Indian labour law
Indian labour law refers to laws regulating labour in India. Traditionally, Indian governments at federal and state level have sought to ensure a high degree of protection for workers, but in practice, this differs due to form of government and because labour is a subject in the concurrent list of the Indian Constitution.
History
Indian labour law is closely connected to the Indian independence movement, and the campaigns of passive resistance leading up to independence. While India was under colonial rule by the British Raj, labour rights, trade unions, and freedom of association were all regulated by the:- Indian Slavery Act, 1843
- Societies Registration Act, 1860
- Co-operative Societies Act, 1912
- Indian Trade Unions Act, 1926
- The Trades Disputes Act, 1929
- 1921 Buckingham and Carnatic Mills Strike
- 1926 Binny Mill Strike
- 1928 South Indian Railway Strike
- Meerut Conspiracy Case
- 1974 railway strike in India
- Great Bombay Textile Strike in 1982
- Harthal in Kerala 2012
Constitutional rights
Articles 38-39, and 41-43A, however, like all rights listed in Part IV of the Constitution are not enforceable by courts, rather than creating an aspirational "duty of the State to apply these principles in making laws". The original justification for leaving such principles unenforceable by the courts was that democratically accountable institutions ought to be left with discretion, given the demands they could create on the state for funding from general taxation, although such views have since become controversial. Article 38 says that in general the state should "strive to promote the welfare of the people" with a "social order in which justice, social, economic and political, shall inform all the institutions of national life. In article 38 it goes on to say the state should "minimise the inequalities in income" and based on all other statuses. Article 41 creates a "right to work", which the National Rural Employment Guarantee Act 2005 attempts to put into practice. Article 42 requires the state to "make provision for securing just and human conditions of work and for maternity relief". Article 43 says workers should have the right to a living wage and "conditions of work ensuring a decent standard of life". Article 43A, inserted by the Forty-second Amendment of the Constitution of India in 1976, creates a constitutional right to codetermination by requiring the state to legislate to "secure the participation of workers in the management of undertakings".
Contract and rights
Scope of protection
Indian labour law makes a distinction between people who work in "organised" sectors and people working in "unorganised sectors". The laws list the ditors to which various labour rights apply. People who do not fall within these sectors, the ordinary law of contract applies.India's labour laws underwent a major update in the Industrial Disputes Act of 1947. Since then, an additional 45 national laws expand or intersect with the 1948 act, and another 200 state laws control the relationships between the worker and the company. These laws mandate all aspects of employer-employee interaction, such as companies must keep 6 attendance logs, 10 different accounts for overtime wages, and file 5 types of annual returns. The scope of labour laws extend from regulating the height of urinals in workers' washrooms to how often a work space must be lime-washed. Inspectors can examine working space anytime and declare fines for violation of any labour laws and regulations.
Employment contracts
Among the employment contracts that are regulated in India, the regulation involves significant government involvement which is rare in developed countries. The Industrial Employment Act 1946 requires that employers have terms including working hours, leave, productivity goals, dismissal procedures or worker classifications, approved by a government body.The Contract Labour Act 1970 aims at regulating employment of contract labour so as to place it at par with labour employed directly. Women are now permitted to work night shifts too.
The Latin phrase 'dies non' is being widely used by disciplinary authorities in government and industries for denoting the 'unauthorised absence' to the delinquent employees. According to Shri R. P. Saxena, chief engineer, Indian Railways, dies-non is a period which neither counted in service nor considered as break in service. A person can be marked dies-non, if
- absent without proper permission
- when on duty left without proper permission
- while in office but refused to perform duties
This contract together with the need to put in efforts in producing goods and services imposes duties and obligations on the part of the employees to render services with the tools provided and in a place and time fixed by the employer. And in return, as a quid pro quo, the employer is enjoined to pay wages for work done and or for fulfilling the contract of employment. Duties generally, including ancillary duties, additional duties, normal duties, emergency duties, which have to be done by the employees and payment of wages therefor. Where the contract of employment is not fulfilled or work is not done as prescribed, the principle of 'no work no pay' is brought into play.
Wage regulation
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.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.
Weekly Holidays Act 1942
Beedi and Cigar Workers Act 1967
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 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
- Indira Gandhi National Old Age Pension Scheme
- National Pension Scheme
- Public Provident Fund
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 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.
Workplace participation
Trade unions
Article 19 of the Constitution of India gives everyone an enforceable right "to form associations or unions".The Trade Unions Act 1926, amended in 2001, contains rules on governance and general rights of trade unions.
Board representation
It was the view of many in the Indian Independence Movement, including Mahatma Gandhi, that workers had as much of a right to participate in management of firms as shareholders or other property owners. Article 43A of the Constitution, inserted by the Forty-second Amendment of the Constitution of India in 1976, created a right to codetermination by requiring the state to legislate to "secure the participation of workers in the management of undertakings". However, like other rights in Part IV, this article is not directly enforceable but instead creates a duty upon state organs to implement its principles through legislation. In 1978 the Sachar Report recommended legislation for inclusion of workers on boards, however this had not yet been implemented.The Industrial Disputes Act 1947 section 3 created a right of participation in joint work councils to "provide measures for securing amity and good relations between the employer and workmen and, to that end to comment upon matters of their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters". However, trade unions had not taken up these options on a large scale. In National Textile Workers Union v Ramakrishnan the Supreme Court, Bhagwati J giving the leading judgment, held that employees had a right to be heard in a winding up petition of a company because their interests were directly affected and their standing was not excluded by the wording of the Companies Act 1956 section 398.
- Excel Wearv. Union of India A.I.R. 1979 S.C. 25, 36
Collective action
According to fundamental rules of the civil service of India, a period of unauthorised absence- in the case of employees working in industrial establishments, during a strike which has been declared illegal under the provisions of the Industrial Disputes Act, 1947, or any other law for the time being in force; in the case of other employees as a result of action in combination or in concerted manner, such as during a strike, without any authority from, or valid reason to the satisfaction of the competent authority; shall be deemed to cause an interruption or break in the service of the employee, unless otherwise decided by the competent authority for the purpose of leave travel concession, quasi-permanency and eligibility for appearing in departmental examinations, for which a minimum period of continuous service is required. hanalcasca, xnak
- Provisions of the Factories Act 1948
Equality
- Caste Disabilities Removal Act 1850
Gender discrimination
- Randhir Singh v Union of India Supreme Court of India held that the principle of equal pay for equal work is a constitutional goal and therefore capable of enforcement through constitutional remedies under Article 32 of Constitution
- State of AP v G Sreenivasa Rao, equal pay for equal work does not mean that all the members of the same cadre must receive the same pay packet irrespective of their seniority, source of recruitment, educational qualifications and various other incidents of service.
- State of MP v Pramod Baratiya, comparisons should focus on similarity of skill, effort and responsibility when performed under similar conditions
- Mackinnon Mackenzie & Co v Adurey D'Costa, a broad approach is to be taken to decide whether duties to be performed are similar
Migrant workers
- Interstate Migrant Workmen Act 1979
Vulnerable groups
- Domestic workers in India
- Sumangali
- Juvenile Justice of Children Act 2000
- Child Labour Act 1986
Job security
Fair dismissal
Some of India's most controversial labour laws concern the procedures for dismissal contained in the Industrial Disputes Act 1947. A workman who has been employed for over a year can only be dismissed if permission is sought from and granted by the appropriate government office. Additionally, before dismissal, valid reasons must be given, and there is a wait of at least two months for government permission, before a lawful termination can take effect.A permanent worker can be terminated only for proven misconduct or for habitual absence. The Industrial Disputes Act requires companies employing more than 100 workers to seek government approval before they can fire employees or close down. In practice, permissions for firing employees are seldom granted. Indian laws require a company to get permission for dismissing workers with plant closing, even if it is necessary for economic reasons. The government may grant or deny permission for closing, even if the company is losing money on the operation.
The dismissed worker has a right to appeal, even if the government has granted the dismissal application. Indian labour regulations provide for a number of appeal and adjudicating authorities – conciliation officers, conciliation boards, courts of inquiry, labour courts, industrial tribunals and the national industrial tribunal – under the Industrial Disputes Act. These involve complex procedures. Beyond these labour appeal and adjudicating procedures, the case can proceed to respective State High Court or finally the Supreme Court of India.
- Bharat Forge Co Ltd v Uttam Manohar Nakate , a worker found sleeping for the fourth time in 1983. Bharat Forge initiated disciplinary proceedings under the Industrial Employment Act. After five months of proceedings, the worker was found guilty and dismissed. The worker appealed to the labour court, pleading that his dismissal was unfair under Indian Labour laws. The labour court sided with the worker, directed he be reinstated, with 50% back wages. The case went through several rounds of appeal and up through India's court system. After 22 years, the Supreme Court of India upheld his dismissal in 2005.
Redundancy
Full employment
- National Rural Employment Guarantee Act 2005
State laws
Each state in India may have special labour regulations in certain circumstances. Every state in India makes its own regulations for the Central Act. The regulations may vastly differ from state to state. The forms and procedures used will be different in each state. The Central Government is in the process on simplfying these multiple state laws into 4 Labour Codes. They are Code on 1. Wages, 2. Social Security and Welfare, 3. Industrial Relations, 4. Occupational Safety and Health and Working Conditions.Gujarat
In 2004 the State of Gujarat amended the Industrial Disputes Act to allow greater labour market flexibility in the Special Export Zones of Gujarat. The law allows companies within SEZs to lay off redundant workers, without seeking the permission of the government, by giving a formal notice and severance pay.West Bengal
The West Bengal government revised its labour laws making it virtually impossible to shut down a loss-making factory. The West Bengal law applies to all companies within the state that employ 70 or more employees.International comparison
The table below contrasts the labour laws in India to those in China and United States, as of 2011.Practice required by law | |||
Minimum wage | /month | 182.5 | 1242.6 |
Standard work day | 8 hours | 8 hours | 8 hours |
Minimum rest while at work | one hour per 6-hour | None | None |
Maximum overtime limit | 200 hours per year | 432 hours per year | None |
Premium pay for overtime | 100% | 50% | 50% |
Dismissal due to redundancy or closure of the factory | Yes, if approved by government | Yes, without approval of government | Yes, without approval of government |
Government approval required for 1 person dismissal | Yes | No | No |
Government approval required for 9 person dismissal | Yes | No | No |
Government approval for redundancy dismissal granted | Rarely | Not applicable | Not applicable |
Dismissal priority rules regulated | Yes | Yes | No |
Many observers have argued that India's labour laws should be reformed.
The laws have constrained the growth of the formal manufacturing sector.
According to a World Bank report in 2008, heavy reform would be desirable. The executive summary stated,
Ex-Prime Minister Manmohan Singh in 2005 had said that new labour laws are needed, however no reforms were made to effect.
In Uttam Nakate case, the Bombay High Court held that dismissing an employee for repeated sleeping on the factory floor was illegal - a decision which was overturned by the Supreme Court of India. However, it took two decades to complete the legal process. In 2008, the World Bank criticised the complexity, lack of modernisation and flexibility in Indian regulations.