Important Labour Laws & their applicability!!
The Constitution of India is the main foundation in framing the basis of rights of individuals under labour and employment. The labour and employment laws and rules are enacted both by the Centre and the State governments respectively. Where the Centre enacts the laws, the State formulates the rules and regulation and legislations.
Every commercial establishment other than factories established under the Factories Act, 1948 are required to get it registered under the Shops & Establishments Act. It is one of the most important regulations required to be complied with for any business.
Labour laws applicable to certain organizations are as follows:
1. The Minimum Wages Act, 1948
The Act was enacted in order to guarantee minimum wage to a worker or employee which allows him to maintain his livelihood. Both the Centre and State prescribes minimum wages to all class of employees i.e. from highly skilled to worker level. Any wage below the minimum wage is void under the act and punishable. The aggrieved worker or employee forced to work below the fixed wage can lodge compliant to the labour authorities.
2. The Employees’ State Insurance Act, 1948
Applicable to all factories and other establishments where 10 or more persons employed and the beneficiaries’ monthly wage does not exceed Rs. 21,000/- are covered under the scheme. The Act aims at social security to workers in contingency such sickness, maternity, temporary or permanent disablement, Occupational disease or death due to employment injury, resulting in loss of wages or earning capacity-total or partial. Contribution towards ESIC:
Employer share: 3.25%
Employee share: 0.75%
3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
The provident fund is a retirement and long-term savings scheme. The Act is applicable to all establishment employing 20 or more persons. EPF deduction is mandatory for employees who draw a salary less than Rs 15,000. The EPFO manages the retirement benefits scheme for all salaried employees. Moreover, any person who is not salaried can register itself with the PF Authorities under the VPF or PPF scheme. Both the employees and the employer contribute equally- i.e. 12% of their salary- to the EPF.
4. The Payment of Wages Act, 1936
Applicable to all factories and other establishments where 20 or more persons are employed on any day during an accounting year. An employee drawing at least a monthly salary of Rs 21,000/- and has served at least 30 days during an accounting year in the company is qualified for the bonus payment.
Minimum bonus: 8.33% of wage or salary earned or Rs 100, whichever is higher
Maximum bonus: 20% of the wage or salary earned
The bonus calculation ceiling is Rs. 7,000 i.e. if the salary of an employee exceeds Rs. 7,000, then bonus should be calculated on Rs. 7,000 only and if the salary of an employee is less than Rs. 7,000, then the bonus is to be calculated on the actual amount.
The bonus needs to be paid within 8 months from the end of the financial year. Annual Return of bonus in Form D needs to be filed within 30 days of the bonus payment.
5. The Contract Labour (Regulation and Abolition) Act, 1970
Applicable to any establishment in which twenty or more workmen are employed on any day of the accounting year as contract labour. The Act uses two important terms: Principal Employer and Contractor. A contractor is the person who supplies contract labour for any work of an establishment. Principal Employer is the employer who employs contract labour through a contractor.
The Principal Employer must enter into a contract with the Contractor and decide on the terms and conditions of the employment of contract labour (such as working hours, wages, disbursement of wages, leaves and holidays, facilities provided to the contract labour).
It it’s the duty of the Principal Employer to file appropriate forms and returns with the appropriate authority and also to maintain a register of contract labour.
6. The Equal Remuneration Act, 1976
Applicable to almost every kind of establishments as it relates to equal remuneration i.e. payment of wages/salaries. This Act provides for payment of equal remuneration to men and women workers, for the same work and prevents discrimination on the grounds of sex against women in the matter of employment, recruitment and for matters connected therewith or incidental thereto.
7. The Apprentices Act, 1961
The main purpose of the Act is to provide practical training to technically qualified persons in various trades. The objective is promotion of new skilled manpower. Apprentice appointed has to execute a contract of apprenticeship with employer which shall contain certain terms and conditions related to the apprentice. The contract has to be registered with Apprenticeship Adviser. The apprentice shall be paid stipend for the work done during his tenure.
8. Sexual Harassment of Women at Workplace Act, 2013
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 protects women at the workplace from sexual harassment. The Indian Penal Code also provides a penalty of upto three years imprisonment with or without fine, for sexual harassment.
Applicable to organizations with 10 or more employees. There has to be an internal complaint committee constituted for the aid of the victims of sexual harassment. This committee is mandatory to be made at all branches and units of an organization. This committee should include:
A woman who is employed at the senior level and will be the Presiding Officer
Not more than 2 other employees who are committed to the cause of women safety or who have appropriate legal and/or social knowledge
A person belonging to a non-governmental organization (NGO) committed to the cause of women or is familiar with issues related to sexual harassment
9. The Payment of Gratuity Act, 1972
Applicable to every factory, mines, oilfields, plantations, ports, railway companies, shops or and every other establishment in which 10 or more persons are employed on any day during an accounting year. It provides a statutory right to an employee in service for more than five years in an organization. Like PF, gratuity is another form of retirement benefit given to employees.
It is a lump sum payment made in a gesture of gratitude towards the employee for their service. The amount of gratuity increases with increment and number of years of service. The maximum amount of gratuity that can be paid to an employee is Rs 20,00,000/-.
Where an employee has worked in an organization for 3 years (01.02.2015 to 31.12.2018) and after 2 years i.e. on 01.01.2021 again joined the organization, then the gratuity will be calculated fresh from the date of his fresh appointment i.e. 01.01.2021.
10. The Maternity Benefit Act, 1961
As the name suggests, this act is enacted for the pre and post natal benefit of the women employees. The Act applies to mines, factories, circus, industry, plantation and shops and establishments employing ten or more persons, except employees covered under the Employees State Insurance act, 1948. There is no wage limit for coverage under the Act.
The definition of women covered under the act specifies:
“woman” means a woman employed, whether directly or through any agency, for wages in any establishment. Which means contract labour employees and apprentice shall also be considered under the act.
Leaves under the Maternity Benefit Act:
1. In case of Miscarriage
In case of miscarriage and on production of such proof as may be prescribed, women be entitled to leave with wages at the rate of maternity benefit for a period of six weeks immediately following the day of her miscarriage
2. Maternity leave
The total leave granted is 26 weeks out of which 6 to 8 weeks prenatal leaves can be taken. The leave of 26 weeks is applicable for 2nd child also. If the women is expecting 3rd child then only 12 weeks maternity leave will be granted.
The law also allows employers to permit women employees to work from home in addition to the maternity benefit period if the nature of work allows that. The law mandates to make it mandatory for establishments with more than 50 workers to establish creches
11. The Employees’ Compensation Act, 1923
An Act to provide for the payment by certain classes of employers to their workmen of compensation for injury by accident or diseased in occupation Applicable to:
1. all employees working in mines, factories, plantations, construction establishments, oilfields, etc. Moreover, it applies to establishments which are under Schedule II of the Worker’s Compensation Act
2. working abroad or outside India as per Schedule II of the Act.
3. person recruited as the mechanic, helper, driver, etc. in connection with a motor vehicle. It also applies to a captain or members of the crew of an aircraft.
4. the act does not apply to the members of armed forces of the Union & Workmen who are covered under ESI (Employee State Insurance) Act.
injury resulting to death
Amount equal to 50% of the monthly salaries of the deceased employee multiplied by the appropriate factor or with the amount of 80,000 or more.
1. injury resulting to permanent total disablement
Amount equal to 60% of the monthly wages of the injured workmen multiplied by the relevant factor or an amount of 90,000 or more.
2. injury occurring in permanent partial disablement
an amount equal to the percentage of loss of earning capacity is given to the disabled
3. injury resulting in temporary disablement.
Half-monthly payment which is equal to 25% of the monthly salaries of the workmen, to be paid by the provisions of section 4(2).
The amount payable as compensation can be adjusted in the manner or means of agreement. The employer needs to send a memorandum to the Commissioner. The commissioner will verify and if satisfied, record the memorandum in a properly registered manner.