Labour Law in India Favours Employees (Opinion)

Labour law is also known as employment law which is the body of laws, administration, ruling and precedents which is to safeguard the legal rights and put restrictions on working people and their organisation. It relates many aspects such as trade unions ,employees and employers. As per the Indian Constitution, the central as well as State governments are empowered to enact legislations to protect the interest of employees and employers so that employment opportunities should be increased to the vast level.It totally depends on the nature of the work undertaken and number of employees, location and remuneration of employees 1 etc. Earlier, the Indian government at the central as well as state platform monitors the protection of workers, but in reality it is far different because the word labour is subject in the Concurrent list of the Indian Constitution. Generally, labour law includes:

  • Industrial Relations
  • Workplace health and safety
  • Employment standard, including general holidays, annual leave. Working hours, unfair dismissal.

As we all know that India is in the process of introducing changes to labour law for the employment sector so that they can live with human dignity and prosperity and there are multiple reforms going on for this change. The first is the recognition of the economic development of the country which  is well predicted and well administered  in labour laws. Not only this social security, social equity and easy way of handling any business are some of other policies of this reform. Labour law were due for review for many years and now this review will take place from the four labour codes including wages, social security, occupational safety, health and working condition, and industrial relations which mainly focuses on protection of the employers and these laws are authorised by International labour Organisation(ILO) standards2 and a well known process involved various changes to be done. Some of the main topics discussed are as under employees benefits, remuneration and base changes in the wage structure and time hours of work in an office, protection of workers rights and balancing of employees rights and employers duties. Many acts have been accomplished and many new reforms have been reviewed and necessary changes be made such as the definition like that of factory has been revised upto 20 workers from 10 workers.


A person employed for ages by an establishment to do any skilled, semi- skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical or any other worker, whether the term employment be expressed or implied.


Section 2(e)  in the payment of wages Act, 1936 ‘employee’ means any person employed on wages, any establishment, factory, mine, oilfield , plantation, port, railway company or shop to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the term of such employment are expressed or  whether it is implied.

Section2(t) of OSHWC Code, 20203 , define employee in respect of establishment as:

  • A person other than the Apprentices Act, 1961 employed on wages by an establishment to do any skilled, semi skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical, clerical or any other work, whether the terms of employment be express or implied; and
  • A person declared to be an employee by the confident  Government.

However, members of the armed forces of the Union are excluded from the purview of term employees.

The EPF Act’s definition of an employee, according to a division bench of the Supreme Court4 speaking through Justice Indu Malhotra, is broad enough to cover any person involved, directly or indirectly, in the operation of the establishment. The Supreme Court further cited its ruling in Silver Jubilee Tailoring House and Others v Chief Inspector of Shops and Establishments, 3 SCC 498 (1974), where it had ruled that the element of control and supervision could be said to be present when the employer had the right to reject the finished product if it did not adhere to the employer’s instructions and direct the worker to rework According to a split bench of the Supreme Court speaking through Justice Indu Malhotra, the definition of an employee in the EPF Act is broad enough to include everyone participating, either directly or indirectly, in the conduct of the establishment.

The Supreme Court also cited its decision in Silver Jubilee Tailoring House and Others v. Chief Inspector of Shops and Establishments, 3 SCC 498 (1974), in which it had determined that the element of control and supervision could be said to be present when the employer had the right to reject the finished product if it did not follow the employer’s instructions and instruct the worker to rework it.

Indian labour laws are made to define clear cut relations between employees and employers. Indian labour laws are made to safeguard the interest of employees or workers. List of major labour law acts in India are –

  1. Worker’s compensation Act, 1923
  2. The Trade Unions Act,1926
  3. Payment of Wages Act,1936
  4. Industrial Employment Act, 1946
  5. Indian Industrial Disputes Act,1947
  6. Minimum wages Act,1948
  7. Factories Act,1948
  8. Maternity benefits Act, 1961
  9. Payment of bonus Act, 1965
  10. MRTU and PULP ACT,1971
  11. The Payments of Gratuity Act,1972
  12. Labour law compliance Rules
  13. EPF
  14. Employees state Insurance
  15. Sexual harassment of Women at workplace Act,2013

There are many other International Acts and legislations, which are regulated for the purpose of protection and promotion of the workforce for their rights and interests at the workplace. Employment equity Act is one of the most efficient Acts which regulates the rights of the workers and employees and ensures social security to them.5


The attempt made by the government from these reforms to provide wider social security coverage to all citizens of the country and also increased the quantum of social security benefits.6 The proposed new labour codes in India require all employee benefits to be calculated on new reference ‘wages’ as defined under the labour codes as against the current practice of calculating on the basis of salary. Under the new definition of ‘wages’ all salary components except specific exclusion are covered. Also, 50% of gross remuneration will now be covered under wages for all employee benefits calculations as this new definition will mean higher quantum of benefits such as higher gratuity, overtime pay and leave encashment in the hands of employees, and is considered to be the largest benefit of the new labour codes.

However, in a cost to company structure, where benefits are part of salary, higher benefits will mean reduced monthly take home salary for employees.

However, even when benefits such as PF and Gratuity form part of CTC of an employee, benefits such as leave encashment and overtime, which are over and above CTC will increase cost for employers as both recurring and retrospective so this show how Indian labour law focusing improvement in employees benefits not on employers. There may be a significant retrospective impact on gratuity costs for employers in the labour codes, which may impact accounting provisions for the past service period. The increase in employees costs would impact hiring plans and future increments thereby impacting creation of employment opportunities.


Although labour has historically been exploited in a variety of ways and places, the judiciary serves as the final arbiter of how the Indian Constitution should be interpreted. The Indian judicial system functions as a separate unit of government7  with its own employees. The judiciary still serves the interests of society and the people and has not yet been corrupted for this reason. The role of the judiciary is to resolve conflicts and improve the quality of life in society. The following cases can be used to understand how the judiciary affects labour:

In the case of Bandhua Mukti Morcha v. Union of India, bonded labour was used and even the workers were subjected to harsh working conditions, which was a violation of labour regulations in and of itself. It was determined that the way these workers were forced to work violated their fundamental rights, and it was further claimed that article 21 includes the right to live in dignity, which the government must uphold.

Regular employees were fired in the matter of Delhi Transport Corporation v. D.T.C. Mazdoor Congress on the grounds that their work was subpar. The Supreme Court ruled that it violated article 14 and the principles of natural justice to dismiss a permanent employee without providing a justifiable explanation.

In the matter of Randhir Singh v. Union of India,8the petitioner was a driver for the Delhi Police Force, and his pay was significantly lower than that of other drivers working there. The Supreme Court ruled that Article 39(d) of the Constitution, along with Articles 14 and 16, alone guarantees equal remuneration for labour performed by men and women.9 As a result, the court ordered that the salaries of the drivers for the Delhi Police Force and the Delhi Administration be adjusted.


Under the labour codes, all organisations will need to classify their employee population as ‘ employees’ or ‘ workers’. While all individuals employed in an organisation will be employees, individuals who do not have managerial or supervisory roles may potentially be employees. With this, even individuals in so-called white collar jobs working in an office may qualify as workers if they are not managers or supervisors10 . If an individual is worker, under the labour codes, he will be eligible for additional from employers such as overtime for working beyond 8 hours or any day or 48 hours in a week and leave encashment for un- availed leave at the end of the year as employers will also need to set up a grievance redressal committee where workers can file complaint on anya matter. From the perspective of employers it may be quite challenging to identify workers given that the definition lacks clarity. Tracking of overtime, especially in alternative work arrangements may be challenging for employees as well. Annual leave encashment will be counter- productive, as employees may not avail leave to receive a higher payout at the end of the year.


Labour law aims to correct the imbalance of power between the employee and employers to prevent the employer from dismissing the worker without good cause; to set up and preserve the processes by which employees are recognized as ‘equal’ partners11 in negotiating about the working conditions etc.


  • Right to keep copies of documents that employees have signed as it gives both the parties a sense of security.
  • Right to complain or protest about working conditions provided by the Factories Act, 1948.
  • Right to get equal pay for equal work as according to the Equal pay Act 2010, every employee whether a man or a woman should not be discriminated against on the basis of their gender, caste etc.
  • Right agaiunst sexual harassment at workplace where the vishaka guidelines set out rules to prevent these activities and the employers are responsible to take steps if any report has ben registered.
  • Right to gratuity as an organisation is supposed to pay gratuity to its employees who have worked for a continuous period with the organisation for 5 years and if the employer cannot provide it to its employee then the employer can face punishment of imprisonment for a maximum term of 2 years.
  •  Right to have leave and holidays such as sick leave, casual leave.
  •  Right to maternity benefits as The maternity benefits Act 1961 provides this right to women to maintain a balanced family and work life.
  •  Right to timely salary to run their houses and encouraging them to show their efficiency and maintain a sense of security among them.


  • To assess risks under health and safety law as identifying work activities that could cause injury or illness and taking action to eliminate the hazard.12
  • Provide earlier information about risk involvement and must be protected and instructed to deal with those risks involved.
  • Consult employees before starting any hazard activity and it may be directly done with the safety representative that is either elected by the workforce or appointed by the trade union.
  • Employers are permitted to maintain all registers and record digitally under the labour codes.
  • Employers have to perform full and final settlement of wages within two working days of employees leaving.


The Indian Constitution grants Indian people several constitution rights, such as the right to quality, the states prohibition against discrimination on the ground of religion, caste, sex or place of birth and allows the state to frame laws that favour them13 The ER Act has been introduced to eradicate gender bias and ensure an equal salary to men and women for the same work. Likewise the Maternity Benifits Act of 1961 and the Sexual harassment of Women at Wok Act of 2013 protects the rights may include women workers in India. The applicability of this Act differs from private to public entities. Therefore, any discriminatiom that is not based on ability or merit and that is not exercised to uplift any category or any class but merely to inflict bias to one party is deemed to be unlawful.


Employees may approach courts or tribunals on the basis of the the nature of discrimination and file lawsuits to enforce their rights of discrimination. In some situations, the concerned workplace may have labour policies in place that allow these discriminated-related grievances. In most cases, the employer can settle disputes before or after a lawsuit has been filed.


EPF is a welfare programme implemented to guarantee employees a better future. It is a legal benefit that employees can take advantage of after retirement or after leaving the workforce in the event of death EPF is a welfare programme implemented to guarantee employees a better future. It is a legal benefit that employees can take advantage of after retirement or after leaving the workforce. Employees who pass away will be able to collect benefits on behalf of their dependents. Employers and employees are required to contribute to the Fund under the Employees’ Provident Fund Scheme (EPF Scheme).

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (“Act”), which is applicable throughout India14, established the Employees’ Provident Fund. Every factory or industry listed in Schedule 1 of the Act that employs 20 people or more is subject to the Act, as is any other institution the Central Government designates by publication in the Official Gazette, even if there are less than 20 employees.


The duty of the employer to provide for the security of your employees is outlined in labour law, often known as employment law15. The legislation serves as a framework to protect your employee, whether they work remotely, in an actual office setting, or as a contract employee.

A few of these laws’ goals are as follows:

  • Equality in terms of opportunities and remuneration.
  • The physical and mental health of employees
  • Diversity at work.

Labour legislation Employer non-compliance is wrong and shows that the business is breaking the law, which has legal repercussions. Due process violations or unjust terminations expose companies to a variety of legal and reputational concerns. Therefore, employers should prepare contracts and human resource (HR) documentation to make sure that top management, HR staff, and employees are well informed of their rights and obligations. The choice to terminate the employee most likely fits one of the aforementioned explanations. No matter the reason for the employee’s termination, every firm is required to abide by certain federal and central regulations. Here are the six key guidelines that must be followed before firing an employee.The typical notice period for dismissing employees in an organisation is 30 to 90 days16. According to the Industrial Disputes Act of 1947, government authorization is required when firing more than 100 employees from an industrial facility, mining, or plantation unit. In other industries, firing employees just necessitates informing the government.

Author: Ishika Agarwal, B.B.A. LL.B. (H) student at Law College Dehradun.

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