Concept Note – Employment and Labour Laws: – INDIA -2017

Under the Constitution of India, Labour is a subject in the Concurrent List where both the Central & State Governments are competent to enact legislation. At present, there are 44 labour related statutes enacted by the Central Government dealing with minimum wages, accidental and social security benefits, occupational safety and health, conditions of employment, disciplinary action, formation of trade unions, industrial relations, labour welfare. Certain statutes are sector specific like for Doc workers, Beedi workers, Cine Workers, Construction workers.

In order to make India a business friendly nation and for the sake of concepts like “Ease of Doing Business”, “Make in India” it is important that governance of the Employment and Labour laws be at par with international standard. This is one of the most important areas which influence the flow of foreign direct investment in any country.

The Ministry of Labour & Employment has introduced online registration process for the Employees’ Provident Fund Origination (“EPFO“) and the Employee’s State Insurance Corporation (“ESIC“), with no registration cost and manual intervention. Also, on the discretion of the employer, registration for both EPFO and ESIC can be done through the common registration form. The Ministry has also launched common registration service on the e-biz Portal of DIPP for 5 Central Labour Laws. Further, single online common Annual Return under 9 Central Labour Acts has been made operational on Shram Suvidha Portal since April 24, 2015 to ensure simplified filings of the single online return by the establishments instead of filing separate returns.

To ensure compliance the Ministry of Labour and Employment has notified the Ease of Compliance Rules 2017 to maintain registers under various labour laws. Further, the rules provide that combined registers may be maintained either electronically or otherwise, without obtaining any prior permission.

It is important to note that the aforesaid reforms and initiative have given a breather to industry and have drawn many foreign investors. There is scope of continuous improvement in the below mentioned statutes and hope government initiative and focus on it will revive this structure.

We can note that the following Central statutes and amendments are applicable on most of the manufacturing units in India.

1. Employees’ State Insurance Act, 1948; – Social Security – The Employees’ State Insurance Rules, 1950 have been amended 4 times since June 2016. Amendments are followings

a. Earlier employees were exempted whose daily wage limit was Rs. 100 which got enhanced up to Rs. 137 with this amendment on June 2016.

b. Rate of Contribution for initial 24 months is for employer – 3% and employee’s – 1% with amendment on October 2016.

c. Wage limit for coverage has been enhanced from 15,000 to 21,000 by amendment on December 2016.

d. Insured mother will include Commissioning mother and adopting mother by amendment on January 2017.

2. The Payment of Gratuity Act, 1972; – Social Security

3. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, – Social Security

4. The Industrial Disputes Act, 1948; – Industrial Relations

5. The Trade Union Act, 1926; -Industrial Relations

6. Industrial Employment (Standing Order),Act – Notification dated 07.10.2016 Industrial Relations

7. The Contract Labour (Regulation and Abolition) Act, 1970; – Labour Welfare

8. The Equal Remuneration Act, 1976; Child & Women Labour

9. The Employees Compensation Act, 1923’ – (Amendment) Act 2017.

10. The Maternity Benefits Act, 1961; -(Amendment) Act 2017 – There are certain changes made in the law particularly the following can be noted :

a. Duration of Maternity leave is now 26 weeks in place of 12 weeks and it can be availed prior to 8 weeks from the date of delivery. But it is 12 weeks only from 3 children onwards.

b. It is available to adoptive and commissioning mothers also for 12 weeks from the date of such adoption.

c. Crèche facility is required for establishment with 50 or more employees within the prescribed distance.

d. Option to work from home, if natures of work permit her to do so with mutual consent of employer.

e. Employer to inform the women of maturity benefits at the time of appointment.

11. The Factories Act,1948 – Industrial Safety &Health

12. Minimum Wages Act, 1948 –wages

13. Payment of Bonus Act,1965 – (Amendment) Act 2015 – wages

14. Payment of Wages Act 1972 – (Amendment) Act 2017 –changes the method of payment of wages to the employees either through cheque or crediting in employee’s bank account.

15. The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959:- Employment.

The above statutes govern issues related with employment, wages, industrial safety and health, labour welfare, industrial relation, social security and such other issues concerning the employees.

The company should ensure that proper compliances of these various statues are in place and the employee policies are formulated accordingly.

DISCLAIMER: The information given in this Note is based on the analysis of the facts and my understanding and interpretation of applicable laws as on date. I expressly disclaim any financial or other responsibility arising due to any action taken by any person on the basis of this note.