Karnataka Ordinance to Boost Ease of Doing Busines

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In a recent development, the Government of Karnataka vide Gazette Notification dated July 31, 2020  has promulgated the Industrial Disputes and Certain other Laws (Karnataka Amendment) Ordinance, 2020 (Ordinance). The Ordinance is effective as of July 31, 2020. This Ordinance amends three labour statutes namely, the Industrial Disputes Act,1947, the Factories Act,1948, and the Contract labour (Regulation and Abolition) Act, 1970. The amendments set under the Ordinance are as follows:

1.  Industrial Disputes Act, 1947: Termination, Lay-off, and Closure   provisions eased

The headcount threshold required for industrial establishments to obtain permission from the appropriate government prior to lay-off, retrenchment (termination of employment), or closure has been increased from 100 workmen to 300 workmen.  Therefore, factories, mines and plantations having up to 300 workmen can now terminate/ lay off its workmen, or close undertakings without prior governmental approval.

2.    Factories Act, 1948: Reduced applicability of the statute and enhanced overtime thresholds

a)   The Ordinance has reduced the applicability of the statute by increasing the threshold from (i) 10 workers to 20 or more workers for factories working with the aid of power, and (ii) 20 to 40 or more workers, for factories working without the aid of power.

b)    Additionally, the State Government is now allowed to provide exemptions allowing factories to work up to 125 hours of overtime in a quarter, instead of the previous cap of 75 hours.

3.   Contract Labour (Regulation and Abolition) Act, 1970:  Applicability limited to establishments engaging 50 or more contract workers

Pursuant to the Ordinance, the Contract Labour (Regulation and Abolition) Act, 1970 shall apply to establishments that engage 50 or more contract workers, instead of 20 or more contract workers.

Date: August 10, 2020