The label is real.
It is a joke on behalf of the manufacturer, the Norwegian company "Ugly Children's Clothing"
(They now seem to be trading as Marius Kids; the history/relationship was too convoluted for Google Translate to adequately explain.)
Evidence that it hasn't been faked in Photoshop comes from the various different sources of different clothes with different washing instructions, but the same joke:
Hat tip to @adam-phelps for two of those images.
Evidence that the manufacturer is Marius Kids/Ugly Children's Clothing comes from:
Ugly Children’s Clothing sent me two items for review [...] The shirt even includes washing instructions: wash inside out, remove child before washing. Funny, right?