Learn in detail about the Indian labour law. Get insights on the compliances, the latest amendments in the rules and more about it. Avail clarity about the same
Introduction
Labour law compliance in India regulates the rights of employees at work. Workers are the most valuable resource for an organisation. The laws on labour are implemented to ensure that their rights are safeguarded and to protect them from exploitation. They regulate businesses, workers, trade unions, and employees. Failure to comply with the law is a punishable offence. The State and Central Governments enforce Labour Laws.
Evolution of Labour Law in India
In India, the roots of labour law are intertwined with British colonial history, where early industrial laws primarily served the interests of British employers. The Factories Act of 1883, influenced by British economic considerations, aimed to make Indian labour more expensive to protect the British textile industry from competition. Despite the welfarist impact, its underlying motivation was protectionist. The Trade Dispute Act of 1929 marked India’s earliest attempt to regulate employer-worker relationships but lacked mechanisms to address disputes. In the post-colonial era, independent India shifted towards a direct labour-capital relationship. A tripartite conference in December 1947 laid the foundation for a partnership, ensuring fair wages and working conditions for labour in exchange for their cooperation in production. This agreement, part of national economic strategy development, included a truce period free from strikes and lockouts for three years.
Relevance and Necessity of Labour Law
- Potential workers are protected from the exploitation of their employers or management
- Improves relations between industrial parties, i.e. employer-employee relations, and reduces disputes
- Minimises labour unrest
- Helps workers get fair wages
- Assures work security for workers
- Offers compensation to employees who have been injured in accidents
- Reduces conflict and strikes
- Corrections for rest pauses, work hours etc.
- Encourages welcoming environment conditions within the industrial system
The Importance of Ensuring Compliance With Labour Laws
The companies operating in India are necessary to implement legal compliance requirements in India according to different Labour Laws. The scope of compliance for labour does not limit to filing tax returns or maintaining documents and deposits necessary by law through the companies. The records must be presented as evidence by various statutes for any legal proceedings. In addition, if the company or business does not meet the requirements of compliance with the law of industrial production, there are major sanctions imposed by the law. Indian Labour Law has several statutes that encompass every element to safeguard rights to work. The law’s application is dependent on the type of company. Numerous laws apply to employees and employers.
What is the Labour Law Compliance in India?
Labour Law Compliances refer to the legally binding regulations and rules companies must follow. Compliance with the law is an arrangement of guidelines and rules for employees. Labour law Compliance includes:
- The benefits plus the option of terminating an employee
- Regulations and guidelines apply to workers.
The following are the different laws that come with Labour Compliance rules:
- Contract Labour (Regulation and Abolition) Act, 1970
- Equal Remuneration Act of 1976
- Minimum Wages Act of 1948 as well as Mines Act, 1952
- Industrial Employment (Standing Order) Act 1946, etc.
- Building and Other Construction Workers Act of 1996
The Basic Concepts of Labour Law
Labour Law involves employee advantages, termination, laws and rules applicable to workers, and so on. Also, there are a variety of laws that are part of compliance with the laws of labour. The main acts comprised in the law of the industry compliance rule include:
- Minimum Wages Act, 1948; Mines Act, 1952; Industrial Employment (Standing Order) Act, 1946, etc.
- Contract Labour (Regulation and Abolition) Act, 1970, Equal Remuneration Act, 1976
- Building and Other Workers in Construction Niche (Regulation of Conditions and Employment Services) Act in 1996
Act to regulate the employment and conditions of service for construction workers. An act that regulates the conditions of employment and service for construction workers and others and guarantees their health, safety, welfare, and various other issues related to or related to it.
1. Equal Remuneration Act, 1976
Contract Labour (Regulation and Abolition) Act, 1970, Equal Remuneration Act, 1976.In every place, at least twenty workers were employed during the previous twelve months in contract work.
2. Compliance Under Labour Laws
We recommend that startups submit a self-declaration that they comply with the nine regulations on labour in the first year after the date of the beginning of the business. There would be no probe as per these laws in case they are applicable. These are the main labour laws to be considered:
- The Contract Labour (Regulation and Abolition) Act, 1970
- The International State Migrant Workmen(Regulation of Employment and Terms of Service) Act, 1979
- The Building and Other Constructions Workers’ (Regulation of Employment and Conditions of Service) Act, 1996
- The Payment of Gratuity Act, 1972
- The Employees State Insurance Act of 1948
- The Employees’ Provident Funds & Miscellaneous Provisions Act of 1952
Startups have to complete self-certification via the Startup mobile application that lets entrepreneurs fill out important forms and provide information on the application or submit it online. Also, the returns from the second year and onwards after five years or more after the unit’s establishment are only subject to inspection under these two conditions:
- When a credible and valid complaint of infringement has been submitted in writing
- Written authorisation is obtained from the higher authorities
3. Industrial Employment (Standing Order) Act 1946
It includes the Minimum Wages Act, 1948; Mines Act, 1952; Industrial Employment (Standing Order) Act, 1946, etc. Also, the Minimum Wages Act 1948 is an Act of Parliament concerning Indian labour law. It establishes the minimum wage that you have to pay to unskilled and skilled labourers.
Factors that Define the Applicability of Labour Compliance Laws
In India, the workforce is divided into employees and non-employees. Non-employees, comprising interns, contract workers, and third-party employees, form a distinct category. Within employees, the distinction lies between ‘workman’ and ‘non-workman.’ Legally, Indian laws provide extensive protection to the workers’ category compared to the non-workmen class. Adherence to labour compliance, based on standard labour laws, varies with business type and operational duration. Some of these laws are detailed below
Contract Labour Act, 1970: This legislation regulates the employment of contract labour in specific establishments, with provisions for abolition under certain circumstances. For instance, when an organisation has employed 20 or more workers as contract labour, or businesses have hired 20 or more workers in the previous year.
Minimum Wages Act, 1948: Applicable to any employment with 1000 workers in the respective state, this Act ensures the provision of minimum wages to workers in the organised sector. It empowers state governments to determine minimum wages and revise salaries within a five-year period.
Building and Other Construction Workers Act, 1996: This Act applies to organisations where ten or more workers are directly employed by the contractor on a construction site.
Registration Process Under Labour Compliance Laws
- Labour compliance mandates registration under specified acts, contingent on meeting specific conditions
- For approval to employ contract labour, contractors must submit documents to the employer
- Required documents include a report verifying the firm’s legal status, receipt or insurance proof, and photographic evidence of PF code number allotment
- Additionally, copies of challans demonstrating security deposit remittance and the relevant fee are essential for obtaining the labour license.
Newly Proposed Categorisation Under Labour Laws
To simplify the complex landscape of labour laws and compliance protocols, the government recommended measures for streamlined returns filing with regulatory authorities. Recognising the challenge faced by India’s 50 crore unorganised sector workers lacking knowledge of their rights, the government aimed to overhaul the existing labour compliance regime.
The government’s efforts to enhance labour compliance are reflected in the implementation of four labour codes. These codes, ensuring minimum wages and social security for employees in both organised and unorganised sectors, include:
Code on Wages, 2019
Subsuming provisions from four laws, it applies to all units and employees, allowing the Central Government to make salary-related decisions.
Code on Social Security, 2020
Encompassing nine existing laws, it empowers the Centre to notify schemes like EPF, ESI, or EPS for workers across sectors, necessitating a unified definition of ‘wage.’
Industrial Relation Code, 2020
Simplifying compliance and promoting business ease, it integrates provisions from the Trade Unions Act, 1926 , Industrial Employment (Standing Orders) Act, 1946 and Industrial Disputes Act,1947.
Occupational Safety, Working Conditions Code, 2020
Regulating health and safety for facilities with ten or more workers and all mines and docks, it emphasises worker conditions in line with the compliance process.
A Comprehensive List of Labour Laws in India
Labour Laws are classed as follows:
Laws Relating to Industrial Relations
- Industrial Disputes Act, 1947
- Industrial Employment Standing Order Act, 1946
- The Trade Unions Act, 1926
Laws Relating to Empowerment and Equity of Women
- Equal Remuneration Act, 1976
- The Maternity Benefits Act of 1961
The Law That Governs Wages
- The Payment of Wages Act, 1936
- Minimum Wages Act, 1948
- Journalists working for the Working Class (Fixation of wages) Act of 1958
- Bonus Payment Act 1965
Laws About the Sections of the Disadvantaged and Deprived Society
- Child Labor (Prohibition & Regulation) Act, 1986
- Bonded Labour System (Abolition) Act in 1976
- Children (Pledging of Labour) Act 1933
Conclusion
Compliance with the law of labour is necessary for all sectors and companies; however, it can be an area of concern for startups. Thus, with the sole goal of promoting and supporting companies, India’s government has devised the strategy of self-certifying nine labour and environmental regulations laws for three years.
This will ensure that entrepreneurs with no prior experience face fewer hurdles and are aware of all labour law regulations. Also, the decision of the government to help entrepreneurs in India is wise. It will contribute to building the startup sector and lead to better employment opportunities.
