By Pradeepan Ravi & Sreyan Chatterjee

Even as the new labour codes still await full implementation in India, the Karnataka State Legislature in February passed the Factories (Karnataka Amendment) Bill, 2023 (‘Bill’), to amend the Factories Act, 1948 (‘Act’). The Bill passed in both the houses focusses on amendments regarding working hours, rest intervals and the employment of women in night shifts. It now awaits the Governor’s assent to come into force.

The latest amendment assumes significance because the Factories Act sets the standards for working conditions in the manufacturing sector, including the garment industry, which predominantly employs female workers. While the amendments are aimed at providing flexibility for employers to plan their workforce to suit production needs, it does not take into account the power imbalance on shop floors and could worsen working conditions and worker welfare.

Proposed Changes

  • The amendment to Section 54 of the Act would allow the state government to permit 12-hour shifts in factories, subject to a maximum of 48 hours in a week. However, the amended rules have stipulated that the daily working hours could be changed on conditions that written consent of the worker is taken and that the remaining days of the week are paid holidays. Potentially this amendment could pave the way for flexibility for employers in setting the number of working days in a week, which could be four or five or six days.
  • The amendment to Section 55 of the Act empowers the state government to permit the total hours of work without rest to be up to 6 hours in a day. Earlier, it was 5 hours without breaks.
  • As per the amendment to Section 56, the state government can notify employers to increase the cap on the spread of working hours up to 12 hours (inclusive of the intervals for rest). Earlier, it was 10.5 hours.
  • The amendment to Section 59 brings in changes to the way overtime wages are calculated in the factories. It allows the state government to prescribe the daily or weekly working hours above which overtime wages are payable to workers. As per the existing law, if the working hours exceed 9 hours in a day, the workers are entitled to overtime wages.
  • Section 65 has been amended to increase the permitted overtime hours from 75 hours to 144 hours in a quarter.
  • Section 66 would now allow women to work in factories beyond 7 pm, provided employers ensure safety facilities and get written consent from the workers.

Possible Impacts on Karnataka’s Garment Sector Workers

 

The amended law provides flexibility to factories to decide on working hours in a day, including having 12-hour work shifts. This goes against the provisions of ILO Hours of Work (Industry) Convention, 1919 (No. 1) that applies to the principle of an 8-hour work day. India, which is a founding member of ILO, has had it in force since 1921.

Although the maximum permitted working hours in a week is capped at 48 hours, it still gives scope for adverse interpretations for workers through adjustment of quarterly and daily limits. In sectors such as readymade garments where production pressures are already high, employers could keep changing the working hours to suit their production needs. For example, workers could be asked to do 12-hour shifts only during peak production months and not paid any overtime wages.

In the prevailing low wage regime in the sector, the 12-hour shifts or the 4-day workweek system will force workers to take up informal or gig jobs to earn more, and thus compromise health and well-being. Even if overtime is payable to workers at higher rates, regulatory control over overtime is required as per a long line of ILO Conventions. These are listed below: ((a) Weekly Rest (Industry) Convention, 1921 (No. 14) (b) Forty-Hour Week Convention, 1935 (No. 47) (c) Holidays with Pay Convention (Revised), 1970 (No. 132) and (d) Reduction of Hours of Work Recommendation, 1962 (No. 116)

It is clear that it would require more oversight by the labour inspection system to ensure that overtime work is exceptional, and workers get overtime pay.

Additional Burden On Women: The 12-hour shifts are unsuitable for women considering the time-poverty they face due to a disproportionate burden of care work and long commutes. The amended law has not taken into account the needs of pregnant workers who will be most impacted by these shifts. The amended rules will pose further challenges to women workers’ participation in the labour market.

As a majority of workers in Karnataka’s garment industry are women, the amendment to allow women to work night shifts can have serious safety implications. Although the bill has put the onus on employers to create facilities to ensure safety, there are hardly any details about the costing and implementation plan. The provisions include having adequate number of women on night shifts, transport facilities with verified drivers, pre-decided routes, and female security personnel. Without providing clear guidance for implementation, compliance would not be uniform or effective as costs would deter most suppliers with lower profit margins.

This amendment goes against the spirit of ILO protocol of 1990 to the Night Work (Women) Convention (P089), which calls for agreements between employers and workers’ representatives for deciding on night works for women. The ILO Convention imposes safeguards for pregnant workers to work night shifts. The bill has no mention of either of these worker-protective measures.

Question Of Consent: Worker consent for production flexibility is an important protection. However, it has been left to individual employers to operationalise this consent mechanism. It is also unclear whether this consent provision would operate at an individual level or a collective level with the involvement of trade unions – leaving a significant scope for employers (and brands) to come up with specific solutions. Amendment to Section 54 only offers the guidance that worker consent obtained for such changes should be in writing.

The possible increase in daily working hours, including 12-hour work shifts and the changes to permitted overtime hours could also be detrimental to women workers’ continuance in the garment industry. The social reproduction burden, including child care and household responsibilities, is disproportionately borne by these workers. Any increase in daily working hours will be an additional strain and could end up preventing their participation in the labour market.

Heightened Harassment Risk: Verbal harassment and production-related pressure on workers have always been high in the garment industry. Now the increased spread over time and total hours of work without rest intervals would put them at a heightened risk of harassment and gender-based violence. In the absence of any functional social dialogue mechanism or grievance redressal system at workplaces, the workers will not have any channel to report grievances.

Long working hours along with increased overtime hours could have health implications. This could also lead to an increase in workplace accidents and injuries. Most factories lack basic medical infrastructure, and the amendments have so far not provided for upgradation of these facilities.

While the amended law increased the permitted overtime hours from 75 to 144 hours in a quarter, it is vague about how overtime wages would be calculated. In the absence of their collective representation, the changes to overtime wages could put workers at a disadvantage. Non-payment of such wages is already an issue and the amendments could further complicate timely payments.

Worker Collectives React

  • The Joint Committee of Trade Unions composed of national trade unions has opposed the amendment to the Factories Act, calling it a move against workers’ interests. They have claimed that it is aimed at helping employers cut labour costs.
  • Many trade unions organised demonstrations across Karnataka protesting against the amendments and some have urged the state’s Governor not to give assent to the bill.
  • The All-India Trade Union Congress (AITUC) has made a complaint to ILO on changes made to the Factory Act in Karnataka. It pointed out that the amendment bill violates ILO conventions and declarations to which India is a signatory.
  • The Centre of Indian Trade Unions (CITU) in its letter to the Karnataka state governor says the share of wages in the Net Value Addition (NVA) is low in Karnataka compared to the national average. It is 15.04% while the national average is 18.87% as per Annual Survey of Industry (2019-20) figures. In contrast, the share of profits of employers in NVA is 46.11% while the national average is 38.71%. The letter states that the amendments will ‘further reduce the share of wages and increase the share of profits (for employers).’

What Global Brands Could Do

The Bill poses a new set of challenges – right from protecting workers’ rights to ensuring that further human rights risks do not emerge. In the light of this, multinational companies who are serious about effective human rights due diligence in their supply chains, can undertake the following steps:

  • Ensure decent work in accordance with international standards and take proactive steps to protect workers in their supply chains in the light of the amendments
  • Follow ILO standard of 8-hours daily work in supply chains rather than follow poorer labour standards set by production countries
  • Implement effective policies and safeguards to ensure that the 12-hour work shifts and night shifts for women workers are not misused by suppliers
  • Map and remediate the new risks arising from the amendments to undertake a thorough Human Rights Due Diligence process
  • Conduct dialogue with suppliers and other stakeholders about the implications of the amended laws on workers in their supply chain
  • Ensure wages are not reduced from current levels and initiate steps for payment of living wages to workers

In The Spirit of Decent Work

The test of effective legislation lies in the balance it achieves in legitimising employer’s close control of the production process vis-à-vis ensuring wage sufficiency and decent working conditions for workers. In the absence of this, it is important for brands, suppliers and workers to come together to negotiate workers’ interests.

Close regulation of working hours is the subject of consistent international regulation and standard setting through the International Labour Organisation Conventions and United Nations Guiding Principles on Business and Human Rights. The UNGP operational principles of Pillar 1- State Duty to Protect says: “Ensure that other laws and policies governing the creation and ongoing operation of business enterprises, such as corporate law, do not constrain but enable business respect for human rights.”

It is well accepted in labour regulatory literature that national legislation on working hours can provide for fair competition between countries (and regions) and ensure that no competitive advantage arises out of diluting economic or workplace rights of workers. These amendments risk creating a business environment where suppliers could run afoul of these international standards.