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The Brief Businessman’s Guide to Labour Laws in India

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Ideally, labor laws are a branch of statutes that are an arcane part of legislation for most people.  India is a diverse country with a vast population and an extensive history of people struggling. Long Back before the independence of the country, the first part of labor laws was enacted by the British government. Right after the liberation, labor laws were the first laws legislated that aimed to protect the interests of laborers.

Since then, India has also opened to the private and foreign sectors, so there have also been significant changes in labor laws. Labour law consultant in India is typically customized for low skill industrial laborers who aren’t comfortable working in the booming sectors. For more than two decades now, many people have been demanding legislative reforms, but so far, no political party has shown keen interest in labor law reforms.

Furthermore, continuously the entrepreneurs and businesses have been facing trouble doing business as the labor laws become a barrier as the rules aren’t clear to all. But you don’t need to worry as here are some crisp and clear facts about labor laws in the country.

Who needs to comply with the labor laws in India?

Be it any commercial establishment, and many labor laws apply to a business that hires more than 20 employees. Still, there will be few laws applicable if there are fewer than 20 employees. If a company fails to comply with the labor laws, one has to face some severe consequences.

Payment of Wages Act, 1936

Generally, the payment of Wages Act, 1936 applies to every employee in a business or an organization. The law is particularly applicable to employees who earn less than 16,000. The central enactment has been legislated to regulate wages payment. The code is relevant to people working in industrial or factory establishment.

If some violate the law for the first time, there are minimal charges for the offense, but it can also lead to imprisonment on repeating the attack.

Minimum Wages Act, 1936

The central legislation has enacted a separate minimum daily wage for every state that an organization must pay to skilled or unskilled laborers. Significantly in the unorganized sectors, the laws play a crucial role in safeguarding the interest of laborers. Additionally, it also protects the interests of laborers in the organized industries.

If an employer fails to comply with the act, he or she can be punished with imprisonment for a term of 6 months or have to pay a fine of 500 rupees. The non-compliance with the wages act includes non -filing of returns and improper maintenance of records.

Payment of Gratuity Act:

An act that applies to all commercial establishments is the gratuity act. The establishments with at least ten or more employees working for them, the gratuity act must pay for them. The company has to pay gratuity to employees who have rendered continuous service for at least five years before the employment termination.

The payment applies to the employees on their retirement, superannuation, and death or disablement due to disease or accident. The condition of completion of 5 years isn’t mandatory if a worker’s termination occurs due to death or disablement.

The employee’s gratuity is paid at the rate of fifteen days based on the wage rates last drawn. Three lakhs and fifty thousand is the ceiling drawn on the payment of gratuity.

Payment of Bonus Act, 1965:

As a labor law consultant, the payment of bonus is given as per an employee’s productivity. Along with employee’s productivity, the profitability of an organization also plays a vital role. An employee is eligible for a bonus if he or she works in an organization for more than 30 days. Furthermore, the top management of a company can also dismiss an organization’s gift on the grounds of fraud, theft, or undesirable behavior on the premises.

The bonus act doesn’t apply to employees of either central or state government, railways, or non-profit organizations. If an employer violates the law, then he or she has to

Laws relating to conditions, working hours of service and employment- Factories act, 1948

The factories act 1948, focuses on provisions for safety, health, and welfare of the employees working in a manufacturing unit or a factory. It also focuses on working hours for adults, leaves, employment of minors, etc. It applies to all manufacturing units employing ten or more than ten people.

Some of the essential provisions of the factories Act are:

  • The act states that all manufacturing units should be kept cleaned and free from drains. Ventilation and temperature should be maintained.
  • The act also emphasizes on providing clean drinking water to employees.

Industrial Employment Act, 1946:

As per the labor law consultant, the industrial employment act, 1946, applies to almost all manufacturing units who work with 100 or more than 100 employees. The law aims to bring stable working conditions for all the employees working in a similar industry. Furthermore, the act also specifies that every employer must submit five draft copies of the standing orders to the respective certifying officer.

Thus as per the act, the standing orders must have a prominent place in the worker’s knowledge.

Employees provident fund act, 1952:

The provident fund includes the benefits that employees can have. A certain percentage of the salary has to be contributed to the provident fund both by the employers and employees. An employee is eligible for the membership of the fund after completion of a one-year continuous service. The act applies to organizations having more than 20 employees.

The inclusions of the act are insurance, risks of old age, and retirement. If an employer fails to comply with the law, then it can lead to imprisonment of one or two years or a fine of ten thousand.

Thus these are some essential laws that apply to almost all types of business. If businessmen fail to comply with the acts then it can also lead to imprisonment.

This article is written by- Amy Johnes, a legal expert and blogger at Ahlawat & Associates – One of the best law firms for intellectual property lawyers in India.

 

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