Common Labour and Employment Laws Disputes in Corporates
Common labour and employment law disputes in corporate settings, including in major IT hubs like Bangalore, Hyderabad, and Chennai, revolve around a range of issues from wages and termination to workplace safety and discrimination. These disputes often arise from violations of key Indian labour laws.
Key areas of labour and employment law disputes include:
- Wages and Compensation – Disputes related to wages are frequent. This includes employers paying less than the mandated minimum wage, which violates the Minimum Wages Act, 1948.Other common issues are delayed payment of wages, improper deductions, or disputes over fines, which are governed by the Payment of Wages Act, 1936.Claims under the Minimum Wages Act and Payment of Wages Act saw a rise between 2023 and 2024
- Termination, Layoffs, and Retrenchment – The Industrial Disputes Act of 1947 governs conflicts related to layoffs, retrenchment, and company closures.Disputes often arise from terminations without proper notice or compensation, illegal layoffs, or failure to follow due process. Indian courts have affirmed the right of employers to reduce their workforce for bona fide business reasons, but any termination seen as a “colourable exercise of employer’s rights” or victimization is considered an unfair labor practice. Employees can challenge wrongful termination and seek reinstatement and back wages
- Social Security Contributions -Violations concerning social security funds are a common source of conflict. This includes employers failing to make their required contributions to the Employees’ Provident Fund (EPF), maintaining improper records, or not paying dues on time, which contravenes the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Similarly, disputes arise when employers fail to register under the Employees’ State Insurance Act, 1948, do not pay contributions, or deny medical and cash benefits to eligible employees for sickness, maternity, or injury
- Discrimination and Harassment-Gender discrimination in pay is a significant issue, addressed by the Equal Remuneration Act, 1976, which prohibits paying women lower wages than men for the same work.The Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013, mandates the formation of internal complaints committees and proper handling of complaints. Violations include not having a committee, improperly addressing complaints, or retaliating against a complainant. The Supreme Court has also affirmed that dismissing a female employee due to her marital status is unconstitutional gender discrimination
- Working Conditions and Hours – The Factories Act of 1948 sets regulations for the health, safety, and welfare of workers. Disputes can stem from unsafe working conditions, a lack of proper facilities, or violations regarding working hours and overtime pay.
- Maternity Benefits The Maternity Benefit Act, 1961, ensures female employees receive benefits like paid leave. Denying these benefits or terminating an employee during her maternity leave are common violations that can lead to legal action and compensation claims
- Contract Labor The Contract Labor (Regulation and Abolition) Act, 1970, is intended to regulate the employment of contract workers and prevent their exploitation. Disputes arise from non-registration of contractors, failure to comply with welfare provisions, and illegally engaging contract labor for core activities
In cities like Bangalore, which have a large IT/ITES sector, there are specific regulatory nuances. For instance, the Karnataka government has exempted establishments in the IT/ITES sector (including gaming, animation, BPO, etc.) from the Industrial Employment (Standing Orders) Act, 1946, for five years, subject to certain conditions. This gives these companies more flexibility but can also be a point of contention if the conditions are not met. The rise of remote work has also brought laws like the POSH Act into focus, as its definition of “workplace” can include an employee’s home.
How to handle such Issues?
To effectively manage labour and employment issues, proactive prevention is far more effective than reacting to a crisis. The foundation of a healthy workplace is a clear and comprehensive set of internal policies and procedures.
This starts with a detailed employee handbook that outlines everything from salary and benefits to leave policies and codes of conduct. It is vital to have standardized and fair processes for hiring, performance reviews, and especially for terminations or layoffs, as this consistency helps prevent claims of unfair treatment. Regular training is also crucial; managers should be trained on proper disciplinary procedures, while all employees must be educated on important topics like sexual harassment prevention to ensure a safe and respectful environment.
Finally, establishing a confidential internal system for employees to voice grievances can resolve many conflicts before they escalate into formal legal disputes
While many day-to-day issues can be managed internally, it is wise to seek advice from a specialized labor and employment lawyer for more complex or high-risk situations. Expert counsel is essential when dealing with contentious departures of senior executives, planning large-scale layoffs, or negotiating with trade unions over strikes and closures Bringing in an external expert is also critical when conducting sensitive internal investigations, such as those involving fraud or serious harassment allegations, to ensure the process is impartial and legally sound. If a dispute proceeds to a labor court or other legal forums, or during major corporate changes like mergers that involve transferring employees, the guidance of a specialist is indispensable to navigate the intricate legal landscape.
