imposed a nationwide lockdown to take effective measures to contain the spread of COVID-19, there was a widespread migration of labour from the cities, where all avenues for work had closed. There was an unprecedented human migration, countless of the marginalized on foot, to rural areas in search of the bare necessities to sustain life. There has been a loss of incomes and livelihood.

“The respondent has in exercise of its powers under Section 5 of the Factories Act issued the impugned notifications purportedly to provide a fillip to industrial and commercial activities.”

The Court said that even if it accepted the argument of the State that the pandemic has resulted in an internal disturbance, it cannot be said that the economic slowdown created by the COVID-19 pandemic would qualify as an internal disturbance threatening the security of the state.

“The pandemic has put a severe burden on existing, particularly public health, infrastructure and has led to a sharp decline in economic activities. The Union Government has taken recourse to the provisions of the Disaster Management Act, 2005.12 However, it has not affected the security of India, or of a part of its territory in a manner that disturbs the peace and integrity of the country.”

The economic hardships caused by COVID–19 certainly pose unprecedented challenges to governance. However, such challenges are to be resolved by the State Governments within the domain of their functioning under the law, in coordination with the Central Government. Unless the threshold of an economic hardship is so extreme that it leads to disruption of public order and threatens the security of India or of a part of its territory, recourse cannot be taken to such emergency powers which are to be used sparingly under the law.

“Recourse can be taken to them only when the conditions requisite for a valid exercise of statutory power exist under Section 5. That is absent in the present case.”

It was further noticed that the impugned notifications do not serve any purpose, apart from reducing the overhead costs of all factories in the State, without regard to the nature of their manufactured products. It would be fathomable, and within the realm of reasonable possibility during a pandemic, if the factories producing medical equipment such as life-saving drugs, personal protective equipment or sanitisers, would be exempted by way of Section 65(2) of the Factories Act, while justly compensating the workers for supplying their valuable labour in a time of urgent need.

“A blanket notification of exemption to all factories, irrespective of the manufactured product, while denying overtime to the workers, is indicative of the intention to capitalize on the pandemic to force an already worn-down class of society, into the chains of servitude.”


SOCIAL AND ECONOMIC VALUE OF ‘OVERTIME’

The Indian Constitution is born from a transformative vision which aims to achieve social and economic democracy. Labour welfare is an integral element of that vision.The need for protecting labour welfare on one hand and combating a public health crisis occasioned by the pandemic on the other may require careful balances. But these balances must accord with the rule of law. A statutory provision which conditions the grant of an exemption on stipulated conditions must be scrupulously observed.

“It cannot be interpreted to provide a free reign for the State to eliminate provisions promoting dignity and equity in the workplace in the face of novel challenges to the state administration, unless they bear an immediate nexus to ensuring the security of the State against the gravest of threats.”

The principle of paying for overtime work at double the rate of wage is a bulwark against the severe inequity that may otherwise pervade a relationship between workers and the management.


CONSTITUTIONAL VISION OF SOCIAL AND ECONOMIC DEMOCRACY

“Ideas of ‘freedom’ and ‘liberty’ in the Fundamental Rights recognized by the Constitution are but hollow aspirations if the aspiration for a dignified life can be thwarted by the immensity of economic coercion.”

The Factories Act is an integral element of the vision of state policy which seeks to uphold Articles 38,22 39,23,24 and 25 of the Constitution. It does so by attempting to neutralize the excesses in the skewed power dynamics between the managements of factories and their workmen by ensuring decent working conditions, dignity at work and a living wage.

The Court said that the Constitution allows for economic experiments. Judicial review is justifiably held off in matters of policy, particularly economic policy. But the Directive Principles of State Policy cannot be reduced to oblivion by a sleight of interpretation.

“To a worker who has faced the brunt of the pandemic and is currently laboring in a workplace without the luxury of physical distancing, economic dignity based on the rights available under the statute is the least that this Court can ensure them.”

The notifications, in denying humane working conditions and overtime wages provided by law, are an affront to the workers’ right to life and right against forced labour that are secured by Articles 21 and 23 of the Constitution.


CONCLUSION

The Court quashed the Notifications and said that Section 5 of the Factories Act could not have been invoked to issue a blanket notification that exempted all factories from complying with humane working conditions and adequate compensation for overtime, as a response to a pandemic that did not result in an ‘internal disturbance’ of a nature that posed a ‘grave emergency’ whereby the security of India is threatened. In any event, no factory/ classes of factories could have been exempted from compliance with provisions of the Factories Act, unless an ‘internal disturbance’ causes a grave emergency that threatens the security of the state, so as to constitute a ‘public emergency’ within the meaning of Section 5 of the Factories Act.

The notifications in question legitimize the subjection of workers to onerous working conditions at a time when their feeble bargaining power stands whittled by the pandemic.

“Clothed with exceptional powers under Section 5, the state cannot permit workers to be exploited in a manner that renders the hard-won protections of the Factories Act, 1948 illusory and the constitutional promise of social and economic democracy into paper-tigers. It is ironical that this result should ensue at a time when the state must ensure their welfare.”

[Gujarat Mazdoor Sabha v. State of Gujarat, 2020 SCC OnLine SC 798, decided on 01.10.2020]

Join the discussion

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.