Labour law rules have been a point of strong contention in India since independence. Through two new labour reform bills scheduled for the upcoming parliament session, here’s a look at five of the most important existing labour laws in India.
With the largest youth population, according to the United Nations, India stances at a point where the dream of becoming a super economy is no longer a ideal but a sweet possibility. A major hurdle which stands between our dear Prime Minister’s ambitious projects and reality is labour laws. With mixed perspectives, labour law rules and reforms have always been a topic of controversy. In such a scenario, Labour rules in India become imperative for employees in both organized and unorganized sectors to be aware of the existing laws and rights, and the on-going reforms.
The Global Rights Index (2016), issued annually by the International Trade Union Confederation (ITUC), ranked as India one of the 10 worst countries for working people. Violence, large-scale exclusions of workers from labour law, and arrests are the causes for the country’s poor rank. India has been loyally defending its position in the Index since 2014. There are eight core agreements of the International Labour Organization (ILO) against forced labour. India has approved only four, and refuses to consent to the following four:
· Freedom of Association and Protection of the Right to Form Convention
· Right to Establish and Collective Bargaining Convention
· Minimum Age Convention
· Worst Forms of Child Labour Convention
India has the golden opportunity to tie together the large youth population and expedite economic growth.
Variation in a country’s economy is marked by the growth of secondary and tertiary sectors. Currently, the part of employment in these sectors is less than 30 %, but their contribution to the GDP is almost double that. Since they are labour-intensive, creating job opportunities in these sectors becomes important. However, this estimation can happen only when one walks the path of labour reforms.
A number of economists have ardently criticized the rigidity of Labour rules in India. They consider that these inflexible laws are the reason behind reduced employment opportunities, and can even be an obstacle to the Make in India campaign. They claim flexibility in hiring and firing of employees.
The Prime Minister, to fulfil his ambitious projects, is planning to restart labour reforms by introducing two new bills—The Industrial Relations Code Bill (2016) and the Wage Code Bill (2016)—in the second half of the budget session. Like the land reforms, even these bills are expected to be intensely opposed by the opposition and labour unions.
Whatever might be the fate of these bills, let us draw our attention to the current labour law rules. These rules are complex, and the use and understanding of them depends on multiple factors. The best way to wrap your head around these rules is to get legal advice from an employment & labour law lawyer. The following are the 5 Labour rules in India every employee should know:
1. The Factories Act, 1948
According to Labour rules in India, this act protects workers of a factory, and its provisions include health, safety, proper working hours, etc. It states not only the working hours, but also provides for overtime pay to workers who work beyond their shift. Night shifts have to be on a rotational basis, and the organization is required to inform the employees of them beforehand. No woman employee is supposed to work between 10 PM and 5 AM, and in the case of a night shift, a notice has to be given 24 hours before the shift.
2. Payment of Gratuity Act, 1972
Gratuity is a retirement benefit paid as a token of thanks for the services offered under Labour rules in India. An organization with 10 or more employees is supposed to pay gratuity to employees who have worked for 12 months or more. Gratuity is the last drawn salary multiplied by the total years of service. In case the proprietor fails to provide gratuity, he/ she faces prison for a term not less than six months and not more than two years.
3. Workers’ Provident Fund and Miscellaneous Provisions Act, 1952
The EPF Act provides social security remunerations under Labour rules in India, like pension and insurance cover to the employee of an establishment which has 20 or more employees. In 2014, the government amended the act and drawn-out the wage ceiling from ₹6,500 per month to ₹15,000 per month. The pensionable salary is an average of the monthly salary for the input for the last 12 months before membership ends.
4. Payment of Bonus Act, 1965
An employee working in a formation with 20 or more labours has rights to a bonus under this labour law rules. The bonus is 8.33 %, and shall not exceed 20 % of the worker’s salary. In 2015, the government amended this act to extend the edge of wages from ₹10,000 to ₹25,000, thus covering a larger pool of employees.
5. Equal Remuneration Act, 1976
This Labour rules in India prevents discrimination among workers on the basis of gender. According to this act, employers can’t differentiate among genders in matters of wages, training, transfer, and promotion. The labour law rules run for equal remuneration to both men and women workers for the same work done.
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