The origins of India's employment laws date back to the British colonial period
preceding independence. These laws were passed by the British government to
safeguard British interests industrialists and employers. In 1883, the Factories
Act was introduced by the British Parliament with the intention of driving up
the cost of Indian labour to benefit British textile magnates. This Act
established rules pertaining to the elimination of child labour, an eight-hour
workday, overtime pay, and prohibitions on females who work at night. Although
the labour market profited from these rules, its real purpose was to appease
special interests.
India saw the enforcement of the Industrial Disputes Act (IDA) of 1929 and the
Trade Union Act of 1923 following World War I and the international talks on
labour reforms. These actions were intended to control the interaction between
employers and workers.
Indian Labour Codes
The Code on Wages, 2019
Four labour regulations that currently exist regarding equal compensation, bonus
payments, minimum wages, and wage payment are replaced by this code. The code
streamlines the computation of overtime compensation and bonus payments and
establishes a uniform minimum salary for all industries.
The Industrial Relations Code, 2020
One of the four primary labour codes included in the Central Government's
biggest reform programme in decades is the Industrial Relations Code of 2020. It
consists of the following three primary core legislation that deal with the
resolution of collective bargaining agreements and labour disputes:
- Industrial Disputes Act of 1947
- The Trade Unions Act of 1926
- Act of 1946 on Industrial Employment (Standing Orders)
The Occupational Safety, Health and Working Conditions Code, 2020
- Factories with 20 employees or more where the production process is powered by electricity.
- Factories with 40 employees or more whose production is done without the use of electricity.
The Office of Central Government, State Government Offices, and any warship,
regardless of nationality, are exempt from this Code. It is important to
remember that this does apply to contract workers who work for contractors in
offices where the State or Central governments are the primary employers. The
Code is divided into schedules that enumerate the industries where risky
employment is performed, a list of topics where health and safety regulations
must be followed, and worker safety as well as a list of diseases that need to
be reported and for which authorities should be notified.
The Social Security Code, 2020
In order to give all employees and workers social security benefits, regardless
of whether they are employed by the government, private industry, or another
sector, the Code on Social Security of 2020 seeks to update and unify social
security laws. Social Security's objective is to safeguard employees by
providing healthcare and a steady income in the event of unforeseen
circumstances like childbirth, old age, or accidents. This act unifies nine key
employment laws pertaining to social security.
Key Features of Indian Labour Laws
Social Security Provisions
Below is a list of Indian laws pertaining to social security:
- The Workmen's Compensation Act of 1923 - Became known as the 1923 Employees Compensation Act. It offers benefits for death, temporary incapacity, permanent partial disability, and permanent total impairment resulting from accidents or occupational diseases that happen while a person is employed. Compensation is given according to the severity of the injuries sustained while on the job.
- The 1948 Employees State Insurance Act - Established a fund to cover medical expenses for workers and their families, in addition to providing monetary benefits for pregnancy and illness and monthly payments to workers in companies employing 10 or more people in the event of death or disability.
- Maternity Benefit Act of 1961 - Article 42 of the Indian Constitution imposes a duty on the state to offer maternity leave and reasonable, equitable working conditions. This Act was passed to guarantee social fairness for female workers. Some of the main benefits of the Act were increased when it was revised in 2017. Women are granted 26 weeks of compensated maternity leave working in the organized sector. After Norway and Canada, India currently offers the third-longest maternity leave in the world.
- The 1972 Payment of Gratuity Act - A gratuity is an upfront payment made by the business. The Act mandates that employers with ten or more workers give workers who have five years of professional experience or longer an extra fifteen days' pay apiece.
Wage Regulations and Working Conditions
Under the Minimum Wages Act of 1948, employers must cap workweeks at 40 hours (9
hours per day + one hour for breaks) and pay the minimum wage imposed by the
government. It is highly discouraged to work overtime because the compensation
is 100% of the total wage. According to the 1936 Payment of salaries Act,
salaries must be sent by mail service or by bank transfer on the last day of the
month's workweek. Every worker is entitled to fifteen working days of fully
compensated time off, seven days of compensated casual leave and seven fully
paid sick days each year in accordance with the 1960 Shops and Establishment Act
and the 1948 Factories Act.
Thanks to the Act of 2017 to Amend Maternity
Benefits for Female Employees in businesses now have the ability to take a fully
paid maternity leave of six months. In addition, it offers six weeks of paid
time off in the event that a pregnancy is lost or medically assisted pregnancy
termination. The statutory acts that oversee the EPFO and the Employees' State
Insurance (ESI) give workers the social security they need for unemployment,
health, and retirement benefits, in that order. Employees who meet the
eligibility requirements for the Employees' State Insurance (i.e., earn less
than Rs. 21,000 per month) have the right to be paid medical leave for a period
of ninety days.
International Labour Laws and Conventions
The International Labour Organization (ILO), established in 1919, plays a
pivotal role in setting international labour standards aimed at ensuring decent
work for all. The ILO's tripartite structure, which includes governments,
employers, and workers, facilitates the creation and enforcement of labour laws
that are crucial for fair and equitable work conditions globally.
Role of International Labour Organization (ILO)
The ILO is the only tripartite United Nations institution. Governments, labour
unions, and businesses from ILO member nations join forces at the organisation
to create labour requirements, improve current legislation, and create projects
that support decent work for people.
The core four strategic goals of the agenda
items for Decent Work are:
- To create and enforce fundamental rights, fundamental principles, and standards in the workplace.
- To guarantee fair access to respectable employment while expanding chances for both men and women.
- To increase everyone's access to and efficiency with social protection.
- To improve social discourse and tripartism.
Universal Labor Rights
A variety of public-private worldwide initiatives, transnational efforts,
binding and soft law norms, public international and private law, and other
factors combine to loosely manage international labour rights. Labour rights are
unique in that they are recognised as political as well as economic, and they
are included in all three of the main international instruments that make up the
International Human Rights Charter.
After governments ratify both United Nations Covenants, they become legally
binding. The ICESCR, ICCPR, and UDHR all acknowledge the importance of the
liberty of association and the ability to organise and join a union. Trade union
rights and freedom of association are also recognised by regional human rights
instruments in the Americas, Europe, and Africa. Furthermore, regional human
rights courts are producing an increasing amount of labour rights jurisprudence.
Labour rights can also be advanced by private agreements, many of which have
dispute resolution procedures. These consist of global framework agreements,
multistakeholder agreements, codes of conduct incorporated into legally binding
contracts, and collective bargaining agreements.
Social Security Agreements (SSA) Framework
Purpose and Benefits
Bilateral agreements called Social Security Agreements (SSA) are made between
nations with the intention of safeguarding the interests of workers who travel
across borders. In a world where globalisation is accelerating, SSAs play a
vital part in protecting workers' interests. An agreement between two countries
that safeguards the rights of cross-border workers is known as a social security
agreement, or SSA. In essence, the SSA strives to prevent "double coverage" and
accords equitable treatment to both home and host country workers, particularly
with regard to social security.
Countries Involved
Korea, the Netherlands, Austria, Canada, Australia, Japan, Hungary, Finland,
Sweden, Czech Republic, and Norway. Consequently, Indian nationals employed
overseas are exempt from paying into the social security systems of SSA nations.
International Labour Standards in India
Application and Relevance
The three components of the ILO: Governments, employers, and workers-develop laws
known as international labour standards (ILS), which elucidate basic workplace
rights, conventions, and values. These rules could be in the form of conventions
or non-binding recommendations which are enforceable international treaties. Of
the 45 Conventions and 1 Protocol that India has ratified, 42 are now in effect.
There are 38 technical conventions, three governance conventions, and four basic
conventions among the accepted conventions.
In India, international labour
standards are crucial for establishing a fair and productive labour market as
well as for influencing national policy and development programmes. There are
several national structures in place to support the implementation and
enforcement of the ILO Conventions, and policies and laws are progressively
reflecting the fundamental principles of these agreements.
Compliance Challenges
The ILO's capacity to manage these challenges and its role in contemporary
worldwide governance have been questioned. As stated by certain observers, the
Organisation is being excluded from the framework regarding the control of the
world economy more and more. The ILO is criticised for its shrinking role in
defining standards, low convention ratification rates, a mandate that is too
ambitious, a sense of representational deficiency, and restrictive
decision-making processes.
The emergence of diverse governance structures and
actors beyond ILO frameworks in recent decades has also raised issues related to
the maintenance of worker rights, or it could potentially pose a threat to them.
Among the significant problems on the aforementioned topic, this study
emphasises a few.
International Labour Workers in India
Legal Status
The International Labour Organization's standards have served as the foundation
for labour rights in India, but there hasn't been any discernible improvement in
standards as a result. A higher level of beneficiary participation can improve
the functionality of India's labour regulation system. The population of India
is the second most employed in the world, behind China, with 501 million people
as of 2021. 6.1% of people were unemployed, while 93.4% of people did not belong
to a trade union. The typical working week was forty hours, and the average
monthly salary was $440.
Rights and Protections
The accepted ILO Declaration on Fundamental Principles and Rights at Work in
1998 and updated in 2022, is a statement of the governments', employers', and
workers' organisations' commitment to upholding basic human ideals that are
necessary for our social and economic existence. It upholds the following duties
and the obligations that with being an ILO member:
- The abolition of all compelled or mandatory employment
- The ability to form associations
- The realisation of the right to collective bargaining
- The effective outlawing of child labour, the eradication of job
- Occupation discrimination, and the provision of a safe and healthy work environment
Indian Government Initiatives for International Workers
Visa and Work Permits
Regular office jobs are not eligible for employment permits for foreign
nationals. Only highly trained individuals who want to work as employees for
formally registered Indian companies are eligible to apply for work visas in
India.
However, a few of professions are exempt, such as:
- Ethnic Cooks for Foreign Missions: This group includes cooks working for foreign missions in India; it does not include cooks employed for profit.
- Language Teachers/Translators: Teachers of languages, with the exception of English language instructors and instructors of subjects taught in a foreign tongue.
- Staff Members of Embassy/High Commission: These individuals are employed by diplomatic missions.
- Honorary Work with NGOs: Foreign nationals working without pay on an honorary basis with Indian NGOs that are registered.
- Faculty at Particular Universities: Foreign teaching faculty, faculty at South Asian University, and faculty at Nalanda University.
- Artists in the Circus: Indian painters looking for work.
If candidates do not fit into this description, they will need to prove that
they are in senior executive roles or have extraordinary talents and make more
than $25,000 USD a year while they are in the nation. Because of this, it is
essential to make sure that any foreign employee you plan to hire locally or
bring to India has the appropriate work permission and visa status. Ignoring
this element may have serious legal repercussions for both foreign companies and
workers, including fines, penalties, and even deportation.
Ease of Doing Business Reforms
The government is leading the efforts under Ease of Doing Business and Reducing
Compliance Burden to create a business-friendly climate, according to the
statement made by Shri Som Parkash, Minister of State for Commerce and Industry,
in response to a parliamentary question today. All organisations, sectors, and
businesses within the economy-including startups-are to gain from these
initiatives. The initiatives' primary areas of concentration are:
- Simplification of the processes involved in filing records, applying, renewing, inspecting, and so forth
- Rationalization by the abolition, modification, or fusion of superfluous laws
- Digitization through the development of web interfaces that replace paper records and forms, additionally
- Decriminalisation of small errors in technique or procedure
Role of EPFO and Social Security Schemes
The Employees' Provident Funds Ordinance was passed on November 15, 1951, and it
gave the Employees' Provident Fund was established. It was replaced in 1952 by
the Employees' Provident Funds Act. Enacted in the Parliament as Bill Number 15
of 1952, the Employees' Provident Funds Bill provided provident funds for
workers employed in factories and other establishments.
With the exception of
Jammu and Kashmir, The present name of the Act is the Employees' Provident Funds
& Miscellaneous Provisions Act, 1952. It covers the entirety of India.
Employers, employees, and representatives from the federal and state governments
make up the tri-partite Central Board of Trustees, Employees' Provident Fund
that oversees the Act and its schemes.
For employees working in India's organised sector, the Board manages an
insurance programme, a pension plan, and a contributory provident fund. In terms
of clients and the number of exchanges of money it handles, it is among the
largest companies in the world. The Employees' PF Organisation (EPFO), which has
offices in 122 locations nationwide, provides support to the Board. The Indian
government's Ministry of Labour and Employment, has administrative authority for
the EPFO. Additionally, the organisation has a well-equipped training facility
where police, staff members, and attending trainings are representatives of both
employers and employees.
Coverage and Benefits
A government-backed programme, the EPF offers investment security and guaranteed
returns. You may take partial withdrawals from your EPF balance before to
retirement under certain conditions (e.g., home purchase, medical problems,
etc.).
Challenges in Implementation
In some situations where workers don't have all the information they need, or
where workers moved employment and their accrued PF wasn't transferred to their
new account; in these cases, the employers have since closed their doors or been
acquired by other companies. In certain situations, employers might not even be
able to confirm and validate the outdated data due to a lack of information.
EPFO ought to offer assistance to these workers or even take into account
different verification techniques. Also, the manager of the retirement fund has
been collaborating with the EPFO to elucidate the procedures, and a number of
businesses and employers' associations have also been in contact with them to
inquire about the timeline for the implementation of the increased pension.
Case Law:
The Employees' Provident Fund Scheme, 1952 (also known as the "EPF Scheme") and
the Employees' Pension Scheme, 1995 (also known as the "Pension Scheme"), which
were framed under the Employees Provident Fund & Miscellaneous Provisions Act,
1952 (also known as the "EPF Act"), were declared arbitrary and unconstitutional
through the Honourable High Court of Karnataka in a landmark decision.
The court's decision addresses long-standing worries expressed by employers and
foreign employees about the financial strain resulting from uncapped provident
fund ("PF") contributions in addition to the difficulties involved in
withdrawing accumulated PF amounts when their employment ends.
References:
- Karnataka High Court Strikes Down Special Provisions for International Workers: A Relief From Social Security? - Lexology
- Employees Provident Fund (EPF) - EPFO Schemes & Benefits (bajajfinserv.in)
- Employees Provident Fund (EPF) - EPFO Schemes & Benefits (bajajfinserv.in)
- Employee Provident Fund Organization: What is EPFO, Structure, Services And Latest Updates (cleartax.in)
- EPFO: Here's all you need to know about Rs 7 lakh insurance cover for salaried employees - BusinessToday
- Press Information Bureau (pib.gov.in)
- Business Friendly Reforms India's Path to Prosperity (investindia.gov.in)
- Improve ease of doing Business | Ministry of Labour & Employment|Government of India
- Work Permits and Visas in India - Gloroots | Gloroots
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