Abstract:-

Major Labour Laws in India

1. The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952

2. The Employees’ State Insurance Act, 1948
3. Apprentices Act, 1961
4. The Contract Labour (Regulation & Abolition) Act
5. The Factories Act, 1948
6. The Industrial Disputes Act, 1947
7. The Industrial Employment (Standing Order) Act, 1946
8. The Maternity Benefit Act, 1961
9. Minimum Wages Act,1948
10. The Payment of Bonus Act, 1965
11. The Payment of Gratuity Act, 1972
12. The Payment of Wages Act, 1936
13. The Workmen Compensation Act, 1923
The Payment of Wages Act 1936 requires that employees receive wages, on time, and
without any unauthorised deductions. Section 6 requires that people are paid in money rather
than in kind. The law also provides the tax withholdings the employer must deduct and pay to
the central or state government before distributing the wages.[11]
The Minimum Wages Act 1948 sets wages for the different economic sectors that it states it
will cover. It leaves a large number of workers unregulated. Central and state governments
have discretion to set wages according to kind of work and location, and they range between
as much as 143 to 1120 per day for work in the so-called central sphere. State governments
have their own minimum wage schedules.
The Payment of Gratuity Act 1972 applies to establishments with 10 or more workers.
Gratuity is payable to the employee if he or she resigns or retires. The Indian government
mandates that this payment be at the rate of 15 days salary of the employee for each
completed year of service subject to a maximum of ₹ 2000000
The Payment of Bonus Act 1965, which applies only to enterprises with over 20 people,
requires bonuses are paid out of profits based on productivity. The minimum bonus is
currently 8.33 per cent of salary.
Health and safety[
The Workmen's Compensation Act 1923 requires that compensation is paid if workers are
injured in the course of employment for injuries, or benefits to dependants. The rates are low

 Factories Act 1948, consolidated existing factory safety laws

 The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013 that seeks to protect and provides a mechanism for women to report incidents
of sexual harassment at their place of work.
Pensions and insurance
The Employees' Provident Fund and Miscellaneous Provisions Act 1952 created
the Employees' Provident Fund Organisation of India. This functions as a pension fund for
old age security for the organised workforce sector. For those workers, it creates Provident
Fund to which employees and employers contribute equally, and the minimum contributions
are 10-12 per cent of wages. On retirement, employees may draw their pension.[18]
The Employees' State Insurance provides health and social security insurance. This was
created by the Employees' State Insurance Act 1948.[19]
The Unorganised Workers' Social Security Act 2008 was passed to extend the coverage of
life and disability benefits, health and maternity benefits, and old age protection for
unorganised workers. "Unorganised" is defined as home-based workers, self-employed
workers or daily-wage workers. The state government was meant to formulate the welfare
system through rules produced by the National Social Security Board.
The Maternity Benefit Act 1961, creates rights to payments of maternity benefits for any
woman employee who worked in any establishment for a period of at least 80 days during the
12 months immediately preceding the date of her expected delivery On March 30, 2017 the
President of India Pranab Mukherjee approved the Maternity Benefit (Amendment) Act,
2017 which provides for 26-weeks paid maternity leave for women employees.
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, provides for
compulsory contributory fund for the future of an employee after his/her retirement or for
his/her dependents in case of employee's early death. It extends to the whole of India except
the State of Jammu and Kashmir and is applicable to:

 Every factory engaged in any industry specified in Schedule 1 in which 20 or more

persons are employed.
 Every other establishment employing 20 or more persons or class of such establishments
that the Central Govt. may notify.
 Any other establishment so notified by the Central Government even if employing less
than 20 persons.
India’s GROUTH RATE is highly increased.. In 2015–16 the GDP growth rate has reached 7.6%, up from
5.6% in the year 2012–13.1 Being the world’s second-populous nation with a labour force over 500
million, India’s labour occupies an important place in the path towards economic growth.2 The challenge,
however, continues to be to ensure that economic growth translates into better labour market conditions.

The Central Government has been pursuing a pro-reform agenda since it took over two years ago, and the
overall trend has been to simplify labour regulations. The Ministry of Labour and Employment,
Government of India has recently conveyed that the aim is to first concentrate on reforms which are
focused on employee welfare and benefits.3

The Researchers has taken a overview of key amendments/proposals for labour law reforms at Central and
State level, trends in employment claims and litigation trends.

Summary of key amendments, proposals and reforms at Central level

(i) Maternity Benefit Amendment Bill: The Maternity Benefit Act 1961 (“MB Act”) regulates the
employment of women employees in factories, mines and shops or establishments for certain periods
before and after childbirth and provides for post-partum care and other benefits. The Maternity Benefit
(Amendment) Bill, 2016 (“MB Bill”) to amend the MB Act was passed in the Rajya Sabha on 11 August
2016. Subject to the approval by the Lok Sabha and assent of the President of India (“Presidential
Assent”), the MB Bill is all set to be a statute on and from the date that it is notified in the Official
Gazette. The MB Bill seeks to introduce several changes to the MB Act which are as follows:

• Increased paid maternity leave: The MB Bill seeks to increase the duration of maternity leave from 12
(twelve) weeks to 26 (twenty-six) weeks. Additionally, while under the MB Act this benefit could be
availed by an employee starting up to 6 (six) weeks before the expected date of delivery and 6 (six) weeks
after the childbirth, this has now been proposed to be increased to 8 (eight) weeks before the expected date
of delivery and 18 (eighteen) weeks after the childbirth. For women who have 2 (two) or more children,
the duration of maternity leave shall continue to be 12 (twelve) weeks (i.e. 6 (six) weeks pre and 6 (six)
weeks post the date of delivery).

• Maternity leave for adoptive and commissioning mothers: Keeping in line with the times, the MB Bill
progressively seeks to extend certain benefits under the MB Act to adoptive and commissioning mothers as
well, and every such woman employee shall be entitled to 12 (twelve) weeks of maternity leave.

• Work from home option: The MB Bill has also introduced an enabling provision relating to “work
from home” for women employees, which may be exercised after the expiry of the 26 (twenty-six) week
period. Though not a statutory entitlement, it provides an encouraging tool to employers to adopt
flexibility in the way women employees may function without disrupting the much-needed care for their
ward.
• Crèche facility: The MB Bill seeks to make a crèche facility mandatory for every establishment
employing 50 (fifty) or more women employees. Women employees would be permitted to visit the
crèche 4 (four) times during the course of the day.

• Educating women about their rights: The MB Bill makes it mandatory for employers to educate
women employees about maternity benefits at the time of their appointment.

(ii) Factories Amendment Bill: The Factories Act, 1948 (“Factories Act”) is intended to ensure that
workers in factories enjoy a safe and healthy work environment. The Factories (Amendment) Bill, 2016
(“Factories Bill”) to amend the Factories Act was passed in the Lok Sabhaon 10 August 2016. The
amendments sought in the Factories Bill are reformative and seek to unlock latent productivity in the
manufacturing sector. Once implemented, they shall provide employers with an opportunity to achieve
greater efficiency by offering increased flexibility in managing their workforce. The proposed changes are
as follows:

• Overtime: In a significant change, it has been proposed to increase the existing limit of overtime hours
for factory workers from 50 (fifty) hours to 100 (one hundred) hours per quarter. The Factories Bill also
proposes to increase the permissible overtime working hours in case of exceptional workload from 75
(seventy-five) hours to 115 (one hundred and fifteen) hours per quarter. It also allows further increase of
up to 125 (one hundred and twenty five) hours per hour by the Central/State Government in view of public
interest.

• Empowering Central Government and State Governments: The Factories Bill seeks to empower the
Central Government to make rules and orders in relation to employees who are currently exempted from
the provisions of Chapter V (working hours for adults) of the Factories Act. These powers are presently
vested only with the respective State Governments.

(iii) Special benefits to start-ups: Continuing the ‘Make in India’ policy to boost the Indian economy and
encourage start-ups, the Ministry of Labour and Employment, Government of India, vide its notification
dated 12 July 2016, has exempted all eligible start-up companies from labour inspections under 9 (nine)
Central legislations, namely: Industrial Disputes Act, 1947 (“ID Act”); Trade Unions Act, 1926 (“TU
Act”); Building and Other Constructions Workers’ (Regulation of Employment and Conditions of Service)
Act, 1996; Industrial Employment (Standing Orders) Act, 1946 (“IESO Act”); Inter-State Migrant
Workmen (Regulation of Employment and Conditions of Service) Act, 1979; Payment of Gratuity Act,
1972; Contract Labour (Regulation and Abolition) Act, 1970; Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952 (“EPF Act”); and Employees’ State Insurance Act, 1948 (“ESI
Act”). This exemption will be granted for a period of 3 (three) years and will be conditional upon the
organisations providing self-compliance reports. Inspections under the specified legislations will only be
conducted in case of credible and verifiable complaints against the organisation.

(iv) Industrial Relations Code Bill: The Union Cabinet has taken up for consideration the Labour Code
on Industrial Relations Bill, 2015 (“IR Code”). The IR Code envisages a simplification and amalgamation
of the ID Act, TU Act and IESO Act into one legislation. It envisages certain changes aimed to relax
norms and increase the ease of doing business in the country. This includes increasing the minimum limit
of employees for regulation by the IR Code from 100 (one hundred) to 300 (three hundred). In a move to
benefit workers, it also increases the amount of retrenchment benefit to 3 (three) months. These
amendments saw stiff protests from trade unions across the country despite having been drafted after
tripartite consultations. The Central Government has recently announced that after considering the
concerns of the trade unions, it will seek to pass the IR Code in the winter session of Parliament in 2016.
The State of Rajasthan has already implemented some of these amendments proposed in the IR Code by
amendments to the relevant laws through an act of State legislature.

(v) Payment of Bonus Amendment Act: The Payment of Bonus Act, 1965 (“Bonus Act”) aims at
ensuring a payment of bonus based on profit or productivity to workers in certain establishments. The
Payment of Bonus (Amendment) Act, 2015 (“Bonus Amendment Act”) sought to amend bonus
entitlements prescribed under the Bonus Act. The Bonus Amendment Act was passed by the Lok
Sabha on 22 December 2015 and by the Rajya Sabha on 23 December 2015. The Bonus Amendment Act
received Presidential Assent on 31 December 2015. The provisions of the Bonus Amendment Act were
made applicable retrospectively, with effect from 1 April 2014. Till then, the financial statements for the
financial year 2014–15 were audited. Also, income tax/bonus computation and payment and statutory
filings under various laws were made on the basis of the audited financials. Accordingly, the retrospective
application of the Bonus Amendment Act received sharp criticism from employers and was challenged
before various high courts.4 Along with the Hon’ble Bombay High Court, the Hon’ble High Courts of
Karnataka, Allahabad, Madras, Kerala, Punjab and Haryana, Rajasthan, Gujarat, Madhya Pradesh, Calcutta
and Andhra Pradesh have also passed ad interim orders staying the retrospective operation of the Bonus
Amendment Act. The salient features of the Bonus Amendment Act are as follows:

• The eligibility limit for the statutory bonus has been increased from INR 10,000 (Indian Rupees ten
thousand) per month to INR 21,000 (Indian Rupees twenty-one thousand) per month.

• The Bonus Act allowed calculation of bonus proportional to the salary of the worker. For this purpose,
the upper limit of salary was fixed at INR 3,500 (Indian Rupees three thousand, five hundred). This meant
that the bonus of a person earning more than INR 3,500 (Indian Rupees three thousand, five hundred)
would still be calculated taking INR 3,500 (Indian Rupees three thousand, five hundred) as the
benchmark. Due to the increase in the eligibility salary, the Bonus Amendment Act has also increased the
calculation limit to INR 7,000 (Indian Rupees seven thousand) or the minimum wage for the employment,
whichever is higher. It is seen that this increase may cause difficulties to companies having a national
presence, as the minimum wage rates across states may differ.

(vi) Child Labour Amendment Act: Child Labour (Prohibition and Regulation) Act, 1986 (“CL Act”) is
intended to regulate employment below a certain age in industrial establishments. The Child Labour
(Prohibition and Regulation) Amendment Act, 2016 (“CL Amendment Act”) was one of the most debated
legislations passed in 2016. The CL Amendment Act was passed by the Rajya Sabha on 19 July 2016 and
the Lok Sabha on 26 July 2016. It received Presidential Assent on 29 July 2016 and was thereafter
published in the Official Gazette. The CL Amendment Act amended the CL Act which prohibited the
employment of children below the age of 14 (fourteen) years. The CL Amendment Act has been criticised
for relaxing the prohibition on child labour under the pretext of social necessity. The Central Government,
however, took a position that such prohibition was hurting families where children were the sole or
necessary wage earners, and relaxed this prohibition through the CL Amendment Act. The salient features
of the CL Amendment Act are as under:

• The prohibition on employment of children below the age of 14 (fourteen) years has been retained in
certain professions such as bidi-making, mines, domestic work and power loom industries. In other
professions, child labour is prohibited unless the child is involved in the family profession or trade after
his/her school hours.

• A new category, ‘adolescent’, has been added − defined as persons between the ages of 14 (fourteen)
years to 18 (eighteen) years. The adolescents are prohibited from employment in hazardous industries, as
listed out in the CL Amendment Act. However, this list of prohibited hazardous industries has been
substantially reduced from the erstwhile list in the CL Act.

• The penalties have also been increased to imprisonment ranging from 6 (six) months to 2 (two) years
and a fine in the range of INR 20,000 (Indian Rupees Twenty thousand) to INR 50,000 (Indian Rupees
Fifty thousand).

(vii) Employees Compensation Amendment Bill: The Employees Compensation Act, 1923 (“EC Act”)
was meant to provide compensation to workers in cases where they cannot continue work due to industrial
accidents or to their kin on death. The Employees Compensation (Amendment) Bill, 2016 (“EC Bill”)
was introduced and passed in the Lok Sabha on 9 August 2016 and is yet to be passed by the Rajya Sabha.
The EC Bill makes it mandatory for employers to make their employees aware of their right to
compensation. Employers are liable to a fine of up to INR 100,000 (Indian Rupees one hundred thousand)
in case they fail to inform their employees of this right to compensation. This is an important initiative, as
many workers fail to claim the benefit available under the EC Act due to lack of awareness. Further, the
minimum amount of compensation required to file an appeal against any order of compensation has been
increased from INR 300 (Indian Rupees three hundred) to INR 10,000 (Indian Rupees ten thousand),
subject to the power of the Central Government to further increase this limit.

(viii)Model Shops and Establishments (Regulation of Employment and Conditions of Service)

Bill:Model Shops and Establishments (Regulation of Employment and Conditions of Service) Bill, 2016
(“MS Bill”) has been prepared by the Ministry of Labour and Employment, Government of India to
increase employment and productivity in the country. The MS Bill also aims to harmonise the State laws
governing general welfare provisions in various states. Therefore, the MS Bill will be circulated to all the
State Governments who have been advised to formulate legislation conforming as closely as possible to the
MS Bill. The MS Bill is applicable to all establishments employing 10 (ten) or more workers but exempts
manufacturing units. The salient features of the MS Bill are as follows:

• General welfare provisions: The MS Bill requires employers to make suitable arrangements for clean
drinking water, latrine facilities, and first aid facilities. In some cases, canteen facilities as well. It allows
groups of employers to operate common facilities in case there is a paucity of space in the area.

• Work hours and facilities for women: The MS Bill provides that a workplace must provide access to
a night crèche facilities, ladies toilet and rest rooms. The consent of the woman worker must also be taken
before assigning her to night duty.

• Leave provisions: The MS Bill provides 45 (forty-five) days of earned leave, 8 (eight) days of casual
leave and 5 (five) festival leaves every calendar year. Additionally, an employee would also be entitled to
leave on all national holidays.

• The MS Bill also allows shops to remain open 24 hours a day, 7 days a week in an attempt to boost
employment and consumption.

• Enforcement mechanism: In order to ensure compliance with the conditions stipulated, the MS Bill
creates compliance officers known as ‘facilitators’ at the local level, as well as a ‘Chief Facilitator’ at the
State level.

(ix) Bilateral Social Security Agreements: These agreements are entered into by the Government of
India with countries that see considerable exchange of workers and professionals. These agreements
ensure that social security benefits accruing to workers in one jurisdiction are protected and generally
include terms to avoid making double social security contributions; and provide for easy remittance of
benefits and simplification of computation periods. India recently entered into a bilateral agreement with
Japan, bringing the total number of such agreements to 18 (eighteen). Of these, 15 (fifteen) agreements
have already been operationalised by way of notification in the Official Gazette and the rest are in the
process of operationalisation.

Set out below is a summary of key amendments/proposals at State level:

(x) The Factories (Maharashtra Amendment) Act: The Factories (Maharashtra Amendment) Act, 2015
was notified on 2 December 2015 and provides a wide range of amendments to the labour law scenario in
the State of Maharashtra. It has primarily focused on the terms and conditions for classification as a
factory, the limits of overtime hours, work hours for women employees and allied matters. It is important
to note that a number of these provisions are similar to those present in the Factories Bill.

Litigation trends

In terms of trends in industrial disputes, the number of man hours lost has seen a sharp decline from recent
years. The first four months of 2016 saw an 89% decrease in the number of man hours lost due to
industrial disputes.5 Such a drop is remarkable and augurs well for greater industrial productivity in the
country.

Unemployment numbers: Despite the unemployment numbers seeing a drastic fall in the early half of the
decade with unemployment touching an all-time low of 4.90% in 2013, it has slowly been on the rise
again6 with the latest unemployment rates touching 5% for the first time since 2012. The numbers also
show that unemployment amongst women (8.7%) was significantly higher than unemployment amongst
men (4.3%).7

Redundancies, business transfers and reorganisations

In terms of provisions for laying off and retrenchment of workers, the provisions of the ID Act will apply.
In cases where the business of a company is being transferred, the ID Act provides conditions wherein the
workers would qualify for retrenchment benefit. Judicial precedents also insist on the requirement to
obtain consent of the employees being transferred. Even when none of the conditions under the ID Act are
fulfilled, the establishment will also require the consent of all the workers to carry on with the
employment.8

This decision has gone against a number of previous Supreme Court decisions and has been criticised by
some as providing an incorrect interpretation of the section.

The Indian Contract Act, 1872 prohibits any agreements which would be in restraint of any trade. The
Courts have therefore taken the firm view that all post-employment non-compete clauses would be
unenforceable as they would be considered to be in restraint of trade.9 It is to be noted that non-compete
clauses operating during employment have been considered enforceable against the employee. Non-
disclosure agreements or agreements for the protection of trade secrets post-employment would form an
exception to this principle and have been held to be enforceable.

The position in respect of non-solicitation clauses is somewhat more uncertain, with no authoritative
Supreme Court judgment in this regard. However, a number of courts have allowed non-solicitation
clauses to be enforced post-employment as well.10 While no authoritative test has been laid out, High
Courts usually look at the reasonableness of the agreement as well as the time period for which it was to be
applicable when deciding on the enforceability of such an agreement.