The employment/labour laws in India primarily flow from the Constitution, specific enactments pertaining to the subject matter both at the central and state level along with judicial decisions along with administrative rulings and regulations. The applicability of a particular enactment is generally contingent inter alia on the nature of the industry; the number of workers employed; remuneration payable to the employee, tenure of employment amongst others. Of the numerous enactments that exist both at the central and state level, the important ones have been summarised below.
|1.||Employees State Insurance Act, 1948 (the “ESI Act”)||The ESI Act provides for certain benefits to employees in case of sickness, maternity and employment injury.||1. The ESI Act applies to
ii. Other classes of establishments (industrial, commercial agricultural) as may be notified by the appropriate government.
2. Employees drawing wages up to a certain limit in establishments covered by the ESI Act are required to be insured, with an obligation imposed on the employer to make certain contributions in relation thereto.
3. In addition, the employer is also required to register himself under the ESI Act and maintain prescribed records and registers in addition to filing of forms with the concerned authorities.
|2.||The Payment of Gratuity Act, 1961 (the “POG Act”)||The POG Act provides for payment of gratuity to employees employed in factories, shops and establishments who have put in a continuous service of 5 years, in the event of their superannuation, retirement, resignation, death or disablement.||1. Applies to every shop or establishment in which ten or more persons are employed.
2. The rule of ‘5 year continuous service’ is however relaxed in case of death or disablement of an employee.
3. Gratuity is calculated at the rate of 15 days wages for every completed year of service with the employer.
4. Under the POG Act, an employer is obliged for a maximum gratuity payout of Rs. 350,000 for an employee.
5. The POG Act also requires the employer to obtain and maintain an insurance policy for the employer’s obligation towards payment of gratuity.
|3.||The Employees Provident Fund and Miscellaneous Provisions Act, 1952 (the “Act”)||The Act provides for the institution of compulsory Provident Fund, Pension Fund and Deposit Linked Insurance Funds for the benefit of eligible employees in factories and establishments as may be specified.||1. Applies to every establishment employing twenty or more persons.
2. A liability is placed on the employer and employee to make certain contributions to the funds mentioned above after obtaining the necessary registrations.
3. There is also a requirement to maintain prescribed records and registers and filing of forms with the concerned authorities.
|4.||The Maternity Benefits Act, 1961 (the “MB Act”)||The MB Act regulates the employment of women in certain establishments for certain periods before and after child-birth and to provide for maternity benefit and other benefits.||1. Applies to every shop or establishment in which ten or more persons are employed.
2. It provides, inter alia, for paid leave of 12 weeks, payment of maternity benefits and enacts prohibitions on dismissal, reduction of wages paid to pregnant women, etc.
|5.||The Industrial Employment (Standing Orders) Act, 1946 (the “Standing Orders Act”)||The Standing Orders Act requires with sufficient precision the conditions of employment of workmen employed and to make them known to such workmen.||1. Requires employers in industrial establishments, which employ 100 or more workmen.
2. The Standing Orders Act requires every employer to which the Standing Orders Act applies to certify and register the draft standing order proposed by him in the prescribed manner.
3. However until the draft standing orders are certified, the prescribed standing orders given in the Standing Orders Act must be followed
|6.||The Industrial Disputes Act, 1947 (the “ID Act”)||Contains provisions regarding lockouts, retrenchment, investigation and settlement of industrial disputes and unfair labour practices.||1. Applies to all commercial and industrial establishments.
2. Not applicable to workers employed in a managerial or administrative capacity.
3. Not applicable to workers who are employed in a supervisory capacity, drawing wages exceeding ten thousand rupees per month.
|7.||Factories Act, 1948||Factories Act contains provisions for ensuring the welfare of workers employed in factories in terms of health, safety, working hours, benefits, leave, overtime pay, etc||Applies to premises carrying out manufacturing process and employing twenty or more workers.|
|8.||Child Labour (Prohibition and Regulation) Act, 1986||Prohibits the engagement of children in certain occupations and to prohibit the engagement of adolescents in hazardous occupations.||1. Applies to all establishment including a shop, commercial establishment, workshop, farm, residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment.
2. Provides a list of industries/undertakings where employment of children and adolescents is prohibited.
|9.||The Minimum Wages Act, 1948 (the “MW Act”)||Under the MW Act, the State and Central Governments are empowered to notify the minimum wages payable to employees.||1. Under the MWA, every employer is mandated to pay not less than the minimum wages to all employees engaged to do any work whether skilled, unskilled, manual or clerical (including out-workers) in any employment listed in the schedule to the MWA, in respect of which minimum rates of wages have been fixed or revised under the MWA.
2. Minimum wages are determined based on factors including the industry, location and nature of work done.
|10.||The Payment of Wages Act, 1936 the “PW Act”)||The PW Act has been enacted to regulate the payment of wages in a particular form at regular intervals without unauthorized deductions and to ensure a speedy and effective remedy to employees against illegal deductions and/or unjustified delay caused in paying wages||1. It applies to the persons employed in a factory, industrial or other establishment, whether directly or indirectly, through a sub-contractor and provides for the imposition of fines and deductions and lays down wage periods.
2. The PW Act is applicable to factories and industrial or other establishments where the monthly wages payable are less than 6,500 per month or such other higher sum as the Central Government may by notification specify.
|11.||The Equal Remuneration Act, 1976 (the “ER Act”)||The ER Act provides for the payment of equal remuneration to men and women workers for same or similar nature of work and prevention of discrimination, on the ground of sex, against women in the matter of employment and for matters connected therewith or incidental thereto.||1. Under the ER Act, no discrimination is permissible in recruitment and service conditions, except where employment of women is prohibited or restricted by law.
2. It also provides that every employer should maintain such registers and other documents in relation to the workers employed by him/ her in the prescribed manner.
|12.||Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 (the “SE Act”)
|The SE Act prescribes a mechanism for prevention and prohibition of workplace sexual harassment and for redressal of grievances pertaining to workplace sexual harassment.||1. The SE Act applies to any private sector organization or a private venture, undertaking, enterprise, institution, establishment, society, trust, non-governmental organization, unit or service provider carrying on commercial, professional, vocational, educational, entertainmental, industrial, health services or financial activities including, production, supply, sale, distribution or service.
2. The SE Act mandates an employer to set up an ‘internal complaints committee’ at each office or branch, of an organization employing at least 10 employees.
|13.||Contract Labour (Regulation and Abolition) Act, 1970 (the “CLRA Act”)||The CLRA Act regulates the employment of contract labour in certain establishment||1. The CLRA Act requires companies employing 20 or more contract labourers to be registered and prescribes certain obligations with respect to welfare and health of contract labourers.
2. The CLRA Act shall not apply to such establishments in which work is only of an intermittent or casual nature.
3. Both the establishment and the contractor are to be registered with the registering officer.
4. The CLRA Act imposes certain obligations on the contractor in relation to establishment of canteens, rest rooms, drinking water, washing facilities, first aid and other facilities and payment of wages.
5. However, in the event the contractor fails to provide these amenities, the principal employer is under an obligation to provide these facilities within such time as maybe prescribed.
|14.||The Payment of Bonus Act, 1965 (the “PB Act”)||The PB Act as amended provides for payment of bonus on the basis of profit or on the basis of production or productivity||1. Applicable to persons employed in factories or in establishments employing 20 or more persons on any day during an accounting year.
2. It ensures that a minimum bonus is payable to every employee regardless of whether the employer has any allocable surplus in the accounting year in which the bonus is payable.
3. The employer is bound to pay to every employee, in respect of the accounting year, a minimum bonus which is 8.33% of the salary or wage earned by the employee during the accounting year or, whichever is higher, provided that an employee has worked in the establishment for not less than 30 working days in that year.
|15.||Shops and Commercial
establishments (the “S&E Acts”)
|The provisions of various shops and establishments legislations, applicable in the states in which the establishments are set up, regulate the work and employment of the workers employed in shops and establishments, including commercial establishments, and provide for fixation of working hours, rest intervals, overtime, holidays, leave, termination of service, maintenance of shops and establishments, rules for employment of children and other rights and obligations of the employers and employees.|
|16.||The Apprentices Act, 1961||The Apprentices Act, 1961, as amended regulates and controls the programme of training of apprentices and matters connected therewith.||1. The term ‘apprentice’ means a person who is undergoing apprenticeship training in pursuance of a contract of apprenticeship.
2. ‘Apprenticeship training’ means a course of training in any industry or establishment undergone in pursuance of a contract of apprenticeship and under prescribed terms and conditions which may be different for different categories of apprentices.
3. Every person engaging as an apprentice is required to enter into a contract of apprenticeship with the employer which is reviewed and registered by the apprenticeship advisor within 30 days from the date of the receipt of such contract by the employer
End Note/Concluding remarks: TRA advises clients on legal aspects of employment and labour law. We advise on the drafting of employment documentation, structuring of stock options, phantom stocks and other employment incentives, termination of employment and restrictive covenants (non-compete and non-solicit agreements). We advise on employment issues arising at the time of corporate restructuring and mergers and acquisitions. We also regularly represent companies and their management on employment related litigation.