Karnataka makes hiring, firing easier for MSME units

BENGALURU: The MSME sector has got a big relief as the State Government is all set to notify a set of amendments to its labour laws making it easier to for small industrial units to hire and fire employees, and close down in the event of a financial crisis.

The amendments also allow more overtime (OT) hours for workers as well as to rope in workers on a contract basis.

The government has amended Industrial Disputes Act, Factories & Boilers Act and Contract Labour Act, and related regulations to boost the morale of the MSME sector. The regulations earlier required MSMEs to seek government permission to layoff, retrench and close down units if they had 100 employees.

The cap has now been raised to 300 employees so that MSMEs can hire more people without the fear of labour regulations coming in the way later, or close down units in the event of a financial crunch. “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 ET. The President, he added, has assented the Labour ordinances sent by Karnataka, and the government will notify them very soon. Five other states too have made similar changes to their labour laws, he said.

“We are passing through a difficult time due to Covid-19 pandemic. Unions seem to have doubts that we are liberlising laws to weaken them. That is not correct. Our aim is to get more investments into Karnataka and add more jobs,” Hebbar said. The amendments also raises the ceiling on the overtime (OT) hours cap from 75 hours to 125 hours in a quarter, and raises the cap on hiring of contract workers from 20 to 50.

“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 liberlisation of laws on these important aspects will go a long way in the establishment of more MSMEs leading to more jobs,” said SN Murthy, legal expert on labour laws.

Karnataka makes hiring, firing easier for MSME units Karnataka makes hiring, firing easier for MSME units Reviewed by TechCO on 7/24/2020 Rating: 5

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