Employment Law

Indian labour law refers to law regulating labour in India. Traditionally, the Indian government at the federal and state levels has sought to ensure a high degree of protection for workers, but in practice, this differs due to the form of government and because labour is a subject in the concurrent list of the Indian Constitution. The Minimum Wages Act 1948 requires companies to pay the minimum wage set by the government alongside limiting working weeks to 40 hours (9 hours a day including an hour of break). Overtime is strongly discouraged with the premium on overtime being 100% of the total wage. The Payment of Wages Act 1936 mandates the payment of wages on time on the last working day of every month via bank transfer or postal service. The Factories Act 1948 and the Shops and Establishment Act 1960 mandate 15 working days of fully paid vacation leave each year to each employee with an additional 7 fully paid sick days. The Maternity Benefit (Amendment) Act, 2017 gives female employees of every company the right to take 6 months’ worth of fully paid maternity leave. It also provides for 6 weeks’ worth of paid leaves in case of miscarriage or medical termination of pregnancy. The Employees’ Provident Fund Organisation and the Employees’ State Insurance, governed by statutory acts provide workers with necessary social security for retirement benefits and medical and unemployment benefits respectively. Workers entitled to be covered under the Employees’ State Insurance (those making less than Rs 21000/month) are also entitled to 90 days’ worth of paid medical leaves. A contract of employment can always provide for more rights than the statutory minimum set rights. The Indian parliament passed four labour codes in the 2019 and 2020 sessions. These four codes will consolidate 44 existing labour laws.

The list of major HR functions and Legal provisions governing them

• Recruitment and Selection
• Training and Development
• Employee appraisal
• Compensation of rewarding
• Healthy, Safety and Welfare measures
• Maintaining Industrial relationships, Code of conduct and Discipline.

Recruitment and selection

In case of public employment; article 16(1) of the Indian Constitution guarantees equality of opportunity to all citizens” in matters relating to employment” or “appointment to any office” under the state. According to Article 16(2), no citizen can be discriminated against, are to be ineligible for any employment or office under the state, on the grounds only of religion, race, caste, six, descent, place of birth or residence or any of them.

Adherence to the rule of equality in public employment is a being feature of our Constitution and the rule of law is its core. the recruitment rules are to be framed with a view to give equal opportunity to all the citizens of India entitled for being considered for recruitment in vacant posts. The word ‘equality’ in Article 16(1) means equality as between member of the same class of employees and not equality between members of separate, independent classes. Therefore article 16 does not bar a reasonable classification of employees are reasonable test for selection.

Equality of opportunity of employment means selection. Equality of opportunity of employment means equality as between member of the same class of employees and not equality between members of separate, independent, classes.

The Child Labour (Prohibition & Regulation) Act, 1986 and Article (24) of the Indian Constitution says that No child below the age of fourteen years shall be employed.

Performance appraisal of employee

Performance appraisal of employees aimed at knowing employee efficiency or a deficit in his work and conduct. On the basis of performance appraisal, employee’s suitability to the job is assessed the purpose of his confirmation, promotion and even further retention in the service. In case of adverse reports against an employee that it should be communicated to him with a view to inform him regarding the deficiency in his work and conduct and effort him an opportunity to make, and improve in his work and further justification. To make it clear that it is again as the principles of natural justice to directly remove an employee from the job without informing him about his/her deficiencies and give an opportunity to rectify him/herself to the satisfaction level of employer.

Compensation and rewarding

There are different labour laws governing the compensation and rewarding of an employee. They are as follows

Payment of wages Act 1936

The object of this act is to provide payment of wages to employees in time without any delay, without unreasonable deduction from the wages, if any deductions to be made by employer, those should be reasonable and in accordance with this act and procedure for payment of wages.

Justified deductions can be made from wages according to the Act

• [Section 7] Deductions which may be made from wages
• [Section 8] Fines
• [Section 9] Deductions for absence from duty
• [Section 10] Deductions for damage or loss
• [Section 11] Deductions for services rendered
• [Section 12] Deductions for recovery of advances
• [Section 12A] Deductions for recovery of loans
• [Section 13] Deductions for payments to co-operative societies and insurance schemes

Workmen compensation Act 1923

The object of  Workmen compensation Act 1923 is to provide compensation to the workman who meet with an accident in the course of employment, causing injury and making him partially or totally disabled or sometimes causing death. Conditions when employer is not liable to pay compensation to the employee who met with an accident in the course of employment.

Payment of bonus Act 1965

The object of this act is about compulsory payment bonus to employee whose salary of wage is not exceeding Rs.21000/-, irrespective of profit or loss of the business.

Minimum amount of bonus payable to employees is 8.33% [section 10]

Payment of Gratuity Act, 1972

The object of this act is about compulsory payment of gratuity to any employee who has completed five years of continuous service at the time of his retirement, resignation or on his death or disablement due to accident or disease. Provided that the completion of continuous service of 5 years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

Gratuity = Monthly salary X  15 X Number of years of service / 26

Monthly salary= last month drawn salary by the employee.

26 = total number of working days in a month.

15 = number of days in half of the month.

Equal Remuneration Act, 1976

Employees’ Provident Fund Scheme, 1952.

Healthy, Safety and Welfare measures

Factories Act, 1948

Factors Act, 1948 is the law that governs healthy, safety and welfare measures of an employee in factories mentioned under this act.

• Healthy measures- [section 11 to 20]
• Safety of employees – [section 21 to 40B]
• Welfare of employees – [section 42 to 50]
• Working hours – [section 51 to 66]
• Leave with wages – [section78 to 84]

Industry relationships and discipline of employees

Industrial Disputes Act, 1947

Industrial dispute act 1947 governs strikes by the employees, lockout by employer, layoff, retrenchment and other disputes between employer and employee, employee and employee, and employer and employer

• Strikes (Industry)
• Lockouts (Industry)
• Lay Offs / Laid off and Retrenchment