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8 Important Rights of Private Employees Under the Indian Labour Laws

July 04, 2018
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Recently, while I was switching jobs, I went through my erstwhile employment contract and the engagement letter to analyse what are the real-life implications of my resignation. Sadly, due to lack of legal understanding, I could not claim my bonus based on the agreement.

I realised I had to know how to draft a resignation letter! However, the rest of the process was still unclear to me as an employee. This goes to show how clueless even a lawyer can be sometimes. In my defense, I was just excited to get my first job and went through the agreement for vulnerabilities. But I at that time did not think through about the implications of my resignation. There is no justification for my ignorance, even being a rookie.

Turns out that my employment agreement had made it binding for me to serve a notice period of three months before leaving the job. Imagine staying in a position you have formally given up on! It is not easy.

I had to either pay an equivalent of three month’s salary or serve the notice period. I, like many, had not thought through while signing the employment terms. But my ignorance had come back to bite me! Thankfully there was no non-compete or non-solicitation clauses; otherwise, I would have been restricted from working in the same industry for a while.

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While I wait for my full and final settlement payment which has been due for over a month, I figured why not find out more about employment and labour laws. I have again signed a contract, which was one-sided. Who knows what I need to know this time around?

To say there is no method to this madness is untrue. There are laws and regulations in place which are to be adhered to. What all don’t I know? I have never paid much attention to the labour laws, and my rights or claims thereof. I mean, I did do that one semester (or two?) in college, but I don’t remember much of it.

I thought I would put down my papers and after three months, I will be free. But was I wrong or what? Turns out there are ‘inner mechanisms and protocols in place to facilitate a successful transition’. Not my words, it is a direct quote from my Human Resource Manager. As a lawyer, am trained to read between the lines, but this was a no-brainer. I had to fulfil and do a set of things before attaining freedom.

Some of the routine tasks were reasonable like fulfil my ongoing responsibilities and create a smooth handover of work. But then there were weird requests from bosses to share the hard disk before I had done the hand-over! I mean how can I possibly work till the end of three months if I hand over my hard drive 3 days prior! Then I had to remind my HR for my Form 16 repeatedly. By law, my employer has to provide me with certain documents. But it took a month of nagging, begging and cajoling to ensure that I get what is rightfully mine!

Not knowing about industrial and labour laws did not bode well for me in hindsight.

So here is a quick refresher for all the in-house lawyers, practising lawyers and anyone who wishes to be employed someday- know your laws.

So what are the important rights of a private employee protected by the law?

Although there are terms of employment defining the specific terms, the employees in the organised private sector are governed by various laws such as Payments of Bonus Act, Equal Remuneration Act,  Payment of Gratuity Act, Employees Provident Fund and Miscellaneous Provisions Act, Employees’ State Insurance Act, Maternity Benefit Act, etc.

The right to safe working place with basic amenities, right to appropriate working hours, right to any assured incentive etc. are protected under the law. Here’s a list of essential rights of an employee under the various laws and regulations:

Employment Agreement

These days the norm is to enter into an employment agreement which details out the terms of employment like, compensation, place of work, designation, work hours, etc. The rights and obligations of both the employer and employee are listed out clearly like non-disclosure of confidential information and trade secrets, timely payment, provident fund etc. In case of a dispute, the agreement also contains a mechanism for effective dispute resolution.  

I remember when a client came to me with his first employment agreement after 30 years of service! He wanted me to have a look and tell him whether or not to agree to those terms. In a cursory glance, it was evident how one-sided the whole agreement was. From retrospective deductions and penalties to an ineffective dispute resolution mechanism, it was dreadful! The owner had made appointed himself as the binding authority in case of a dispute. After my advice, the client went and renegotiated and got his old terms of service renewed.

But the point remains that without a written employment agreement in place, the employee does not have much protections afforded to him in case of a dispute.

Maternity Benefit

The Maternity Benefit Act, 1961, provides for prenatal and postnatal benefits for a female employee in an establishment. Post-2017 amendments, the duration of paid leave for a pregnant female employee has been increased to 26 weeks, including eight weeks of postnatal paid leaves.

In case of a complicated pregnancy, delivery, premature birth, medical termination, female employees are entitled to one month paid leave. In case of tubectomy procedure, only two weeks of additional paid leave is provided for.

Pregnant female employees cannot be discharged or dismissed on account of such absence. Such employees are not to be employed by the employer within six weeks of delivery or miscarriage. If dismissed, they can still claim maternity benefits.

In India, men do not get any paid paternity leave. The Central Government provides for child care leave and paid paternal leave. But in case of private sector, it is a discretionary right of the employer.

Provident Fund

Employee Provident Fund Organisation (EPFO) is the national organisation which manages this retirement benefits scheme for all salaried employees. Any organisation with more than 20 employees is legally required to register with EPFO.

Any employee can opt out of the scheme provided they do it at the beginning of their career. The amount cannot be withdrawn at will. The rules limit the withdrawal amount and term of years in service. Once registered, both employer and employee have to contribute 12 % of the basic salary to the fund. If the employer does not pay his share or deduct the entire 12 % from the employee’s salary, he can be taken to PF Appellate Tribunal for redressal.

The amount can be withdrawn subject to a waiting period of maximum two months for emergent needs and necessary expenses. The rules specify limits of withdrawal and the necessary years of service for each purpose. An employee can withdraw a maximum of 3 times, and if withdrawn before five years the amount becomes taxable. A list of withdrawal rules of EPF is available here.

Gratuity

The Payment of Gratuity Act, 1972  provides a statutory right to an employee in service for more than five years to gratuity. It is one of the retirement benefits given to the employee. 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.

However, the employee if dismissed for proven lawless or disorderly conduct, forfeits this right upon dismissal.

Timely and Fair Salary

The whole point of providing service for an employee is fair and appropriate remuneration. Article 39(d) of the Constitution provides for equal pay for equal work. The laws under The Equal Remuneration Act, The Payment of Wages Act, mandates timely and fair remuneration of an employee. If an employee is not receiving his/her remuneration as per the employment agreement, can approach the Labour Commissioner or file a civil suit for arrears in salary. An employee cannot be given wages less than the legal minimum wages, as per law. A more detailed look into the remuneration under the Equal Remuneration Act, is available in this article.

Appropriate Working Hours and Overtime

All employees have a right to work in a safe workplace with basic amenities and hygiene.

The Factories Act provides and the Shop and Establishment Acts (statewise) protects the rights of the workers and non-workmen.

Under the most recent laws, an adult worker shall work over 9 hours per day or 48 hours per week and overtime shall be double the regular wages. A female worker can work from 6 am to 7 pm. This can be relaxed to 9.30 pm upon explicit permission, and payment for overtime and safe transportation facility. Apart from this weekly holiday, half an hour break and no more than 12 hours of work on any given day is mandated. The working hours for child workers are limited to 4.5 hours a day.

Right to Leaves

An employee has the right to paid public holidays and leaves such as casual leave, sick leave, privilege leave and other leaves. For every 240 days of work, an employee is entitled to 12 days of annual leave. An adult worker may avail one earned leave every 20 days whereas its 15 days for a young worker. During notice period an employee can take leaves for emergencies, provided the employment agreement does not bar it.

Prevention of Sexual Harassment at workplace

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.

For organisations with ten or more employees, there has to be an internal complaint committee constituted for the aid of the victims of sexual harassment.  The law mandates that a grievance redressal policy and mechanisms be in place in such organisations which outlines what constitutes sexual harassment, penalties, redressal mechanism, etc. The committee should also include a senior woman as a member, two other employees as members and a non-governmental member. The detailed duties of an employer are available in this article.

My attempt here is, simply to demystify the jargons used with an employee who does not fully understand and agree to it anyway. The HR or the company is not always going to educate you about all this. It is not their job, but yours to learn about your rights.

This is by no means an exhaustive list of rights and obligation of an employee under the laws and regulations. There are so many laws governing different aspects of labour and employment-related laws!

How does one learn about the labour laws which directly impact most of us everyday?

Well, I will not say its an easy task to accomplish. You have to do a lot of reading and research to understand the labour and employment laws, and their implications. Although there are  easier way to learn like the comprehensive online courses covering the relevant aspects of industrial and labour law. But all of this is incomplete without hard work and dedication.

There is no shortcut here. You have to put in the time to know your rights and obligations as an employee or even as a lawyer advising one’s clients. The employment agreement is the holy grail for an employee, but one must proceed with caution while signing one. You have to know the prevalent laws and what you can or cannot do. I mean I have learnt my lesson, why else will I research about this and write an article to talk about it?  But please don’t be as ignorant as me, and get stuck in the nitty-gritty of things.

Just be more proactive, learn and be wiser!


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