Code that governs the specific contractual relationships growing out of the
old-style employment status quo, labour law deals with the legal requirements
and collective relationships that are more and more important in mass-production
the social order, the legal relationships sandwiched between organized economic
interests and the state, and the various rights and obligations related to some
sorts of social services, also consist of social security and disability
insurance as well. Liberation from forced labour, equality of treatment in
employment and occupation, and unemployment reimbursements may, in a broad
sense, be regarded as part of the same general issue.
Indian scholars have identified the rules for labour-management
relations in the Hindu Laws of Manu (Manu-smriti; 100 CE) and similarly, other
scholars have identified labour standards as far back as the Babylonian Code of
Hammurabi (18th century BC) and the Laws of the Indies promulgated by Spain in
the 17th century for its New World territories.
Though these can be viewed as merely having only limited influence on subsequent
developments. Labour Code or Laws backgrounds can be traced back to its roots in
the most varied parts of the world, from various revolutions such as the French
Revolution, and the political forces that, set in motion creating the elements
of the modern social conscience. Enlightenment, that took place in the world
during the 19th century with the many activist coming forward such as Karl Marx,
who developed the theory of exploitation in Das Capital
He suggested a systematic correlation between labour-values and money prices and
stated under capitalism the source of profits is the value added by workers and
that value is not paid out in wages as the workers generate value during a short
time of the working day to pay their wages for that day, yet they continue to
work for numerous more hours and continue to create value.
The first breakthrough of contemporary labour law was the British Health and
Morals of Apprentices Act of 1802, backed by Sir Robert Peel. Similar law for
the protection was approved in Zürich in 1815 and France in 1841. By 1848 the
first legal framework of the working hours of adults was approved by the Lands
Gemeinde (citizens’ assembly) of the Swiss canton of Glarus. Sickness insurance
and workers’ compensation were established by Germany in 1883 and 1884, and
obligatory arbitration in industrial disputes was announced in New Zealand in
The United States began to enact such regulations toward the end of the 19th
century. In Japan, elementary regulations on work in mines were announced in
1890. Labour law in Latin America started in Argentina in the early years of the
20th century and acknowledged an influential impetus from the Mexican
Revolution, which ended in 1917. In Africa, the noteworthy evolution of labour
law begins in the 1940s.
Throughout the 20th century, the standards evolved by the International Labour
Organisation, created in 1919 as an independent partner of the League of
Nations, and since 1946 a dedicated agency linked with the United Nations
developed into a principal external influencer upon the labour laws of many
Conventions when approved becomes obligatory upon the member nations approving
them; recommendations are designed as standards for legislation, collective
agreements, administrative courses, which shield, in varying degrees of detail
and at varying stages of development, virtually all of the more significant
branches of labour law, that is continuously amplified and reviewed at the
annual sessions of the International Labour Conference and achieve present
importance, relative maturity, and international acceptance. LABOUR LAW IN INDIA
Generally, there has been a relative drought of serious focusing on the
evolution of Indian labour laws in their economic, social, and political
contexts. Mahatma Gandhi believed that workers had as much of a right to partake
in the management of firms or companies as shareholders, stakeholders, or the
owners. Labour laws in India, brands a distinction between individuals who work
in organised and unorganised sectors.
Conventionally, the Indian government at the center and state level have sought
to ensure a great degree of protection for workers, but in practice, it differs
due to the form of government as labour laws are a subject in the concurrent
list of the Indian Constitution. While from Pre-1920s to 1947 in India, under
colonial rule by the British, labour rights, trade unions, and freedom of
association were all controlled by the Labour law, the wide-ranging body of law
functional to such matters as employment, remuneration, conditions of work,
trade unions, and industrial relations.
Labour Code or laws in India since 1947 or post-independence period, Indian
Constitution 1950 contains specific goals relating to labour, including the
“right to work,” “just and humane conditions of work,” “living wage,” and a
“decent standard of life,” in addition to the right to form “trade unions
The 42nd Amendment of the Constitution of India in 1976 inserted the Article
43A, established a right by demanding the state to legislate to protect the
involvement of workers in the management of the company.
The 45 national laws and another 200 state laws control the relationships
between the worker and the company and most of the labour laws of this time was
an extension of the factory-style directive of the pre-war, dealing with hours
of work, rest intervals, female and child protection, health, and safety, and
mandate all aspects of employer-employee interaction, such as companies must
keep 6 attendance logs, 10 different accounts for overtime wages, report 5 types
of annual returns and also covers standardise the height of urinals in workers'
lavatories to how frequently a workspace must be lime-washed, scrutinization of
the working space anytime and the imposition of fines by examiners for violation
of any labour regulations.
The 2 nd National Commission on Labour (NCL) stressed the need to simplify and
consolidate labour laws for the sake of transparency, and uniformity. Most of
the Labour laws in India are archaic, dating to pre-independence – even though
subsequent amendments were carried out from time to time but reform was needed
in India concerning labour Laws and therefore, generating an urgent need for a
revamp of the laws to acclimate them to present realities.
A high growth in the economy necessitates a resourceful workforce and many
experts would argue that Indian labour laws need to be simple. Labour laws
transpiring part and parcel of the concurrent list therefore laws can be created
by both the central and the state government, resulting in an overlapping
jurisdiction. At present, there are 44 laws and 160 laws at center and state
level respectively on the subject. Multiple laws are governing a single area,
for instance, 19 laws overriding each other on the conditions of work and
industrial relations, 14 laws overriding each other on social security and
labour welfare. A consequence of the unwieldy labour law structure is that the
organized sector has continued to remain small and forming barely 16% of the
total employment and the rest employed in the unorganized sectors.
India ranks 99th in labour market effectiveness among 148 countries. The
manufacturing sector in India only accounts for 12.9% of GDP in India as per the
2013 report against 31.8% and 23.7% in China and Indonesia respectively. The
constricted labour market regulations have dissuaded foreign companies from
establishing and investing in large manufacturing plants in India. India’s
progress in creating jobs in non-farm sectors has been slow with agriculture
still employing 49% of the labour force, which has slowed urbanization.
With the changing time, it is becoming more and more difficult to attain
economic stability and to catch up with the developed countries with rigid and
clutches of ancient time laws that are somewhat has become redundant such as:
- Industrial Disputes Act:
It necessitates companies employing more than 100 workers must get
government authorisation to fire a worker or wind-up a plant or
factory. Workers can interfere in company decisions and could get into
litigation for years. The strictness is a key motive and the reason for the
failure of manufacturing to take off in India.
- The Contract Labour Act:
The Contract Labour (Regulation and Abolition) Act 1970, bans the practice
of contract labour for core functions in a company to safeguard the
interests of permanent employees. However, recently, companies have employed
contract labour as it offers flexibility to companies. In the organized
sector the segment of informal or contract employees has amplified from
37.9% in F2000 to 57.8% in F2010.'
The contract workers are paid less than permanent employees. If the majority
of the workforce is on contract, the entire purpose is overpowered.
- Trade Union Act:
provide unions with a right to recognition, and some subsequent legislation
made the refusal to bargain on the part of an employer an unfair labour
practice,more or less making the duty to bargain legally obligatory. However,
for instance, one large factory may have multiple unions sponsored by different
political parties. The law necessitates at least 7 workers to create a trade
union. In numerous countries, the prerequisite to form a trade union in a
factory is considerably higher, thereby the scope of forming unions with
different agendas is diminished.
The key challenge in labour laws restructurings is to facilitate employment
growth along with shielding workers’ rights including of small firms, deciding
thresholds for erstwhile authorisation for retrenchment, solidification labour
enforcement, allowing flexible systems of labour, and encouraging collective
However, in 2019, following the recommendations of NCL, the Ministry of Labour
and Employment proposed 4 Bills on wages, industrial relations, social security,
and occupational safety to consolidate 29 central laws in Parliament. The
objective is to simplify and modernise labour regulation and give some freedom
from overlapping restrictions.
The 4 new Codes:
Wages The minimum wage is an inalienable right of every worker in the country.
Prospective wage rules will, inter alia, have the following implications on
the salary structure of workers and companies:
- Respective governments will fix floor wage to establish a minimum wage
- The new code that allows capping allowances at 50% of total compensation
is a game-changer as it will modify the ratio of salary components, basic
pay should be above 50% of the total compensation offered to each worker.
This will scale up Provident Fund contribution in proportion to variance in
basic pay and enhancement in post-retirement fund due to higher Provident
Fund contribution and gratuity. However, cut down on take-home salary could
affect the economic dynamics of workers as they need to adjust their
spending in proportion to their reduced earnings.
- The establishment of the Central Advisory Board and to regulate the
functionality of the said board by starting to fix a national floor-level
minimum wage to implement with effect from April 01, 2021, and revise them
(as and when needed).
- The Central Labour Minister will lead the team of the Central Advisory
Board. The board shall comprise 12 representatives of employers and
employees; 5 representatives of state governments as nominated by the
central government and independent members not exceeding 1/3rd of the board.
- Independent persons of the Board will comprise of a Labour Secretary,
two members of parliament, four members which shall include a professional
with expertise in labour matters, Industrial Tribunal presiding officer, and
advisory board chairman of two states on a sequence basis.
- The dynamics are going to be changed following the implementation of the
national floor-level minimum wage as State governments cannot fix minimum
wage less than national floor minimum wage.
- The Central Advisory Board will also regulate the women employment
prospects such as employment generation for women and establish eligibility
parameters and working rules for women to work in different establishments.
8) The central advisory board will come up with an appropriate national
minimum floor wage for benefit of the workers’ segment.
- This Code increases the hire-and-fire policy and winding-up of the
company to 300 employees and allows the government to further increase this
limit by notification.
- This Code creates provisions for the acknowledgment of trade unions
where there are several registered trade unions and provides criteria to recognise
unions that can formally negotiate with employers.
- This code introduces a new form of short-term labour or fixed-term
- This Code creates provisions that allow web-based inspections, which may
be accompanied by randomized inspections according to the different cases
and also the third-party certification, for notified classes or categories
of establishments and creates provisions for maintaining the common
registers and returns.
- This Codes intensified the quantum of fines and imprisonment in several
cases and allows for the compounding of offenses in certain cases.
- This Code removes the obligation for publication of award in the gazette
and replaces industrial courts/tribunals with two-member labour tribunals
comprising one judicial and one administrative member.
- This code allows the government to exempt any new establishment from its
provisions in the public interest.
- The Code applies to establishments oversize of above 10 or 20 workers.
2) The Code facilitates the government to formulate schemes for the benefit
of platform workers, unorganised workers, and gig workers.
- This code necessities to notify a separate social security fund for unorganised workers.
- The code allows compliance reporting on different aspects, such as
provident fund and insurance may continue to be required to be made to
Occupational Safety, Health, And Working Conditions
- This code applies to establishments that oversize above 10 or 20 workers
and declares the non-applicability in those establishments in which
hazardous activities are being carried out.
- This code enhances the thresholds for factories from 10 to 20 with power
and 20 to 40 without power.
- This code on occupational safety allows the government to exempt any new
establishment from its provisions in the public interest. Importance of
Judiciary: For “no work no pay” The Supreme Court of India, in Chief
Regional Manager, United India Insurance Company Limited v. Siraj Uddin Khan and Airports
Authority of India and Others v. Shambhu Nath Das, held setting aside of the
termination order, does not automatically warrant the salary for the period and
that no person can claim wages for the period that he/she continued to be absent
from work without leave or justification.
Similarly, in Shobha Ram Raturi v.
Haryana Vidyut Prasaran Nigam Limited and Others held the employer cannot claim
the benefit of “no work no pay” where an employer has restricted the employee
- Pankaj Prakash v. United India Insurance Company Limited
- Dev Dutt v. Union of India and
- Sukhdev Singh v. Union of India
Held that all public servants are eligible to know their grades in an annual
performance appraisal report (APAR). Each and every submission or entry in the
record in the annual performance appraisal report (APAR) of a public servant
must be communicated to him or her within a reasonable period.
The division bench of High Court of Bombay in:
- Dr. Mrs. Hema Vijay Menon v. the State of Maharashtra and
- Dr. Pooja Jignesh Doshi v. The State of Maharashtra and Another,
Maternity Benefit (Amendment) Act, 2017 and effective from 1 April 2017,
dealt with matter arising before 1 April 2017, that even in case of the birth of
a child by surrogacy, the parents who have lent the ova and sperm, would be
entitled to maternity leave and paternity leave, respectively. As of date,
paternity leave is not statutorily provided in India and is discretionary.
In the initial phases of the progress of Labour Laws governing a specific legal
relationship, the scope of labour law is often limited to the most developed and
important industries, to undertakings above a certain size, and wage earners.
Gradually these limitations are eliminated and the scope of the law stretched to
embrace handicrafts, rural industries, agriculture and farming, small
undertakings, office workers, and, in some nations, public employees as well.
The official labour code in India is firmly based on Western values and
concepts, as much of it derived from International Labour Organization
standards. However, labour law system has evolved up to the present time, can be
seen to have fulfilled its two fundamental purposes: the protection of labour
and the maintenance of industrial peace to some extent but has taken a long time
and implementation of it, still requires more effort from the government as well
as the legal system of India.
Labour law has gained recognition as a distinctive and classifiable branch of
the law within the legal community, nonetheless, the extent to which it is
recognized as a separate branch of legal practice varies extensively and depends
firstly on the extent to which there is a labour code or other distinctive body
of labour law in each state concerned, secondly on to which extent there are
separate labour courts or tribunals, and thirdly to which extend an influential
group within the legal profession, a practice specifically in labour laws.
Key Issues in Labour Reforms:
While the NCL recommended that all 40 central labour laws should be subsumed but
only 29 codes were incorporated by four Codes, therefore even though they
amalgamate and reduce to bare bones existing laws to some extent, they fall
short in some regards.
the Codes on occupational safety and
social security continue to retain distinct provisions of each of the laws that
these Codes subsume and as such contains provisions on leaves for all employees,
it continues to retain additional leave entitlements for sales promotion
employees and earned medical leave for 1/18th of time on duty.
Recently in the Labour Law 2021, the government has approved an overtime payment
to the employees working more than 15 minutes of scheduled shift. It is
applicable from 1st April 2021.