Employment / Labour Laws in India

Labour law is also referred to as employment law which is separate branch of law that protects workers rights. The Republic of India being a federal form of government having labour matters subject on its concurrent list in the the Indian Constitution, where the Central government and State governments can enact laws on labour relations and employment issues. Many labour laws have been enacted by the central government and that the State government not only for the protection of workers but also to protect workers against discrimination in the employment and in working government, to ensure proper relationship between employer and employee for the smooth working environment for industrial peace, to impart discipline among workers and also to take disciplinary action against indiscipline and disputed workmen in the work environment.

Workers being abundantly available in supply were not in a position to bargain with their employers for the just terms and conditions of employment. Mostly employers being conscious of their strength used to date their own terms and workers being conscious of their weakness and dependence on the employer for want of their livelihood were compelled by economic necessity to accept those unfair terms and conditions of employment. But wherever interfere to render the relationship on a equitable plane. Thus the labour law grew Speedily keeping pace with the growing of industrialisation.

Origin and history of labour laws

When it comes to the interpretation and application of labour law, the courts having regard to the bargaining status of the parties and the spirit to protect the vehicle class of workers from the rigours of the employer who can even create new obligations, although they might not have been asked for by either parties.

Origin and history of labour laws in India probably starts from the year 1860 onwards. In 1872 factories in Bombay invited the attention of public towards horrible working conditions in the factories. As a result of that for the first time Factories Act was enacted in the year 1881, which subsequently got amended for several times and finally got a shape in the year 1948, now being called as Factories Act 1948, which is meant for industrial workers exclusively for ensuring workers safety and healthy measures and also welfare measures two workers by employer. Though social security was provided to industrial workers in the form of ESI Act 1948 [Employees' State insurance Act], more Social Security was provided in the form of Workmen compensation Act 1923 by adopting certain conventions of the ILO [International labour organisation] in the year 1927. Eventually, other labour laws have evolved by reason and for specific object which ultimately aims for the protection of workers interest.

Every function under the human resource Management is governed by labour law of the land. Hence human resource manager should be diligent and be very careful while performing duties are functions as those are governed by concerned labour law. It is the duty of the human resource manager to check whether particular function is in accordance with concerned labour law or contravening. To make it for the clear it is clearly mention below which HR function is governed or covered by which labour law.

The following are some of the labour laws which have been enacted for specific purpose, which every industrial establishment and other manufacturing organisations mentioned in the labour laws should comply what the labour laws says. Otherwise such organisations are liable for penal action by the courts.

The list of major HR functions and Legal provisions governing them

    • Recruitment and Selection

    • Training and Development

    • Employee appraisal

    • Compensation of rewarding

    • Healthy, Safety and Welfare measures

    • Maintaining Industrial relationships, Code of conduct and Discipline.

Recruitment and selection

In case of public employment; article 16(1) of the Indian Constitution guarantees equality of opportunity to all citizens" in matters relating to employment" or "appointment to any office" under the state. According to Article 16(2), no citizen can be discriminated against, are to be ineligible for any employment or office under the state, on the grounds only of religion, race, caste, six, descent, place of birth or residence or any of them.

Adherence to the rule of equality in public employment is a being feature of our Constitution and the rule of law is its core. the recruitment rules are to be framed with a view to give equal opportunity to all the citizens of India entitled for being considered for recruitment in vacant posts. The word 'equality' in Article 16(1) means equality as between member of the same class of employees and not equality between members of separate, independent classes. Therefore article 16 does not bar a reasonable classification of employees are reasonable test for selection.

Equality of opportunity of employment means selection. Equality of opportunity of employment means equality as between member of the same class of employees and not equality between members of separate, independent, classes.

The Child Labour (Prohibition & Regulation) Act, 1986 and Article (24) of the Indian Constitution says that No child below the age of fourteen years shall be employed

Performance appraisal of employee

Performance appraisal of employees aimed at knowing employee efficiency or a deficit in his work and conduct. On the basis of performance appraisal, employee's suitability to the job is assessed the purpose of his confirmation, promotion and even further retention in the service. In case of adverse reports against an employee that it should be communicated to him with a view to inform him regarding the deficiency in his work and conduct and effort him an opportunity to make, and and improve in his work and further justification. To make it clear that it is again as the principles of natural justice to directly remove an employee from the job without informing him about his/her deficiencies and give an opportunity to rectify him/herself to the satisfaction level of employer.

In this connection the Supreme Court has observed in Baidhyanth Mahaputra v. State of Orissa

"it is therefore imperative that the adverse entries awarded to the government servant must be communicated to him within a reasonable period to afford him opportunity to improve his work and conduct and also to make representation in the event of the entity of being unjustified".

Compensation and rewarding

There are different labour laws governing the compensation and rewarding of an employee. They are as follows

Payment of wages Act 1936

The object of this act is to provide payment of wages to employees in time without any delay, without unreasonable deduction from the wages, if any deductions to be made by employer, those should be reasonable and in accordance with this act and procedure for payment of wages.

Justified deductions can be made from wages according to the Act

    • [Section 7] Deductions which may be made from wages

    • [Section 8] Fines

    • [Section 9] Deductions for absence from duty

    • [Section 10] Deductions for damage or loss

    • [Section 11] Deductions for services rendered

    • [Section 12] Deductions for recovery of advances

    • [Section 12A] Deductions for recovery of loans

    • [Section 13] Deductions for payments to co-operative societies and insurance schemes

Workmen compensation Act 1923

The object of Workmen compensation Act 1923 is to provide compensation to the workman who meet with an accident in the course of employment, causing injury and making him partially or totally disabled or sometimes causing death. Conditions when employer is not liable to pay compensation to the employee who met with an accident in the course of employment.

Payment of bonus Act 1965

The object of this act is about compulsory payment bonus to employee whose salary of wage is not exceeding Rs.21000/-, irrespective of profit or loss of the business.

    • Minimum amount of bonus payable to employees is 8.33% [section 10]

Payment of Gratuity Act, 1972

The object of this act is about compulsory payment of gratuity to any employee who has completed five years of continuous service at the time of his retirement, resignation or on his death or disablement due to accident or disease. Provided that the completion of continuous service of 5 years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

Gratuity = Monthly salary X 15 X Number of years of service


    • Monthly salary= last month drawn salary by the employee.

    • 26 = total number of working days in a month.

    • 15 = number of days in half of the month.

[Sec 4(3)] The maximum amount of gratuity payable to an employee shall not exceed 3, 50,000/- rupees.

(According to the latest 2010 amendment the maximum gratuity payable amount was increased to rupees 10,00,000/-)

Equal Remuneration Act, 1976

Employees' Provident Fund Scheme, 1952.

Healthy, Safety and Welfare measures

Factories Act, 1948

Factors Act, 1948 is the law that governs healthy, safety and welfare measures of an employee in factories mentioned under this act.

    • Healthy measures- [section 11 to 20]

    • Safety of employees - [section 21 to 40B]

    • Welfare of employees - [section 42 to 50]

    • Working hours - [section 51 to 66]

    • Leave with wages - [section78 to 84]

Industry relationships and discipline of employees

Industrial Disputes Act, 1947

Industrial dispute act 1947 governs strikes by the employees, lockout by employer, layoff, retrenchment and other disputes between employer and employee, employee and employee, and employer and employer

Govt planning new labour legislation by merging 44 laws under 4 categories

-June 12, 2019

Aimed at helping investors and accelerating growth, the Modi government is planning a new labour legislation that would merge 44 labour laws under four categories-- wages, social security, industrial safety & welfare, and industrial relations.

The decision has been taken at an inter-ministerial meeting chaired by Home Minister Amit Shah and attended by Finance Minister Nirmala Sitharaman, Labour Minister Santosh Gangwar, Commerce and Railway Minister Piyush Goyal among others.

"A new Labour Bill will be introduced in the coming session of the Parliament," Gangwar told reporters Tuesday after the hour-long meeting.

Gangwar said the draft bill will be placed before the Union Cabinet after which it will be introduced in Lok Sabha, possibly in the second week of the coming Parliament session. "All major labour unions in the country were consulted by the government for the new labour laws,"

The four categories will deal with wages, social security, industrial safety and welfare, and industrial relations, an official said. It is expected that the laws related to social security, including the Employees' Provident Fund and Miscellaneous Provisions Act, Employees' State Insurance Corporation Act, Maternity Benefits Act, Building and Other Construction Workers Act and the Employees' Compensation Act will be merged to create a single social security law or code.

Several industrial safety and welfare laws such as the Factories Act, the Mines Act and the Dock Workers (Safety, Health and Welfare) Act, will be merged to create a single category on industrial safety and welfare. The Minimum Wages Act, the Payment of Wages Act, the Payment of Bonus Act, the Equal Remuneration Act and a few others are likely to be merged.

The Labour Code on Industrial Relations will combine Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946.

The proposed new labour law will help investors and is expected to accelerate growth, another official said.

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