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This article has been written by Naveen Talawar, a law student at Karnataka State Law University’s law school. The article discusses the concept, origin, and evolution of labour laws in India, as well as the principles and factors that have contributed to the development of labour laws with constitutional provisions. Furthermore, the article discusses the four labour codes recently enacted by the Indian government.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction 

Labour laws, also known as employment laws, are the body of laws, administrative rulings, and precedents that address the legal rights and restrictions of working people and their organisations. Labour laws attempt to regulate the relationships between an employer or group of employers and their employees. This branch of law has the broadest application because it affects more men and women than any other branch of law. As a result of its vast implications and dynamic facets, it is also the most fascinating area to study. These laws generally address issues like workplace health and safety, collective bargaining, unfair labour practices, certification of unions, labour-management relations, general holidays, annual leave, working hours, unfair terminations, the minimum wage, layoff procedures, severance pay and so on.

In India, the Central Government has promulgated around 44 labour-related statutes, 29 of which have been consolidated into four new labour codes. This article summarises some of the labour laws in India, as well as the four labour codes.

Concept and origin of labour laws

In society, institutions develop to abhor the gap that changes leave behind. The Industrial Revolution, a historical phenomenon, completely transformed society from rural and agricultural to industrial and consumerist. The changes brought about by the industrial revolution left some gaps, and it became society’s responsibility to fill those gaps. To fill the gaps, society turned to certain social devices known as labour laws. Labour laws are the result of the industrial revolution, and they were created to address the problems that they caused. They differ from ordinary legislation in that they are meant to address unique issues brought on by particular situations. As a result, their orientation, philosophy, and concepts are specific rather than general.

Industrial society resulted in the over-exploitation of the working classes by employers who took advantage of the individual worker’s dispensability and sought the highest profit from their investment. Due to the capitalist axiom that ‘risk and right’ go hand in hand, they had the authority to ‘hire and fire.’ The law at the time also included ideas like ‘master and servant,’ among others. The common law principle was in effect. The terms of the contract were typically verbal and were mostly used in cases of breach, which resulted in prosecution and imprisonment of the workers.

The purpose and scope of labour laws have evolved over time. Early labour laws were enacted to protect employers’ interests. It was governed by the laissez-faire doctrine, which entails a policy of minimal government intervention in the economic affairs of individuals and society. On the other hand, contemporary labour law aims to safeguard employees from employer exploitation. The foundation of the welfare state doctrine is the concept of progressive social philosophy, which has rendered the previous doctrine of laissez-faire outdated. The ‘hire and fire’ and ‘supply and demand’ theories, which enjoyed unrestricted application under the previous laissez-faire philosophy, are no longer valid.

The approach to labour law and industrial relations has changed significantly since the Philadelphia Charter, which stated that ‘labour is not a commodity’ and that ‘poverty anywhere is a danger to prosperity everywhere.’ W. Friedmann and others who have attempted to analyse the essential characteristics of legal development in this branch of law consider “social duty on the part of the employer” to be the main bedrock upon which this law is built.

Evolution of labour legislation in India

The history of labour law in India dates back more than 125 years. Beginning with the Apprentice Act of 1850, which allowed orphaned children to find work when they reached the age of 18, several labour laws covering all aspects of industrial employment have been enacted. Labour laws govern not only the working conditions of industrial establishments but also industrial relations, wage payment, trade union registration, certification of standing orders, and so on. They also provide social security measures for workers. The Indian Constitution serves as the foundation for all Indian laws. According to the Constitution, labour is a matter under the Concurrent List, meaning that both the Central and State governments may pass labour laws, subject to the restriction that the State legislature may not pass laws that conflict with Central law. 

The Apprentice Act of 1850 was followed by the Factories Act, 1881, and the Bombay Trade Disputes (and Conciliation) Act, 1934, was the first State law. During World War II, both of these, as well as the Bombay Industrial Disputes Act, 1938 were amended. In its place, the Bombay Industrial Relations Act, 1946, was enacted. The Central government passed the Industrial Employment (Standing Orders) Act, 1946 around this time. The Industrial Disputes Act, 1947, which was later amended, took the place of the Trade Disputes Act, 1947.  This law is the primary tool for governmental intervention in labour disputes. Following independence, many laws governing labour employment and social security were enacted, which are discussed in the latter part of this article. 

Principles of labour laws in India

In a civilised society, working people have rights and responsibilities that are established by the fundamentals of labour law. As a form of social security for all citizens, the country’s current labour laws provide progressive benefits like health insurance, an old-age pension, maternity benefits, gratuity payments, and others. The various labour law principles are as follows:

Principle of social justice

The fundamental tenet of social justice states that all social groups, regardless of circumstance, must be treated equally. It seeks to end social inequality as it is obvious that some groups experience social disadvantage when it comes to employment or labour. Its goal is to ensure that everyone, regardless of social status, has equal access to employment opportunities.

Principle of social equity 

The fundamental tenet of this principle is the preservation of labour-friendly social equity laws because circumstances don’t always remain the same and occasionally change. Thus, laws need to be updated frequently. Based on the idea of social equity, the government intervenes to make adjustments or changes to reflect the evolving situation. In a nutshell, social equity is the creation of fair standards for everyone through statutory obligations.

Principle of social security

A person’s overall security in their family, place of employment, and society are referred to as social security. To maintain a sufficient standard of living, the social security system covers both basic needs and unexpected life events. It envisions collective action against social risks, which are at the heart of labour laws.

Principle of the national economy

According to this principle, the nation’s overall economic situation must be taken into account while enacting labour laws because the condition of the national economy has a significant impact on labour laws in any country.

Factors influencing labour laws in India

The following are the factors influencing labour laws:

Early industrial society of exploitation

The excesses of early industrialization after the industrial revolution were where labour laws first emerged. Early industrialization in the capitalist nations of the world was marked by long workdays, the hiring of young children in very unhygienic conditions, the payment of low wages, and other excesses. The workers’ access to legal protection was limited. Such excesses could not have continued indefinitely without public outrage and the demand for reforms.

Development of trade unionism

Another factor that accelerated the expansion of labour laws was the trade union movement, which emerged from the industrial revolution. They pushed for the protection of working-class interests, and as a result, laws were passed that dealt with wages, working conditions, women’s rights, social security, and other issues. However, as a result of their expansion, laws addressing industrial disputes, their prevention and resolution, and trade union privileges and rights also had to be passed.

Emergence of socialist and other revolutionary ideas

Karl Marx showed through his analysis of capitalism that the capitalist economic system is inherently exploitative of labour. He, therefore, promoted the overthrow of the capitalist system. The slogan ‘The workers of the world unite, you have nothing to lose but your chains’ sent tremors through conservative and capitalist circles, causing ameliorative and protective labour laws to emerge as safe alternatives. They quickly realised that labour laws could be used as a check on the spread of revolutionary ideas. The first and second internationals, as well as the creation of socialist and communist parties in numerous nations, strengthened the trend toward progressive labour laws.

Establishment of the international labour organisation (ILO)

The establishment of the International Labour Organization in 1919 had a significant impact on how labour laws developed throughout the world. Acceptance of the principle that ‘labour is not a commodity’ and the slogan that ‘poverty anywhere is a threat to prosperity everywhere’ have influenced the development of labour laws in all countries. The ILO has consistently established the need for improved labour laws through its ongoing investigation of workers’ living conditions. It has proposed new labour laws, gone through extensive deliberations and reviews, and adopted conventions and recommendations. By attempting to establish uniform labour standards insofar as the world’s diverse conditions and uneven economic development permit, the ILO has performed a singular service in the field of labour legislation.

Factors that affect labour laws in India

The aforementioned factors have a significant impact on how labour laws are drafted. India has specific characteristics that have shaped its labour laws. They are as follows:

Impact of colonial rule

The majority of the early labour laws were enacted as a result of pressure from Lancashire and Birmingham manufacturers, who saw that labour employed in factories and mills in India was very cheap in comparison to their British counterparts. These laws undoubtedly benefited Indian labour, but the protection of British capitalists’ interests was their primary concern. 

The democratic and pragmatic British traditions were carried by the British Civil Servants. The Workmen’s Compensation Act, 1923, the Indian Trade Unions Act, 1926, the Payment of Wages Act, 1936, and other Acts followed the British model.

The adoption of the Indian Constitution and the struggle for national emancipation

The industrial workers were supported by freedom fighters and nationalist leaders who worked hard to pass protective labour laws. The Indian Trade Unions Act, 1926 the Royal Commission on Labour, and other laws were developed as a result of the freedom struggle. The Preamble, Fundamental Rights, and Directive Principles of State Policy of the Indian Constitution are all manifestations of promises made by the national movement leaders regarding the establishment of a better and more just social order post-independence.

Constitutional provisions relating to labour laws in India

The Constitution is the supreme law of a country, and all laws are based on it. The Constitution, which has a significant impact on all laws, particularly labour laws, guarantees its citizens a ‘Socialistic pattern of Society’ and the formation of a “Welfare State”. Indian labour laws are greatly influenced by the Preamble, fundamental rights, directive principles of state policy, and judicial wisdom.

Seventh Schedule 

The Indian Constitution, the supreme law of the land, governs all legislative, executive, and judicial actions in the country. The Constitution’s Seventh Schedule envisions the distribution of legislative powers between the central and state legislatures on various issues. The Schedule is divided into three lists: the Central List (List I), the State List (List II), and the Concurrent List (List III). 

List III (Concurrent List) addresses the majority of labour-related issues. These cover a variety of topics, such as maternity benefits, employers’ liability, workmen’s compensation, invalidity and old age pensions, social security and social insurance, employment and unemployment, labour unions, industrial and labour disputes, and provident funds. Parliament has passed labour laws in almost all of these areas because the majority of labour-related issues are on the Concurrent List. However, states have amended the Central Acts to meet their local needs and have obtained the President’s approval for the changes.

Directive principles of state policy 

Socio-economic justice, which is the main objective of the State as prescribed by the Constitution, is emphasised in the Preamble to the Constitution. The framers of the Constitution recognised that without economic democracy, political democracy would be useless in a developing nation like India. As a result, they added a few clauses to the Constitution that would help the socio-economic situation of the general public. The directive principles work to establish some socio-economic objectives that the Indian government must pursue to strengthen and advance. The country is supposed to transition into social and economic democracy through directive principles. These principles oblige the State to act constructively in certain directions to advance the welfare of the people and achieve economic democracy. In India, the executive and legislative branches should exercise their authority in accordance with these principles. 

In industrial legislation and adjudication, Articles 38, 39, 41, 42, and 43 are particularly crucial. They serve as the ‘Magna Carta’ of industrial law or its foundation. These obligations include the Central and State governments’ duty to ensure social order and living wages in line with the economic and political circumstances of the nation.

Article 38 of the Indian Constitution

The concept of social justice is outlined in Article 38 of the Constitution, which states that “the State shall strive to promote the welfare of the people by securing and protecting, as effectively as it can, social order where justice, social, economic, and political shall inform all institutions of national life.” This directive reaffirms what is stated in the Preamble to the Constitution, namely, that the function of the Republic is to ensure social, economic, and political justice. Furthermore, Article 39 mandates that the state must incorporate specific social justice principles into its legislative process. 

In the case of State of Mysore v. Workers of Gold Mines, 1958, Justice Gajendragadkar stated that “the idea of social and economic justice is a living idea of revolutionary import that upholds the rule of law and gives the welfare state ideal meaning and significance.”

Article 39 of the Indian Constitution

The right to a livelihood has been included in Article 21 according to the Supreme Court’s interpretation of Article 39(a). In Olga Tellis v. Bombay Municipal Corporation, 1986, the Supreme Court stated, “If the State has an obligation to secure to its citizens an adequate means of livelihood and the right to work, it would be sheer pedantry to exclude the right to livelihood from the content of the right to life.”

Articles 39(b) and (c) are crucial constitutional provisions because they have an impact on India’s entire economic system. Socialism seeks to distribute the community’s material resources in a way that promotes the welfare of all. According to Article 39(b), socialism requires distributive justice.

In accordance with Article 39(d) of the Constitution, Parliament passed the Equal Remuneration Act, 1976 and the Act is judicially enforceable. The Act forbids gender discrimination and requires equal pay for men and women performing the same or similar work. The Supreme Court has drawn the general principle of equal pay for equal work from the reading of Articles 14, 16, and 39(d). 

The Supreme Court in Randhir Singh v. Union of India, 1982 identified that even though the idea of ‘equal pay for equal work’ is not a fundamental right, it is unquestionably a constitutional objective that can be upheld through constitutional remedies under Article 32 of the Constitution.

Articles 42 and 43 of the Indian Constitution

Article 42 requires the State to provide for maternity leave and fair and humane working conditions. Article 42 serves as the foundation for India’s extensive body of labour law. All industries must provide a ‘living wage’ and comfortable working conditions in accordance with Article 43. This clause expresses the ground-breaking concept that certain reliefs are owed to employees as a matter of right.

The Supreme Court has emphasised that the Constitution expresses strong concern for the welfare of workers with regard to Articles 42 and 43. The Supreme Court has given Article 21 a broad interpretation, including the right to live with human dignity, by combining it with several Directive principles, including Article 42.

Fundamental Rights (Part III of the Indian Constitution)

Part III of the Constitution enumerates the fundamental rights. The freedoms and rights mentioned in Part III are all intended to be shielded from arbitrary state action.

Article 14

Article 14 is particularly important because it states that “the State shall not deny to any person within the territory of India, equality before the law or equal protection of the laws.”

Equality before the law strictly prohibits discrimination; it is a negative concept. While the concept of equal protection under the law is a positive one, it necessitates the State to provide special treatment to people in various situations in order to achieve equality among all. As a result, equals must be treated equally, whereas unequals must be treated unequally.

Article 16

Article 16  prohibits the State from discriminating on the basis of religion, race, caste, sex, descent, place of birth, residence, or any combination of these factors, and guarantees equal opportunity in public employment. The State is also empowered to make special provisions for the underprivileged classes under this Article.

Article 19

Furthermore, Article 19 protects ‘the right to free speech and expression, the right to peaceful assembly without the use of arms, the right to assemble in unions or associations, the right to practise any profession, and the right to engage in any occupation, trade, or business.’ These constitutional protections, which include minimum standard legislation, are crucial in the area of labour law. The ability of the legislature to pick and choose which businesses or industries must adhere to minimum standards is constrained by equal protection. The freedom to engage in any trade, profession, or business reduces the burden that legislation may impose on businesses in the interest of workers. Workers’ rights to free speech, assembly, association, and unionisation protect their efforts to advance their interests through self-organisation, picketing, or strike action.

Article 21

Everyone has the right to life and liberty under Article 21. The definition of life has become incredibly expansive. A lot of different rights that contribute to a citizen’s personal liberty are included under the umbrella term ‘personal liberty’, which has been given a very broad amplitude. Its derivation must follow the appropriate legal process, which must be fair, just, and reasonable. According to a broad interpretation, the right to life guaranteed by Article 21 encompasses more than mere survival, existence, or animal existence. As a result, it encompasses all aspects of life that contribute to a man’s life being meaningful, complete, and worthwhile.

Articles 23 and 24

Human trafficking and forced labour are prohibited under Article 23. It states that trafficking in human beings and begar, as well as other similar forms of forced labour, is prohibited, and any violation of this provision is punishable by law. The Supreme Court has interpreted life in Article 21 to include livelihood, and the Court has held in several cases that any employment below minimum wage levels is illegal because it accounts for slavery. Article 24 prohibits the employment of children under the age of 14 in any factory, mine, or other hazardous occupation.

Preamble of the Indian Constitution

Another significant source of authority for the legislature in enacting labour laws is the Preamble to the Constitution. ‘Social, economic, and political justice; liberty of thought, expression, belief, faith, and worship; equality of status and opportunity’ are among its promises. The Preamble is developed and expanded upon in Part IV of the Constitution, which addresses the Directive Principle of State Policy. The State is responsible for ensuring and defending a social order in which justice, social equality, and political stability underlie all facets of national institutions in order to advance the welfare of the people.

The promotion of people’s welfare is addressed by some of these directives, such as minimising inequalities, directing the State’s policy toward securing the satisfaction of certain minimum needs, the right to work, an education, and public assistance in some circumstances, providing for just and humane working conditions and maternity leave, a living wage, worker participation in industry management, providing free and mandatory education for children, and enhancing public health.

Labour laws in India 

Some of the labour laws in India are as follows:

Laws related to industrial relations

Trade Union’s Act, 1926

One of the earliest labour laws in the nation is the Trade Unions Act, 1926. The early passage of the Trade Unions Act, as well as the constitutional provision guaranteeing freedom of association, have aided trade unions in legitimising their existence and operations. The main function of trade unions is to enable workers to take collective action. When negotiating with employers, people are in a weak bargaining position because strikes are a last resort for trade unions and should only be used when all other options have failed.

The Act includes detailed provisions for formation, procedure, and registration, as well as conditions of registration, benefits of registration, and the immunities available to union leaders when they participate in union activities of a registered Trade Union from both civil and criminal laws. The Act applies to both employer associations and labour unions.

The Industrial Employment (Standing Orders) Act, 1946

One of the most common reasons for conflict between management and employees in Indian industrial enterprises is the lack of standing orders. The Industrial Employment (Standing Orders) Act, 1946 was passed to address this problem with the aim of regulating the conditions of recruitment, termination, disciplinary action, holidays, and other benefits for workers in industrial undertakings. The Act requires employers in industrial establishments to clearly define and adequately describe the working conditions for their employees. Standing orders, which specify the conditions of recruitment, termination, disciplinary action, holidays, leave, and other things, assist in reducing conflict between management and workers in industrial enterprises.  It applies to any industrial establishment with 100 or more employees. 

Industrial Dispute Act, 1947 

Industrial disputes are those that arise from a disagreement in labour relations. Industrial relations covers a wide range of interactions between employers and employees. Such relationships can result in dissatisfaction for either of the parties involved when there is a conflict of interests, which can result in conflicts or industrial disputes. The dispute could take the form of demonstrations, strikes, lockouts, layoffs, and other actions.

The Industrial Disputes Act, 1947, is a progressive piece of social legislation intended to improve the working conditions for industrial workers. The primary objective of this Act is to reduce conflict between labour and management while providing the highest level of assurance for economic and social justice. The purpose of this Act was to address the investigation and settlement of labour disputes. 

The Act encourages harmonious relationships between employers and employees and establishes procedures for peaceful conflict resolution. The Act is beneficial legislation that aims to prevent industrial tensions and provide dispute resolution mechanisms. The Act defines the powers, functions, and duties of Conciliation Officers, Work Committees, Courts of Inquiry, Labour Courts, Industrial Tribunals, and National Tribunals, as well as the procedure to be followed by them.

It also outlines the conditions for a worker to be laid off, retrenched, discharged, or dismissed, when an industrial establishment may be closed down, when a strike or lockout may be lawfully used, when they may be declared illegal or unlawful, and several other matters affecting industrial employees and employers.

Laws related to wages in India

The Payment of Wages Act, 1936

During the early stages of industrialization, two common employer malpractices were late payment of wages and unauthorised deductions from wages. The Payment of Wages Act, 1936, was passed in response to a recommendation made by the Royal Commission on Labour in 1931 to end such malpractices.

The main objective of this Act is to eradicate all malpractices by defining the timing and procedure for wage payments and ensuring that workers are paid on time and without any unauthorised deductions. The Act gives the government the authority to raise the ceiling in the future by notification in order to increase its reach and enable more efficient enforcement.

Minimum Wages Act, 1948

The Minimum Wages Act was passed in 1948 to safeguard workers’ rights by setting a minimum wage in certain occupations. The Act sets a minimum wage for time work, a minimum wage for piece work, a guaranteed time rate, and an overtime rate for different occupations, regions, or classes of work, as well as for adults, teenagers, children, and apprentices. It is also important to point out that this Act complies with Article 43 of the Indian Constitution, which ensures a living wage and respectable working conditions.

The Act was primarily enacted to protect the interests of workers in the unorganised sector. The Act establishes and revises the minimum wage for workers in scheduled employment. The Act mandates that both the central and state governments establish and revise the minimum wage, as well as enforce payment of the minimum wage for scheduled employment within their respective jurisdictions.

The Payment of Bonus Act, 1965 

The Payment of Bonus Act, 1965 doesn’t define the word ‘bonus’. The definition of a bonus according to Webster’s International dictionary is “something given in addition to what is ordinarily received by or strictly due to the recipient.” Bonus payments are made to close the pay gap between the actual wages and the ideal of a living wage. Every factory, as defined by the Factories Act, 1948, as well as any other establishment employing twenty or more people on any day during an accounting year, is covered by the Payment of Bonus Act of 1965.

If an employee works for his or her employer for at least 30 working days in a given accounting year, that employee is eligible for a bonus from the employer. A bonus must be at least 8.33% of an employee’s yearly salary or wages, or 100 rupees, whichever is higher. To enforce the Act, inspectors work for the appropriate government. For violations of the Act, both imprisonment and fines are provided. A dispute over the payment of a bonus is considered an industrial dispute under the Industrial Disputes Act of 1947.

The Equal Remuneration Act, 1976 

In the International Year of Women in 1975, India passed the Equal Remuneration Ordinance to implement Article 39 of the Constitution, which requires equal pay for men and women. The Equal Remuneration Act, 1976, eventually replaced the ordinance. The Act prohibits discrimination against women employees during recruitment for the same or similar work, or in any condition of service after recruitment. It also mandates that men and women employees receive equal pay for the same or similar work without exception. The Act applies to all public and private establishments and employment, including domestic work.

Laws relating to work hours, working conditions and employment in India

The Factories Act, 1948 

The Factories Act, 1948 was another law enacted to promote social change. The provisions of this Act state indisputably that its labour regulations are for the benefit and welfare of workers, and the Act’s purpose is to regulate labour. The primary objectives of the Act are to control the working conditions of the factory, to take appropriate measures to ensure employee welfare, safety, and health, to control working hours, and to provide efficient equipment for the administration of the Act.

The Act aims to protect workers employed in factories from industrial occupational hazards and to provide them with safe and healthy living and working conditions. It includes comprehensive provisions for the health, safety, and welfare of employees to provide comfortable working environments and other perks to enhance their quality of life.

The Court ruled in Ravi Shankar Sharma v. the State of Rajasthan, 1993, that the Factories Act is social legislation that addresses issues relating to the welfare, safety, and health of factory workers. In a nutshell, the Act aims to improve working conditions in industrial settings and to safeguard workers from being exploited by greedy commercial enterprises.

The Plantations Labour Act, 1951 

The working conditions for plantation labourers are governed by the Plantation Labour Act, 1951. It applies to plantations growing cinchona, rubber, tea, and coffee. Every plantation must be registered with a registering officer. It focuses primarily on welfare and health-related issues. Any plantation to which this Act, wholly or in part, applies is referred to as a plantation, and this term includes buildings used for offices, hospitals, dispensaries, schools, and any other purposes associated with such a plantation.

The Act specifies the working hours, a weekly holiday, and paid time off. It also permits the employment of qualified inspecting, medical, or other personnel to ensure compliance with the various provisions of the Act.  Employers are required by the Act to provide housing, child care, health care, welfare, and paid time off to their employees. In order to carry out the requirements of the Act, it provides the State Government with the power to enact regulations and appoint a variety of officials, including registering officers, Chief Inspectors, certifying surgeons, and commissioners. Additionally, the Act prohibits the employment of children on plantations.

The Mines Act, 1952

Measures for the health, safety and welfare of mine workers are covered by the Mines Act, 1952. The word ‘mine’ refers to any excavation where a mining operation has been or is being conducted to search or obtain minerals. This includes all borings, boreholes, oil wells, accessory crude conditioning plants, shafts, opencast workings, conveyors or aerial ropeways, planes, machinery works, railways, tramways, slidings, workshops, power stations, and other locations that are near or in the mining area.

The Act has several provisions that must be followed to guarantee that the safety and medical requirements for the working conditions of miners are met. Additionally, these sections set minimum requirements for all the activities falling under the Act. 

The Act includes provisions regarding work hours and limitations, including a weekly day of rest, a compensatory day of rest, hours worked during night shifts above and below ground, overtime pay, a limit on daily hours of work, a prohibition on the presence of people under the age of 18, and the employment of women. 

It examines the workers to establish a fair and healthy environment in the mines. The Central Government is allowed to appoint chief inspectors and inspectors who are given a  range of powers and responsibilities under the Act for the efficient implementation of the Act. The Act also includes provisions for overtime pay and night shifts.

The Motor Transport Workers Act, 1961 

The Motor Transport Workers Act, 1961, was enacted to regulate the working conditions of motor transport workers. The Act applies to any motor transport company that employs five or more motor transport employees. Every employer who employs a motor transport undertaking to which this Act applies is required to register the undertaking. 

The welfare and health provisions to be made available to all workers include uniforms, canteens where 100 or more motor transport workers are employed, restrooms where workers are required to stop at night, and medical and first-aid facilities.

Laws relating to social security in India

The Workmen’s Compensation Act, 1923 

This Act was one of the first to be enacted to benefit workers. It was passed in 1923, but it didn’t take effect until July 1st, 1924. The Workmen’s Compensation Act was later renamed the Employees’ Compensation Act, 1923. The Act applied to workers in the sewage, firefighting, railway, tram, factory, mine, sea, dock, and building industries. The Act provides compensation for losses brought on by accidents or occupational diseases occurring during the course of and arising from employment, including death, permanent total disability, permanent partial disability, and temporary disability. It established compensation based on the seriousness of the injury suffered while performing duty. The Act mandates the payment of compensation to employees and their dependents in the event of death or disablement caused by industrial accidents or occupational diseases arising out of and in the course of employment.  

The Employees’ State Insurance Act, 1948 

There are several laws relating to the social security of workers have been passed by Parliament. The Indian parliament enacted the Employees’ State Insurance Act in 1948. It was the first significant social security law passed in independent India to provide such benefits to workers in the organised sector in situations of sickness, maternity, and workplace injury.

In addition to addressing other pertinent issues, the main objective of the Act is to provide certain benefits to employees in cases of illness, pregnancy, and workplace injuries. The insured and their dependents are eligible for a number of benefits based on the established scale. The right to receive benefits cannot be transferred or assigned.  

The Act gives the State Government the authority to establish an Employees Insurance (EI) Court. The EI Court has the authority to determine a person’s status as an employee under the Act, the number of wages or contributions they make, who their principal employer is or was, and whether they are eligible for any benefits provided by the Act. 

The EI Court may also hear actions for failure or negligence to pay contributions, claims for recovery of any benefit admissible under the Act, and claims for contribution recovery from a principal or immediate employer.

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, along with the Employees State Insurance Act, is important social security legislation in India. It applies to any factory connected to any of the industries listed in Schedule I of the Act that employs 20 or more people, as well as any other establishment that employs 20 or more people that the central government may specify by notification. 

The Employees’ Provident Fund Act provides for the three major schemes. They are:

The Employees’ Provident Fund Scheme, 1952, Employees’ Deposit-Linked Insurance Scheme, 1976 and the Employee Pension Scheme, 1995.

The Act intends to provide social security and prompt financial aid to industrial employees who are in need and their families. As a result, three schemes are in use in accordance with the Act. Together, the schemes provide the employee’s long-term protection and security, survivorship benefits, long-term protection and security for his or her family members after the employee’s death, and timely advances, including advances for medical expenses and the purchase or construction of a dwelling during the membership period.

The Maternity Benefit Act, 1961 

According to Article 42 of the Indian Constitution, the government must establish policies to guarantee just and humane working conditions and maternity leave. This Act was passed to ensure social justice for female workers. This social welfare law includes a number of provisions for benefits for female wage earners. The Act was enacted to provide maternity benefits and other benefits, as well as to regulate women’s employment in specific establishments for a specified period before and after childbirth.

The Maternity Benefit Act, 1961, regulates the employment of women in factories, mines, circuses, plantations, and shops or establishments employing 10 or more people, with the exception of workers who are covered by the Employees’ State Insurance (ESI) for specific periods before and after childbirth. It also provides maternity and other benefits.

The Payment of Gratuity Act 1972 

Another significant social security benefit in India is gratuity. According to the Payment of Gratuity Act, 1972, a gratuity is a one-time payment. When an employee retires, the employer is believed to give them a gratuity as a thank you for their many years of exemplary service. It replaces at least a portion of the income lost as a result of superannuation, retirement or resignation, death, or disabling illness or injury. The PGA is applicable to businesses with 10 or more employees, including factories, mines, oil fields, plantations, ports, railroads, and retail establishments. 

The Unorganised Workers’ Social Security Act, 2008

The Unorganised Workers’ Social Security Act, passed in 2008, mandates the creation of welfare programmes for the benefit of employees in the unorganised sector by the central government and the States. According to the Act, workers must be registered and issued smart cards with individual social security numbers to provide social security to those employed in the unorganised sector.

According to the Act, the Central Government must create suitable welfare programmes for unorganised workers in the areas of health and maternity benefits, life insurance, disability insurance, old-age security, and any other benefits it deems appropriate. Ten schemes have been created by the government under Schedule I of the Act. In accordance with the Act, state governments may create welfare programmes that include provident funds, benefits for workers who suffer an injury on the job, housing, child educational initiatives, worker skill advancement, and old-age homes.

Laws on employment and training in India

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 mandates that employers notify employment exchanges of openings and submit employment returns. As a result, the main functions of employment exchanges are registration, job placement, career counselling, vocational guidance, and data gathering about the labour market.

The Act is applicable to all establishments in the public and private sectors that engage in non-agricultural activities and have 25 or more employees. In relation to openings that have occurred or are about to occur in their establishment, every employer in the public sector in any state or region is required to provide the required information or return to the required employment exchanges. 

Apprentices Act, 1961

To govern and control the apprenticeship training programme and related matters, the Apprentices Act, 1961 was passed. The term ‘apprentice’ refers to a person who is completing apprenticeship training in accordance with a contract of apprenticeship. While apprenticeship training is a programme that is completed in any industry or establishment in accordance with a contract for an apprenticeship and under predetermined terms and conditions that may vary for different categories of apprentices.

The Act requires employers in both the public and private sectors to provide the training infrastructure specified in the Act. Every employer is required to give apprentice training in their trade in accordance with the provisions of the Act and the rules made thereunder. The Apprentices Act of 1961 was updated in 2014 in an effort to increase the number of apprenticeship opportunities available to young people.

The labour codes 

The Government of India has recently started implementing significant labour law reforms across the nation as per the recommendations of the 2nd National Commission of Labour. To ensure that definitions and approaches are clear and consistent, the Commission emphasised the significance of consolidating and simplifying labour laws. Consolidating labour laws would also enable more comprehensive labour coverage because different labour laws apply to various employee classifications and across various thresholds. In response to the National Commission of Labour recommendations, the four Codes on wages, labour relations, social security, and occupational safety were introduced in Parliament.

There are currently over 40 laws governing wages, industrial relations, social security, workplace safety, and working conditions. For Indian industries, the proliferation of rules and regulations has been a major source of concern because it frequently leads to increased resources, documentation, administrative time, and costs. The new labour codes seek to harmonise India’s various labour laws and streamline the country’s various compliance requirements. Each code governs a specific area of labour law, as indicated in the title, and aims to codify and replace earlier laws in that area.

Objective of the codes

The following are some of the objectives of the codes 

  1. The amalgamation of 29 laws relating to wages, working conditions, social security, safety, and health.
  2. To ensure consistency in definitions for ease of compliance.
  3. To increase business accessibility, generate employment, and give employers more flexibility in terms of employee mix and hiring.
  4. To simplify and make clear the issues surrounding contract labour.
  5. To standardise issues related to union recognition and negotiating agents, rationalise wages, and address unethical behaviour.
  6. The rationalisation of enforcement authorities and the implementation of a web-based inspection process.

The Code on Wages, 2019 

The Code on Wages, 2019 was passed by both Houses of Parliament and received assent by the President on August 8, 2019. The Code aims to regulate wages in all jobs involving any industry, trade, business, or manufacturing, including wages and bonuses. It consolidates the following laws pertaining to wages:

  • Minimum Wage Act, 1948
  • Payment of Wages Act, 1936
  • Payment of Bonus Act, 1965 
  • Equal Remuneration Act, 1976 

Two important definitional changes came about as a result of the codification. First, the Code widened the scope by erasing the distinction between scheduled and non-scheduled employment, whereas the Minimum Wage Act of 1948 only applied to the ‘schedule of employment’ covered by the law.  As a result, the definitions of employee and employer have been broadened to include both the formal and informal sectors.

Second, the Code extended the application of the Minimum Wage Act of 1948 and the Payment of Wages Act of 1936 to all establishments and employees, unless expressly exempted, rather than just those whose income had to be below a fixed limit.

Salient features of the Code on Wages, 2019

  1. It contains all the necessary clauses regarding wages, equal pay, payment, and bonuses.
  2. Provisions of wage shall be applicable to all employees, including both organised and unorganised sectors.
  3. It enables the relevant government to choose the criteria for determining the minimum wage for various employee categories. The factors will be decided by taking into account the necessary skills, the difficulty of the work assigned, the geographical location of the workplace, and any other factors that the relevant government deems necessary.
  4. To guarantee that those making less than a predetermined wage ceiling are entitled to an annual bonus of at least 8.3 % of their wage or Rs. 100, whichever is higher, provisions from the previous Payment of Bonus Act, 1965, have been incorporated.
  5. The specific references to ‘man’ and ‘woman’ in the Equal Remuneration Act of 1976, which guaranteed equal pay for equal work for men and women, have been replaced by ‘gender.’ This has the potential to protect transgender communities from discrimination.
  6. The Code also establishes a quasi-judicial appellate authority to handle disputes. It is significant that the Inspectors-in-Charge of Compliance Monitoring have been renamed Inspectors-cum-Facilitators in the Code.
  7. The code also established Central and State Advisory Boards to decide on Minimum Wages and other related issues, and women’s representation on the boards was made statutory.
  8. The statute of limitations for filing claims has been increased from six months to two years to three years to give workers more time to resolve their claims.

The Industrial Relations Code, 2020 

The Industrial Relations Code was passed by Parliament in September 2020 and received the President’s assent on September 28, 2020.  The Industrial Relations Code was brought into force to consolidate and amend the laws governing trade unions, working conditions in industrial establishments, undertaking investigations, resolving industrial disputes, and other related issues. It consolidates the following labour laws: 

  • Industrial Disputes Act, 1947 
  • Trade Unions Act, 1926 
  • Industrial Employment (Standing Orders) Act, 1946 

Salient features of the Industrial Relations Code, 2020 

  1. The Code governs strikes, trade union registration, and industrial dispute resolution.
  2. The definition of a worker under the Code has been broadened to include individuals in supervisory positions making up to 18,000 rupees per month or an amount as determined from time to time by the Central Government.
  3. To register a trade union, either 10% of an industry’s workers or a minimum of 100 workers must be present. A trade union will be designated as the negotiating union only if 51% of the workers support it. In all other cases, the Code requires the formation of a union negotiating council.
  4. In addition, workers are now required to provide 60 days’ notice before striking, which was not previously required. Companies with more than 300 employees must obtain permission from the union or the state government before terminating employees. The previous law stipulated that there must be 100 employees in an establishment for the provisions to be in effect. It also recommends establishing an industrial tribunal to settle disputes.
  5. To resolve disputes resulting from individual complaints, all establishments with more than 20 employees are required to have one or more grievance redressal committees. Both employers and employees must have an equal number of representatives on this committee. Notably, the committee must have a sufficient number of women employees, and the chairman must be selected alternately from among the employees and the employer.

The Occupational Safety, Health and Working Conditions Code, 2020

The Code on Occupational Safety, Health and Working Conditions, 2020, received the assent of the President on 20.09.2020. The purpose and objective of the code are to consolidate and amend the laws regulating the occupational safety, health, and working conditions of the persons employed in an establishment and other connected matters. It also contains provisions concerning the employment of women in all types of work. The code consolidates the following legislations 

  1. The Factories Act, 1948
  2. The Contract Labour (Regulation and Abolition) Act, 1970
  3. The Mines Act, 1952
  4. The Dock Workers (Safety, Health and Welfare) Act, 1986
  5. The Building & Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
  6. The Plantations Labour Act, 1951
  7. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
  8. The Working Journalist and Other Newspaper Employees (Conditions of Service and Miscellaneous Provision) Act, 1955
  9. The Working Journalists (Fixation of rates of wages) Act, 1958
  10. The Cine Workers and Cinema Theatre Workers Act, 1981
  11. The Motor Transport Workers Act, 1961
  12. The Sales Promotion Employees (Conditions of Service) Act,1976
  13. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966

Salient features of the Occupational Safety, Health, and Working Conditions Code, 2020 

  1. The Code applies to factories with at least 20 workers engaged in a manufacturing process that requires power or at least 40 workers engaged in a manufacturing process that does not require power.
  2. The Code does not apply to the Central Government, State Governments, ships of war, or any other nationality, but its provisions apply to contract employees who are employed by a contractor in places of business where the Central Government or a State Government is the principal employer.
  3. The code places a high priority on the health, safety, and welfare of employees working in a variety of trades, businesses, manufacturing facilities, motor vehicle operations, building and other construction work, newspaper establishments, audio-video production, plantations, mines, and service industries.
  4. By replacing multiple registrations under various laws with a single common registration, one licence, and one return, the Code seeks to lessen the administrative burden on employers. Eventually, this will result in the creation of a centrally located database that will facilitate business operations.
  5. Provisions for leave encashment are set aside for use at the end of the fiscal year. Most importantly, if a worker does not use all of his/her permitted leave in a given calendar year, the Code allows for the carry forward of leaves. The total number of leave days that can be carried forward cannot exceed 30 days, but any unpaid leave may be carried forward indefinitely.
  6. There are provisions for women’s employment between the hours of 7 p.m. and 6 a.m., with conditions pertaining to their consent and safety, working hours, and holidays. If women’s employment poses a risk to their health and safety, the employer will provide adequate safeguards before their employment.
  7. The employer is required to obtain the employee’s permission for overtime work. It also applies to small businesses with fewer than ten employees. Additionally, the employees will be paid twice as much for their overtime work.
  8. The code also provides the Central Government broad authority to control the general safety and health of citizens in all or parts of India in the event of an epidemic, pandemic, or disaster. Furthermore, it also provides for a social security fund to care for unorganised workers.

The Code on Social Security, 2020

The Social Security Code, 2020 was approved by both houses of Parliament and given presidential assent on September 28, 2020. In order to extend social security coverage to all employees and workers in all sectors, whether organised or unorganised, the Code was passed to amend and consolidate the pertinent provisions of the nine following central labour enactments.

  1. The Employees’ Compensation Act, 1923
  2. The Employees’ State Insurance Act, 1948 
  3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 
  4. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 
  5. The Maternity Benefit Act, 1961
  6. The Payment of Gratuity Act, 1972
  7. The Cine Workers Welfare Fund Act, 1981, 
  8. The Building and Other Construction Workers Welfare Cess Act, 1996 and 
  9. The Unorganised Workers’ Social Security Act, 2008.

Salient features of the Code on Social Security, 2020

  1. The Code defines fixed-term employment, home-based workers, independent contractors, platform workers, and gig workers.
  2. The Code permits an establishment to voluntarily provide coverage for the Employees’ Provident Fund in Chapter 3 and the Employees’ State Insurance Corporation in Chapter 4 even if it has fewer employees than the minimum required.
  3. The Code provides the Central Government with the power to establish social security schemes through the Employees State Insurance Corporation for gig workers, platform workers, and undocumented workers as well as their families. The Central Government also has the authority to create plans to provide social security benefits to independent contractors and any other group of people it sees fit.
  4. Every platform worker, gig worker, and unorganised worker is required to register under the code based on a self-declaration submitted in the format and with the Aadhar number as specified by the Central Government.
  5. The Code requires the employer to pay the gratuity to fixed-term employees on a pro-rata basis rather than according to the pre-existing minimum of five years of continuous service.
  6. Chapter Six of the Social Security Code addresses maternity benefits and clarifies creche facilities. A woman is not allowed to work for six weeks after giving birth,  miscarriage, or medical termination of pregnancy. If their employer does not provide free prenatal or postnatal care, women are entitled to a medical bonus of Rs. 3,500 or the amount determined by the Government of India. A woman is also entitled to maternity benefits for a total of 26 weeks, beginning no more than eight weeks before the scheduled delivery date.
  7. Offences and penalties under the Code have undergone significant change. Before taking any legal or prosecutorial action, employers are given the chance to address non-compliance. A fine of Rs. 1,000,000 and a one- to three-year prison sentence are imposed for failing to deposit employee contributions. On the other hand, repeat offenders are subject to harsher punishments, and corporate offences are subject to punishments that go beyond the boundaries of the corporation.

Conclusion 

Labour law was developed as a result of workers’ struggles for their justly deserved rights and lives throughout the world.  They engaged in disputes to defend themselves and improve their living conditions. The field of labour law is dynamic and has a unique place in the legal profession. It has specific components aimed toward employees.  In some ways, India’s labour laws resemble those of advanced industrial societies.  Many laws govern social security, workplace health and safety, and other issues such as minimum employment standards.  However, only a small portion of India’s workforce is formally covered by the nation’s labour laws, and even among that group, the actual application of the law is very limited.

The consolidation of multiple labour laws is a significant step toward making compliance easier. Because of the rationalisation of definitions and the expansion of coverage to include the unorganised sector, the benefits of the law will be available to a larger workforce. Even though it took decades, the change should pave the way for more significant ones in the years ahead, improving India’s ease of doing business, creating jobs, and influencing the country’s future industrial relations.

FAQ’s

What is the status of the implementation of the 4 labour codes?

The following states and union territories (UTs) have pre-published draft rules for the four labour codes as the first step toward implementation: 

  • 27 States/UTs have published pre-draft rules on the  Code on wages, 2019
  • 23 States/UTs have published pre-draft rules on the Industrial Relations Code, 2020;
  • 21 States/UTs have published pre-draft rules on the Code of Social Security, 2020; and
  • 18 States/UTs have published pre-draft rules on the Occupational Safety, Health and Working Conditions Code, 2020

Although implementation has made steady progress, there are currently no specifics available regarding the precise date when enforcement will begin.

What are the benefits of labour codes?

Some of the benefits of the labour codes are as follows

  • Labour codes help in streamlining compliance by ensuring that each industry has a single licensing mechanism. 
  • Technology-assisted national databases have formalised the workforce, which is the first step toward distributing welfare benefits. 
  • Furthermore, all individuals who were previously disqualified from coverage under labour laws are now included in the definition of workmen/employees. 

How does the Code on Social Security, 2020 define the concept of social security?

To guarantee access to healthcare and financial security, particularly in cases of old age, unemployment, sickness, invalidity, work injury, maternity, or the loss of a breadwinner, benefits are provided to workers, including unorganised workers, gig workers, and platform workers. These benefits are referred to as ‘social security’ under the code.

References


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