Labour and Employment Law

The labour and employment laws in India are framed and implemented by both the Central Government and respective State Governments. The primary focus of labour and employment laws in India is the protection of interests of employees and workers and regulation of working conditions.

This part contains basic queries relating to purpose, applicability, and scope of some of the important employment laws and regulations. The detailed aspects of some of these laws will be covered in separate parts subsequently.

1. What are the various categories of labour and employment laws in India?

Employment laws in India can be categorised as follows:

• Industrial relations
• Industrial safety and health
• Child and women labour
• Social security
• Wages
• Labour welfare
• Employment

2. What are the important labour and employment laws typically applicable to businesses in India?

Some of the important employment and labour laws which should be considered while setting up and operating a business in India are as follows:

• Factories Act, 1948
• Industrial Dispute Act, 1947
• Shops and Establishment Act as framed by respective State Governments
• Minimum Wages Act, 1948
• Payment of Wages Act, 1936
• Payment of Bonus Act, 1965
• Contract Labour (Regulation and Prohibition) Act, 1970
• Employees Provident Fund and Miscellaneous Provisions Act, 1952
• Employees’ State Insurance Act, 1948
• Payment of Gratuity Act, 1965
• Equal Remuneration Act, 1976
• Maternity Benefit Act, 1961
• Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Central Government and respective State Governments have framed rules under the above-mentioned laws.

3. What is the purpose and objective of the Factories Act, 1948?

The purpose and objective of this law is to regulate working conditions in factories and health, safety, and welfare of workers employed in factories.

4. What is the applicability of the Factories Act, 1948?

This law is applicable to all factories in which:

• 10 or more workers are employed in the preceding 12 months, where manufacturing process is carried out with the aid of power; and
• 20 or more workers are employed in the preceding 12 months, where manufacturing process is carried out without the aid of power.

Further, this law is applicable in respect of workers who are employed in a factory, whether for remuneration or not, in any manufacturing process and any activity incidental to the manufacturing process.

5. Who is responsible to comply with the provisions of the Factories Act, 1948?

An ‘occupier,’ that is, a person who has the ultimate control over the affairs of the factory, is responsible for the compliances. In the case of a company, all directors and any person authorised by the directors will be considered to be an occupier and will be responsible for compliances under this law.

6. What are the compliances required under the Factories Act, 1948?

Under this law, the occupier is required to obtain a license to establish and operate a factory. The application for a license has to be made at least 15 days prior to the occupation or use of a premise as a factory. The occupier or the manager needs to maintain a register of workers employed in the factory. Further, the occupier also needs to display a notice in English and the vernacular language in a convenient place in the factory premise containing an abstract of this law.

7. What are the basic duties and responsibilities of the occupier?

Some of the basic duties and responsibilities of the occupier include:

• Maintenance of plant and machinery which are safe and without health risks for the workers.
• Making arrangements in the factory for ensuring safety and absence of risks to health in connection with the use, handling, storage, and transport of articles and substances.
• Providing information, instruction, training, and supervision which are necessary to ensure the health and safety of all workers at work.

8. What are the penalties or punishments for non-compliance with the provisions of the Factories Act, 1948?

In the event of non-compliance with the provisions of the Factories Act, 1948, the occupier will be liable to pay a fine and also punishable with imprisonment. The amount of fine payable and the term of imprisonment will depend on the nature of the non-compliances.

9. What is the purpose and objective of the Industrial Disputes Act, 1947?

The main purpose of this law is to provide a mechanism for investigation and settlement of industrial disputes. This law also governs the payment of compensation to workers on account of the closure of a business, layoff, or retrenchment.

10. What is the applicability of the Industrial Disputes Act, 1947?

This law applies to every industry and its various industrial establishments carrying on any business, trade, manufacture, or distribution of goods and services irrespective of the number of workmen employed.

This law is applicable in respect of workers who are employed to do any manual, skilled or unskilled, technical, operational, clerical, or supervisory work for reward, excluding workers who are employed in a supervisory or managerial capacity and who draw more than INR 10,000 per month.

11. What matters are governed by the Industrial Disputes Act, 1947?

The matters which are governed by this law include:

• Settlement of disputes between employer and workers.
• Regulation and prohibition of strikes and lockouts by workers.
• Workers’ rights in cases of layoff or retrenchment by employers.
• Regulation and prohibition of unfair labour practices by employers.

12. What are the penalties for non-compliance or contravention of the Industrial Disputes Act, 1947?

The penalty for non-compliance or contravention of this law includes fines and imprisonment of the person in charge of the company. The amount of fine and the term of imprisonment will depend on the nature of non-compliance or contravention.

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13. What is the purpose and objective of the Shops and Establishment Act?

The main objective of this law is to regulate payment of wages, terms of service, leaves, work conditions, and certain other benefits for people employed in shops and commercial establishments. There is no central Shops and Establishment Act, and each State in India has framed their own Shops and Establishment Act.

14. What is the applicability of the Shops and Establishment Act?

This law is applicable to all shops and commercial establishments from which any business, trade, or profession is carried on.

15. What are the compliance requirements under the Shops and Establishment Act?

Every owner of an establishment needs to obtain a registration certificate for establishing and operating a commercial establishment. An owner of a shop or a commercial establishment is also required to comply with the provisions relating to:

• Opening and closing hours of the shops or establishment.
• Working hours for its employees.
• Holidays.
• Employment of women and children.
• Health and safety of employees.

16. What are the penalties for non-compliance or contraventions of the Shops and Establishment Act?

The penalties for non-compliance or contraventions of the Shops and Establishment Act involve fines on the employer. The amount of the fine depends on the nature of non-compliance or contravention. Further, each State has prescribed varied rates of fines under respective Shops and Establishment Acts.

17. What is the purpose and objective of the Minimum Wages Act, 1948?

The purpose and objective of this law is to ensure that workers and employees get fair wages for their labour. As per this law, all employers who engage employees in the prescribed employments are required to pay the minimum wages, as prescribed by the Government, to their employees.

18. What is the applicability of the Minimum Wages Act, 1948?

This law is applicable to all employers who hire employees in respect of any prescribed employments. Further, the law applies to all employees who are employed to do any work, whether skilled or unskilled, manual or clerical, for hire or reward.

19. What are the prescribed employments to which the Minimum Wages Act, 1948 is applicable?

The list of employment to which the law is applicable is provided in a ‘schedule’ to the Act, which includes employments in:

• Tea or coffee plantations.
• Construction or maintenance of roads or buildings.
• Mining.
• Loading and unloading of goods in ports.
• Agriculture, etc.

20. Who fixes the minimum wages under the Minimum Wages Act, 1948?

The rates of minimum wages are fixed by the Central Government and respective State Governments through notifications, on employments which are under their authority.

21. What are the compliances for employers under the Minimum Wages Act, 1948?

All employers to whom this law applies are required to:

• Pay employees at least the prescribed minimum wages.
• Maintain registers containing details of the employees and the wages paid.
• Display notices in their factory or establishment.

22. What are the penalties for non-compliance with the provisions of the Minimum Wages Act, 1948?

In the event a company fails to comply with the provisions of this law, the company will be liable to pay a fine. Further, every person who is in charge of the company (including any director, manager, officer, or secretary) will also be liable to pay a fine and may also be punished with imprisonment of up to 6 months. The amount of the fine will depend on the nature and type of non-compliances.

23. What is the purpose and objective of the Payment of Wages Act, 1936?

The main purpose and objective of this law is to regulate the payment of wages of persons employed in any industry.

24. What is the applicability of the Payment of Wages Act, 1936?

This law is applicable to persons employed in factories, railways, industrial, and other establishments, and earning wages up to INR 24,000 per month.

25. Who is responsible for payment of wages under the Payment of Wages Act, 1936?

The manager of a factory or a supervisor of an industry is responsible for payment of wages as an employer for a factory, industry, or any other establishment. Under this law, an employer is required to make timely payment of wages to the employees.

26. What matters are regulated under the Payment of Wages Act, 1936?

This law contains provisions with respect to:

• Responsibility for payment of wages.
• Fixing of wage periods.
• Time of payment of wages.
• Permissible deductions.
• Maintenance of records and registers.

27. What are the penalties for non-compliance or contravention of the Payment of Wages Act, 1936?

The penalties for non-compliance or contraventions of this law involve fines on the employer. The amount of the fine depends on the nature of non-compliance or contravention.

28. What is the purpose and objective of the Payment of Bonus Act, 1965?

The objective of this law is to reward the employee of the organization by sharing the profits earned and is linked to productivity.

29. What is the applicability of the Payment of Bonus Act, 1965?

This law is applicable to every establishment and factory in which 20 or more persons are employed on any day during a year and with respect to such persons who are drawing a remuneration of less than INR 21,000.

30. What is the maximum and minimum bonus payable under the Payment of Bonus Act, 1965?

Bonus is payable under this law between 8.33% (minimum) to 20% (maximum) of the wages during a financial year.

31. What are the compliance requirements for an employer under the Payment of Bonus Act, 1965?

Every employer has to:

• Maintain a register and record containing details of employees and computation of bonus paid.

32. What are the penalties for non-compliance or contravention of the Payment of Bonus Act, 1965?

The penalties for non-compliance or contraventions to this law involve fines on the employer. The amount of the fine depends on the nature of non-compliance or contravention.

33. What is the purpose and objective of the Contract Labour (Regulation and Prohibition) Act, 1970?

The purpose and objective of this law is to regulate employment and working conditions of contract labourers.

34. What is the applicability of the Contract Labour (Regulation and Prohibition) Act, 1970?

This law applies to:

• Every commercial establishment in which 20 or more workers are employed or were employed on any day of the preceding 12 months as contract labourers.
• Every contractor who employs or employed 20 or more workers on any day of the preceding 12 months.

The provisions of this law are applicable to all workers who are employed in any establishment to do any skilled, unskilled, supervisory, technical, or clerical work for reward but exclude workers who are employed in a supervisory, managerial, or administrative capacity or who is drawing a wage of INR 5,000 or more per month.

35. What are the licensing requirements under the Contract Labour (Regulation and Prohibition) Act, 1970?

An establishment and a contractor to which this law applies need to obtain registrations for employing and engaging workers on a contract basis. No establishment or contractor can employ or engage any worker on a contract basis unless it has obtained the registration.

36. What are the compliances required to be done by an establishment under the Contract Labour (Regulation and Prohibition) Act, 1970?

In addition to obtaining registrations, a principal employer (person in charge of the establishment) needs to:

• Ensure the welfare and health of the workers employed on a contract basis by providing adequate facilities.
• Ensure that the wages are paid timely by the contractor.

Under this law, if the contractor fails to discharge his duties with respect to the payment of wages to the workers, the principal employer will be responsible for payment of all dues.

37. What are the penalties for non-compliance or contravention of the Contract Labour (Regulation and Prohibition) Act, 1970?

In case of non-compliance or contravention of this law by any person or company, the company and every officer in charge of such company will be liable to pay a fine and punished with imprisonment as prescribed under this law.

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38. What is the purpose and objective of the Employees Provident Fund and Miscellaneous Provisions Act, 1952?

The object of this law is to provide security to the employees and their dependents on retirement or death. An ‘employee provident fund’ is a retirement savings scheme that the Government of India has mandated for all salaried employees. To be eligible to avail the benefits under this law, employees should be drawing wages of less than INR 15,000 per month.

39. What is the applicability of the Employees Provident Fund and Miscellaneous Provisions Act, 1952?

This law applies to factories or establishments in which 20 or more employees are employed.

40. What is the requirement for mandatory registration under the Employees Provident Fund and Miscellaneous Provisions Act, 1952?

Registration under this law is mandatory for factories and other establishments employing 20 or more persons.

41. Is it possible for an establishment employing less than 20 people to be covered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952?

Yes, establishments with less than 20 employees can obtain voluntary registration under the law.

42. Which is the registering authority under the Employees Provident Fund and Miscellaneous Provisions Act, 1952?

Employees’ Provident Fund Organisation is the registering authority under this law.

43. What is the rate of contribution of employer and employee under the Employees Provident Fund and Miscellaneous Provisions Act, 1952?

Contributions are to be made at the rate of 12% of the wages by the employers, with the employee contributing an equal amount.

44. What is the penalty for non-compliance or contravention of the Employees Provident Fund and Miscellaneous Provisions Act, 1952?

Any employer who contravenes or fails to comply with the provisions of this law is liable to pay a penalty and punished with imprisonment.

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45. What is the purpose and objective of the Employees’ State Insurance Act, 1948?

It is social welfare legislation enacted with the objective of providing certain benefits to employees in case of sickness, maternity, and employment injury.

46. What is the applicability of the Employees’ State Insurance Act, 1948?

This law is applicable to establishments where 10 or more persons are employed. All employees, including casual, temporary, or contract employees drawing wages less than INR 21,000 per month, are covered under this law.

47. What is the rate of contribution under the Employees’ State Insurance Act, 1948?

An employer is required to contribute at the rate of 4.75% of the wages paid/payable in respect of every wage period. The employees are also required to contribute at the rate of 1.75% of their wages.

48. Which is the registering authority under the Employees’ State Insurance Act, 1948?

All establishments coming within the purview of this law are required to obtain registration from the Employees’ State Insurance Corporation.

49. What is the penalty for non-compliance or contravention of the Employees’ State Insurance Act, 1948?

Any employer who contravenes or fails to comply with the provisions of this law is liable to pay a penalty and punished with imprisonment.

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50. What is the purpose and objective of the Payment of Gratuity Act, 1972?

A ‘gratuity’ is a lump sum that a company pays when an employee leaves an organization. The purpose of this law is to provide for a scheme and regulate the payment of gratuity by applicable establishments.

51. What is the applicability of the Payment of Gratuity Act, 1972?

This law is applicable to all establishments that employ 10 or more employees. Every employee, who has completed continuous service of 5 years or more, irrespective of his wages, is entitled to receive gratuity upon termination of his employment, on account of:

• Retirement
• Death or disablement due to accident or disease

52. How is the amount payable as gratuity to an employee calculated?

The formula at which the amount of gratuity payable is calculated is based on 15 days of the last drawn salary for each completed year of service or part thereof in excess of six months.

53. What is the penalty for non-compliance or contravention of the Payment of Gratuity Act, 1972?

Any employer who contravenes or fails to comply with the provisions of this law is liable to pay a penalty and punished with imprisonment.

54. What is the purpose of the Equal Remuneration Act, 1976?

The purpose and objective of this law is to ensure payment of equal remuneration to men and women workers for the same work and to prevent discrimination on the ground of sex, against women in the matter of employment, recruitment, and for matters connected to it.

55. Who all are covered under the Equal Remuneration Act, 1976?

All persons employed by an employer of any establishment, factory, mine, oilfield, plantation, port, railway company, or shop are covered under this law.

56. What are the duties of an employer under the Equal Remuneration Act, 1976?

Under this law, every employer has to:

• Pay equal remuneration to both men and women employees for the same work.
• Make no discrimination in recruitment or terms of services for men and women.

57. What is the penalty for non-compliance or contravention of the Equal Remuneration Act, 1976?

Any employer who contravenes or fails to comply with the provisions of this law is liable to pay a penalty and punished with imprisonment.

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58. What is the purpose and objective of the Maternity Benefit Act, 1961?

The purpose and objective of this law is to provide for certain maternity benefits, including leave and wages, to women employees.

59. What is the applicability of the Maternity Benefit Act, 1961?

This law is applicable to every shop or establishment in which 10 or more persons are employed, or were employed, on any day of the preceding 12 months.

60. What are the main duties and obligations of an employer under the Maternity Benefit Act, 1961?

Some of the main duties and obligations of an employer under this law are:

• An employer cannot knowingly employ any woman in an establishment during the 6 weeks immediately following the date of delivery or miscarriage.
• The employer is required to pay maternity benefit at the rate of the average daily wage for the period of a woman employee’s actual absence immediately preceding and including the day of her delivery and for 6 weeks immediately following that day.
• An employer cannot discharge or dismiss a woman who absents herself from work for maternity leave in accordance with the provisions of this law.

61. What is the penalty for non-compliance or contravention of the Maternity Benefit Act, 1961?

Any employer who contravenes or fails to comply with the provisions of this law is liable to pay a penalty and punished with imprisonment.

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62. What is the purpose and objective of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013?

The purpose and objective of this law is to provide protection against sexual harassment of women at the workplace and to provide for prevention and redressal of complaints of sexual harassment.

63. What is the applicability of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013?

This law is applicable to every workplace, establishment, company, or organization employing 10 or more employees.

64. What are the duties and obligations of an employer under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013?

Under this law, every employer is required to:

• Frame and implement an anti-sexual harassment policy as prescribed under law.
• Set up an Internal Complaints Committee as prescribed under the law for administering any complaints.
• Provide a safe working environment, which shall include safety from persons coming to the workplace.
• Display the penal consequences of workplace sexual harassment and the order constituting the Internal Complaints Committee at any conspicuous place at the workplace.
• Conduct training programs to create awareness and sensitization among employees at all levels.
• Provide necessary facilities for the members of the Internal Complaints Committee and assist in any manner required to enable the aggrieved woman to secure justice.
• Monitor the timely submission of reports by the Internal Complaints Committee.

65. What is the penalty for non-compliance or contravention of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013?

Any employer who contravenes or fails to comply with the provisions of this law is liable to pay a penalty.

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Disclaimer

The information contained in this document is not legal advice or legal opinion. The contents recorded in the said document are for informational purposes only and should not be used for commercial purposes. Acuity Law disclaims all liability to any person for any loss or damages caused by errors or omissions, whether arising from negligence, accident, or any other cause.