Thursday, February 10, 2011

Overview of Labour laws/Employment laws &Industrial Relations in India

Overview of Labour laws/Employment laws &Industrial Relations in India


The frame work of employment law /service law applies the moment employee joins the organisation.The employer-employee has to respect all legal obligations in their relationship.The employers-employees relationship is paramount for any organisation.There can no organisation without employees. The employee contribution is immense for any organisation’s growth, it is unethical for any organisation to undermine the employee contribution for the growth of business /profits of the organisation.It is also unethical for organisation for not sharing profits and not giving adequate say in the affairs of the management of organisation.The employee has to ensure that he comply with all legal obligations under employment contract.

Who is  an employee :

The definition of employee can be drawn from various Central acts and State Acts.There is no perfect legal definition, it is defined in various legislation's depending upon the salary drawn, activities, nature of job undertaken by employee.. The labour acts like ID Act , ESI Act, Payment of Bonus Act, PF Act, Payment of Gratuity Act, Payment of Wages Act and Payment of minimum wages act defined term workmen /employee. 
The term Workman" is defined under the Industrial Disputes Act, 1947 "workman" means any person (including an apprentice employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute…”
The Apprentice Act , 1961“ Worker “ means any  person who is employed for wages in any kind of work and gets his wages directly from the employer but shall not include as apprentice referred to this clause. Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 2B (b) "employee" means any person who is employed in an establishment to do any work for remuneration;

Definition of ‘worker ‘under the Factories Act: Worker" means  a person employed, directly or by or through any  agency (including  contractor)  with  or without  the   knowledge  of the  principal  employer, whether for remuneration or not], in any manufacturing  process, or  in cleaning any part  of the machinery or premises used  for a manufacturing process,  or in any other kind  of work incidental to,  or connected with, the  manufacturing process,  or  the  subject  of  the manufacturing  process but  does  not  include  any member of the armed forces of the union”

Section 2(9) of ESI Act the term 'Employee' is defined under Section 2(9) as follows: Any person employed for wages in or in connection with work of a factory or establishment to which the Act applies. ESI (Central) (Amendment) Rules, 2010 applicable to employees whose wages does not exceed Rs. 15,000/-

The new definition under Payment of Gratuity Act,1972 “Employees means any persons [NOT being an Apprentice] employed for wages in any kind of work (manual or otherwise) or in connection with work of factory, mine, plantation, oilfield, railway company, port or other establishment” [as amended 2010 with revision in maximum ceiling from Rs. 3.5 lac to Rs. 10 lakhs.] 

Workmen’s Compensation Act is now known as Employees Compensation Act, 1923 and the broad definition of employee includes clerical employees & casual employees also.[compensation increased to Rs. 1,20,000 & 1,40,000]

Employers Provident Fund Scheme,1952"Employee" as defined in Section 2(f) of the Act means any person who is employee for wages in any kind of work manual or otherwise, in or in connection with the work of an establishment and who gets wages directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment.”

The Rights &Duties of Employer and Employee:

Implied Duties of Employer: Some of common well accepted duties and  other statutory duties  of employer includes ;
· To pay contractually agreed wages/pay/remuneration including bonus ,D.A allowances and other benefits. [fixing pay according to prevailing labour market rates depending upon skill ,qualification&experience ] ,
·   Duty bound to pay national minimum wage.
·  Duty bound to provide pay slip, every month giving all break up details[taxes remittances &other statutory compliance's information ]
·  Duty bound to pay sick pay/sick leave provision/maternity paternity leave provision, duty to take back women, who has availed maternity leave.
·   To treat employees with trust and confidence.
·   To provide minimum holidays[CL,SL,LTC etc]
·   To observe statutory provisions relating to working hours
· Duty bound to treat employee with respect, dignity and decorum, employees human rights should be respected and onus lies on the management to provide good working atmosphere.
· Duty bound to address the grievances of employees relating to work. Pay and leave and adequate grievance machinery should be set up.
· Duty bound to look into complaints of discrimination and sexual harassment's at work place.
· Duty to adhere to all social security provisions for betterment of workers/employees
·  Duty to follow due procedure established by law, with regard to dismissal, lay off and retrenchment with notice pay and compensation.
·  To permit employees for time off for duties relating to public importance like casting vote in general elections.
·  To indemnify employees[expenses incurred during course of employment like traveling allowances]
·   To provide references: There is no legal obligation on part of employee to provide references, if there is miss –statement or  defamatory statement of employer on employee conduct ,the employee can sue the employer under penal laws. Even negligent miss-statement attracts penal action and compensation for loss suffered.
·  Duty to provide adequate faculties basic to employees like wash room/resting room, drinking water .The facilities for disabled people. The adequate facilities for women employees with nursing children like providing creche.
· Duty to adhere to concept of “Equal opportunities employer”. The organization has a matter of policy ,provide employment to disadvantage sections of society and minority groups[women religious minority]
·   Duty to give adequate opportunity to employee to present his case during disciplinary proceeding or internal inquiry some cases legal representative is allowed to represent the employee.
Implied Duties of Employees:
1.   Duty to obey lawful orders.
2.   Duty to use reasonable care &skill.
3.   Duty to be ready and willing to work.
4.   Duty to take care of the Employers property.
5.   Duty to act in good faith.
6.   To restraint of trade /employment [breaking of contract terms]
7.   Duty to issue notice before leaving job.
8.   Duty to obey all contractual terms.
9.   Duty to not disclose confidential information related to IPR to third party[breaching confidentiality clause]

Essentials of Employment Contracts:

1. Your name and name of employer
2.Date of commencement of employment
3.Title and description of job[job profile with reporting to whom]
4.The rate of pay/wages, when will be paid ,how will paid, periodical pay revision/enhancements like Dearness Allowances in separate sheet mentioning Basic pay with other break up components like DA,T.A or emoluments etc
5. Your working hours &holiday entitlements
6. Notice period
7. Disciplinary and grievance with name of person to be contacted for any grievances.
8. Statement whether employment is permanent or Temporary or contractual [fixed term]
9.  Signature of Head of Human Resources Department and  other senior professionals [ seal , signature with date]&the employee’s consent with signature 

Why &How labor laws evolved in world

After Industrial revolution during 18th and 19th century,there was lot of labour unrest due to ill-treatment of workers by organisation ,there was  allegations on the organisations that they are ill treating workers and enriching themselves by not sharing their profits, powerful collective labour movement/revolution emerged in the world for better treatment of workers, all countries enacted the laws and regulations to regulate the unlawful/unfair  behavior of employers towards to employees.

There is always friction and conflict between employees and employers over the issue of wages,bonus,social security measures[PF/ESI],fixation of working hours, lay offs/retrenchment/lock outs /unfair dismissals, maternity benefits &sickness  ,discrimination, safety & environmental  concerns, right to strike to enforce their demands and maintaining trade union or employees association for protecting collective interest. Most organization are reluctant to recognize employee union or trade union.

Overview of International Labour Conventions 

The International Labour Organisation [ILO]Organises the International Labour Conferences in Geneva every year in June.
ILO was established in 1919 through the Treaty of Versailles as an agency of the League of Nations, the ILO became the first specialized agency affiliated with the UN in 1946.Its activities include compiling labour statistics, protecting international migrants, and safeguarding trade-union rights
International labour law is one category of international law.The ILO works on various themes like;
1.Freedom of association, collective bargaining, and industrial relations
2.Forced labour
3.Elimination of child labour and protection of children and young persons
4.Equality of opportunity and treatment
5.Tripartite consultation
6.Labour administration and inspection
7.Employment policy and promotion
8.Vocational guidance and training
9.Employment security
11.Working time
12.Occupational safety and health
13.Social security
14.Maternity protection
15.Social policy
16.Migrant workers
17.HIV and AIDS
21.Indigenous and tribal peoples
22.Specific categories of workers
23.Final Articles Conventions

Concept of Whistle blowing :

This is very sensitive subject to debate it is all about individual going to public with certain confidential information because he/she  believe that the company is doing  immoral , unethical or wrongful ,which he/she chooses to disclose to the public for betterment of society.”Whistle blowers goes to public because they believe that they have good story”. He or she is making a strong protest that is naturally above his /her own level of interest and in the larger interest of society. The Whistle blowing may be internal or external ,it depends upon the facts and circumstances of the case.The subject of whistle blowing is not well taken by management ,it does not mean whistle blowing is bad and totally avoided or discouraged .There are many organisation ,who understood the whistle blower intention and acted upon. One of the common complaint is that person has not disclose same information to the management before going to public. While employee will not be in position to trust his senior officer’s to share with problems[Sometimes senior officer may colluded with wrongdoers and  undermine the issue].There are many statutory enactment which is contrary to  official secrecy like Right to Information[with certain exceptions] and there is demand for strong whistle blowing protection laws.There is a view that nothing is secret ,if it is contrary to public interest,the public interest is supreme and paramount in the society.
The best possible advice in this regard is strictly following ethical rules to avoid problems of whistle blowing.

Universal Declaration of Human Rights –Right to Work:

The United Nations  Universal Declaration of Human Rights states  that “Every one has the right to work& free choice of employment ,just and favourable conditions of work,and to protection against unemployment “paradoxically it does not mention, who should provide employment, perhaps it is the government to hold this right.
Artcle 23 of declaration says “Every one has right to form and join trade union for protection of his interest “ 

Employment /labour laws in India overview : 

In India the first trade union activity surfaced during the year 1918.The trade union were not encouraged by managements neither government protected the concept of trade unionism.
It has been observed that there is an unhealthy trend in labour market in the name of recession, many organisations are resorting to downsizing/laying off so-called excess staff or unproductive staff  ,even though organisation is not an loss making outfit nor affected due to adverse economic situation. The litigation of unfair dismissals /mass lay off  increased three fold in labour courts and higher judiciary for violating  procedural formalities[ID Act] like unfair dismissals&inadequate compensation. Many advocates for labour rights say that such lay off /unfair dismissals are clear violations of Constitutional Law of country and labour laws enacted to protect the labour force.

Constitution of India :Under the Constitution of India, labour is a subject in the Concurrent List ,where both the Central & State Governments are competent to enact legislation subject to certain matters being reserved for the Centre.The labour legislation have different eligibility criteria for establishments as well as to the workmen. The Matters relating to Social Security are mentioned in Directive Principles of State Policy, chapter IV of the constitution  and the subjects in the Concurrent List. The Fundamental Rights ,Chapter III of constitution Article 16 speaks about equal opportunities in the matter of public employment , Article24 is about “ Prohibition of employment of children in factories, etc”
There are over 45 legislation's on labour from the Central Government and various state legislation on labour issues. The main laws relating to labour /worker protection, welfare and rights are enumerated below:

Industrial Relations:
  1. The Trade Unions Act, 1926
  2. The Trade Unions (Amendments) Act, 2001
  3. The Industrial Employment (Standing Orders) Act, 1946
  4. The Industrial Employment (Standing Orders) Rules, 1946
  5. The Industrial Disputes Act, 1947
  6. The Payment of Wages Act, 1936
Laws related to Wages
  1. The Payment of Wages Rules, 1937
  2. The Payment of Wages (AMENDMENT) Act, 2005
  3. The Minimum Wages Act, 1948
  4. The Minimum Wages (Central) Rules, 1950
  5. The Working Journalist (Fixation of Rates of Wages) Act, 1958
  6. Working Journalist (Conditions of service) and Miscellaneous Provisions Rules, 1957
  7. The Payment of Bonus Act, 1965
  8. The Payment of Bonus Rules, 1975

Laws related to Working Hours, Conditions of Services and Employment
  1. The Factories Act, 1948
  2. The Dock Workers (Regulation of Employment) Act, 1948
  3. The Plantation Labour Act, 1951
  4. The Mines Act, 1952
  5. The Working Journalists and other Newspaper Employees’ (Conditions of Service and Misc. Provisions) Act, 1955
  6.  The Working Journalists and other Newspaper Employees’ (Conditions           of   Service and Misc. Provisions) Rules, 1957
  7. The Merchant Shipping Act, 1958
  8. The Motor Transport Workers Act, 1961
  9. The Beedi & Cigar Workers (Conditions of Employment) Act, 1966
  10. The Contract Labour (Regulation & Abolition) Act, 1970
  11.  The Contract Labour Regulation Rules
  12. The Sales Promotion Employees (Conditions of Service) Act, 1976
  13. The Sales Promotion Employees (Conditions of Service) Rules, 1976
  14. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
  15. The Shops and Establishments Act
  16. The Cinema Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981
  17. The Cinema Workers and Cinema Theatre Workers (Regulation of Employment) Rules, 1984
  18. The Cine Workers’ Welfare Fund Act, 1981. 
  19. The Dock Workers (Safety, Health & Welfare) Act, 1986
  20. The Building & Other Construction Workers (Regulation of Employment & Conditions of Service) Act, 1996
  21. The Dock Workers (Regulation of Employment) (inapplicability to Major Ports) Act, 1997
Laws related to Equality and Empowerment of Women

  1. The Maternity Benefit Act, 1961
  2. The Equal Remuneration Act, 1976
Laws related to Deprived and Disadvantaged Sections of the Society

  1. The Bonded Labour System (Abolition) Act, 1976
  2. The Child Labour (Prohibition & Regulation) Act, 1986
  3. The Children (Pledging of Labour) Act, 1933
Laws related to Social Security

  1. The Workmen’s Compensation Act, 1923
  2. The Workmen's Compensation (Amendments) Act, 2000
  3. The Employees’ State Insurance Act, 1948
  4. The Employees’ Provident Fund & Miscellaneous Provisions Act, 1952
  5. The Employees’ Provident Fund & Miscellaneous Provisions (Amendment) Act, 1996
  6. The Payment of Gratuity Act, 1972
  7.  The Payment of Gratuity Rules
  8. The Unorganised Woekers' Social Security Act 2008
  9.  The Unorganised Workers' Social Security Rules 2008
Laws related to Labour Welfare

  1. The Mica Mines Labour Welfare Fund Act, 1946
  2. The Limestone & Dolomite Mines Labour Welfare Fund Act, 1972
  3. The Beedi Workers Welfare Fund Act, 1976
  4. The Beedi Workers Welfare Cess Act, 1976
  5.  The Beedi Worker's Welfare Cess Act Rules, 1977
  6. The Iron Ore Mines, Manganese Ore Mines & Chrome Ore Mines Labour Welfare Fund Act, 1976
  7. The Iron Ore Mines, Manganese Ore Mines & Chrome Ore Mines Labour Welfare Cess Act, 1976
  8. The Cine Workers Welfare Fund Act, 1981
  9. The Cine Workers Welfare Cess Act, 1981
  10. The Employment of Manual Scavengers and Construction of Dry latrines Prohibition Act, 1993
Laws related to Employment & Training

  1. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
  2.  The Employment Exchanges (Compulsory Notification of Vacancies) Rules, 1959
  3. The Apprentices Act, 1961


  1. The Fatal Accidents Act, 1855
  2. The War Injuries Ordinance Act, 1943
  3. The Weekly Holiday Act, 1942
  4. The National and Festival Holidays Act
  5. The War Injuries (Compensation Insurance) Act, 1943
  6. The Personal Injuries (Emergency) Provisions Act, 1962
  7. The Personal Injuries (Compensation Insurance) Act, 1963
  8. The Coal Mines (Conservation and Development) Act, 1974
  9. The Emigration Act, 1983
  10. The Emigration Rules, 1983
  11. The Labour Laws (Exemption from Furnishing Returns and Maintaining Register by Certain Establishments) Act, 1988
  12. The Public Liability Insurance Act, 1991


The laws and regulations are enacted to see that employees and employer does not cross limit, onus lies on the management to adhere to statutory provisions to avoid litigation and it is advised to address all problems of employees seriously. Onus also lies on the employee to address the issue of wrong doing or unfair treatment or dismissal to top management members before approaching the labour court or tribunals. All efforts through Alternate Dispute  Resolution methods like meditation and conciliation should be explored to address the labour /employee grievances.   

References :
Prepared from various websites &Reference material.
Websites of International Labour Union&India code for bare acts.

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