Labour Laws

Labour & Employment Laws

The labour rightsit are enshrined in the Articles 14-16, 19(1)(c), 23-24, 38, and 41-43A of the  Constitution of India, 1950. Article 14 states the Right of Equality, Article 15 specifies the Right against discrimination and article 16 extends a right of "Equality of opportunity" for employment or appointment under the State. Article 19(1)(c) empowers a right "to form associations or unions". Article 23 imposes prohibition on all trafficking and forced labour, while Article 24 prohibits Child Labour, whereby no child under the age of 14 years, can be made to work in a factory, mine or "any other hazardous employment".

Article 38(1) suggests that the state ought to "strive to promote the welfare of the people" with a "social order in which justice, society, economy and politics, shall inform all the institutions of national life”. In article 38(2) it is stated that the State should minimize the inequalities of Income. Article 41 creates a "Righ to Work", for which Government schemes such as the National Rural Employment Guarantee Scheme, are put to implementation. Article 42 requires the State to make provisions for securing just and human conditions of work and for maternity relief. Article 43 justifies the right to “wage” in return for the work done and decent conditions of work ensuring a safety and standard of life to the workers/ employees. Article 43A, inserted by the Forty-Second Amendment to the Constitution of India in 1976 guarantees the participation of workers in the management of undertakings.

India's labor laws gained momentum after a historic update in the Industrial Disputes Act, 1948. Since then, various Central & State enactments have developed a fillip to control the relationships between the workers and the Management. These laws regulate the aspects of employer-employee relationship, such as maintenance of attendance logs, overtime wages accounts, filing of annual returns. The scope of labour laws extend to every aspect of employment, right from maintenance of workplace to allowances to leaves and leave encashment benefits. There are dedicated Inspectors who are appointed to conduct workspace surveys and declare fines for violation of any labour laws and regulations, which in some cases may go the extent of lodging of a criminal proceeding.

The Industrial Employment (Standing Orders) Act 1946 requires that employers to determine the working hours, leave, productivity goals, dismissal procedures or worker classifications, after due approval from the jurisdictional Labour Commissioner.

The Contract Labour (Regulation and Abolition) Act 1970 aims at regulating employment of contract labour, so as to place it at par with labour employed directly. Women are now permitted to work night shifts too (10pm to 6am).

In cases of willful and unauthorized absence from work, the leave sanctioning authority may decide and order that the days on which the work is not performed be treated as dies non, on the principle of no work no pay. The principle of "no work no pay" is widely being used in the banking industry in India. All other manufacturing industries and large service establishments like railways posts and telecommunications are also implementing it to minimize the incidences of unauthorized absence of workers.

The Payment of Wages Act 1936 requires that employees receive wages, on time, and without any unauthorised deductions. The law also provides the tax withholdings the employer must deduct and pay to the Central or State government before distributing the wages.

The Minimum Wages Act 1948 sets the minimum schedule of wages, the employer ought to pay for the different economic sectors. Central and State governments have discretion to set wages according to kind of work and location.

The Payment of Gratuity Act 1972 applies to establishments with 10 or more workers. Gratuity is payable to the employee if he or she resigns or retires. The Indian government mandates that this payment be at the rate of 15 days salary of the employee for each completed year of service.

The Payment of Bonus Act 1965, which applies only to enterprises with over 20 people, requires bonuses to be paid out of profits based on productivity.

The Workmen's Compensation Act 1923 requires that compensation is paid if workers are injured in the course of employment for injuries, or benefits to dependants.

The Employees' Provident Fund and Miscellaneous Provisions Act, 1952 functions as a pension fund for old age security of the organised workforce sector. For those workers, it creates Provident Fund to which employees and employers contribute equally, and the minimum contributions are 10-12 per cent of wages. On retirement/ resignation, employees may the contributions so made.

The Employees' State Insurance provides health and social security insurance.

The Maternity Benefit Act 1961, creates rights to payments of maternity benefits for any woman employee who worked in any establishment for a period of at least 80 days during the 12 months immediately preceding the date of her expected delivery.

The Trade Unions Act, 1926, amended in 2001, contains rules on governance and general rights of trade unions.

The Industrial Disputes Act 1947 aims at the development of relations between the employer and workmen and, to regulate the grievances arising out of industrial disputes such as Closure, lockout, layoff, termination, retrenchment etc. It controls the lawful processes for mediation and  adjudication of labour disputes.

Disclaimer:- This is only generic information on Indian Laws, which may be subject to change regard being had to legal amendments from time to time and should not be relied on for any legal action or inaction. Legal Nexus will not be liable for any damages or losses, direct or indirect, suffered or incurred by any user who chooses to proceed on the basis of reliance on the information provided herein.

Please fill up the form below

Note: *Fields marked with asterisk (*) are mandatory.
Scroll To Top