Labour laws

Labour Laws-HR Professional Should Know
By Rekha Sharma
sharmarekha2608@gmail.com
By Rekha Sharma

LAWS RELATED TO INDUSTRIAL RELATIONS
THE TRADE UNIONS ACT, 1926 was passed before independence to provide legal
protection to employees collectives and regulate them. Under the act, trade
unions are to be registered with the appropriate government-appointed Registrar
of Trade Unions. The TRADE UNION ACT, 1926, allows freedom for any seven
employees to apply to register a trade union, but a later amendment (2001)
specified minimum membership as 10% of unionisable employees or 100,
whichever is less. Registration is not compulsory. However, the registered trade
unions receive protections from certain civil and criminal actions.
The act does not specify any criterion or method for recognition of trade union
by the employer as the representative of employees. Various state governments
like Maharashtra have enacted separate legislations to deal with recognition.
By Rekha Sharma
By Rekha Sharma

THE INDUSTRIAL EMPLOYMENT(STANDING ORDERS) ACT, 1946 is regulatory in
nature and is applicable to industrial establishments under the jurisdiction of central and state
governments. By formally defining conditions of employment, the Act serves to reduce conflict
and also be a communication mechanism between management and labour.
Industrial establishments have to frame standing orders and apply for certifications for those
as well. Certification will be done by the designated certifying officer after inviting objections
from workmen or trade union and considering the objections in the absence of certified
standing orders, the model standing orders provided in the act will automatically apply except
in Gujrat and Maharashtra.
By Rekha Sharma
By Rekha Sharma

THE INDUSTRIAL DISPUTES(ID) ACT, 1947 is regulatory in nature since it puts
restrictions on the direct actions that can be taken by both the parties involved in the
industrial dispute. Different conflict resolution forums have been proposed, including
works committees(section 3), conciliation officers (section 4), boards of
conciliations(section 5), courts of inquiry(section 6), labour courts(section 7),
tribunals(section 7A) and the national tribunal(section 7B). The act also allows the
government to intervene in the interest of maintaining industrial peace.
The act places restrictions on the employees in public utilities going on strike(section
22,23 an 24) without appropriate notice(6 weeks and 14 days before giving the notice)
or when any conciliation effort is operational. It has also provisions for firms employing
more than 50 workmen regarding layoffs(section 25A), payment of layoff
compensation(section 25C), retrenchment of workmen after giving sufficient
notice(section 25F), and for closer of undertakings(section 25FFA).
By Rekha Sharma
By Rekha Sharma

LAWS RELATED TO WAGES
THE PAYMENT OF WAGES ACT, 1936 has objective of ensuring payment of wages to
certain groups of employees, at regular intervals and without any unauthorized
deductions. The Act also provides relief to the group of employees in case of non
payment of wages on time(Section 5) or if unauthorized deductions are made(Section
7)
By Rekha Sharma
By Rekha Sharma

LAWS RELATED TO WAGES
MINIMUM WAGES ACT 1948 is to ensure that a minimum rate of wages is paid to all
those who are engaged in wage employment. The state and Union governments are
empowered to declare minimum wages(Section 3) for employment categories given in
Schedule I & II of the Act. It also specifies the structure of minimum wages(Section 4)
and the procedure for fixing and revising minimum wages at regular intervals(Section
5). Non payment of Minimum wages is an offence under the legislation.
With more than 1500 minimum wages declared by central and state governments,
India has one of the most complicated minimum wages system. PayCheck
India(www.paycheck.in) maintains regularly updated database of Minimum wages of
all states and central sphere.
By Rekha Sharma
By Rekha Sharma

LAWS RELATED TO WORKING HOURS,
CONDITIONS OF SERVICES AND EMPLOYMENT
FACTORIES ACT, 1948 is one of the most important legislations covering the manufacturing sector.
The Act provides safeguards for workers to protect their health, provides for safety at the workplace
when dealing with machinery, improves the physical conditions at the workplace and provides welfare
amenities.
It also restricts the hours of work, provides for overtime and spread of working hours(Section 51,54,55
and 56), employment of young persons(Section 69,70,71,72 & 73), and places restriction on
employment of women during the night hours(Section 66).
Factories are approved, licensed and registered under the Factories Act(Section 6) and authorities are
appointed by the government(Chief Inspector of Factories and Inspectors(Section 8 and 9). The
certifying Surgeons(Section 10) ensure implementation of the Act. The Act also provides for the
appointment of Welfare Officers in factories employing more than 500 workers(Section 49) and Safety
Officers(Section 40 B), with appropriate qualifications.
While the factory worker is protected and given some rights under the act(Section 111A), there are
obligations placed on workers to abide by the rules set in the interests of health, Safety and
welfare(Section 111). Violating workers are liable to be punished.
By Rekha Sharma
By Rekha Sharma

LAWS RELATED TO WORKING HOURS,
CONDITIONS OF SERVICES AND EMPLOYMENT
SHOPS AND COMMERCIAL ESTABLISHMENTS ACT 1961 has seen enactments from most
state of India. In fact, such acts have existed even before the central government enacted
legislations in 1961. With the growth of the IT and ITES sector, this Act has become significant.
Due to nature of work, IT and ITEs firms are also covered. It deals with important work related
aspects like restrictions on working hours, the period of work, extra wages for overtime and
earned leave and sick leave. It also prohibits employment of children, underage people and
women during night hours and lays down the procedure for dismissal, discharge and
termination of employment. In the interest of encouraging IT/ITEs firms to function more
effectively, many states have made suitable amendments in their laws, particularly to allow
employment of women during night hours and even permit 24 hour operation.
By Rekha Sharma
By Rekha Sharma

LAWS RELATED TO EQUALITY AND
EMPOWERMENT OF WOMEN
MATERNITY BENEFIT ACT, 1961 a social welfare oriented law aimed at empowering
women, provides security(both employment and financial) for women employees working in
certain establishments(except those dismissed for gross misconduct only because the act
prohibits discharge/dismissal during the period of pregnancy and for defined periods before
and after child birth).
Thus Section 5 of the Act makes it the right for women to avail maternity benefits, including
pay and leave and employers liable to provide the same. Some states have added provisions
that provide for additional benefits such as free medical aid, maternity bonus, provision of
creches, additional rest intervals
The Act also provides for cash and non cash benefits, including a maximum period of leave of
twenty six weeks. Non cash benefits include a reduced workload(Section 4.3), a medical bonus
if the employer does not provide pre and post natal support(Section 8) and four nursing breaks
every working day till the child attains the age of fifteen months(Section 11)
By Rekha Sharma
By Rekha Sharma

LAWS RELATED TO EQUALITY AND
EMPOWERMENT OF WOMEN
THE EQUAL REMUNERATION ACT, 1976 has its basis in Article 39 of the Constitution of
India. The Act directs the state to ensure “equal pay for equal work for men and women”. It
stipulates that there should be no discrimination between genders in matters of remuneration
for the same type of work(Section 4) and in recruitment and subsequently in promotions,
trainings or transfers(Section 5), unless the law explicitly prohibits employment of women.
This legislations assumes significance in the context of wide wage gap existing between
genders in India.
By Rekha Sharma
By Rekha Sharma

LAWS RELATED TO SOCIAL SECURITY
WORKMEN’S COMPENSATION ACT,1923 is the earliest social security legislation in
India, enacted with the purpose of making the employer liable to pay compensation to
employees who are affected by personal injury arising out of accidents. Compensation
is payable for partial disablement(Section 2(1)(g)) and total disablement (Section 2(1)
(1)).
The claim for compensation has to arise from event that is “Out of” and “in the course”
of employment and hence necessarily has not taken place in the formal place of work.
The expression “out of” the course of employment refers to the casual connection
between accident and employment, while “in the course of” refers to the time of
accident. If only one condition is fulfilled, then the claim for compensation is not
admissible.
By Rekha Sharma
By Rekha Sharma

THE EMPLOYEE STATE INSURANCE ACT, 1948 has been enacted with the objective of securing
financial relief in cases of sickness, maternity, disablement and for providing medical benefits
to employees of factories and establishments and their dependents. It is also applicable to non
seasoned factories using power and employing 10 or more employees and non power using
factories and certain other establishments employing 20or more employees. Employees and
employer make contribution to the scheme and various benefits are given to eligible
employees like:
• Sickness Benefits-in cash(Section 46(1)(a))
• Maternity Benefit-in cash(Section 46(1)(b))
• Disablement Benefit-in cash(Section 46(1)(c))
• Dependents’ Benefit-in cash(Section 46(1)(d))
• Funeral Expenses-in cash(Section 46(1)(f))
• Medical Benefit-as service and kind(Section 46(1)(e))
By Rekha Sharma
By Rekha Sharma

THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELANEOUS PROVISIONS ACT, 1952 is a
social security legislation for employees working in factories and other establishments.
A dedicated Provident Fund has been created with contribution from employer and
employee. The objective is to provide monetary assistance to employees and their
families, when they are in distress, unable to meet family and social obligations and to
protect them in old age, disablement, early death(of the employee) and in some other
contingencies.
By Rekha Sharma
By Rekha Sharma

THE PAYMENT OF GRATUITY ACT 1972 is an additional financial benefit given to
employees of organizations irrespective of salary or status, when their services end
because of superannuation, retirement, resignation, death or disablement. The act
provides for gratuity payment to all employees at the prescribed rates(currently 15
days for every year of service).
Five years continuous service(as defined in Section 2-A) is required for an employee to
be eligible(except in case of death or disablement) to receive gratuity. The maximum
amount receivable as gratuity is Rs. 20,00,000 and the amount is exempt from Income
Tax. However under section 4(5) of the law, employer enter into agreement with
employees and pay higher amount, though the difference is taxable in the hands of
receiver.
By Rekha Sharma
By Rekha Sharma

APPLICABILITY OF LABOUR LAWS TO THE
IT/ITES SECTOR
From the nature of work performed, it can be seen that IT/ITES companies are covered by the
Shops and commercial Establishments Act. However many states have granted exemption from
Apprentices Act and Industrial Employment(Standing Orders) Act 1946 or flexibility in opening
and closing times, employment of women in night shifts, weekly offs etc.
The given relaxation do not mean that the IT/ITES industry is outside the purview of all labour
legislations that provide a protective cover to the employees. Many exemptions are for specific
period of time or location(like SEZs) and can not be considered permanent.
ITES/BPO employees fall within the definition of “workmen” under the Industrial Disputes
Act, unless they are in the managerial cadre
By Rekha Sharma
By Rekha Sharma

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