Indian labour law refers to laws regulating labour in India. India is a federal form of government and because labour is a subject in the concurrent list of the Indian Constitution, labour matters are in the jurisdiction of both central and state governments. Laws have been enacted by both central and state governments on labour relations and employment issues.

Indian labour law makes a distinction between people who work in “organised” sectors and people working in “unorganised sectors”. The laws list the different industrial sectors to which various labour rights apply. People who do not fall within these sectors, the ordinary law of contract applies to them.

Employment Contracts

Among the employment contracts that are regulated in India, the regulation involves significant government involvement which is rare in developed countries. The Industrial Employment (Standing Orders) Act 1946 requires that employers have terms including working hours, leave, productivity goals, dismissal procedures or worker classifications, approved by a government body.

The Contract Labour (Regulation and Abolition) Act 1970 aims at regulating employment of contract labour so as to place it at par with labour employed directly. Women are now permitted to work night shifts too (10 pm to 6 am).

Wage Regulation

The Payment of Wages Act 1936 requires that employees receive wages, on time, and without any unauthorised deductions. Section 6 requires that people are paid in money rather than in kind. The law also provides the tax withholdings the employer must deduct and pay to the central or state government before distributing the wages.

The Minimum Wages Act 1948 sets wages for the different economic sectors that it states it will cover. It leaves a large number of workers unregulated. Central and state governments have discretion to set wages according to kind of work and location, and they range between as much as ₹143 to 1120 per day for work in the so-called central sphere. State governments have their own minimum wage schedules.

The Payment of Gratuity Act 1972 applies to establishments with 10 or more workers. Gratuity is payable to the employee if he or she resigns or retires. The Indian government mandates that this payment be at the rate of 15 days salary of the employee for each completed year of service subject to a maximum of ₹2000000.

The Payment of Bonus Act 1965, which applies only to enterprises with over 20 people, requires bonuses are paid out of profits based on productivity. The minimum bonus is currently 8.33 per cent of salary.

Health and Safety

The Workmen’s Compensation Act 1923 requires that compensation is paid if workers are injured in the course of employment for injuries, or benefits to dependants. The rates are low.

  • Factories Act 1948, consolidated existing factory safety laws
  • The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 that seeks to protect and provides a mechanism for women to report incidents of sexual harassment at their place of work.

Pensions and insurance

The Employees’ Provident Fund and Miscellaneous Provisions Act 1952 created the Employees’ Provident Fund Organisation of India. This functions as a pension fund for old age security for the organised workforce sector. For those workers, it creates Provident Fund to which employees and employers contribute equally, and the minimum contributions are 10-12 per cent of wages. On retirement, employees may draw their pension.

  • Indira Gandhi National Old Age Pension Scheme
  • National Pension Scheme
  • Public Provident Fund (India)

The Employees’ State Insurance provides health and social security insurance. This was created by the Employees’ State Insurance Act 1948.

The Unorganised Workers’ Social Security Act 2008 was passed to extend the coverage of life and disability benefits, health and maternity benefits, and old age protection for unorganised workers. “Unorganised” is defined as home-based workers, self-employed workers or daily-wage workers. The state government was meant to formulate the welfare system through rules produced by the National Social Security Board.

The Maternity Benefit Act 1961, creates rights to payments of maternity benefits for any woman employee who worked in any establishment for a period of at least 80 days during the 12 months immediately preceding the date of her expected delivery. On March 30, 2017 the President of India Pranab Mukherjee approved the Maternity Benefit (Amendment) Act, 2017 which provides for 26-weeks paid maternity leave for women employees.

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, provides for compulsory contributory fund for the future of an employee after his/her retirement or for his/her dependents in case of employee’s early death. It extends to the whole of India except the State of Jammu and Kashmir and is applicable to:

  • every factory engaged in any industry specified in Schedule 1 in which 20 or more persons are employed.
  • every other establishment employing 20 or more persons or class of such establishments that the Central Govt. may notify.
  • any other establishment so notified by the Central Government even if employing less than 20 persons

Collective action

The Industrial Disputes Act 1947 regulates how employers may address industrial disputes such as lockouts, layoffs, retrenchment etc. It controls the lawful processes for reconciliation, adjudication of labour disputes.

Fair dismissal

Some of India’s most controversial labour laws concern the procedures for dismissal contained in the Industrial Disputes Act 1947. A workman who has been employed for over a year can only be dismissed if permission is sought from and granted by the appropriate government office (Indian Labour Regulations). Additionally, before dismissal, valid reasons must be given, and there is a wait of at least two months for government permission, before a lawful termination can take effect.

A permanent worker can be terminated only for proven misconduct or for habitual absence (Parul Sharma, February 2007). The Industrial Disputes Act (1947) requires companies employing more than 100 workers to seek government approval before they can fire employees or close down. In practice, permissions for firing employees are seldom granted. Indian laws require a company to get permission for dismissing workers with plant closing, even if it is necessary for economic reasons. The government may grant or deny permission for closing, even if the company is losing money on the operation.

The dismissed worker has a right to appeal, even if the government has granted the dismissal application. Indian labour regulations provide for a number of appeal and adjudicating authorities – conciliation officers, conciliation boards, courts of inquiry, labour courts, industrial tribunals and the national industrial tribunal – under the Industrial Disputes Act. These involve complex procedures. Beyond these labour appeal and adjucating procedures, the case can proceed to respective State High Court or finally the Supreme Court of India.

  • Bharat Forge Co Ltd v Uttam Manohar Nakate [2005] INSC 45, a worker found sleeping for the fourth time in 1983. Bharat Forge initiated disciplinary proceedings under the Industrial Employment Act (1946). After five months of proceedings, the worker was found guilty and dismissed. The worker appealed to the labour court, pleading that his dismissal was unfair under Indian Labour laws. The labour court sided with the worker, directed he be reinstated, with 50% back wages. The case went through several rounds of appeal and up through India’s court system. After 22 years, the Supreme Court of India upheld his dismissal in 2005.

Simplification of Labour Laws Over the Years

Reforms in labour laws are an ongoing process to update the legislative system and address the need of the hour so as to make them more effective, flexible and in sync with emerging economic and industrial scenario.The Second National Commission on Labour has recommended that the existing Labour Laws should be broadly grouped into four or five Labour Codes on functional basis. Accordingly, the Ministry has taken steps for drafting four Labour Codes on Wages; Industrial RelationsSocial Security & Welfare; and Occupation Safety, Health and Working Conditions respectively, by simplifying, amalgamating and rationalizing the relevant provisions of the existing Central Labour Laws. Out of these, the Labour Code on Wages has been introduced in Lok Sabha on 10.08.2017 and subsequently, referred to the Parliamentary Standing Committee on Labour. The rest of the codes are at pre-legislative consultative stage.

The process of Legislative reforms on Labour includes consultation with stakeholders including Central Trade Unions, Employers’ Association and State Governments in the form of tripartite consultation. Suggestions/comments received during the tripartite consultations are taken into account/considered while finalizing the amendment in various Act/Rules.

The Ministry has taken a number of legislative initiatives in labour laws during the last 3 years. Some of the important initiatives are as follows:

  1. Amendment to the Payment of Bonus Act, 1965 by which   eligibility limit for payment of bonus enhanced from Rs 10000/- to Rs. 21000/- per month and the Calculation Ceiling from Rs. 3500/- to Rs. 7000/- or the minimum wages.
  2. Payment of Wages (Amendment) Act, 2017 enabling payment of Wages to employees by Cash or Cheque or crediting it to their bank account.
  3. Child Labour (Prohibition and Regulation) Amendment Act, 2016 provides for complete ban on employment of children below 14 years in any occupation or process.
  4. Maternity Benefit Amendment Act, 2017, increases the paid maternity leave from 12 weeks to 26 weeks.
  5. The Employee Compensation (Amendment) Act, seeks to rationalize penalties and strengthen the rights of the workers under the Act.
  6. Ministry has notified “Ease of Compliance to maintain Registers under various Labour Laws Rules, 2017” on 21st February 2017 which has in effect replaced the 56 Registers/Forms under 9 Central Labour Laws and Rules made there under in to 5 common Registers/Forms. The number of forms provided under 3 Central Acts/Rules has been reduced from existing 36 to 12. The register can also be maintained in digitised manner. This will save efforts, costs and lessen the compliance burden by various establishments.
  7. A Model Shops and Establishments (RE&CS) Bill, 2016 has been circulated to all States/UTs for adoption with appropriate modification. The said Bill inter alia provides for freedom to operate an Establishment for 365 days in a year without any restriction on opening/closing time and enables employment of women during night shifts if adequate safety provisions exist.
  8. A category i.e. Fixed Term Employment has been introduced under Industrial Employment (Standing Orders) Act, 1946 to impart flexibility to an establishment to employ people in case of Apparel Manufacturing Sector to meet the fluctuating demands of the sector due to its seasonal nature.

(This information was given by Shri Santosh Kumar Gangwar, Union Minister of State (I/C) for Labour and Employment in written reply to a question in Rajya Sabha.)

Legal Query

Labour Law, Query on Industrial Dispute Act, 1947

Dear Sir,

My case is running in labour court, regarding illegal termination and salary cheating.

My designation was “Field Service Engineer”

Management in their written statement told that I have been appointed in supervisory capacity, but in my replications, I told that I was working in ‘worker’ category because nobody was reporting or working under me, I don’t have any leave passing authority, hiring or firing authorities, cheque signing authority, company policy making authority and I was working under manager.

After their WS and my Replication following issues were framed by the hon’ble court

(1)          Whether the termination of the services of the workman is illegal and unjustified, if so to what effect? OPW

(2)          Whether the petitioner is covered under the definition of ‘workman’ as per section 2(s) of   the I.D.act? OPW

(3)          Relief.

After framing issues, workman evidence closed, followed by cross-examination conducted by management on me and after that, I found very important documents in which the management itself declared me as ‘worker’. These documents, I was unable to tender during workman evidence phase, because these documents were misplaced during my house shifting process from one city to another city. I was unable to trace these documents before workman evidence was closed.

So I wanted to submit these documents as additional workman evidence, so I have submitted the application for additional workman evidence, containing Exhibits EX-P17 to EX-P35. Out of these exhibits, EX-P34 was misplaced and most critical to me, to prove myself as the worker. Hence the hon’ble court said to submit the reply for this application to management on next hearing.

But management did not give any reply on next hearing since they did not file any reply, the hon’ble court was supposed to accept my application. since there is no resistance from management but hon’ble court without their reply and my replication directly conducted the argument. In that I have strongly argued that EX-P34 contains very critical document in which the management itself declared me as a ‘worker’ and the burden of proof is on me to prove myself as a ‘worker’ in front of court as you can see the three issues were framed by the hon’ble court, the management argument was very poor. But even then hon’ble court mentioned that my arguments were poor and my application was finally rejected by improper, irrelevant and incomplete explanations. i.e. no reasons were given to Exhibits EX-P21, EX-P33, EX-P34 and EX-P35 out of Exhibits EX-P17 to EX-P35.

Question No 1

I know that this order can be challenged in HC for this which petition to be applied? Review petition, revision petition or writ petition? And I came to know that there is no time limit for Review petition, revision petition or writ petition, is it correct?

Question No 2

Since there is no explanations or reasons of rejection given for Exhibits EX-P21, EX-P33, EX-P34 and EX-P35 out of Exhibits EX-P17 to EX-P35.

Shall I ask the same court (trial court) to give reasons for rejection of Exhibits EX-P21, EX-P33, EX-P34 and EX-P35 out of Exhibits EX-P17 to EX-P35 As law also permits under section 114, Order/Rule 47 of C.P.C., is correct?

Question No 3

Before going my case to labour court, there was a conciliation process and there it has failed and then, the case was referred to labour court, the conciliation report, confidential report was sent to Head Office, the labour commissioner but this document is missing in court file, please tell me whether this confidential report is supposed to send this document to labour court know or not?

Question No 4

Since I was unemployed from last 3 years, I took 5 lakhs loan from my father in law towards my family expenditure and they are unable to give further loan and I am not getting any job due to following three reasons a) may age is above 41years b) due to termination and c) due to my court case is running. Since the company did not pay full salary during my entire 22 months tenure. i.e. salary cheating done to me, paid less salary than the offered salary, So finally my question is shall I ask “INTERIM RELIEF or MAINTENANCE” If yes under which section of I.D.Act or any other act other than I.D. Act is applicable for this situation?


  1. A writ can be filed. It is to be filed at the earliest available opportunity.
  2. The trial court will not recall its order. So don’t waste your time filing the application.
  3. The conciliation report had to be included in the judicial file. You can file an application for tracing of the document to the trial court,
  4. To claim the arrears of your salary you have to file a suit for recovery. If you have not sought reinstatement with full benefits then the plaint will have to be amended to incorporate this prayer now.

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