10 Major Labor Laws in India

 · 9 mins read

-Nathalia M Fenwick

In the words of Abraham Lincoln, “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”

Undoubtedly, laborers are the backbone of any industry and ultimately the economy of the country. Labor laws are those Acts, ordinances, rules, judgments and other administrative rulings that regulate the working conditions, timings, compensation and other aspects relating to labor in any industry. In India there are a multitude of legislations for the protection of these workers from exploitation and for providing compensation in cases of injury while performing their tasks.

The labor laws came into existence mainly due to the workers demand to have a healthy, safe and financially rewarding work atmosphere. The trade unions were formed to negotiate with the employers and all these disputes have lead the people to understand the importance of effective labor laws. The International Labor Organization (ILO) was one of the earliest organizations at international level to deal with labor problems. It was formed as a part of the ‘League of Nations’ and after Second World War, it was restructured.

In India, the development of these laws can be traced back to the British Colonization, where at that time there was stiff competition between India and Britain with regard to textile export. It was then the Britishers adopted the Factories Act, 1833, first ever legislation in India to make the labor costlier. There it was, our first ever legislation to regulate the workings of workers, fixation of working hours, abolition of child labor and so on. Even though it was brought with the intention to suppress the Indian exports, ultimately it has proven to be effective for Indians.

Constitution of India lays the groundwork for all labor laws in India, today. Part 3 and 4 i.e., Fundamental rights and Directive Principles of State Policy have provisions regarding the same. Articles 16, 19, 23 and 24 affirm the need for protecting and safeguarding the labor and also to maintain the dignity of human labor.

Now let’s discuss some of the major labor laws in India-

  1. The Factories Act, 1948- It is an Act to ensure the adequate safety standard of workers and also to protect and promote the health and welfare of the workers in a factory. It also aims to provide provisions for approval before establishing a factory to prevent the haphazard growth of factories in India. It extends to whole of India, to all manufacturing processes and establishments and others falling under the definition of ‘factory’. It is applicable to those factories which employ more than 10 workers with power and without power more than 20. The Factories Act clearly specifies the timings for work, it says that no worker shall be employed for more than 48 hours in a week. It also says that no woman worker can work after 7 pm and before 6 am. Overtime wages must also be given. However, it is not necessary for field workers who work outside the premises of the headquarters as a tour . R. Anandhan v. Avery India[1]
  2. Industrial Disputes Act, 1947- It is an Act to provide for settlement of disputes and to secure harmony and peace between the workers and the employers. It provides provision for payment of compensation to workers on injury, closure, retrenchment or lay- off. It also regulates the industries for closure and establishes rules and prior approval from the government. The industrial dispute Act is an effective law to check the unfair labor practices on the part of the employer. It extends to whole of India and every industrial establishment carrying on any business, trade, manufacture or distribution of goods and services.In__Bangalore Water Supply v. A. Rajappa & Ors.[2]__ The court defined the term ‘industry’ and held that any establishment where there is a systematic activity, cooperation between the employer and employee and there is production/ distribution of goods or services which satisfy the human needs and wants is an industry.
  3. The Payment of Bonus Act, 1965- It is an Act which provides for the payment of bonus to persons working in certain class of industries on the basis of profits or production or productivity of the said industry. It extends to whole of India and in every factory with 20 or more employees working on any day during an accounting year. Every employee receiving a salary or wages of Rs. 10,000 or more is entitled to bonus whether or not the person employed is doing skilled, unskilled, managerial or supervisory jobs. It also provides for minimum and maximum bonus payable and the disqualification for receiving it.
  4. The Payment of Gratuity Act, 1972- This is an Act to provide for the payment of gratuity to an employee in factories, mines, plantations, ports, railway companies, oilfields or other establishments on his superannuation, resignation or on his death/ disablement. This is for the service rendered to the employer by him and not when gratuitously given,Delhi Cloth and General Mills Co. Ltd v. The Workmen.[3] Provided that the employee has rendered his service continuously for a period of five years or more to the employer.
  5. The Workmen’s Compensation Act, 1923- It is an Act to provide compensation to the workmen or their dependents in cases of fatal injuries, disablement or even death resulting from the accident that occurred in the factories. It does not apply to the workmen covered under the ESI Act. It defines, workmen, disablement, the employer’s liability towards employees, when the employer will not be liable, accident arising in or out of the course of employment and so on. It is pertinent to note that the compensation will be awarded only for the injuries arising in the course of employment and there must be a casual connection between the injury and the work done. It also regulates the amount of compensation that needs to be given in specific situations.
  6. The Trade Unions Act, 1926- It is an Act to provide for registration of Trade unions created for the purposes of resolving the conflicts between employers and employees or between employees themselves. It enables collective bargaining. It is not mandatory to have the trade union registered but it is desirable so that it will be able to face the legal consequences in future. It also provides for the rules regarding notice, amalgamation of trade unions, its dissolution, change in registered office, obligations of trade unions and also a detailed procedure regarding registration.
  7. The Payment of Wages Act, 1936- It is an Act to provide for wages to all persons employed in factories, railways either directly or by a sub- contractor, or by contract and to any other establishment or industry. It defines wages as the remuneration payable to the employees for the services rendered by them. The definition of industrial or other establishment is defined and it includes a wide range of activities such as mines, tramway services, plantations, workshop etc. It also specifies what is not included under the definition of establishment. The Act specifies the wage period for payment to employees, responsibilities of employers towards employees with regard to wage payment, deductions, rights of employees, penalties and so on.
  8. Minimum Wages Act, 1948- It is a legislation which aims to provide minimum wages to the workers to prevent the exploitation of their labor. The concept of minimum wages was first introduced by ILO. In the case of Bhavan Boarding and Loadging Bangalore v. State of Mysore[4] and another, it was held that the main objective of Minimum Wages Act is to protect the workers from exploitation and to provide for speedy mechanism to award compensation. Even though a fixed rate could not be given to all as nature of work in each industry is varied, the Act aims to provide a basic standard wage owing to the particular class of industry. The norms for fixing the minimum wages include three consumption unit per earner, 2700 calories of food requirement, 72 yards per annum per family for cloth, rent, fuel, lighting, children’s education, medical requirements etc.
  9. The Contract Labor (Regulation and Abolition) Act, 1970- It is an Act to regulate the working of contract laborers in an establishment employed by the contractors. It aims to prevent the exploitation of such contract laborers who work only for a short period of time as per the contract. It applies to any establishment, where 20 or more workers are engaged on any day of the preceding 12 months. It defines who is a workmen, principal employer and also a contractor. It also provides for the registration of the principal employer, licensing of contractors, facilities to be provided to the contract laborers and other aspects of their working.
  10. Maternity Benefit Act, 1962- It is an Act which provides protection to the workers who are mothers and regulates their working conditions, leave and payments. It applies to women who work in mines, factories, plantations, circus industry, shops and other establishments with 10 or more persons engaged in work. Any woman who has worked for more than 160 days in any establishment as defined under the Act is entitled to maternity benefit. The maximum period for which she can avail this benefit is up to 12 weeks. This will include 6 weeks till her delivery and another 6 weeks after delivery. Even in the event of miscarriage she is entitled to maternity benefit.

Conclusion

Establishing an effective legal system for labor related aspects are vital for every country’s economic growth and prosperity. The government of India notified on August 8, 2019, the Code of Wages which subsumes the 4 existing legislations on labor such as The Payment of Wages Act, 1936, The Minimum Wages Act, 1948, The Payment of Bonus Act , 1965 and The Equal Remuneration Act, 1976. It is necessary to simplify certain laws and yet make it efficient when it comes to implementation. Though the Code of Labor presents in itself certain defects, it cannot be denied that we have a comprehensive legislation regarding each and every aspect of labor. However, there are few areas that need to be addressed such as working of transgender in factories or industries. And with the changing times, few of the outdated provisions must be revamped.

  1. 1972 (42) FJR 304 (Mad HC).

  2. AIR 1978 SC 553

  3. 1987 AIR 2414.

  4. 1970 AIR 2042.