A View on Labour Acts in India

Your Guide
Introduction
Laws are made to bring discipline and control the situation.

We have various laws.

Labour Laws are the laws which provides guidelines for

establishments and organizations.

These laws are made for smooth functioning of

establishments and to protect the employee and employer
rights in running the organization.

Labour laws are divided into Central & State acts. Central
acts are applicable all over India, whereas State acts are
applicable for the particular State.
Labour Acts
1. Shops and Commercial Establishment Act.
2. The Employees Provident Fund & Misc.Provisions Act.,1952 &
The Employees Pension Scheme 1995.
3. The Payment of Gratuity Act, 1972
4. The Employees’ State Insurance Act, 1948
5. Maternity Benefit Act, 1961
6. The Workmen’s Compensation Act, 1923
7. Minimum Wages Act, 1948
8. The Payment Of Wages Act, 1936
9. The Industrial Employment (Standing Orders) Act, 1946
10.Payment of Bonus Act, 1965
1. Shops and Commercial Establishment Act.
This is a State act. Each state will have separate act.

ITES & IT industry comes under S&E Act.

This license needs to renewed as per the norms of the act.

The main objective is to regulate the working and

employment conditions of employees.

This Act specifies about the working hours, rest intervals,

overtime, holidays, leave, termination of service etc.
2. The E P F & M P Act, 1952 & The EPS 1995
• The Employee contributes 12 % & Employer also contributes 12 %.
• From Employer’s contribution 8.33 % on Rs.6500 or Rs.542 will be
remitted towards Pension.
• Balance 3.67% and in excess of Rs.542 will be added to EPF.
• An employee has to fill nomination form at the time of joining.
• There are two major Benefits: Withdrawal & Transfer
• An employee can withdraw the amount if he/she quits on specific
conditions or on retirement.
• If an employee joins another company he/she can opt for transfer of
funds.
• In the event of death of an employee the amount will be settled to
nominated persons.
3. The Payment of Gratuity Act, 1972
Gratuity is applicable to all employees.

Eligibility: After completion of 5 years, & in excess of six months,

OR

If an employee expires while in service the Gratuity will be paid to

his/her nominee. In this case the number of service will not be
applicable.

Payment: Company shall pay Gratuity on last drawn Basic.

Formula: Last Drawn Basic X No. of Service X 15

--------------------------------------------------------
26
4. The Employees’ State Insurance Act, 1948
This benefit is extended to non-government sector.

•Partners: Employee, Employer, State & Central Govt’s are the partners In this
corporation.

•Identification Cards:
Employee has to fill up declaration form and submit to HR along with 2
POSTCARD SIZE PHOTO’S. Initially employees will get a temporary card followed with
permanent card.

•Benefits: The benefits of this scheme are:

a) Medical: When an employee is sick he/she can visit local dispensary to
get the medical treatment.
b) Sickness: If an employee is on long leave due to sickness the ESI
department will reimburse 50 % of his salary.
c) Maternity: Women employees will get 12 weeks of paid leave under the Act.
d) Disability: When an employee becomes disable due to accident , the ESI Dept.,
will settle the amount as per the table applicable at that time.
5. Maternity Benefit Act, 1961
•This Act will not be applicable for women employees who are
covered under ESI Act

•Women employees who are not covered under ESI will be

covered under this Act.

•A women employee will be paid for 12 weeks of salary during

maternity leave. 6 weeks in case of miscarriage.

•The employee should have worked for minimum of 80 days to

avail benefits.

•If the employee takes another employment during maternity

leave the benefits will be withdrawn.
6. The Workmen’s Compensation Act, 1923
• The Act is a welfare legislation which treats compensation amount as a cost of
production or trade.

• The Act does not apply to establishments where the Employee’s State Insurance Act is
in force.

• Death or injury should have occurred arising out of and in the course of employment in
order to be entitled for compensation.

• For determining compensation, disablement is categorized as partial and total. Each

category is further classified into temporary and permanent.

• No limit on wages or salaries is stipulated for entitlement of the benefits of the Act.

• Compensation is calculated on the basis of minimum wages prescribed for the industry
or establishment.

• The employer is not liable to compensate when death or injury occurs due to the willful
disobedience of the workman.
7. Minimum Wages Act, 1948
• The objective of the Act is to preserve the minimum amount
payable as wages to employees.

• It ensures constant revision of minimum wage so that a stage of a

living wage is reached.

• The Act also specifies the minimum rates of wages payable in

respect of scheduled employment

• It is the State Government which fixes the minimum wage in

respect of every Scheduled employment.

• The minimum wage is related to the cost of living index number.

• The index number is ascertained and declared by the competent

authority by notification in the Gazette.
8. The Payment Of Wages Act, 1936
• The Act seeks to regulate frequency and mode of payment of wages, levying
fines and making deductions from wages of employees.

• It is applicable to workers whose monthly average wages are up to and

inclusive of Rs. 10000.00 P M.

• A wage period shall not be longer than one month

• Wages comprise basic pay, dearness allowance, production incentive and all
other allowances payable under the contract of employment

• The responsibility for wage payment rests on the Manager so identified. If no

person is so identified, the occupier is deemed as employer.

• Wages are payable before 7th of the succeeding, if the company or

establishment employs less than 1000 and before 10th of succeeding month if
the employees are 1000 or more.
9. The Industrial Employment (Standing Orders) Act, 1946
• The Act seeks to prevent vagaries in fixing accountability on the employees
and prevent unfair labour practices by employers.

• The provisions of the Act apply to establishments wherein 50 or more

employees are employed or were employed.

• Such establishments are required to submit draft sanding orders for

certification of Labour Commissioner.

• Draft standing orders must be prepared on the lines of the model standing
orders prescribed in the Act.

• The Act sets out matters required to be provided by every employer in the
standing order.

• A copy of the standing orders shall be displayed by every employer on the

notice board (in English & local language) within the establishment.
10.Payment of Bonus Act, 1965
• This act provides for payment of bonus on the basis of profits or on the
basis of production or productivity.

• Every employee receiving salary or wages (Basic + DA) up to

Rs.10000.00 p.m. are eligible for Bonus.

• However the amount of bonus is payable subject to the max. of 3500.00

only.

• The employee has to worked for at least 30 working days in a financial

year.

• The infancy period is 5 years.

• The minimum Bonus payable is 8.33% & maximum is 20%.

• The Bonus should be paid within 8 months from end of financial year.
Monthly , Half-yearly & Annual Returns
All establishment has to file monthly, quarterly, half-yearly and
annual returns of below acts. They are:

1. S & E Act
2. The EPF & MP and EPS Act
3. The P of G Act, 1972
4. The ESI Act, 1948
5. M B Act, 1961
6. Minimum Wages Act, 1948
7. The Payment Of Wages Act, 1936
8. National & Festival Holiday Act
THANK YOU