Major Labour Laws and Acts in India

Labour legislation in India regulates the relationship between employers, workers, trade unions, and the state. It balances economic growth with social protection, human dignity, and fair working conditions. The constitutional architecture places labour under the Concurrent List of the Seventh Schedule, granting both Parliament and State Assemblies legislative powers. India has transitioned from a fragmented framework of over 40 central laws to four consolidated Labour Codes based on recommendations of the Second National Commission on Labour.

Constitutional Foundations of Labour Laws

Division of Legislative Powers

• Union List (List I): Entry 55 covers regulation of labour and safety in mines and oilfields. Entry 61 covers industrial disputes concerning Union employees. Entry 65 deals with vocational training institutions.
• Concurrent List (List III): Entry 22 covers trade unions along with industrial and labour disputes. Entry 23 covers social security, employment, and unemployment. Entry 24 covers welfare of labour, working conditions, provident funds, pensions, and maternity benefits.

Constitutional Rights and Principles

• Article 14, 15, and 16: Guarantee equality before law, prohibit state discrimination, and mandate equal opportunity in public employment.
• Article 19(1)(c): Guarantees the fundamental right to form associations or trade unions.
• Article 23: Prohibits human trafficking, forced labour, and begar.
• Article 24: Prohibits the employment of children below 14 years of age in factories, mines, or hazardous occupations.
• Directive Principles of State Policy (Part IV): Article 39 mandates equal pay for equal work and protection of worker health. Article 41 secures the right to work. Article 42 directs the state to secure just and humane conditions of work and maternity relief. Article 43 directs the provision of a living wage, while Article 43A encourages worker participation in management.

Evolution of Key Pre-Code Labour Acts

Wage and Working Conditions Regulations

• Factories Act, 1948: Regulated health, safety, welfare, working hours, annual leave, and young person employment in factories employing 10 or more workers with power, or 20 or more without power.
• Payment of Wages Act, 1936: Ensured timely payment of wages without unauthorized deductions for specific classes of wage earners.
• Minimum Wages Act, 1948: Mandated central and state governments to fix minimum rates of wages in scheduled employments.
• Equal Remuneration Act, 1976: Enforced payment of equal remuneration to men and women workers for same or similar nature of work without gender discrimination.
• Payment of Bonus Act, 1965: Provided for bonus payment to persons employed in certain establishments on the basis of profits or production.

Industrial Relations and Trade Union Acts

• Trade Unions Act, 1926: Provided mechanisms for the registration of trade unions and granted immunity to registered trade unions from civil and criminal liability for legitimate trade union activities.
• Industrial Disputes Act, 1947: Provided machinery for investigation and settlement of industrial disputes through conciliation, arbitration, and adjudication. Regulated strikes, lockouts, layoffs, retrenchments, and establishment closures.
• Industrial Employment (Standing Orders) Act, 1946: Required employers in industrial establishments to define conditions of employment precisely through certified standing orders.

Social Security and Welfare Acts

• Employees’ Compensation Act, 1923: Required employers to pay compensation to employees or their dependents for injuries or death arising out of and in the course of employment.
• Employees’ State Insurance (ESI) Act, 1948: Provided health insurance, sickness, maternity, and disablement benefits to employees working in factories and specified establishments.
• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952: Established mandatory provident funds, pension schemes, and deposit-linked insurance schemes for employees.
• Maternity Benefit Act, 1961: Provided maternity leave with wages and healthcare amenities. The 2017 amendment increased paid maternity leave from 12 weeks to 26 weeks for up to two surviving children.
• Payment of Gratuity Act, 1972: Provided a statutory scheme for payment of gratuity to employees engaged in factories, mines, ports, railways, and shops after five years of continuous service.
• Unorganised Workers’ Social Security Act, 2008: Formulated social security schemes covering life, disability, health, maternity, and old-age protection for informal sector workers.

Consolidated Four Labour Codes Architecture

Key Reforms Introduced by New Labour Codes

Code on Wages, 2019

• Extends minimum wage coverage to all workers across organized and unorganized sectors without restriction to scheduled employments.
• Authorizes the Central Government to fix a Floor Wage taking into account minimum living standards across geographical regions. State Governments cannot fix minimum wages below this floor wage.
• Mandates overtime pay at a minimum rate equal to double the normal rate of wages.
• Standardizes the definition of ‘wages’ across all four codes, restricting exclusions to a maximum of 50 percent of total remuneration.

Industrial Relations Code, 2020

• Raises the threshold for mandatory government permission before layoff, retrenchment, or closure of establishments from 100 workers to 300 workers.
• Raises the threshold for mandatory certified Standing Orders from 100 workers to 300 workers.
• Formalizes Fixed-Term Employment, granting fixed-term employees equal wages, working hours, and social security benefits on par with permanent workers.
• Requires a 14-day prior notice before calling a strike or lockout in any industrial establishment.
• Grants sole negotiating union status to a trade union possessing at least 51 percent worker support in an establishment.

Code on Social Security, 2020

• Expands statutory social security coverage to include gig workers, platform workers, and unorganized workers.
• Establishes a Social Security Fund funded through corporate social responsibility contributions, government grants, and aggregator contributions (1 to 2 percent of annual turnover).
• Reduces the gratuity eligibility threshold for fixed-term employees from 5 years to pro-rata completion of one year of service.
• Mandates the creation of a national database through Aadhaar-seeded registration for unorganized workers.

Occupational Safety, Health and Working Conditions Code, 2020

• Applies uniform safety standards across establishments employing 10 or more workers, as well as all mines and docks.
• Introduces a single pan-India electronic registration system for establishments replacing multiple registrations.
• Mandates employers to conduct free annual health check-ups for employees above a prescribed age.
• Permits women to work in all establishments for all types of work, including night shifts between 7 PM and 6 AM, subject to their consent and employer-provided safety arrangements.
• Defines inter-state migrant workers to include employees recruited directly by an employer or contractor, providing journey allowance and transport benefits.

Key Facts to Remember

• The First National Commission on Labour was set up in 1966 under the chairmanship of Justice P.B. Gajendragadkar.
• The Second National Commission on Labour was constituted in 1999 under Ravindra Varma, which recommended grouping complex labour laws into broader codes.
• Labour falls under Entry 22, 23, and 24 of the Concurrent List in the Seventh Schedule of the Constitution.
• The Indian Slavery Act of 1843 was one of the earliest pre-independence statutory steps dealing with unfree labour conditions.
• The Factories Act of 1881 was the first statutory legislation in India regulating child employment and factory hours under British administration.
• The Trade Unions Act, 1926 requires at least seven members to apply for registration of a trade union.
• The Maternity Benefit (Amendment) Act, 2017 made creche facilities mandatory for establishments employing 50 or more employees.
• Under the Code on Wages, 2019, wages must be paid in currency notes, coins, electronic mode, or by cheque.
• The e-Shram portal was launched by the Ministry of Labour and Employment to build a comprehensive national database of unorganized workers.
• The Inspector-cum-Facilitator model replaces traditional labour inspectors under the new Labour Codes to promote web-based randomized inspections.