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Labour Laws in India: Brief Idea

A 4th year student of W.B.N.U.J.S, Kolkata

Given the large human resource availability within the country, the government has set up a comprehensive regulation system in order to prevent its exploitation. These laws essentially govern terms of employment and conditions of work of laborers. Therefore, if you are a business startup, company or an industry employing a certain number of employees as laid down by each law, you would be required to provide certain benefits or adhere to the guidelines prescribed by the following Acts which are enumerated below:

            Industrial Disputes Act, 1947– This Act aids in determining whether or not one’s company would be deemed as an industry and if the workers would qualify as ‘employees’ for the purpose of benefits such as collective bargaining, protecting rights of both employer and employees during strikes and lockouts, and determining modes of dispute settlement between both contracting parties. For instance, Section 18 of the Act envisages settlement arrived in the course of conciliation proceeding before the authority, wherein such settlements not only bind the member of the signatory union but also non-members as well as all the present and future employees of the management orthe settlementis not arrivedat in the course of conciliation proceedings but signed independently by the parties to the settlement binds only such members who are signatory or party to the settlement. Further Section 19 of the Act prescribes the period of operation which includes such a settlement and envisage the continuation of the validity of such a settlement unless the same is not replaced by another set of settlement, while Section 29 prescribes the penalty for the breach of such a settlement.Workers have the right to strike, even without notice unless it involves a public utility service; employers have the right to declare lockout, subject to the same conditions as a strike. The parties may sort out their differences either bilaterally, or through a Conciliation Officer who can facilitate but not compel a settlement, which is legally binding on the parties, even when a strike or a lockout is in progress. But if these methods do not resolve a dispute, the government may refer the dispute to compulsory adjudication and ban the strike or lockout. However in recent times the Higher Courts have deprecated the tendency to go on strike quite frequently. Furthermore, the Supreme Court of India has also held that government employees have no fundamental right to go on strike.


            Payment of Wages Act, 1936– This Act applies to all factories, industrial establishments, tramway services, motor transport services and such other establishments. Wherein wages means all remuneration expressed in terms of monetary value and includes that which is paid through award, settlement, overtime wages, wages for holidays or that paid during termination. This would however exclude bonus, payment to schemes such as PF or ESI, Gratuity, House Accommodation, Travelling allowance, etc as per Section 2(vi) of theAct. It is pertinent to note that if the number of employees is less than 1000 in any organization, then wages shall be paid before the seventh day of the following month, if employees are more than 1000 then before the tenth day of the following month. In addition, the maximum deduction can be fifty percent of monthly wages; however a maximum of 75 percent is permissible if deduction is partly made for payment to a cooperative society. With respect to fines, it cannot exceed over three percent in the same wage period and should be recovered within ninety days from the date it was imposed. The Act requires the maintenance of certain registers such as that for fines (Form II), deductions (Form III), advance (Form IX), wages paid (Form IV and V), muster roll cum register of wages (Form VI) and annual returns such as for transport services.


            Workmen’s Compensation Act, 1923 –This Act is specific to provide for protection in case of accident or injury caused  to employees during or arising out of the course of their employment. The benefits accrue to every employee irrespective of their category or capacity or form of hire, thereby including contract laborers as well. The compensation depends upon the form of injury caused that is total, partial or an occupational disease. The amount of compensation payable has been laid down under Section 4 of the Act wherein in case of death the amount is either 40 % of the wages multiplied by the relevant factor or Rs 20,000, whichever is more, total disablement out of injury is 50% of the wages multiplied by the relevant factor or Rs 24,000 whichever is more. This relevant factor is as per the schedule provided within the Act specifying the period of work to be considered for the above calculation. In cases of partial disablement, reference must be made to Part II of Schedule I which provides the percentage of compensation which would have been payable in case of permanent total disablement but as a percentage of the loss of earning capacity caused by the injury. In case such injury is not mentioned then the percentage of compensation should be proportionate to the loss of earning capacity. When an injury does occur it must be reported as per Rule 11 Form EE ,within seven days of the injury to the Commissioner (this however is not necessary if the Employees State Insurance Act, 1948 is applicable)


            Employees State Insurance Act, 1948 – This Act has been incorporated as a form of social security insurance which is applicable to factories employing ten or more persons irrespective of whether power is used in the process of manufacturing or not. In addition it also includes theatres, motor transport undertakings and newspaper establishments employing twenty or more persons and private medical and educational institutions employing twenty or more persons in certain states. To be included under this Act the wage limit must be within Rs 15,000 per month. The contribution is made by the employer on behalf of the employee on or before the 21st day of the following month. This Act, similar to the Workmen’s Compensation Act provides benefits in case of injury, accident, maternity, sickness, etc.



            Employees Provident Fund Act – Every factory or establishment employing twenty or more persons from the date of its setup is covered under this Act including theatres that employ five or more persons. The Act essentially requires the employer to place a certain contribution towards a common fund wherein contribution is from both the employer and employee. The benefits that accrue ranges from retirement, medical care, housing, family obligations, education, financing insurance policy, etc. An employer must keep in mind Forms 5A, 9, 11 and 2 that provide for registration and nomination in case of a withdrawal to be made by an employee. While employees mustbe  provided for Forms 19, 1 10 C, 13, 31, 20, 10 D, 5 (IF), 8 which would facilitate withdrawal, change of nominees or other formalities to register for this fund.


            Factories Act, 1948 –  In cases where a premises employees ten or more persons with the aid of power or twenty or more workers without the aid of power on any day preceding twelve months wherein a manufacturing process is being carried on, with the exclusion of mines as per the Mines Act, 1952 would fall under the purview of this Act. The employer has to undertake the responsibility  to keep the factory clean at all times (Section 11), arrange for disposal of wastes and effluents (Section 12), maintain a reasonable temperature for comfort of employees (Section 13), control dust and fumes as per permissible limits (section 14), artificial humidification should be at a prescribed standard level (Section 15), overcrowding should be avoided (Section 16), adequate lighting, drinking, water, latrines, urinals and spittoons should be provided (Section 17 to 19) and proper ventilation for air and light  to be maintained within the factory. He must also undertake certain safety measures for employees such as: ensuring all machinery are fenced or kept in a manner that would not endanger a workers life, hoists and lifts tests periodically for quality maintenance, floors, stairs and means of access should be of a sound construction, all safety appliances for eyes against  dust, gas and fumes provided, additional safety measures for hazardous substances, adequate firefighting equipment and a safety officer should be appointed if number of workers in the  factory are 1000 or more.  Further a certain standard of working hours should be maintained wherein it may not exceed 48 hours in a week with a maximum of 9 hours in a day and Sundays being a compulsory holiday. A minimum of half an hour of rest should be provided after 5 hours of work. He must also be provided with weekly holidays and notice of period of work must be provided along with other requirements as laid down within Sections 51 to 61. Reference may be made to the rules under this act for specific guidelines in cases of annual leave, notice, overtime and employment of young individuals which however prohibits employment of a person below 14 years of age.


            Maternity Benefit Act, 1961 – This is applicable to every establishment being a factory, mine or plantation in which ten or more persons are employed on any day of the preceding twelve months, wherein every pregnant woman is eligible to a leave of 80 days before the expected date of delivery, however if her pay is below 15,000 she may be offered a similar benefit under the ESI Act. An important facet being  that she is provided pay for the period of leave and an additional leave of one month is provided in case of illness and includes  six weeks for miscarriage and two weeks leave in case of a tubectomy operation.


            Gratuity Act, 1972- This Act is a social security measure provided by establishments with twenty or more persons employed to avail of a retirement benefit if he has served at least five years or provided continuous service of 4 years and 240 days. It is payable at a rate of fifteen days wages for every year completed and in case of seasonal establishments at the rate of seven days wages for each season. However, the benefit is provided to an employee whose salary is below Rs 15,000, but if there exists even a single employee who meets this salary threshold, then the employer is bound to provide for gratuity to the stated employee irrespective of the other employees drawing a higher salary.


            Payment of Bonus Act, 1965– ThisAct extends benefits to any factory employing ten or more persons wherein any processing is carried out with the aid of power and also other establishments employing twenty or more persons, thereby allowing the employee who draws wages uptoRs 10,000 to be eligible for a bonus with minimum 30 days worked performed by the employee during the accounting period (Section 8).



            Apprenticeship Act, 1961 – This Act applies to all industries as notified by the central government that places a statutory obligation on the employer to recognize certain minimum rights of an apprentice. In order to be qualified as an apprentice, a candidate must be not less than fourteen years of age and has to satisfy the laid down standard of education and physical fitness. Further he or she must be under such employer for a period of six months to four years and who works 42 to 48 hours a week but not between 10 pm to 6 am unless approved by what the Act deems as the ‘apprenticeship advisor’. The employer on the other hand must provide casual leave of 12 days, medical leave of 15 days and extraordinary leave of 10 days in a year and provide a minimum rate of stipend as per the rules of this Act.