Maharashtra will likely allow companies to retrench up to 300 employees without government permission soon. In fact, if sources are to be believed, the number could even go up to 1,000.
Earlier, companies were free to retrench only up to 100 employees with government sanction.
The government defence is that the state will encourage investments and growth of industries and will help smaller companies unable to sustain themselves to shut shop without much hassles.
"If a company which has employed up to 300 workers is not able to sustain, it can shut shop without government permission," an official said.
A similar move was recently introduced in the BJP-ruled Rajasthan as well. The Maharashtra move comes weeks after Prime Minister Narendra Modi announced a slew of labour reforms at the Centre.
Is the move employee-friendly?
No, say trade unions. They fear it can have serious implications, given the sky-rocketing real-estate prices in Mumbai and nearby areas. Annasaheb Desai, Mumbai unit president of Bharatiya Mazdoor Sangh, believes because of the soaring realty prices, it will be far more profitable for a factory owner to sell off his factory to a promoter who might develop a shopping mall there.
How will government protect employees?
A senior government official said that the reform may come with certain clauses like 'change of user'. "We are contemplating putting the clause, so that a plot that is being used for a factory cannot be used for any other purpose. That can reduce chances of misuse," he said.
How many small factories are there?
According to Tapan Sen, general secretary of the Centre of Indian Trade Unions, "almost 71.2% of factories in the country employ up to 50 workers. Only a handful employ more than 1,000. This move will only encourage the 'hire and fire' regime in almost 90% factories."
What will be the fall-out in the state?
According to Desai, even a small factory employing 200 workers stands on a plot measuring a minimum of 10 acres. Desai fears that once the new reform comes into place, hundreds of factories in the state may shut. Sen says government records show Maharashtra has the highest instances of factory closure, followed by Gujarat.
Will the trade unions protest?
Desai feels though reforms of certain labour laws are necessary, "they should not be implemented without consulting us." Sen warns of an eventual backlash from the labour forces and extremism in workplaces.
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