India has designated areas called Special Commercial Zones (SEZs) that were
created to support export-oriented commercial activity and draw international
investment. A framework for the creation, management, and regulation of SEZs in
India is provided by the SEZ Act, 2005, and the SEZ Rules, 2006. India's Special
Economic Zones (SEZs) are subject to a number of labour laws and compliance
requirements. Major labour compliances in India's SEZs include:
Industrial Disputes Act, 1947
A key labour regulation in India, the Industrial Disputes Act, of 1947,
regulates the settlement of labour disputes between employers and employees. It
is applicable to a variety of enterprises, including those that are located in
Special Economic Zones (SEZs). Here are some crucial details about how SEZs and
the Industrial Disputes Act of 1947 interact:
Application: Just like any other institution in India, SEZs and the units inside
them are subject to the Industrial Disputes Act, of 1947. SEZ units are not
exempt from adhering to the Industrial Disputes Act's rules.
Resolution of Disputes: The Industrial Disputes Act offers a method for
resolving conflicts that may develop between employers and employees, including
conflicts over pay, working conditions, employment terms, and other industrial
issues. To settle any problems that may emerge with their employees, SEZ units
are expected to adhere to the dispute resolution methods outlined under the
Industrial Problems Act, such as conciliation, arbitration, or adjudication.
Notice Requirements: SEZ entities must abide by the Industrial Disputes Act's
notice requirements. For instance, as required by the Act, SEZ units must notify
the proper authorities before announcing a lockout or a strike.
Legal Repercussions: Failure to abide by the Industrial Disputes Act's rules may
have legal repercussions, such as penalties, fines, and other responsibilities.
SEZ units must be aware of and take the appropriate steps to guarantee
compliance with their obligations under the Industrial Disputes Act.
Obligations to Workers: Under the Industrial Disputes Act, SEZ units are
expected to grant their employees certain rights and benefits, including fair
salaries, reasonable working hours, leave entitlements, and other statutory
benefits. SEZ units must abide by these requirements to prevent disagreements
and legal responsibilities.
Trade unions: According to the Industrial Disputes Act, employees have the right
to establish and join trade unions. According to the Act's requirements, SEZ
units must respect the rights of their employees to establish and join unions
and, if necessary, engage in good faith collective bargaining.
Employees Provident Fund and Miscellaneous Provisions Act, 1952:
The Employees' Provident Fund Organisation (EPFO) requires SEZ units to register
and make contributions to the Employee Provident Fund (EPF) for their employees.
The Minimum Wages Act, 1948:
An Indian labour regulation known as the Minimum Wages Act, of 1948 requires
employers to pay minimum wages to employees working in certain scheduled
employments, including businesses in Special Economic Zones (SEZs). The
relationship between SEZs and the Minimum Wages Act of 1948 has several
important components, which are listed below:
The Minimum Wages Act of 1948 is applicable to SEZs and the units within them,
just like it is to any other establishment in India. SEZ units are not excluded
from following the Minimum Wage Act's regulations.
Minimum Wage Rates: The Minimum Wages Act enables state governments to set
minimum wage rates for a variety of scheduled employments while taking into
account a number of variables, including the nature of the work, skill level,
and cost of living. The minimum wage rates set by the state government for the
planned employment that the SEZ unit falls under must be at least met by the
wages paid to employees in SEZ units.
Regular Minimum Wage Review and Revision: The Minimum Wages Act requires the
state governments to periodically examine and change the minimum wages, usually
no more than every five years. SEZ units must make sure they are paying the
minimum wage in accordance with any amended rates that have been made known by
the state government.
The rules of the Minimum Wages Act require SEZ units to keep records of the
wages paid to their employees, including information such as the name, address,
job completed, and payments paid. These documents must be kept for a specific
amount of time and made available for inspection by the authorities as needed.
Non-Compliance Penalties: Penalties, fines, and other obligations may apply if
you violate the Minimum Wages Act's requirements. To avoid non-compliance and
legal repercussions, SEZ units must make sure they are paying the required
minimum wages and maintaining accurate records.
Keeping Records: In accordance with the terms of the Minimum Salaries Act, SEZ
units are required to keep records of the salaries paid to their employees,
including information such as the name, address, job completed, and payments
paid. These documents must be kept for a specific amount of time and made
available for the authorities to inspect as needed.
Rewards for Compliance: Penalties, fines, and other liabilities may be imposed
for failing to abide by the Minimum Wages Act's requirements. To avoid
non-compliance and legal repercussions, SEZ units must make sure they are paying
minimum wages in accordance with the required rates and maintaining proper
Worker obligations: SEZ units must pay employees the minimum wages set by the
state government for the scheduled employment and are not allowed to pay
salaries below these rates. SEZ units must also adhere to additional
requirements, such as the Minimum Wages Act's requirements for prompt wage
payments, appropriate deductions, and adherence to working hours and other
Payment of Bonus Act, 1965:
The Payment of Bonus Act, of 1965 is an Indian labour regulation that requires
businesses to give eligible workers statutory bonuses depending on their
performance and other factors. Here are some crucial details about how Special
Economic Zones (SEZs) and the Payment of Bonus Act of 1965 relate:
Application: Just like any other establishment in India, SEZs and the units
inside them are subject to the Payment of Bonus Act, of 1965. SEZ units are not
exempt from adhering to the Payment of Bonus Act's rules.
Eligibility for Bonus: The Payment of Bonus Act lays forth the requirements for
employees to qualify for bonuses, such as the required minimum wage and the
number of hours worked each week. The eligibility of their employees for bonuses
under the Act must be determined by SEZ units, and bonuses must be paid
Bonus calculation: According to the Payment of Bonus Act, bonuses are determined
based on the establishment's profits and the allocable surplus. The incentive
granted to qualified employees must be determined by SEZ units using the formula
outlined in the Act.
Payment Period: The Payment of Bonus Act mandates that bonuses be paid to
qualified workers within a predetermined window of time, often eight months
following the end of the accounting year. According to the Act, SEZ units must
make sure that eligible employees get bonuses on time.
Record-keeping: In accordance with the terms of the Payment of Bonus Act, SEZ
units are required to keep records pertaining to the payment of bonuses,
including information such as the name, address, bonus amount, and other
pertinent data. These documents must be kept for a specific amount of time and
made accessible to the authorities for inspection as needed.
Penalties for Non-Compliance: Breaking the Payment of Bonus Act's rules can
result in fines, penalties, and other responsibilities. To avoid non-compliance
and legal repercussions, SEZ units must make sure they are paying bonuses to
eligible employees in accordance with the Act, keeping accurate records, and
following the deadline for payment.
Obligations to Workers: SEZ units are expected to pay qualified employees
statutory bonuses based on the Act's criteria, and they are not allowed to
refuse or wrongfully withhold bonus payments. Additionally, SEZ units must
adhere to other requirements outlined in the Payment of Bonus Act, including as
timely bonus payments, accurate computations, and record keeping.
Maternity Benefit Act, 1961:
The Maternity Benefit Act, which offers paid maternity leave to qualified female
employees, must be complied with by SEZ units.
Contract Employees (Regulation and Abolition) Act of 1970: The Contract Labour
(Regulation and Abolition) Act, which governs the employment of contract
employees, must be complied with by SEZ units.
The Sexual Harassment of Women at Workplace (Prevention, Prohibition, and
Redressal) Act of 2013:
It mandates creating an Internal Complaints Committee (ICC) to handle claims of
sexual harassment in the workplace. SEZ units are required to abide by the
provisions of this act.
These are a few of the most important labour regulations that SEZ operations in
India must follow. To avoid fines and other consequences, it is crucial for SEZ
units to make sure they abide by all applicable labour laws and regulations.
- An overview of worker men's Compensation Act, 1923, available
- Payment of Wages Act, 1936,
- Minimum Wages Act, 1948, available at<https://blog.ipleaders.in/minimum-wages-act-1948-2/>
- Payment of Bonus Act, 1965, availableat<https://www.teamleaseregtech.com/resources/acts/article/57/payment-of-bonus-act-1965/>
- Employees' State Insurance Act, 1948: details you must know available