All About Labour Laws In India

INTRODUCTION

The Constitution of India is the foundation upon which the protection of people’s rights and freedom and the governance of laws that regulate labour and employment in India rest. The Constitution of the developed countries ensures some of the basic Individual’s civil liberties including right to life, right to privacy, right to equal protection under the law and non-discrimination in public place of education and employment on the ground of religion, sect, sex or caste. Fundamental Right to life included the right to earn to live in the Indian Constitution as well.

For this purpose, apart from the rights, the Constitution has also provided for some ‘directive principles’ which are the guidelines to the legislative to achieve the socio-economic objectives. In view of this background, the social justice is pre-eminent to a number of regulations in India, particularly the labour and employment laws. Besides it must be pointed out that many labour laws in India adopted from the perspective of worker emancipation and these comprise of factories, mines, plantations, shops and commercial establishments act and the wages, trade unions regulation, social security, industrial safety and hygiene payment act.

Despite this, due to the new economic demands in today’s world, the Indian Government has been growingly aware of the needs of the businesses as well. Recently within a span of half a year Indian Government has introduced few major changes in labour laws for the purpose of enhancing the condition of doing business in India. Besides there are many other big reforms planned for the future, which one may expect will be implemented in the near future. 

DIFFERENTIATING BETWEEN WORKER AND EMPLOYEE

The Indian labor law regime depends on three major terms for its applicability: “employee”, “workmen”, and “worker”. Understanding this regime necessitates distinguishing between “workman” relative to employee in context of the Industrial Disputes Act, 1947.

PRE-LABOUR CODES

In the context of the Indian labour law regime, which operated prior to the Codes being enacted, the courts were mostly tasked with differentiating between workman and employee as the Legislature did not make any specific provisions under the ID Act for this purpose. But, the definition of ‘employee’ was separately given under the Employee State Insurance Act 1948, though even that definition is restricted to the scope of the said Act only cannot be generalized for use under any other labour law statutes. It is important to note that the definition of “workman” under the Act does not cover employees falling under the following categories: Workmen managers or supervisors Employees who earn a monthly salary of less than rupees ten thousand. In the light of the above-mentioned definition, Indian Courts have, in course of time evolved certain factors which are relevant for consideration while deciding the aspect of whether such an employee can be deemed to be a ‘workman’ under the ID Act. A relevant decision for this purpose is Arkal Govind Raj Rao vs. Ciba Geigy of India Ltd., wherein it was held by the Supreme Court of India that only the basic and primary obligation of the employee is to be looked for, and the additional obligations are to be excluded. The observation is in consonance with Section 1(s) (iii) of the Act and which keep employees who work in administrative capacity away from the definition of ‘workman’. The Courts have also tried to evaluate whether or not other forms of employees are included or excluded from the definition of “workman”; such types of employees include those employees who work in a supervisory capacity as held in the case of G. M. Pillai v. A. P. Lakhmikar Judge. Part-time employee as recognized and included in the Bombay Dyeing and Manufacturing Co. Ltd. v. R. A.

Hence, it was the Courts, not the Legislature which had a defining role in deciding which the classes of employees the Act held to be “workmen.” This determination was critical because many rights now said to be enjoyed by an employee are enforceable only on the basis of such determination.

However, contrary to the above, it cannot be said that the Legislature has done nothing concerning the distinction between workmen and employees. An example of this differentiation is the recognition of it in the 2009 Amendment which was made to the Workmen’s Compensation Act 1923 whereby its name was changed to the Employees’ Compensation Act. and was drafted to implement the recommendation of the Second National Commission on Labour which was set up in 2002 (Second National Commission, 2002). Among other things, the report suggested the removal of the word ‘workmen’ in the short title of the Act to ‘employee’ to ensure the legal protection of excluded employees from the meaning of ‘workman’ in the light of the labour law legislations (Second National Commission, 2002). Thus, by putting into force this amendment the Legislature had demonstrated its readiness to deliver the express differentiation between employees and labour. Discrimination to that effect was done only in the aforementioned Amendment Act and it was never followed in the future which resulted to the fact that much as there were other amendments to many other labour law legislations in the country, uncertainties remained as to the extent of many of them.

POST-LABOUR CODES

The progressive enactments of the Labour Codes seem to have shifted attention from the Courts to the Legislature to a great extent. This is due to the fact that the Codes have uniformly accepted the definitions of ‘employee’ and ‘worker’; the only Code which lacks the definition of ‘worker’ is the Social Security Code. According to the Code, an employee has been described as a person working in an establishment, excluding; Apprentices, employed on wages to do: skilled, semi-skilled work as well as the unskilled work despite whether the terms of employment are implicit or express. Unlike the unorganized worker, the gig worker, etc. which are different types of workers described in the Social Security Code, each of these has its own definition. It can, therefore, be concluded that the factors that support the differentiation between an employee and a workman have been retained in the three new labour Codes, and more importance has been given to the form of remuneration received by an employee. At this point, the issue of what the Codes mean by “wages” arises. In said definition, wages refer to all consideration in cash or money’s worth including wages, salary, allowance, etc, earned by an employee in the fulfillment of the terms and conditions of the employment whether expressly stated or otherwise. Wages also consist of basic pay, dearness allowance and retaining allowance but it excludes bonus, conveyance allowance etc

EMPLOYMENT CONTRACT

It can thus be defined in simple terms that an ‘employment contract’ or ‘contract of employment’ implies the legal and specific legal relationship that is willingly drafted and entered between an employer and an employee concerning the conditions of employment, which includes the nature of the employment relationship and the undertakings of the two parties. 

In India, non-government employers usually follow one of two types of employment contracts:

In India, most of the non-government employers offer contractual employment, either type ‘A’ or type ‘B’.

Open-ended employment contract: This clause gives the parties the right to terminate this contract, but it only comes into force once it is severed by one of the parties, either the employer or the employee. 

Fixed-term contract: This contract also points or inform in which occasions or time of period the employee ceases to be employed. Notably, such an agreement is mostly drawn up with the aim of rendering employment for the involved employee for a certain duration or in relation to a specific work. (“Indian Contract Act, 1872”)

In effect, like contracts in the usual sense, Indian employment contracts are governed by the Indian Contract Act of 1872. The essential legal requisites of a contract include offer, acceptance which ought to be unconditional, and consideration together with capacity. However, such legal provisions and other corporeal norms that need legislative regulation, for instance labour relations legislation, envision the possibility of using other limiting clauses except the clause on non-competition contained in an employment contract in order to avoid future conflicts with employees.

Job title and description 

This clause allows you to, in detail, determine the type of work that the employment contract is going to entail. It is highly desirable to state this from the very start of the employment relationship so that the employer and the employee alike are clear at the time of signature and there can be consensus ad idem, or ‘meeting of the minds’ as to what is expected from the employee. 

Length of employment 

This head will state the period during which the employment is to take place. This clause can also contain the conditions for the renewal of the employment if needed. Renewals may be joint, one-time etc. This section can also be sometimes referred to as ‘schedule’. However, if the employee is not going to work again in the succeeding days then it will be effective to state the days of work as well as the time thereof, most especially if the aim is to have a transparent policy.  

Salary, bonuses and benefits 

This is a very critical clause that spells down the pay structure that the employee will be receiving due to the employment. Before accepting this clause, it is very important to negotiate properly. Employees would also have to make sure that they are getting bonuses that they are rightly entitled to through this clause. This clause should regard the compensation and benefits as the annual salary of the hourly salary, strategic increases in the rate of pay, additional bonuses as well as incentives, the health benefits of all the staff, the company’s shares, retirement remunerations, the signing bonuses and any other remunerations. 

Holidays and leaves 

Holidays and leave provisions are some of the significant aspects of an employment contract. A convincing time-off policy should describe when time-off is earned when it can be taken, and what one must do to access those perks. Company policy holidays and other policies dealing with detailed provisions on paid leaves should also be included in these clauses. 

Communication channels

Thus, it is possible to indicate that the degree of definition of the employee’s superior is high; moreover, it is necessary to distinguish the person to whom the employee is subordinated. This results in the enhancement of efficiency and transparency since everyone follows the right channels of communication. They pointed out that relationships of authority must be clearly defined so that work can be accomplished with minimal problems.

The Intellectual Property Clause

These clauses state who owns the intellectual property that may be developed during the duration of the contract. For instance, a software engineer in a certain firm may probably develop some code that will be an item of his creation. However, similar to most employment contracts, this idea will be the property of the firm and not the individual who came up with it. Amendments of the kind outlined above should be made beforehand to avoid future vagueness. 

Confidentiality and privacy

This is the policy that outlines when and in which cases the employees should maintain anonymity. These conditions are of paramount importance because the employees gain access to the company’s confidential information while under the employment of the company in question. 

Part of the Content

The legal repercussions for an employee in regard to disclosures of any of the information that is deemed confidential normally forms part of the content of the confidentiality agreement.

Post employment 

These are the clauses which are effective once the employment is over and will affect the future employment of the employee. The following are some examples of restrictive clauses:  

Non-compete clause: This is a clause that bars an employee from soliciting clients or customers of the current company to join the employee’s new company or organization in the duration of the contract, in a given geographical area or for the duration of an agreed period.

Non-dealing clause: This clause does not allow an employee to communicate or have any interaction with their former employer or any employees of the former employer. 

Non-solicitation clause: This helps to guard against situations where an employee takes some of the clients of a company to which he or she moves in a new company. 

Non-poaching clause: This is like the non-solicitation clause but instead restricts the employee from contacting those who used to work with him or her or the previous employers.

Termination and Severance 

There are certain rules when an employee’s termination takes place. Making sure that the reputation of the company is not tarnished or affected badly during the process matters most to the employer. Thus, we must have ways of compensating the affected individuals.

EMPLOYEE RIGHTS

1. Employment Agreements 

Employment is a legal instrument that outlines the contractual relationship between an employer and an employee of an organization. This is just like an agreement on paper which outlines the nature of hire and duties, remuneration of the employee, the perks they will accrue to, among other factors of employment. These entail; the manner in which the employees will work, the conduct of the business, the hours of work, the wages/salary and any other benefits such as health insurance, pensions, company’s policy on leave, the provisions on termination of employment, and any restrictions on usage of certain information or dealing with competitors after leaving the business. This way, both the employer and the employee are abreast with the expected standards thus eliminating cases of disagreements at later dates. 

2. Maternity Benefit 

The Maternity Benefit Act of 1961 provides for women employees which states women must be allowed to go and stay home without pay when she is pregnant or has just delivered a child. Under this law, the women employees are allowed parental leave of about six months although this is not more than 26 weeks. This leave entails tenure prior to child birth and after birth, thus allowing expecting moms to be rested. The law also provides for the workers to have break to allow them feed or pump breast milk for their babies. This support is important especially for women who have newly given birth so as to ensure that they can take care of their babies as well as they have to look for ways to continue earning a living without being fired. At the workplace level, Paid Maternity Benefit and provision of nursing breaks empowers women employees with the health benefits of them and their babies, making transition into motherhood less stressful and protecting their job. 

3. Provident Fund For employees

There is the Provident Fund which is administered in accordance with the provisions of the Employees’ Provident Fund (EPF) Act and it was aimed at providing for the retirement of the employee. This scheme requires that an employee must set aside a fraction of his salary every month in the Provident Fund. Employees as well as employers contribute to this fund. It is like saving up for the rainy days, saving up for a good life after retirement ages. The amounts paid up get to accrue steadily with interest added over the years, to provide a nice corpus that the employee can use upon retirement. This fund assists one to have some income after they have retired, so that they are able to have a decent lifestyle even after they stop earning. In other words, the EPF scheme is a systematic plan to save for the future by providing employees with options that ensure financial security during their retired years.

4. Gratuity Remuneration 

The Payment of Gratuity Act, commonly known as the Gratuity Act, says that employers are legally bound to provide gratuity to employees who have served the organisation for five or more years. Earnings in lieu of notice can also be paid off as a onetime lump sum when an employee resigns, dies or retires. It is an indication that the employer wants to let the employee know that he or she is valued after serving the company for so long. This can be of quite a large amount of money especially for an employee who has been contracted with a certain employer for several years. The Gratuity Act is in force to enable employees to have financial support when they retire from service or when they are in need. They consider it as a reward for the loyalty and effort that they exhibit in their respective working environment.

5. Right to take leaves

They are especially allowed to private employees, and they can be of several categories depending on the law and the contract signed between the employee and the employer. The other one is the earned leave, whereby the employee is allowed to receive leave based on certain period of time or days worked and request off-time for business or personal reasons. Sick leave is meant for an employee to be away from work to attend to their health needs when they are ill, and this does not make the employee to lose their earnings due to illness. Paid casual leave can be availed in case there is need for leave that’s either unplanned or in cases of an emergency. Also, pregnancy and baby bonding leave is provided to new mom and dad to take care of their newbie or adoptive infant. It is these leaving that are important to employees and their scheduling to provides them with a good health and a productive life. These options demonstrate the employers’ concern for the welfare of their employees and their ability to take time off for health reasons, to care for family members, or to simply have a much-needed break from work, all which create a healthier organizational workplace culture.

6. On-Time Salary

It remains the legal obligation of the employers to ensure that they remit their employees’ salaries in full and on time in compliance with the laid down employment contract and the country’s laws governing working conditions. This is payment that employees should be paid their wages on the day the pay is due in the month whether it is monthly, weekly or bi weekly. Timely payment of remunerations is fundamental in ensuring employees’ financial obligations, taking care of their dependants, and attaining good standard of life. It also ensures that they are rewarded for the work they have done as a way of encouragement to work hard. There are various challenges that employees face wherein delayed salary is a major cause because these make it difficult for them to meet other necessary expenses, they have such as rent, bills, and food. In addition, according to the labour relations and employment laws, employers can find themselves facing certain legal repercussions or ramifications for their failure to meet their pay obligations on their employees. To sum it up, paying employees on time does not only constitutional, but also directs towards proper employee relationship which shall significantly contribute in maintaining harmonious and productive organisation.

7. Appropriate Working Hours

The working hour Acts which have been prescribed under the Factories Act and the Shops and Establishments Act provide information on this aspect. These laws set the standards in relation to the daily and weekly working hours which must not exceed certain number. They also set rules that must be observed between working hours, for example, lunch breaks to enhance health and productivity. In general, the laws stipulate that employees should not be worked over these standard hours and in case of the need for employees to work over these standard hours the employer has to pay these employees for overtime. This policy protects the employees’ rights of reasonable working hours so that they dedicate most of their time between work and home. This includes frequency of a break to avoid feeling pressured and thus getting a bad health. Employers thereby demonstrate their good will and duty of care towards employees and promote a healthy working environment that encourages optimum performance and staff satisfaction.

8. Sexual harassment has always been a big problem in workplaces where women are employed most of the time due to lack of Prompt and proper implementation of POSH (Prevention of Sexual Harassment).

POSH is regulated by the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redemption) Act. This law protects women at the workplace and the employers have the legal obligation of ensuring that no harassment of women occurs at workplace. It has measures where complaint of sexual harassment has to be handled by internal compliance committees in organizations. These committees are supposed to investigate fairly and also return remedies to the victims. Moreover, the employers are required to more frequently organize seminars to familiarize employees with sexual harassment and their legal status. By following all these measures, employers can ensure that respect, dignity, and equality of every worker at the workplace are highly regarded. This helps in a way that any cases of sexual harassments are avoided and if they occur at all are dealt with professionally.

LABOUR LAW COMPLIANCE

The most relevant legislation for working relations in India is the Industrial Disputes Act of 1947, the Factories Act of 1948, Minimum Wages Act of 1948, Payment of Wages Act 1936, Employees State Insurance Act of 1948, Employees Provident Fund and Miscellaneous Provisions Act 1952 and Contract Labour Regulation and Abolition Act of 1970. These laws are in regard to earnings, hours worked, health, safety, and social security as well as contracts for employment. Regarding certain factors of labour law compliance in India, one of the most crucial ones is Awareness about keeping the records of the employees. This includes documents such as registers, payrolls, and other appendixes that elicit information on the employees’ conduct, wages, or incentives granted to them. It is also important that the employers who want to avail Employees’ provident fund (EPF) also known as PF (Provident Fund) they must ensure that they are giving all statutory advantages and benefits including the ESI (Employee State Insurance) as well as gratuity. In addition, employers must comply with various labour law compliances such as:    

Registration and licensing: Another regulation, an employer is required to register his or her establishment with the local government authority and acquire any permits required. Displaying notices: Employers are also expected to post various awards like the minimum wages, working hours, and other compulsory facilities that emanate from the labor Laws.

Statutory filings: It includes the return to be filed by the employer for various reasons such as the annual returns and other returns under the PF and the ESI and other statutes. 

Compliance audits: Employers should carry out compliance audits on a regular basis so that they can be sure that they are observing all the legal requirements in their area of operations.

It is not only mandatory to follow the labour law in Indian organization but it is the moral responsibility of the employer. Observance of labor laws aims at protection of employees within their workplace and this containment is significant since it will improve the employees’ remunerations, incentives, and status, thus improving their morale, performance and satisfaction. It also has the added benefit of promoting a healthy employer-employee dynamic, which is critical in ensuring any business’ prosperity. 

From time to time, the government of India has developed various labour law reforms to simplify existing laws with an aim of modernizing them. These reforms are; Occupational Safety, Health and Working Conditions Code, 2020, Industrial Relations Code, 2020, and the Code on Social Security, 2020. These codes seek to avail a legal regime for workers’ rights enhancement and to enhance the business environment of the nation. 

Nevertheless, the abovementioned reforms have increased additional demands on employers in terms of compliance. For instance, we have the Occupational Safety, Health and Working Conditions Code, 2020 that imposes duties of keeping and furnishing to the central government for any workplace and class of employee, a record of all accidents, injuries and illnesses. It also gives employers the responsibility of ensuring that they offer the employees a work place that is free from health hazards. 

Likewise, under the Industrial Relations Code, 2020 which has amalgamated existing laws of the code on sanitization, employers are bound to provide a notice to the government before retrenchment or laying off the employees this the employers personnel had economical and effective impacts. There is therefore a need employers have to make constant check and ensure that their policy, practice and procedures adhere to these laws and regulations. This entails internal audit, record keeping, and staff training among the employees and stakeholders of an organization. Employers must also ensure that they get acquainted with any changes that may occur in the labour laws/rules and regulations to ensure that they adhere to them.

CONCLUSION

Therefore, labor laws in India will be helpful in defending the legal rights of the private workers and their proper treatment in the organizations. Including aspects such as employment contracts, maternity leave, gratuity, among others, these laws set the measures to ensure workplace safety from harassment and discrimination. Likewise, the Industrial Disputes Act and Minimum Wages Act are other laws which indeed enhance the security of the employees and ensure accountability. Thus, following these regulations, employers can establish and encourage the respect of and care for employees, which will lead to the health improvement of the economic body as a whole..