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Karnataka Government Amends Labour Laws for MSMEs

Under the new amendments, the companies are allowed to do more overtime (OT) hours for workers and employ more workers on a contract basis
BY BEx Bureau
Jul 24, 2020

In a bid to bring relief to the MSMEs, the Karnataka government has proclaimed a slew of amendments to its labour laws. The move is done to make it easier for small business units to employ and terminate employees effortlessly and shut down their business during the financial crisis, reported The Economic Times.

Under the new amendments, the companies are allowed to do more overtime (OT) hours for workers and employ more workers on a contract basis.

The state government has also changed the Industrial Disputes Act, Factories Boilers Act, and the Contract Labour Act, and other related regulations to stimulate the MSME sector. Earlier on, MSMEs having an employee base of 100 or more, had to take the state governments permission to lay off, make employees' redundant and shut down business units.

As per the new amendment, the MSMEs can now hire up to 300 employees without considering the labour regulations or shutting their business during the downturn.

"The relaxation of labour regulations will go a long way in attracting new investments and encourage industries to hire more," Labour Minister, Shivaram Hebbar told the cited media agency.

"The President has assented to the Labour ordinances sent by Karnataka, and the government will notify them very soon. Five other states to have made similar changes to their labour laws," Hebbar added.

The new amendment has also increased the overtime (OT) cap to 125 hours in a quarter and enhanced the cap on employing contract workers to 50, from earlier 20.

"We are passing through a difficult time due to the Covid-19 pandemic. Unions seem to have doubts that we are liberalizing laws to weaken them. That is not correct. Our aim is to get more investments into Karnataka and add more jobs," Hebbar told the cited media agency.

"The earlier law was a great setback to the growth of the industrial sector. We had always said the government should not get into prescribing OT hours, or into the nitty-gritty of hiring of contract workers. The liberalization of laws on these important aspects will go a long way in the establishment of more MSMEs leading to more jobs," SN Murthy, a legal expert on labour laws.

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