Labor Laws in India: All you need to Know

The economic history of India relying on agriculture was primarily based on the zamindari system enforcing a labor-employer class hierarchy. Criticized by political philosophers such as Karl Marx the class hierarchy between the bourgeoisie and proletariat is the hurdle to an equal, just and developed society. Labors in India have a history of being deprived of their financial rights and health benefits. This reinforced hegemony began to be opposed by organizations formed by the suppressed labor force. In 1950, India witnessed the implementation of Indian Labor Laws safeguarding labor rights, focusing on health benefits of the labor and safeguarded their respect and dignity.

labor laws in india; Explained

Drafting the Indian Labor Laws was done with the foundational constitutional grounds of article 14 (every citizen is equal before law), article 15 (there should be no discrimination against citizens, article 16 (equality of opportunity), article 19(c) (right to form unions or associations), article 23 (prohibiting forced labor), article 24 (prohibiting child labor), article 38(1) (promoting welfare of citizens), article 38(2) (minimizing inequality of income) and article 43(a) (securing participation of workers in management undertakings) implemented through the 42nd amendment.

In 1920, labors from different parts of India went on a strike after which a suit was filed in Madras High Court against the laborers. This suit led to the implementation of the Trade Union Act in 1936, giving powers to unions of certain criminal activities. This act was an example of reinstating democracy. The Minimum Wages Act, 1948 determined wages in the organized sector, however, the wages fixed were too low. The 1923 Workmen Compensation Act covered issues of employment, health and maternity benefits through cases of accident and recovery of employers during the period of employment. The amount of recovery here is calculated by the amount of injury. Such as; in-case of death the dependent is liable to recovery. The Maternity Benefit Act offered pregnant women the provision of a 90day pain leave. The labor law implemented the provision of ‘equal pay for equal work’. The labor laws later also evolved to the acknowledgement of the safety of women at workplace implementing The Sexual Harassment at the Workplace Act, 2012.

Labor Laws in India: Timeline

  • Workmen’s Compensation Act, 1923
  • Trade Unions Act, 1926
  • Payment of Wages Act, 1936
  • Industrial Employment (Standing Orders) Act, 1946
  • Industrial Disputes Act, 1947
  • Minimum Wages Act, 1948
  • Industries (Regulation and Development) Act, 1951
  • Employees Provident Fund and Miscellaneous Provisions Act, 1952
  • Maternity Benefit Act, 1961
  • Payment of Bonus Act, 1965
  • Payment of Gratuity Act, 1972
  • Sexual Harassment and Workplace Act, 2012

Provisions under the Indian Labor Law

Minimum Wage: Rs. 25,000/month

Standard time of work: 9 hours/day

Minimum rest time: 30 minutes/ 5 hours

Maximum Limit of Overtime: 200 hours/ year

Overtime pay (premium): 100%

Dismissal due to redundancy: permitted (if government-approved)

Current Situation

In September 2020 passed three labor code bills pertaining to labor laws in India-

The three labor code bill(s) integrates 24 central labor laws amplifying labor reforms in India. The reforms permit industries a certain amount of flexibility in retrenchment and hiring. The reforms also expand the social security net of labor in both the formal and informal sectors.

The Industrial Relations Code, 2020 drafts out new conditions pertaining to the rights of workers going on strikes where the Union is required to submit a ‘strike notice’ 60 days prior. This changes the earlier criteria where workers could go on a strike within 2-6 weeks of submitting a strike notice.

The Occupational Safety, Health and Working Conditions Code, 2020 amends regulations concerning working conditions, occupational safety and health of workers. The Code offers provisions of the maximum work time being shifted to 8 hours per day. Other than enforcing the inclusion of women in all establishments it also enforces that the employer must ensure adequate safeguards at the workplace prior to employment.

The Code on Social Security, 2020 guarantees social security for workers in both the formal and informal sector.  It also accommodates gig and platform workers. The bill assures the announcement of provisions (by the government) in relation to- provident fund, housing, skill upgradation, employment injury benefit, old age homes, education schemes (for children) and funeral assistance.  It also taps onto the corporate social responsibility funds, setting up a National Social Security Board to offer recommendations to the central government in regard to suitable schemes for the workers of the unorganized sector.

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