Legal Guide

Know All About the Employment Act in India

by Bhavya Choudhary · 4 min read

Employment Act in India

Introduction

Employment Acts in India have traditionally been controlled by contract as well as fragmented legislation at both the national and state levels.

The Ministry of Labour and Employment introduced four bills in 2019 to amalgamate 29 central laws related to labor laws in order to harmonize and consolidate the various legislations pertaining to Employment, social security, wages, industrial disputes, and other relevant labor/Employment-related matters.

These bills were codified and enacted as follows:

  • The Wage Code, 2019;
  • The Industrial Relation Code, 2020;
  • The Occupational Safety, Health, and Working Conditions Code, 2020; and
  • The Social Security Code, 2020.

These are the Employment Acts in India. We have summarised the substance of each Employment Act in India in order to emphasize the changes that may be expected once the four codes and rules are in force.

The Wage Code of 2019 (“Wage Code”)

The Wage Code; a type of Employment Act in India, consolidated and merged four separate Acts:

  1.   The Payment of Wages Act of 1936,
  2. The Minimum Wage Act of 1948,
  3. The Payment of Bonus Act of 1965, and
  4. The Equal Remuneration Act of 1976.
  • The Wage Code’s implementation is projected to have wide-ranging repercussions for the majority of industries. Thus it is critical to grasp the essential components of the Wage Code and how they vary from past legislation.
  • The Wage Code has changed the concept of “employee” from the existing meaning in the Minimum Wages Act of 1948.
  • The term “employee” was confined to workers in particular specific kinds of scheduled Employment under the Minimum Wages Act of 1948, but under the Wage Code, it has been expanded to all sorts of establishments, regardless of whether they come within the organized or unorganized sector as per the Employment Act in India.
  • This implies that the benefits under the Wage Code regarding wage payment and minimum wages apply to all employees, including those engaged in skilled, semi-skilled, or unskilled manual, operational, supervisory, managerial, administrative, technical, or clerical work, and regardless of whether the terms of Employment have been expressly conveyed or merely implied, thus significantly broadening the ambit.
  • This advancement is especially useful to the enormous number of workers in India’s unorganized sector, who frequently lack formal contracts on which to rely as per the Employment Act in India.

The Industrial Relations Code, 2020

The Industrial Relations Code; a type of Employment Act in India incorporates and modifies the following acts:  

i)                The Industrial Disputes Act of 1947,

ii)              The Trade Unions Act of 1926, and

iii)             The Industrial Employment (Standing Orders) Act of 1946.

  • In establishments with more than one trade union, the IR Code has established a ‘sole negotiating union.’ A lone negotiating union must have 51% or more workers as members.
  • Negotiations with the employer will be limited to the one negotiating union as per the Employment Act in India.
  • The IR Code includes measures for workers to re-enter the labour force after being laid off. 
  • It also establishes a structure for resolving industrial disputes that will be established by the central government and will consist of a national industrial tribunal and one or more industrial tribunals. 
  • It also requires that a worker seek the grievance Redressal body as per the Employment Act in India.
  • The IR Code also specifies the notification periods that must be supplied by a worker before going on strike or lockout in breach of contract.
  • The IR Code states that the regulations of standing orders apply to all industrial facilities with three hundred (300) workers, as opposed to the previous one hundred (100) workers. Other clauses in the IR Code deal with retrenchment, layoffs, establishment closures, industrial tribunals, and so forth.

The Occupational Safety, Health, and Working Conditions Code, 2020

  • It is a set of rules that govern workplace safety, health, and working conditions. This is a type of Employment Act in India.
  • The OSH Code, a type of Employment Act in India, has unified various significant pieces of labor law, such as the Contract Labor (Regulation and Abolition) Statute of 1970, the Factories Act of 1948, and others, into a single comprehensive act.
  • The OSH Code has updated several significant definitions, including Contract Labour, Employee, Employer, Establishment, Principal Employer, Wages, and Workers.
  • The OSH Code establishes specific responsibilities for employers in relation to their workplace and employees as per the Employment Act in India.  
  • Under the OSH Code, the employer is also expected to provide and maintain welfare activities for employees as stipulated by the Central Government and as necessary for the employees’ decent level of living.
  • Furthermore, the OSH Code imposes stricter obligations on employers in factories, mines, port work, buildings, and other construction activities, or plantations as per the Employment Act in India.
  • The OSH Code has also clarified that it is the responsibility of the architect, project engineer, or designer responsible for any building or construction work or the design of any project relating to a such building to ensure that due consideration is given to the safety and health aspects of the building workers and employees who are employed in the erection, operation, and execution of such projects during the planning stage.
  • For the OSH Code to apply, the number of minimum contract labor hours has been increased from twenty (20) to fifty (50).
  • The major employer of the establishment must offer welfare amenities as stated by the OSH Code to the contract labor engaged in such establishment.
  • The OSH Code has also protected the rights of Inter-State Migrant Workers by requiring contractors to provide all benefits accessible to workers under various labor laws to inter-state migrant workers.
  • Furthermore, the employer of every relevant firm is obligated to pay a lump sum fee for each inter-state migrant worker to and from a voyage to his native location from the place of Employment. This is mentioned under the Employment Act in India.

The Social Security Code, 2020 (“SS Code”)

  • The SS Code, a type of Employment Act in India, was created to update and unify the legislation pertaining to social security, with the purpose of extending social security to all employees and workers in all industries, whether organized or unorganized. This
  • The SS Code; a type of Employment Act in India has absorbed numerous major pieces of law, including the 
  1. Employees’ Compensation Act of 1923, 
  2. The Employees’ Provident Funds and Miscellaneous Provisions Act of 1952, 
  3. The Payment of Gratuity Act of 1972, and 
  4. The Maternity Benefit Act of 1961. 
  • The word “aggregator” refers to a digital middleman or marketplace that connects a buyer or user of a service with the seller or service provider.
  • Under the SS Code, a “Gig Worker” is defined as someone who does labor or participates in a work arrangement and receives money from such activities outside of the typical employer-employee relationship. This is the Employment Act in India.
  • These are the Employment Acts in India. While drafting an Employment agreement, one must talk to a lawyer online. Talking to a lawyer online helps you to get the Employment agreement drafted.  

Conclusion

Given the changes that the new labour codes have brought to India’s current Employment Acts in India, it will be critical for establishments to analyze the consequences and examine the compliance requirements under each Code once it is implemented together with the final regulations and state revisions.

Labour laws are critical to understanding. Therefore, it is recommended to consult an expert labor lawyer in case of any dispute.

Bhavya Choudhary

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Bhavya Choudhary

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