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A Summary on Existing Labour Laws in India

Labour law also known as employment law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations. As such, it mediates many aspects of the relationship between trade unions, employers and employees. In other words, Labour law defines the rights and obligations of workers, union members and employers in the workplace.

Generally, labour law covers:
  • Industrial relations – certification of unions, labour-management relations, collective bargaining and unfair labour practices;
  • Workplace health and safety;
  • Employment standards, including general holidays, annual leave, working hours, unfair dismissals, minimum wage, layoff procedures and severance pay

Labour law arose due to the demands of workers for better conditions, the right to organize, and the simultaneous demands of employers to restrict the powers of workers in many organizations and to keep labour costs low. Employers' costs can increase due to workers organizing to win higher wages, or by laws imposing costly requirements, such as health and safety or equal opportunities conditions.

Workers' organizations, such as trade unions, can also transcend purely industrial disputes, and gain political power - which some employers may oppose. The state of labour law at any one time is therefore both the product of, and a component of, struggles between different interests in society.

Labour legislation that is adapted to the economic and social challenges of the modern world of work fulfils three crucial roles:
  • It establishes a legal system that facilitates productive individual and collective employment relationships, and therefore a productive economy;
  • By providing a framework within which employers, workers and their representatives can interact with regard to work-related issues, it serves as an important vehicle for achieving harmonious industrial relations based on workplace democracy;
  • It provides a clear and constant reminder and guarantee of fundamental principles and rights at work which have received broad social acceptance and establishes the processes through which these principles and rights can be implemented and enforced.

The Industrial Disputes Act, 1947:

The Industrial Disputes Act, 1947 extends to the whole of India and regulates Indian labour law so far as that concerns trade unions as well as Individual workman employed in any Industry within the territory of Indian mainland. The objective of the Industrial Disputes Act is to secure industrial peace and harmony by providing mechanism and procedure for the investigation and settlement of industrial disputes by conciliation, arbitration and adjudication which is provided under the statute. The main and ultimate objective of this act is "Maintenance of Peaceful work culture in the Industry in India" which is clearly provided under the Statement of Objects & Reasons of the statute.

Welfare in industry can be achieved only if there is healthy understanding between employers, workers and the Government. There can be no growth of the industrial structure unless workers and employers realize their mutual responsibilities. Labour welfare has special significance in India where the Constitution itself enjoins the promotion of humane conditions of work and securing to all workers full employment of leisure and social as well as cultural opportunities.

The Industrial Employment (Standing Orders) Act, 1946:

This Act is to require employers in industrial establishments to formally define conditions of employment under them and submit draft standing orders to certifying Authority for its Certification. It applies to every industrial establishment wherein 100 (reduced to 50 by the Central Government in respect of the establishments for which it is the Appropriate Government) or more workmen are employed. And the Central Government is the appropriate Government in respect of establishments under the control of Central Government or a Railway Administration or in a major port, mine or oil field. Under the Industrial Employment (Standing Orders) Act, 1946, all RLCs(C) have been declared Certifying Officers to certify the standing orders in respect of the establishments falling in the Central Sphere.

There was no uniformity in the conditions of service of workers until this act was brought, which led to friction between workers and Management. An Industrial worker has the right to know the Terms & condition which he is expected to follow. Hence the legislation.

The Trade Unions Act, 1926

Trade union is a voluntary organization of workers relating to a specific trade, industry or a company and formed to help and protect their interests and welfare by collective action. Trade union are the most suitable organisations for balancing and improving the relations between the employees and the employer. They are formed not only to cater to the workers' demand, but also for imparting discipline and inculcating in them the sense of responsibility.

The law relating to the registration and protection of the Trade Unions is contained in the Trade Unions Act, 1926 which came into force with effect from 1st June 1927.

A trade union is an organized group of workers who strive to help the workers in the issues relating to the fairness of pay, good working environment, hours of work and other benefits that they should be entitled to instead of their labour. They act as a link between the management and workers. In spite of being newly originated institutions, they have turned into a powerful force because of their direct influence on the social and economic lives of the workers.

To control and manage the working of these trade unions different legislations regulating the same required. In India Trade Unions Act of 1926 is a principal Act for controlling and managing the working of trade unions. The present article aims at explaining and bringing forth various aspects of the Act.

The Employees Compensation Act, 1923

The Employee's Compensation Act, 1923 (the EC Act) aims to provide financial protection to workmen and their dependents in case of any accidental injury arising out of or in course of employment and causing either death or disablement of the worker by means of compensation.

This Act applies to factories, mines, docks, construction establishments, plantations, oilfields and other establishments listed in Schedules II and III of the said Act, but excludes establishments covered by the ESI Act.

The Act provides for payment of compensation by the employer to the employees covered under this Act for injury caused by accident. Generally, companies take insurance policies to cover their liability under the EC Act.

It is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence. Workmen Compensation Insurance covers employees under Workmen Compensation Act, Fatal Accident Act and common law.

The Employees State Insurance Act, 1948

The Employees State Insurance Act, 1948 is beneficial and social legislation. Its main aim is to provide economic security to people who work in certain factories and establishments. The Act contains several important definitions and provisions that regulate these workers. It basically provides for payment of benefits to workers in cases of sickness, maternity, injury, etc.

The Employees’ State Insurance Act incorporates a number of sections, these sections provide for medical benefits and insurance for any employees working under factories registered under the ESI Corporation. This is an exciting prospect from both an employee’s and a legal perspective as the beginning of a formal social security program in India.

The Employees’ State Insurance Act, 1948 (ESI), enables the financial backing and support to the working class in times of medical distress such as:
  • Sickness.
  • Maternity Leave.
  • Disorder (mental or physical).
  • Disability.
  • Death.
It is a self-financed initiative, which serves as a type of social security scheme, to prevent the working class from any financial problems arising out of the above medical issues.

The Employees Provident Funds And Miscellaneous Provisions Act, 1952:

Provident fund is a welfare scheme for the benefits of the employees. Under this scheme both the employee & employer contribute their part but whole of the amount is deposited by the employer. Employer deducted the employee share from the salary of the employee. The interest earned on this investment is also credited in pf account of the employees. At the time of retirement, the accumulated amount is given to the employees, if certain conditions are satisfied.

Every employee, including the one employed through a contractor (but excluding an apprentice engaged under the Apprentices Act or under the standing orders of the establishment and casual labourers), who is in receipt of wages up to Rs.6,500 p.m., shall be eligible for becoming a member of the funds. The condition of three months’ continuous service or 60 days of actual work, for membership of the scheme.

The Minimum Wages Act, 1948:

India introduced the Minimum Wages Act in 1948, giving both the Central government and State government jurisdiction in fixing wages. The act is legally non-binding, but statutory. Payment of wages below the minimum wage rate amounts to forced labour. Wage boards are set up to review the industry's capacity to pay and fix minimum wages such that they at least cover a family of four's requirements of calories, shelter, clothing, education, medical assistance, and entertainment.

Under the law, wage rates in scheduled employments differ across states, sectors, skills, regions and occupations owing to difference in costs of living, regional industries' capacity to pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across the country and the structure has become overly complex.

The Indian Constitution has defined a 'living wage' that is the level of income for a worker which will ensure a basic standard of living including good health, dignity, comfort, education and provide for any contingency. However, to keep in mind an industry's capacity to pay the constitution has defined a 'fair wage'. Fair wage is that level of wage that not just maintains a level of employment, but seeks to increase it keeping in perspective the industry's capacity to pay.

The Payment Of Wages Act, 1936:

The Payment of Wages Act regulates the payment of wages to certain classes of persons employed in industry and its importance cannot be under-estimated. The Act guarantees payment of wages on time and without any deductions except those authorised under the Act.

The Act provides for the responsibility for payment of wages, fixation of wage period, time and mode of payment of wages, permissible deduction as also casts upon the employer a duty to seek the approval of the Government for the acts and permission for which fines may be imposed by him and also sealing of the fines, and also for a machinery to hear and decide complaints regarding the deduction from wages or in delay in payment of wages, penalty for malicious and vexatious claims.

As per section 1(6) of the Payment of Wages Act, the wages averaging less than INR 6,500 per month are covered and protected by the Act. The Wages Act regulates the payment of wages to persons employed in factories, railways, industrial and other establishments specified under the Wages Act. It contains provisions with respect to the responsibility for payment of wages, fixing of wage-periods, time of payment of wages, permissible deductions, maintenance of records and registers and penal consequences for non-compliances of the provisions stipulated under the Wages Act.

The Factories Act, 1948

The Factories Act, 1948, serves to assist in formulating national policies in India with respect to occupational safety and health in factories and docks in India. It deals with various problems concerning safety, health, efficiency and well-being of the persons at work places.

The Act is applicable to any factory using power & employing 10 or more workers and if not using power, employing 20 or more workers on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on; but this does not include a mine, or a mobile unit belonging to the armed forces of the union, a railway running shed or a hotel, restaurant or eating place.

The Factories Act, 1948 is a beneficial legislation. The aim and object of the Act is essentially to safeguard the interests of workers, stop their exploitation and take care of their safety, hygiene and welfare at their places of work. It casts various obligations, duties and responsibilities on the occupier of a factory and also on the factory manager.

The Industries (Development And Regulation) Act, 1951:

The Act brings under the control of the Central Government the development and regulation of a number of important industries listed under the first schedule attached to the Act as the activities of such industries will affect the country as and, therefore, the development of such important industries must be governed by the economic factors of all India importance.
A system of licensing is introduced under the Act to regulate planning and future development of new undertaking on sound and balance lines and may be deemed expedient in the opinion of the Central Government.

The Act provides and protects the development of those industries, present under schedule 1, those which are important for the country’s welfare and economy. Being under supervision of the government, guarantees availability of funds and smooth functioning of these industries.

The Payment Of Bonus Act 1965:

The payment of Bonus Act, 1965 aims to regulate the amount of bonus to be paid to the persons employed in establishments based on its profit and productivity. The act is applicable to the whole of India for all establishments which had twenty or more persons employed on any day during the year.

Any employee is eligible for availing bonus if the following conditions are satisfied:
  • The employee receiving salary or wages up to Rs.21,000 per month
  • The employee engaged in any work whether skilled, unskilled, managerial, supervisory etc.
  • The employee who have worked not less than 30 working days in the same year.
The employees cannot avail the bonus if any action taken by the management in case of dishonesty, theft, sabotage of any property of establishment, violent behaviour while on the duty within premises of the establishment.

The Apprentices Act 1961:

The main purpose of the Act is to provide practical training to technically qualified persons in various trades. The objective is promotion of new skilled manpower. The scheme is also extended to engineers and diploma holders.

The employer is required to provide training facilities to apprentices. Multiple employers to come together, either themselves or through an approved agency to provide apprenticeship training to apprentices under them. Thus, the facilities of training apprentices in theoretical subjects can be shared among employers.

The Apprenticeship Act explains apprentices to be the ones who receive apprenticeship or practical training under an apprenticeship scheme for a specified duration. The main requisites for a person to receive an apprentice training are that he/she should have attained an age of 14 years and for the trades where safety issues are concerned to the apprentice should have attained 18 years.

The main objective of the Apprentices Act, 1961 is to meet the rising need for proficient craftsman. Giving experimental training to the people who’re specialized in their crafts is the primary aim of the Apprentice Act. Candidates holding Diploma and Engineering Graduates can likewise benefit from this plan.

The Maternity Benefit Act, 1961:

The Maternity Benefit Act, aims to regulate of employment of women employees in certain establishments for certain periods before and after child birth and provides for maternity and certain other benefits. The Maternity Benefit Act is one of the best steps taken by the government to protect women employment while they experience their Maternity. Maternity Benefit is basically the benefit of getting full paid absence from work. As per the government rules, every establishment having 10 or more employees need to apply this act in the organization.

Every woman shall be entitled to, and her employer shall be liable for, the payment of maternity benefit, which is the amount payable to her at the rate of the average daily wage for the period of her actual absence. The maximum period for which any woman shall be entitled to maternity benefit shall be 12 weeks in all whether taken before or after childbirth. However she cannot take more than six weeks before her expected delivery.

The Payment Of Gratuity Act, 1972:

The Payment of Gratuity Act, enables the government to raise the limit of tax-free gratuity. The change can be made through an executive order by the prime minister.
Gratuity is a lump sum that a company pays when an employee leaves an organization, and is one of the many retirement benefits offered by a company to an employee.

The Payment of Gratuity Act, 1972 (the Gratuity Act) is applicable to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments with ten or more employees. Gratuity is fully paid by the employer, and no part comes from an employee’s salary.

Gratuity is paid when an employee:
  • Is eligible for superannuation;
  • Retires;
  • Resigns; or
  • Passes away or is rendered disabled due to accident or illness

The Child Labour (Prohibition And Regulation) Act, 1986:

The Child Labour (Prohibition & Regulation) Act, 1986 aims at prohibiting engagement of children aged below 14 in certain hazardous Occupations and Processes as well as regulating the conditions of services of such children engaged in non-hazardous Occupations and Processes. The penal provisions for engaging child labour in hazardous Occupations and Processes is quite rigorous. It is a cognizable criminal offence to employ a Child for any work.

Children between age of 14 and 18 are defined as "Adolescent" and the law allows Adolescent to be employed except in the listed hazardous occupation and processes which include mining, inflammable substance and explosives related work and any other hazardous process as per the Factories Act, 1948. In 2001, an estimated 1% of all child workers, or about 120,000 children in India were in a hazardous job. Notably, the Constitution of India prohibits child labour in hazardous industries (but not in non-hazardous industries) as a Fundamental Right under Article 24.

The Equal Remuneration Act, 1976:

The employer must not discriminate on grounds of sex, when it comes to remuneration provided for the same amount and nature of work. This Act was placed because there were numerous cases of women getting paid at a lower rate than their male counterparts.

In the case of People’s Union of Democratic Republic v. Union of India 1982, women were only paid 7 per day as opposed to 9.25 per day for male workers. After hearing both sides, Justice P.N. Bhagwati held that the authorities need to make sure that the men and women both are paid at par to each other for similar amount of work.

The basic concept underlying, the very controversial subject, Feminism, is “equity”. Equity refers to a treatment of equal with equals and Unequal with unequal. The Equal Remuneration Act, does just that. It provides for Equal remuneration both men and women, but also understanding the fact that it will not override any special treatment provided to women in the country. There was a time in India when women used to face heavy discrimination in pay. But, after the advent of this Act, women have been able to sue malpractices prevailing in their workplace.

The Bonded Labour System (Abolition) Act, 1976:

The Bonded Labour System (Abolition) Act, 1976 provides for the abolition of the bonded labour system, with a view to preventing the exploitation of vulnerable sections of society.
This Act prohibits, criminalises and extinguishes any system of debt bondage, whether by agreement, custom or contract. The object of the Act is to provide for the abolition of bonded labour system with a view to preventing the economic and physical exploitation of the weaker sections of the people and for matters connected therewith or incidental thereto.

According to the definition given in section 2(g) of the Act, bonded labour means service arising out of loan/debt/advance. The bonded labour is to be immediately released from the bondage. His liability to repay bonded debt is deemed to have been extinguished. Freed bonded labour shall not be evicted from his homesteads or other residential premises which he was occupying as part of consideration for the bonded labour. A rehabilitation grant of Rs.1 20,000/- to each of the bonded labour is to be granted and assistance for his rehabilitation provided.

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