Labour Laws in India: India is a developing country having billions of populations where majority of people depends on the income earned by the head of the family working in Government departments, private companies, factories and in unorganized sector.
There are a number of Labour Laws in India formed by the Government to protect the rights of employees to provide them social security benefit and feasible working environment that ultimately contributed to the work satisfaction and better standard of living of the employees.
Time to time Government reforms the Labour Laws in India according to the necessity and to provide better working experience not only for employees but also for employer to get benefit under various subsidy scheme of Government, Tax Rebates and get them complied according to the provisions of the Labour Laws and Acts.
We have listed out 17 important Labour Laws in India that every individual should know or employees should be aware of before starting their career to get a basic idea about the Labour Laws, rules & regulations under Various Acts.
Minimum Wages Act
Minimum Wages Act ensure the payment of Minimum Wages to an employee according to his Skilled Categories, Categories of the Employer or Company and the current Minimum Wages of the State.
Minimum Wages generally segregated according to the skilled level and every state/Central Government publish notification on Minimum wages on yearly basis.
Aside that the Minimum Wages for Contract Labours/ Workers are different from person falls under schedule employment or Shops & Establishment Act of the State.
For example, if a company engage contractors/ Vendors for deployment of manpower in their organization and you are engaged under such contractors or vendor that your Minimum Wages would be according to the notification published under Contract Labour Regulation and Abolition Act (CLRA) of the State.
If you are a direct Payroll employee of the company and your company falls under Shops and Establishment Act then your Minimum Wages would be according to the notification publish under Shops and Establishment Act of the state for Schedule Employment.
Again some companies falls under state jurisdiction and some companies falls under Central Government Jurisdiction. So, your Minimum Wages may very according to the Company. If your company falls under State Giverment jurisdiction then it will follow state Minimum Wages notification and if company falls under Central Govt jurisdiction then it should follow central Govt Minimum Wages Notification.
Payment of Wages Act: Labour Laws in India
Payment of Wages Act administer the wages of the employees so that they can get their salary on time on or before 7the of every month. It also specify the deduction part from the salary and the employer cannot deduct unnecessary amount as per the provision of the Act.
For any non-compliance, the employer or company may face legal obligation and some time penal provisions also imposed on the employer by the competent authority. So, it is advisable for companies to maintain the rules and regulation according to the provision of the Act.
If an employee want to report any non-compliance or violation of rules specified under the POW Act, then the Labour commissioner of the respective state is the best option available out there to report such complain.
Payment of Bonus Act
Bonus Act imposed statutory liability on employer or companies covered under the Payment of Bonus Act, 1965 to provide Bonus to its employee on yearly basis. Bonus is provided by companies from their profit to every employee who have worked in the organization at least 30 days in a financial year.
The minimum payable Bonus is 8.33% of the wages or salary of the employee and the rate goes up to 20% depending on the profit and desire of the company. To become eligible to get bonus, Salary of the employee should be less than 21000/- at present. (subject to change in future).
For more information on Payment of Bonus and other relevant provision you may click here.
Payment of Gratuity Act
Payment of Gratuity Act, 1972: Gratuity can be considered as loyalty bonus or the payment made by the employer to the employee who have served more than 5 years of continuously to a particular company or establishment.
In tern of sudden/accidental death of the employee, the 5 years continuous service provision is waved off and Gratuity is provided by the employer to the nominee of the deceased employee.
Gratuity is provided at a rate of 15 days salary for every completed year. For example, if an employee worked 5 years continuously, then he will be eligible to get 75 days salary based on the last salary drawn by the employee.
Contract Labour Regulation and Abolition Act (CLRA)
CLRA Act is applicable on the companies or establishment, who wish to engage contractual manpower in their organization through contractor or vendor. First the establishment required to take registration under the Act then they can engage manpower through vendor or contractor.
If a person employed under such contractor then the Minimum Wages is applicable according to the provision of the Act. The employer of contractor should be liable to pay the wages according to the latest notification without any unnecessary deduction to employees periodically.
The establishment and contractor should maintain the compliance and provisions under the Act and provide proper facilities to the employees like rest room, canteen facilities, proper sanitation and healthily working environment etc.
The rules and regulation under CLRA Act may very in different states. So, you may refer to your respective state CLRA Act or rules for better understanding.
Maternity Benefit Act: Labour Laws in India
Maternity Benefit Act, 1961 is formed with an objective to protect the rights of a working women when she is not in a position to perform her duty during her pregnancy. The act give an assurance to the working women that her job is safe and secure when she is at home taking care of her newly born child.
Under Maternity Benefit Act, 26 week paid leave provided to the female employee where she can take 8 weeks leave before delivery and remaining leave can be taken post delivery or confinement.
If an employee covered under ESIC, then it is the responsibility of the ESIC to provide 26 week leave payment to the female employee when she applied though proper channel for such payment subject to the eligibility condition.
If the employee is not covered under ESIC Act, then the employer have to make the payment for her Maternity Leave.
To know more about the the procedure, you may click here to get complete information on how to to apply for Maternity benefit in India.
Shops and Establishment Act
Shops and establishment Act applicable for Schedule employment and govern the leave entitled to an employee and fixed the holidays an employee can avail during a year. It also specify the working hours, breaks during works, daily and weekly limit of working hours, opening and closing our of work, etc.
The employer or company required to register themselves under the Shops & Establishment Act of the respective state even they have zero employee count subject to eligibility condition for registration according the the provision of the Act.
To know more about the Act you may refer to your respective state Shops and Establishment Act for better understanding.
For, Assam Shops and Establishment Act, you may click here.
EPF and MP Act
Employees Provident Funds and Miscellaneous Provision Act, 1952 is applicable to those establishment who engage manpower more than 20 number and the Act is extended to the whole of India. It is a social security scheme that enables the employee to save or invest a part of their income towards the scheme during the service period. The employer also contribute same amount of money on behalf of the employee.
Individual working in private sector organization, company or firm whose monthly salary (Basic+ DA+ Retaining Allowance) is less than Rs-15000/- eligible for PF in India.
At present the contribution rate under provided is 12% for employee and 12% for employer. But the employer contribute 1% more towards the scheme as per the provision of the Act for EDLI which is 0.50% (Employees Deposit Link Insurance) and Administrative charges which is 0.50%.
Every Provident Fund subscriber will get an Universal Account Number (UAN) to access their provident Fund Account.
The following benefit an employee may get under the said Act:
- High interest rate on the amount deposited towards PF around 8.50% per annum subject to change.
- Advance facilities for illness, construction of House, Marriage etc. subject to eligibility condition.
- Retirement benefit like monthly pension to the subscriber and the nominee or legal heir.
- EDLI benefit during the death of the provident fund subscriber during his service up to INR 7 Lacs subject to eligibility.
For more information you may Click Here.
Employees’ State Insurance Act
Employees’ State Insurance Act, 1948 also aimed to provide health security and protection against life hazard to employees working under private companies or organization. ESIC not only provide benefit to the employee but also covered the family member of the employee to get medical facilities and care subject to eligibility.
To be eligible under the ESI Scheme, the employee should get a salary less than INR 21000/- gross per month.
The contribution rate under the ESI scheme is 0.75% on gross for employee and 3.25% on gross for employer at present.
ESIC provide a number of benefit to the eligible employee. Some of those pointed out below:
- Medical Benefit for Treatment and diagnosis of illness.
- Sickness Benefit.
- Enhance Sickness Benefit.
- Extended Sickness benefit.
- Temporary and Permanent Disablement Benefit.
- Maternity Benefit etc.
To know more you may visit the official website by click here.
Factories Act, 1948 is a social welfare legislation applicable to factories that aimed to provide a healthy, secure and safe working environment to employees under the premises or Factories.
There are various provision under the Act like Health, Safety and Welfare Provision, Provision relating to working hour and leave, Provision relating to employment of young adult etc. The employer should maintain the compliance under the Act like to avoid penal provisions.
You may read in details about the Factories Act and the compliances that need to maintain under the Factories Act, 1948 by click here.
Equal Remuneration Act: Labour Laws in India
Equal Remuneration Act, 1976 is an Act that protect the rights of Female employees in the organization and ensure that she will get same remuneration or salary that a Male employee is getting for same position or job without any discriminations on the ground of sex, against women in the matter of employment and for matters connected therewith or incidental thereto.
For example, if a company hire a male software engineer having qualification B.Tech and providing salary of INR 50000 per month then the company must pay the same salary to a female software engineer having same qualification and experience.
This Act is applicable to whole of India to ensure a fair practice of wages for male and female employees. It is the Duty of employer to pay equal remuneration to men and women workers for same work or work of a similar nature.
If an employer or company used to practice discriminations in the process of recruitment and don’t follow the provision under the Act, penalties or fines or imprisonment up to a period of one month may be imposed by the appropriate Government on the employer.
Professional Tax Act
Professional Tax Act is applicable in most of the state in India. But in some state this Act is not applicable. Aside that, the Professional Tax may defer state to state. The Act is came into effect with the object of levying tax on professions, trades, callings, and employments.
According to Income Tax Act 1961, the profession tax paid by an employee is allowed as a deduction from his/her gross salary income. Employer deduct the professional tax before paying salary to an employee and same will be deposited to appropriate Government on periodic intervals like monthly, quarterly, half yearly or annually.
The deduction under the Act against professional Tax may not exceed INR 2500 per annum. There is no benefit you may claim under the Act. This is just an ordinary tax collected by Government.
If you want to know about The Assam Tax on Professions, Trades, Callings and Employment Act, 1947 you may click here.
Industrial Dispute Act: Labour Laws in India
Industrial Dispute Act, 1947 came into effect from 1st April, 1947. The main purpose of Act is to make provision for investigation and settlement of Industrial dispute and for certain other purpose.
This Act governs the relationship between the employee and the employer. It also formulated the procedure to be followed at the time of termination of an employee. It also includes the compensation to be provided at the time of termination.
According to the Act, no employer can terminate an employee immediately from his or her job without giving at least 6 week of notice in advance. This Act helps the employees to to fight against employer for non payment of wages and illegal termination from job etc.
The Sexual Harassment of Women at Workplace Act
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is an Act that seeks to protect the female employees from Sexual Harassments at their workplace and for the prevention and redressal of complaints of sexual harassment and abuse and for matters connected therewith or incidental thereto.
The Act defines sexual harassment at the work place and creates a mechanism for redressal of complaints. It also provides safeguards against false or malicious charges.
This Act not only applicable to to workplace but also covered the schools and hospitals or medicals to prevent sexual abuse against females.
According to the Act, every employer is required to form an Internal Complaint committee which needs to complete the inquiry against the grievances received in connection of sexual abuse within 90 days from the date of getting such complain or grievance. The employer also need to conduct periodic awareness program within the organization for better prevention of such activities.
You may click here for more information.
Workmen Compensation Act: Labour Laws in India
Workmen Compensation Act, 1923 came into effect from 1st July, 1924. The main objective of the Act to compensate an employee against the injury by accident in connection to his or her employment.
The Act ensure to provide financial protection to employee as well as their dependents in the form of compensation, in the case of accidental injury during the work.
According to the Act, if personal physical injury caused to an employee by accident arising out of or in the course of his employment his employer shall be liable to pay compensation not only to employee but also his dependent according to the provision of the Act.
This act also specify the condition where it is applicable and the amount of compensation an employee may get. The Act extended to the whole of India.
Apprenticeship Act, 1961 is applicable to whole of India. The Act is applies to those apprentices who are undergoing to apprenticeship training in designated trade in the organization. From time to time Central Govt. has specified the designated trade under the Act.
It is the responsibility of the employer to provide suitable arrangement for Apprentice trainee. The apprentice will entitled to receive stipend not less than the prescribed Minimum Wages. Apprentice trainee also entitled to receive compensation against injury during the work under Workmen Compensation Act, 1961.
According to the provision of the Act, no Apprentice trainee should be allowed to do overtime work. After completion of the Apprenticeship Training Program completion certificate will be provided to the Apprentice trainees.
For more information you may click here.
Labour Welfare Fund: Labour Laws in India
Labour Welfare Fund is also similar to Professional Tax where a little amount is deducted from the salary of an employee and deposited to Labour Welfare Fund of the respective state. But in Labour Welfare Fund employee may get certain facilities where in Professional Tax employee get nothing.
At present in India, Labour Welfare Fund is Applicable only in a few states around 16 states out of 37 states including union territories and managed by individual state authorities. The state labour welfare board determines the amount and frequency of the contribution.
Labour Welfare Fund Act is introduced by the state Governments of many states in order to provide social security benefit to workers in the unorganized sector.
The applicability of LWF Act is depends on the number of employees of the organization & also depends upon the wages earned and designation held by an employee. And the rules may defer from state to state.
For more information you may check the applicability of the Act in your respective state.
I hope this article will help you to get a basic knowledge on Indian Labour Laws. If you have any query regarding this article please do comment below.