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Our Bureau

Chennai , June 19

THE World Bank has suggested that the Tamil Nadu Government could explore ways to rationalise the numerous laws governing labour and statutory compliance requirements, "within the constraint of national legislation," as a reform measure to improve the investment climate in the State.

In a report titled `Economic growth and poverty alleviation in Tamil Nadu,' the bank has said these reform measures would create elbow-room for a contractual labour relationship and for easing the threshold for retrenchment. It has suggested short-term, medium-term and long-term measures.

In the long-term, the World Bank said the State could consider consolidating the 27 Central and seven State laws for industrial relations and labour matters.

Like in most developing countries, steps need to be taken to consolidate labour regulations to five main legislations to govern.

These include the relationship between the employer and the employee (Employment Act); a quasi-judicial body that arbitrates between the employer and the employee (Industrial Disputes Act); the activities of employees in unions (Trade Unions Act); welfare and compensation (Workman Compensation Act) and safety and security at work (Occupational Safety Act).

It asked for institutional re-engineering to make the regulation of labour effective and cost-efficient and suggested that the State could consider establishing an independent labour regulatory authority to deal with retrenchment and closure of factories.

In the short-term, the State could carry a complete review of the entire spectrum of labour laws and the machinery needed to implement these laws.

The bank also wants flexibility brought into the Factory Act for working hours, overlapping of shifts, work days and working on holidays either through State amendments or through an exemption under Section 65.

Besides, the bank recommended to the State to amend the Contract Labour (Regulation and Abolition) Act, 1970 so that a "core" activity can be redefined and many activities can be reclassified under the "non-core" category.

The State could consider amending the notifications under the Shops and Establishment Act to remove inflexibility in working hours and dismissal of employees and also review licensing procedures in all labour-related laws.

The World Bank also mooted the removal of inflexibilities introduced by the State to the Industrial Disputes Act.

For the medium term, the World Bank wants the State to amend Section 16 of the Trade Union Act, 1926, which contemplates the constitution of a separate fund for political purposes.

Steps could be taken at the State level to amend Industrial Disputes Act, 1947 and Shops and Establishment Act to allow termination on reasonable grounds; differentiation between the termination of a temporary and a permanent employee; the removal of compulsory regularisation of a person who works for more than two years and to provide for Court-awarded compensation instead of reinstatement and permitting compulsory retirement under the Industrial Disputes Act.

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