Contents
  1. Indian labour law
  2. Employment & Labour Law | India | ICLG
  3. India: Employment & Labour Law 2019
  4. Indian labour law

PDF | This chapter attempts to analyze the structure of Indian labour law in the overall context of the notion of social and economic justice as enshrined in the. General Introduction. The law relating to labour in India deals mainly with the regulation of the contract of employment under which the servant, or the employee. As per Factories Act or Mines Act as the case may be when undergoing CONTRACT LABOUR(REGULARATION & ABOLITION) ACT, All over India.

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Indian Labour Law Pdf

1. Short title, extent and commencement. (1) This Act may be called the Factories Act, 2*[(2) It extends to the whole of India 3***.] (3) It shall come into force. Indian labour law refers to laws regulating labour in India. Traditionally, Indian governments at .. "Contemporary Issues on Labour Law Reform in India" (PDF). The labour laws derive their origin, authority and strength from the provisions of the 43, 43A & 54) of the Constitution of India keeping in line with Fundamental .

The Industrial Disputes Act defines "Industrial dispute" as a dispute or difference between workmen and employers or between workmen and workmen, which is connected with employment or non-employment or the terms of employment or with the conditions of labour. Dismissal of an individual workman is deemed to be an industrial dispute. The ID Act provides for the constitution of the Works Committee, consisting of employers and workmen, to promote measures for securing and preserving amity and good relations between the employer and the workmen and, to that end, endeavours to resolve any material difference of opinion in respect of such matters. Another method recognised for settlement of disputes is through arbitration. The Industrial disputes Act provides a legalistic way of settling disputes.

How does a business sale affect collective agreements? As stated in the response to question 5. Based on the above, it is safe to assume that employee rights or the terms of the collective bargaining agreement shall remain unchanged.

Indian labour law

How long does the process typically take and what are the sanctions for failing to inform and consult? Employment laws in India do not provide for information and consultation rights on a business sale.

However, collective bargaining agreements may contain provisions to this effect empowering the relevant trade unions. Employers have the right to terminate the employment of any employee, subject to provision of notice and payment of retrenchment compensation as per the provisions of the IDA.

Please refer to our responses to questions 5. Termination of Employment 6. How is the notice period determined? Employees must be given a notice of their termination by the employer; however, in case the employer chooses to terminate the employment with immediate effect, i. This period is stipulated to be a period of one month under the IDA and the Shops and Establishment Acts of certain states.

This period of notice may be altered as per the terms contained in the contract between the employer and employee governing the terms of employment.

It is pertinent to note that the period of notice or wages thereof is waived off in cases of termination owing to misconduct of the employee, in which case the employer can terminate the employment with immediate effect without any further liability.

Under the IDA, such termination must be carried out after following the due process prescribed under the Act and after the findings of the domestic enquiry conducted to consider the allegation of misconduct, are found to be against the employee. However, the concept lacks legal backing in India as the same has been held to be in restraint of trade and thus hit by Section 27 of the Indian Contracts Act, It is thus clear that while the concept is not founded in any legal provisions in India, it may be included in the employment contract; however, it can only be enforced until the employee so restrained is in service of the employer, and not thereafter.

In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss? Therefore, despite complying with all applicable legal requirements, a termination may be construed to be bad in law if the employer fails to prove the existence of the alleged grounds amounting to termination. Under the IDA, an employee in the workman category who has been in continuous service for at least one year cannot be terminated at will of the employer unless the employee is dismissed by way of disciplinary action or as a result of non-renewal of contract of employment, or terminated on the grounds of continued ill-health, etc.

Termination for any other reason whatsoever, including termination of service on the grounds of reduction in volume of business, amounts to retrenchment, and the IDA prescribes a detailed procedure for retrenchment of a workman including compliance with the last to come first to go rule, notice, payment of prescribed compensation i. Third-party approvals, i. There is a statutory embargo on the employer not to dismiss or punish female employees during the period of their pregnancy under Section 21 of the Maternity Benefit Act, During said period, no notice of dismissal or discharge or reduction shall be served on an employee.

Are employees entitled to compensation on dismissal and if so how is compensation calculated? Grounds for the termination of workmen in India can be divided into three primary categories.

These include i misconduct, ii superannuation, and iii retrenchment, layoffs, and closure.

An employer can terminate the employment of an employee due to individual reasons such as misconduct, non-performance or loss of confidence. In each such case, the termination should be preceded by a domestic enquiry. In case this happens, the procedure as stated in the IDA needs to be complied with.

For the non-workmen category of employees, or contract workers, the contract of employment or the Service Agreement governs the procedure in case of dismissal and any or all procedures stipulated therein must be followed by the employer. Decision to terminate the employment depends on the gravity of the misconduct on the part of the employee, and a simple warning or suspension letter may also be issued in cases of first offenders or minor offences.

What are the remedies for a successful claim? An employee is entitled to claim unfair dismissal on the following grounds, namely by questioning the procedural aspect of the termination and by denying existence of the element of non-performance.

Thus, despite complying with requirements of a valid and legal termination, the employer faces a challenge to the termination if the evidence of the reasons leading to termination of the employee is not supported by proof.

Under some circumstances, the employee may also allege unfair labour practice on the part of the employer. The adjudicating authority can award a penalty lesser than dismissal, if it finds misconduct on behalf of the workman. For a non-workman, the only relief available is that of damages from the employer as governed by the terms of the service agreement, unless the employer is a public-sector undertaking, in which case reinstatement can also be sought. The employers can settle the claims at any time after the dispute arises by way of entering into a settlement agreement on mutually acceptable terms between the parties.

If the conciliation fails, the failure of the conciliation report makes the basis for the reference of the dispute by the appropriate Government. Notwithstanding the conciliation stage, the parties can mutually settle the dispute at any time before or thereafter. In the event the dismissal falls under the category of retrenchment and the number of workmen being dismissed meets the threshold specified in the IDA for such retrenchment, the procedures and obligations mentioned therein get triggered.

For dismissal of non-workmen, and also for workmen by any means other than retrenchment, there are no additional obligations for the dismissal of employees in the case of several workmen, as compared to the dismissal of one. In the case of mass dismissal, an industrial dispute can be raised under the IDA or an appropriate forum can be approached under the Shops and Establishment Act of the concerned state.

Non-compliance with the statutory requirements might render the dismissal invalid and the employees could also be reinstated. Further, wrongful terminations are considered unfair labour practices under certain circumstances and an adverse finding in this regard may be made against the employer, and an appropriate prescribed punishment shall be accorded in each case.

Protecting Business Interests Following Termination 7. While these restraints are recognised for as long as the employee remains in the service of the employer, any form of post-employment restraint is considered as reducing the economic mobility of the employees and thereby limiting their personal freedom of right to livelihood.

In view of Section 27 of the Indian Contracts Act, , which renders any agreement, which restrains anyone from carrying on a lawful profession, trade or business void, the courts have prioritised the protection of rights of an employee seeking employment over protecting the interests of the employer seeking to protect itself from competition.

Article 42 requires the state to "make provision for securing just and human conditions of work and for maternity relief". Article 43 says workers should have the right to a living wage and "conditions of work ensuring a decent standard of life".

Article 43A, inserted by the Forty-second Amendment of the Constitution of India in , [2] creates a constitutional right to codetermination by requiring the state to legislate to "secure the participation of workers in the management of undertakings".

Indian labour law makes a distinction between people who work in "organised" sectors and people working in "unorganised sectors". People who do not fall within these sectors, the ordinary law of contract applies. India's labour laws underwent a major update in the Industrial Disputes Act of These laws mandate all aspects of employer-employee interaction, such as companies must keep 6 attendance logs, 10 different accounts for overtime wages, and file 5 types of annual returns.

The scope of labour laws extend from regulating the height of urinals in workers' washrooms to how often a work space must be lime-washed. Among the employment contracts that are regulated in India, the regulation involves significant government involvement which is rare in developed countries. The Industrial Employment Standing Orders Act requires that employers have terms including working hours, leave, productivity goals, dismissal procedures or worker classifications, approved by a government body.

The Contract Labour Regulation and Abolition Act aims at regulating employment of contract labour so as to place it at par with labour employed directly. The Latin phrase 'dies non' is being widely used by disciplinary authorities in government and industries for denoting the 'unauthorised absence' to the delinquent employees.

According to Shri R. Saxena, chief engineer, Indian Railways, dies-non is a period which neither counted in service nor considered as break in service. In cases of such willful and unauthorised 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.

This will be without prejudice to any other action that the competent authority might take against the persons resorting to such practises. The term 'industry' infuses a contractual relationship between the employer and the employee for sale of products and services which are produced through their cooperative endeavor. This contract together with the need to put in efforts in producing goods and services imposes duties including ancillary duties and obligations on the part of the employees to render services with the tools provided and in a place and time fixed by the employer.

And in return, as a quid pro quo, the employer is enjoined to pay wages for work done and or for fulfilling the contract of employment. Duties generally, including ancillary duties, additional duties, normal duties, emergency duties, which have to be done by the employees and payment of wages therefor.

Where the contract of employment is not fulfilled or work is not done as prescribed, the principle of 'no work no pay' is brought into play. The Payment of Wages Act requires that employees receive wages, on time, and without any unauthorised deductions. Section 6 requires that people are paid in money rather than in kind. 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 sets wages for the different economic sectors that it states it will cover.

It leaves a large number of workers unregulated. State governments have their own minimum wage schedules. The Payment of Gratuity Act applies to establishments with 10 or more workers. Gratuity is payable to the employee if he or she resigns or retires.

The Payment of Bonus Act , which applies only to enterprises with over 20 people, requires bonuses are paid out of profits based on productivity. The minimum bonus is currently 8. Weekly Holidays Act [14]. Beedi and Cigar Workers Act [15].

Employment & Labour Law | India | ICLG

The Workmen's Compensation Act requires that compensation is paid if workers are injured in the course of employment for injuries, or benefits to dependants. The rates are low. This functions as a pension fund for old age security for the organised workforce sector. For those workers, it creates Provident Fund to which employees and employers contribute equally, and the minimum contributions are per cent of wages.

On retirement, employees may draw their pension. The Employees' State Insurance provides health and social security insurance. This was created by the Employees' State Insurance Act The Unorganised Workers' Social Security Act was passed to extend the coverage of life and disability benefits, health and maternity benefits, and old age protection for unorganised workers.

The state government was meant to formulate the welfare system through rules produced by the National Social Security Board. The Maternity Benefit Act , 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.

It extends to the whole of India except the State of Jammu and Kashmir and is applicable to:. Article 19 1 c of the Constitution of India gives everyone an enforceable right "to form associations or unions". The Trade Unions Act , amended in , contains rules on governance and general rights of trade unions.

It was the view of many in the Indian Independence Movement , including Mahatma Gandhi , that workers had as much of a right to participate in management of firms as shareholders or other property owners.

India: Employment & Labour Law 2019

However, like other rights in Part IV, this article is not directly enforceable but instead creates a duty upon state organs to implement its principles through legislation and potentially through court cases. In the Sachar Report recommended legislation for inclusion of workers on boards, however this had not yet been implemented. The Industrial Disputes Act section 3 created a right of participation in joint work councils to "provide measures for securing amity and good relations between the employer and workmen and, to that end to comment upon matters of their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters".

However, trade unions had not taken up these options on a large scale. In National Textile Workers Union v Ramakrishnan [25] the Supreme Court, Bhagwati J giving the leading judgment, held that employees had a right to be heard in a winding up petition of a company because their interests were directly affected and their standing was not excluded by the wording of the Companies Act section The Industrial Disputes Act regulates how employers may address industrial disputes such as lockouts, layoffs, retrenchment etc.

It controls the lawful processes for reconciliation, adjudication of labour disputes. Further, the IESO Act requires display of standing orders in a prominent place for the knowledge of workers.

Shops and Commercial Establishments Act of respective States The Shops and Commercial Establishments Act s of the respective States generally contain provisions relating to registration of an establishment, working hours, overtime, leave, privilege leave, notice pay, working conditions for women employees, etc. The provisions of the Shops and Commercial Establishments Act apply to both white collar and blue-collar employees.

IT and IT-enabled services have been given relaxations by various State Governments in respect of the observance of certain provisions of their respective Shops and Commercial Establishments Act. The Act defines a "worker" as a workman who shall be deemed to be employed as "contract labour" in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer.

The Contract Labour Act regulates the employment of contract labour in certain establishments and provides for its abolition in certain circumstances. The Government may, however, by notification in the Official Gazette, make the provisions of the Contract Labour Act applicable to establishments or contractor employing less than 20 workmen. The Contract Labour Act is not applicable to establishments in which work only of an intermittent or casual nature is performed.

The Contract Labour Act prohibits the employment of contract labour on jobs that are perennial in nature.

For such jobs, permanent employees need to be employed. The Contract Labour Act provides that no contractor shall undertake any work through contract labour, except under and in accordance with a licence issued in that behalf by the licensing officer. In terms of s 7 of the Contract Labour Act, the principal employer has to make an application in the prescribed form accompanied by the prescribed fee payable to the registering officer for registration.

The Employee's Compensation Act, formally known as "The Workmen Compensation Act, " The Employee's Compensation Act, the EC Act aims to provide financial protection to workmen and their dependents in case of any accidental injury arising out of or in course of employment and causing either death or disablement of the worker by means of compensation. This Act applies to factories, mines, docks, construction establishments, plantations, oilfields and other establishments listed in Schedules II and III of the said Act, but excludes establishments covered by the ESI Act.

The Act provides for payment of compensation by the employer to the employees covered under this Act for injury caused by accident. Generally, companies take insurance policies to cover their liability under the EC Act. The ISMW Act applies to i any establishment in which five or more inter-state migrant workmen are employed or who were employed on any day of the preceding twelve months; and ii every contractor who employs or who employed five or more inter-state migrant workmen on any day of the preceding twelve months.

For the purpose of the ISMW Act, an inter-state migrant workman means any person who is recruited by or through a contractor in one state under an agreement or other arrangement for employment in an establishment in another state, whether with or without the knowledge of the principal employer in relation to such an establishment.

Weekly Holiday Act, The Weekly Holiday Act, provides for the grant of weekly holidays to persons employed in shops, restaurants and theatres. The Act provides that every shop shall remain entirely closed on one day of the week, which day shall be specified by the shop-keeper in a notice permanently exhibited in a conspicuous place in the shop. Further the state government may require in respect of shops or any specified class of shops that they shall be closed at such hour in the afternoon of one week-day in every week in addition to weekly day off.

This Act empowers the State Governments to take all feasible steps to improve the lot of the plantation workers.

Indian labour law

The passing of PLA has helped in creating conditions for organising the workers and the rise of trade unions. The Act defines an employer as, the person who has the ultimate control over the affairs of the plantation and where the affairs of the plantation are entrusted to any other person, such other person shall be the employer in relation to that plantation.

Plantation: Any plantation to which this Act applies and includes offices, hospitals, dispensaries, schools and any other premises used for any purposes connected with such plantation. The Act makes it mandatory for every employer to get their plantation registered within 60 days of its coming into existence. The Mines Act provides that persons working in the mine should not be less than 18 years of age. The Mines Act lays down provisions for appointment of one chief inspector who would be regulating all the territories in which mining is done and an inspector for every mine who would be sub ordinate to the chief inspector.

Moreover, the District Magistrate is also empowered to perform the duties of an inspector subject to the orders of the Central Government.

The chief inspector or any of the inspectors may make such inquiry, at any time whether day or night, in order to check whether the law is being abided in the mines or not.

This Act applies to virtually every kind of establishment. Maternity Benefit Act, The Maternity Benefit Act, Maternity Benefit Act regulates the employment of women in certain establishments for a certain period before and after childbirth and provides for maternity benefits and certain other benefits including maternity leave, wages, bonus, nursing breaks, etc, to women employees.

The Maternity Benefit Act, applies to a a factory, mine or plantation including any such establishment belonging to Government and to every establishment wherein persons are employed for the exhibition of equestrian, acrobatic and other performances; b every shops or establishments within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed on any day of the preceding 12 months.

Except for s 5A and 5B, the provisions of the Maternity Benefit Act shall not apply to the employees who are covered under the Employees' State Insurance Act, for certain periods before and after child-birth and for which the ESI Act provides for maternity and other benefits. The coverage under the ESI Act is, however, at present restricted to factories and certain other specified categories of establishments located in specified areas. The Maternity Benefit Act is, therefore, still applicable to women employees employed in establishments which are not covered by the ESI Act, as also to women employees, employed in establishments covered by the ESI Act, but who are out of its coverage because of the wage-limit.

Under the Maternity Benefit Act, an employer has to give paid leave to a woman worker for six weeks immediately following the day of her delivery or miscarriage and two weeks following a tubectomy operation. The maximum period for which a woman shall be entitled to maternity benefit shall be 12 weeks, of which not more than six weeks shall precede the date of her expected delivery.

A pregnant woman is also entitled to request her employer not to give her work of arduous nature or which involves long hours of standing, etc, during the period of one month immediately preceding the date of her expected delivery or any period during the said period of six weeks for which the woman does not avail leave of absence. When a woman absents herself from work in accordance with the provisions of the Maternity Benefit Act, it shall be unlawful for her employer to discharge or dismiss her during or on account of such absence.

Under the Bonded Labour Abolition Act, the term "bonded labour" has been defined to mean any labour or service rendered under the bonded labour system. The term "bonded labour system" has been defined to mean the system of, forced or partly forced, labour under which a debtor enters or has, or is presumed to have, entered into an agreement with the creditor to the effect that: In consideration of an advance obtained by him or by any of his lineal ascendants or descendants whether or not such advance is evidenced by the document and in consideration of the interest, if any, due on such advance; or In pursuance of any customary or social obligation; or In pursuance of any obligation devolving on him by succession; or For any economic consideration received by him or by any of his lineal ascendants or descendants; or By reason of his birth in any particular caste or community.

The debtor would render, by himself or through any member of his family, or any person dependent on him, labour or service, to the creditor, or for the benefit of the creditor, for a specific period or for an unspecified period, either without wages or for nominal wages.

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