Employment LawOverview of Employment Laws in India

February 5, 20220


Employment law specifically governs the relationship between an employer and an employee. These laws help the employers and employees in understanding their rights and establishing a standard law regarding safe practices in the work environment.

The Constitution of India has authorized both the Central Government as well as the State Government to enact suitable laws to regulate and protect the interest of the employees and to make available enough employment opportunities for the public.

The Government of India has enacted various legislations depending on the types of industries, nature of work, number of employees and location, etc. In the backdrop of the same, the Government has enacted the Industrial Disputes Act, 1947 (the ID Act), Factories Act, 1948 (the Factories Act), Trade Unions Act, 1926 (the TU Act) and Shops and Establishment Acts (the S&E Act)(s) for the respective States of India.

With the aim and objective to consolidate and reform Labour laws, the Government has enacted four Labour Codes by subsuming approximately 29 Labour laws which were implemented at both the Central and the State levels. The four new Labour Codes are namely; Code on Wages 2019, the Code on Social Security 2020, Occupational Safety, Health and Working Conditions Code 2020, and Industrial Relations Code 2020. The Codes are not yet enforced by the Central Government even though they has been passed by both the Houses of Parliament and received the assent of the President.


Industrial Disputes Act, 1947: The scope of the ID Act is limited to workmen. The ID Act further governs the industrial disputes, industrial actions such as lockouts and strikes, layoffs, regulation of retrenchment, transfer of undertaking and also regulates the changes in the service conditions and workspace of the workmen.

Factories Act, 1948: A large population of the country works in factories. In the light of the same, the Factories Act was enacted to regulate the working conditions of factory workers where typically manufacturing operations take place. The Factories Act is an extensive legislation that deals with health, safety and welfare of the factory workers.

Payment of Wages Act, 1936: The Payment of Wages Act, 1936 (the Wages Act) regulates the method of payment of the wages to the employees whose wages do not exceed Rs. 24,000 per month, and the workers employed in factories and industrial establishments. Other than certain mandatory deductions such as income tax, fines or deductions due to absence in duty, the Wages Act encourages non-deduction of wages of any kind.

Minimum Wages Act, 1948: The Minimum Wages Act, 1948 (the MW Act) stipulates that the Government should fix daily and monthly minimum wages as per the different industries and the skills of the employee. The MW Act is applicable to the wages of the employees working in specific kinds of employment, which is termed as ‘Scheduled Employment’.

After the minimum wages have been fixed by the Government, the employer needs to pay the employees engaged in scheduled employment, wages at a rate which is not less than the one fixed by the Government for that particular category of employees.

Employees Provident Fund and Miscellaneous Provisions Act, 1952: The Employees Provident Fund and Miscellaneous Provisions Act, 1952 (the EPF Act) is one of the key legislations that deals with social security of the employees.

As per the provisions of the EPF Act, the employer and employee are required to contribute a minimum of 12% of an employee’s ‘basic wages’ towards the EPF fund. Furthermore, the employer’s contribution is directed towards the pension fund of the respective employee and the employee is entitled to receive a monthly pension after retirement.

Shops and Commercial Establishments Act: The S&E is a state-specific act and almost all the States have enacted their own S&E Acts. The S&E Act regulates and governs the work conditions and practices of the employees engaged in shops and commercial establishments which also includes most of the private companies and firms.

The S&E Act regulates the working hours, payment of wages, leaves and holidays, overtime, etc.

In the recent times, a few other steps have been taken by the Government which cover the aspects viz; employer-employee relations and encourages a safer workspace and work practices for women and persons with disabilities. The legislations are namely, the Maternity Benefit (Amendment) Act, 2017, Sexual Harassment of Women at Work (Prevention, Prohibition and Redressal) Act of 2013, the Right of Persons with Disabilities Act, 2016, and the Payment of Gratuity (Amendment) Act, 2018.


Difference between ‘Workmen’ and ‘Non-Workmen’ under Employment Law

The ID Act characteristically recognizes two kinds of employees, ‘workmen’ and ‘non-workmen’. A workman is an individual who has been employed in an industry to do any manual, unskilled, skilled, technical, or operational work. It is pertinent to note that workmen do not include those who are employed in a managerial, administrative, or supervisory capacity, drawing a salary of more than Rs. 10,000 per month.

Besides the above-mentioned, the Contract Labour (Regulation & Abolition) Act, 1970 discusses the regulation of ‘contract labour’ in certain establishments and also provides for its abolition in certain other establishments.

A workman when hired in connection with a particular work by or through a contractor, with or without the knowledge of the employer, shall be considered as a contract labour.

Employment Contracts

The Employment Laws in India does not strictly require that the contract of employment between an employer and an employee be express or in writing. Therefore, the Employment Contracts in India can be expressed or implied, written or oral.

However, in common trade parlance in order to avoid disputes between the parties, an Employment Contract stipulating the terms and conditions to the scope of the employment is executed. Some of the examples of implied terms are as follows – payment of wages, statutory bonus, gratuity payments, etc. The Employment Contracts are governed by the Indian Contract Act, 1872.

Employee Representations

Employee representation is of pivotal importance as it establishes the rights of the employees to form a union or choose a single person/representative who would represent them during any negotiation with the management in matters concerning wages, working hours, overtime, working conditions, security, and many more.

Employee representation is a classic example of voicing the concerns of the workmen and the employees in the workspace.

Trade Unions

Trade Unions are governed by TU Act. Trade Union can be defined as a union formed by the employees at the workplace to represent a particular group of employees in order to protect their mutual interests. Trade Unions helps employees in matters related to equal pay, good working conditions, working hours, and other benefits and problems.


Employment laws form the foundational matrix of all the workers, employees and employers engaged in any commercial or employment relationship. The laws safeguard the interests of the employees and also ensures a certain amount of regulation in the workplace which shall be ensured by the employer.

In the event of any discrimination or grievances, the Government and the legislations provide that the workers and employees can seek redressal from the Grievance Cell of the respective company or approach the Judiciary.

The new developments pertaining to the employment laws in India distinctly demonstrates the need to ensure safety of women and people with disabilities, and further demonstrates the rights of female workers and employees in workspaces. In the event of these developments being incorporated, the employers and the establishments need to revisit the compliance with regards to all the legislations.

-Team AMLEGALS assisted by Mr. Harsh Kapadi (Intern)

For any queries or feedback, feel free to get in touch with chaitali.sadayet@amlegals.com or mridusha.guha@amlegals.com.

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