Blog Details

Author : Associate Megha Motwani

Labor legislation or the labor law or the employment law is a body of laws, precedents and administrative rulings that address the legal rights of workers and restrictions on working people and the organizations. The term labor legislation is used to cover all the laws which have or enacted to deal with the employment and non-employment, wages, working conditions, industrial relations, certification of unions, labor-management relations collective bargaining, workplace health and safety, social security and welfare of persons employed in industries.

The history of labor legislation is interwoven with the history of British colonialism. The industrial labor relations enacted by the British were primarily intended to protect the interest of British employers. Independent India called for a transparent partnership between labor and capital. Ultimately Industrial Dispute Act brought into force on 1st April 1947 repealing the Trade Disputes Act 1929 has since remained on the statute book.

The amendments in Indian labor legislation have gradually increased after the year 2017, the significant once are:

1. The Payment of Wages Act, 1936 – the amount of wages to employees was raised from INR 10,000 p.m. to INR 18,000 p.m.

2. Employees State Insurance Act, 1948 – the employees getting 10,000 p.m. were covered under this Act after amendment this limit shifted to INR 21,000 p.m. to bring maximum employees under the ambit of this Act.

3. The Payment of Bonus Act 1965 – tow amendments were brought under this Act.

a. Under this Act to the limit of employees getting INR 10,000 p.m. was raised to INR 21,000 p.m., thereby bringing within the ambit of this Act, various employees who will be entitled to claim bonus.

b. Earlier it was criteria that bonus must be calculated on the maximum amount of INR 3,500. Thus, if some is earning less than the bonus will be calculated on the reduced amount but in no case the amount has to be exceeded, but now the same has been amended and the amount to be taken on which the bonus will be calculated is INR 7,000 p.m., in any case, the salary earned, is more than the actual limit than for this Act the actual salary to be considered will be INR 7,000 only.

4. Employee Provident Fund and Miscellaneous Provisions Act1952–

a. The Act defines excluded employee is one whose earning is more than INR 6,500 p.m., and this limit is now raised to INR 15,000 p.m., thus, whose earning less than INR 15,000 will not be considered an excluded employee for this Act.

b. As well as the pensionable salary is exceeded to INR 15,000 p.m. and the insurance benefit provided is of a maximum of INR 6 lacs.

c. Also, the EPF members who remain jobless for a month can withdraw 75% of PF contribution, remaining 25% after two months.

d. EPF admin charges reduced to 0.50% from 0.65% w.e.f 1 June 2018.

e. PF interest reduced to 8.55% from 8.65%.

5. Government has also increased the limit of gratuity from INR 10 lacs to INR 20 lacs

6. Maternity Benefit Amendment Act 2017 – maternity leave for women employees have increased from 12 weeks to 26 weeks.

7. Code on Wages Bill – the central government is planning to remove four existing labor laws like the Payment of Bonus Act 1965, the Payment of Wages Act 1936, the Minimum Wages Act 1948 and the Equal Remuneration Act 1976.

8. Ease of Compliance to Maintain Registers under Various Labor Laws Rules, 2017 – this amendment has reduced 56 registers under 9 labor laws into five common registers.

How Have Amendments Impacted?

1. Applicability to your establishment – the amendments introduced would apply to every establishment employing workers in contrast to ventures in which person is dealing solely or in partnership without involving services of the other.

2. Challenges before you, as the employer – this Act purely provides for the benefits and advantages of employees/workers/labors and the entitlement of the same is to be ensured by the employer. 

3. Consequences in adapting to the amendments – in any case, the employer fails to provide which under the Act it is obligated to do so will have to face consequences which can be either in the form of fine or compensation or any other way as may be provided.

The amendments have tried to cover more employees to make them entitled to the fair wages and various other benefits given under the Act or are made available by the amendments. This has thus, raised the quality of life and thereby caused to improve health and safety of workers. It protects workers against oppressive management and practices, helps in enforcing social insurance and labor welfare schemes On the other hand companies can also avail some benefits such as tax advantages that they get when transfers amount towards the provident fund contribution at the same time employer treats this as the salary of the employee.