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India: Labour Law Amendments 2016-2017*

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INTRODUCTION
There is a view that the Indian Labour Legislation has vowed its commitment to the
welfare of workers alone. Despite numerous legislations, the enforceability always
seemed to lack in India, thus defeating the very purpose. Labour market flexibility is a
very important factor that influences the flow of foreign direct investment in any country.
A need was seen for having fewer laws, like a unified labour code and ensuring better
enforcement.

This approach has not only made India's rank in World Bank's ranking of countries for
"Ease of Doing Business" better, but it has also been in furtherance of the 'Make in India'
campaign by the Prime Minister.

In order to make India a business friendly nation in line with changing market conditions,
initiatives have been undertaken by the government since 2014, and have been going
on; with the most recent amendment in maternity and child labour law and some are in
the pipeline, simplifying and consolidating laws dealing with industrial relation, wages,
social security, industrial safety and welfare.

These reforms have given a breather to industry and have drawn many foreign investors.

I. The Maternity Benefit (Amendment) Act, 2017


The Maternity Benefit (Amendment) Act, 2017 has come into force on March 28, 2017
after receiving the assent from the President on March 27, 2017. The major changes
brought by the amended Act, compared with the provisions of the earlier Act, are given
hereunder:

Particulars The Maternity Benefit (Amendment) Act, 2017

Duration of Increases the duration of the maternity leave from 12 to 26 weeks which can
maternity be availed prior to 8 weeks from the date of expected delivery (earlier it was 6
leave weeks prior).
From third child onwards, maternity leave to be for 12 weeks which can be
availed 6 weeks prior1 .

The following new provisions have added by the amendment:

Maternity leave for Maternity leave of 12 weeks to:


adoptive and i. Adoptive mothers (adopts a child below 3 months of age);
commissioning ii. Commissioning mother2 .
mothers This period to be calculated from the date the child is handed over to
the said mothers. 3

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Crche facilities To be provided by an establishment with 50 or more employees
within a prescribed distance. 4 visits in a day to crche should be
allowed.

Option to work from Employer to permit a woman to work from home, if the nature of
Home work permits her to do so and the same can be availed after the
completion of her maternity leave for a duration mutually decided.4

Employer to inform Woman to be informed at the time of appointment, of the maternity


the woman of benefits available, either in writing or electronically.5
maternity benefits

Analysis:
It is anticipated that as now the employer will have to pay full wages for 26 weeks. The
aforesaid amendments may have an adverse impact on job opportunities for women.
The amendment is silent on paternity leave. The women who work in the unorganised
sectors are not covered due to their unstructured employment conditions.

II. The Child Labour (Prohibition and Regulation) Amendment Act, 2016
The Child Labour (Prohibition and Regulation) Amendment Act, 2016 has come into
force on July 30, 2016. The major changes brought by the amended Act compared with
the provisions of the earlier Act, are given hereunder:

Particulars The Child Labour (Prohibition and Regulation) Amendment


Act, 2016

New Category of person A person between 14 to 18 years of age 6 .


called "Adolescent" Prohibition7 of employment in any hazardous occupations
and processes as specified in the Schedule.

Definition of child A person who is less than 14 years of age or of age given
under the Right of Children to Free and Compulsory
Education Act, 2009, whichever is more.8

Prohibition of employment Prohibits employment of a child in all occupations except


of children in any where the child helps his family after school hours.9
occupation and process.

Power of Central Govt. To add or omit any hazardous occupation and process from
the list as included in the amendment.10

Regulation of work Provides for regulation of work conditions viz. working


Conditions of Adolescent hours limited to 6 hours in a day, 1 hours rest after every 3
hours of work, no overtime etc.

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Penalty Enhanced penalty for violation of the provisions of the
amended Act:
Imprisonment: 6 months to 2 years (earlier it was 3 months
to 1 year)
Fine: INR 20,000 to 50,000 (earlier it was INR 10,000 to
20,000)

Schedule- List of hazardous As per the amendment:


occupations and processes Prohibition is only on occupations related to mining and
explosives/inflammable substances. (earlier the list
contained 18 occupations).
Hazardous processes as mentioned under the Factories
Act, 1948 (earlier the list contained 65 processes).

Analysis:
Regulation will be a challenge as the amendment does not provide the criteria to
determine if an enterprise is a family enterprise or not.
Amendment legalises child labour in "family business" and is silent on regulation of
working hours, overtime, weekly holidays etc. for such child labour, thereby,
making this provision exploitable for employment of child labour.

III. The Employees' State Insurance (Central) Amendment Rules, 2016


The Employees' State Insurance Rules, 1950 ensure implementation of the provisions of
the Employees' State Insurance Act, 1948. The Rules have been amended 4 times since
June 2016.

The major changes brought by the various amendments are as under:

Amendments Particulars Change by Amendment


with effect
from

June 14, Employee exempted An employee whose average daily wage is upto
2016 from contribution INR 137 is exempted from contribution (earlier it
was INR 100).11

October 6, Rates of employer's In areas where the Act is implemented for the
2016 and employee's first time, the rates of contribution for initial 24
contribution months:
Employer - 3% of the wages
Employee - 1% of the wages.12

December Wage limit for Wage limit for coverage of an employee has
22, 2016 coverage of an been enhanced from INR 15,000 to 21,00013
employee

January 20, Insured Mother Includes a commissioning mother and an


2017 adopting mother.14

Analysis:
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Amendments to have a financial impact on employer's contribution as they cover
more employees due to increase in the wage limit and the benefits will have to be
provided to insured women as well.

IV. The Payment of Wages (Amendment) Act, 2017


The Payment of Wages (Amendment) Act, 2017 changes the method of payment of
wages to the employees. Now the employer can pay wages to its employees by the
following modes without obtaining written authorisation (as required earlier):

i. in coin or currency notes; or


ii. by cheque; or
iii. by crediting them into his bank account.

The relevant government may notify establishments, whereby the employer should pay
the wages only by cheque or crediting the wages in employees' bank account (and not
through cash).15

V. Ease of Compliance Rules, 2017


In order to facilitate the ease of doing business in India, the Ministry of Labour and
Employment has notified the Ease of Compliance rules to maintain registers under
various labour laws, which have been in effect since February 21, 2017.

Prior to the aforesaid amendment, almost every labour statute required the employer to
maintain registers providing details of employees, working hours, overtime, wages,
leaves, etc. Thus, compliances under every statute resulted in multiple efforts by the
employer in maintaining separate registers, which was a major drawback under the
Indian Labour Laws. Therefore, in order to avoid overlapping/ redundant fields and to
save costs and efforts, maintenance of combined registers was introduced by way of
these new rules, thereby ensuring better compliances of labour laws.

Further, the rules provide that combined registers may be maintained either electronically
or otherwise, without obtaining any prior permission. The enactments on which these
rules would be applicable are:

i. Building and Other Construction Workers (Regulation of Employment and


Conditions of Service) Act, 1996
ii. Contract Labour (Regulation and Abolition) Act, 1970
iii. Equal Remuneration Act, 1976
iv. Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979
v. Mines Act, 1952
vi. Minimum Wages Act, 1948
vii. Payment of Wages Act, 1936
viii. Sales Promotion Employees (Conditions of Service) Act, 1976 and
ix. Working Journalists and Other Newspaper Employees (Conditions of Service) and

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Miscellaneous Provisions Act, 1955

VI. Other initiatives by the Central Government16


In furtherance to the "Ease of Doing Business" initiative, the Government of India is
keenly following the benchmarks set by Doing Business Project of the World Bank to
improve the business environment in India. The Ministry of Labour & Employment has
introduced online registration process for the Employees' Provident Fund Origination
("EPFO") and the Employee's State Insurance Corporation ("ESIC"), with no registration
cost and manual intervention. Also, on the discretion of the employer, registration for
both EPFO and ESIC can be done through the common registration form which is
available at the e-Biz Portal of Department of Industrial Policy and Promotion ("DIPP")
since March 9, 2016. Establishments can also file online a common Electronic Cum
Challan Receipt ("ECR") for both EPFO and ESIC on Shram Suvidha Portal.

The Ministry has also launched common registration service on the e-biz Portal of DIPP
for 5 Central Labour Laws including Employees Provident Fund & Miscellaneous
Provisions Act, 1952, Employees State Insurance Act, 1948, Building & Other
Construction Workers (Regulations of Employment and Conditions of Service) Act, 1996,
Contract Labour (Regulation and Abolition) Act, 1970 and Inter-State Migrant Workmen
(Regulations of Employment and Conditions of Service) Act, 1979.

Further, single online common Annual Return under 9 Central Labour Acts has been
made operational on Shram Suvidha Portal since April 24, 2015 to ensure simplified
filings of the single online return by the establishments instead of filing separate returns,
under the said 9 Acts.

Footnotes

* These amendments are only Central Amendments and do not include the State Amendments

1 Section 5(3)

2 Biological mother who uses her egg to have a surrogate child

3 Section 5(4)

4 Section 5(5)

5 Section 11A

6 Section 2 (ia)

7 Section 3A

8 Section 2 (ii)

9 Section 3

10 Section 4

11 Rule 52

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12 Rule 51B

13 Rule 50

14 Rule 2 (6A)

15 Section 6

16 http://www.labour.nic.in/sites/default/files/Ease%20of%20Doing%20Business%20MoLE%20initiatives
09.03.2017.pdf

The content of this article is intended to provide a general guide to the subject matter.
Specialist advice should be sought about your specific circumstances.

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