During the British Colonial times, there were no rights in place to safeguard the labourers from exploitation. Their health issue was never taken into account, and upon that they were paid very less for their work. After a long period of exploitation, they decided to raise their voice and fight back to put a system in place to protect their rights. They formed unions and went on strikes which collectively led to Industrialization in India. This led to the formation of many acts to safeguard the rights of labourers. This article provides a brief analysis of notable labour law acts and the impact of changes in labour laws over the years.

Introduction Of Labour Law Acts

In India, there are several acts to interpret labour laws on different grounds.  Labour laws are made to protect the rights of employees. Everyone needs to be aware of their rights under these acts to know the rules and regulations on the matters of wages, working conditions, facilities of bonus, and many more. Few of the essential acts are:

Minimum Wages Act

  • This act governs laws relating to the minimum wage that has to be allotted to a person.
  • It differs from states to states.
  • Factors like experience and skills are key factors in deciding the minimum wage of an employee as per the Act.

One of the landmark Judgment under the Act was Chandra Bhavan Boarding and Lodging Bangalore vs The State Of Mysore And Anr. The SC in this case held that freedom of trade does not give the permit to exploit the workers and the purpose of the act is to protect workers from exploitation.

Payment of Wages Act, 1936

  • This acts provides the list of types of deductions that can be made by the employer, salary dates, allowances, and overtime wages.
  • Any deduction that is not covered under the act if made will not be lawful. Registers to be maintained by the employers are also mentioned under the act.

Equal Remuneration Act, 1976

  • This act states that people in the same position with the same number of experience and qualifications should be paid the same. 
  • The payment of employees should not be distinguished on the basis of colour, race, sex, caste.

In Sita Devi & Others v. State of Haryana & Ors.SC held that “The doctrine of ‘equal work for equal pay’ is recognised by this as a facet of the equality clause contained in Article 14 of the Constitution.”

Provident Fund Act, 1952

In government jobs, employees are paid fixed pensions. For employees not working in government organizations the amount to be received through provident fund and amount to be received after retirement is governed under this act.

Employee State Insurance Act

  • The Act provides provisions on two types of insurance allotted to the employees:
  • medical insurance which is for the employee and its family; and
  • accidental insurance is limited to employees.
  • It supports the workers in times of sickness, maternity Leave, disorders (mental or physical), disability, death.

In Western India Plywood Ltd vs Shri. P. Ashokan, SC held that an employee who has already claimed compensation for an injury cannot ask twice for the same. It is to safeguard the employer from facing more than one claim for the same accident.

Payment of Bonus Act, 1965

  1. This act provides that it is mandatory for companies to give a statutory bonus to its employees.
  2. It states the minimum percentage of bonus that should be given to employees.

Gratuity Act, 1972

  • Gratuity means a gift or a present in return for services rendered.
  • This act states that if an employee has worked in a company for more than 5 years than on his termination the company shall provide gratuity of 15 days per year on the wages last drawn by the employee.

Professional Tax Act

  • This act is not applicable in all states in India.
  • Under this act a deduction of Rs. 2500 per annum maximum can be made on the wage of an employee on the name of professional tax. It is taxed by the government.

Constitutionality And Human Rights

changes in labour law

Labour Law has Constitutional validity. Rights of labourers are protected by Part III of the Constitution of India which are as follows:

Equal pay for equal work

The Right to Equality under Article 14 is interpreted in labour law as “Equal pay for equal work”. The payment may, however, differ according to skills and physical ability of labourers.

The Right to form a union or association

It is a fundamental right guaranteed under Article 19 (1) (c) of the Constitution. This Right enabled to form “The Trade Union Act, 1926”. This Act gives power to labourers to work in unionization to raise voice against unjust done to labourers. K.R.W. Union Vs. Registrar states that the Right to form association does not carry the Right to inform rival.

The Supreme Court, in this case, held that “Article 19(1)(c) did not confer on any individual or association the Right to carry on trade union activities free of competition from rivals. Therefore state action which introduced new competitors could not be challenged as contravening to Article 19(1)(c)”.

Forced Labour and Child Labour

Article 23 of the Constitution prohibits forced labour. Forced labour prevailed all over India during the British Raj. But now the forced labour is an offence punishable under law. The article also gives rights to prisoners to receive remuneration for labour done by them otherwise it will invite legal obligations under the title of “forced labour” as held by the Supreme Court in Deena @ Deena Dayal Etc. Etc vs Union Of India And Others. Child labour is regarded as an offence under Article 24 of the Constitution.

Constitution of India is regarded as the Supreme Law of the Land. All laws in India are required to be made under the Constitution. Directive Principles of the State Policy (DPSP) is dealt with in Part IV of the Constitution. It plays a significant role in the formation of new labour Laws in India. Following are the guidelines provided by DPSP to form labour law:

Article 39

As per Article 39 (a), the State shall, in particular, direct its policy towards securing all the citizens of India irrespective of race, sex, colour, etc. Right to adequate means of livelihood. Under clause (d) it is provided that there should not be discrimination in the payment of wages on the grounds of sex, colour, religion, race, etc.

Article 42

The article provides that there should be a sustainable working condition for employees. It also talks about the relief provided to women during or after their pregnancy (Maternity leave).

Article 43

It directs states to endeavour policies to deliver to all employees living wages which must include adequate standards of life along with opportunities to uplift social and cultural standards of persons.

Human rights are fundamental to the overall development of individuals.  They are inherent to all human beings irrespective of their nationality, sex, colour, religion, language, or any other status.  Different forms of treaties, customary international law, general principles and other sources of international law guarantees human rights universally. During British Raj, Indians were humiliated and discriminated by the foreign rulers.

This gave rise to freedom movement against British rulers which encouraged the fight for the establishment of fundamental freedom, civil liberty, and human rights for all the citizens of India. Eventually, the Constitution of India established in 1950, guarantee basic human rights to everyone. Human and labour rights are inseparable. The Right to form an association, equality of wages, protection against forced labour, and Right of adequate means of livelihood are some of the human rights, which are the basis of labour Laws in India.

Changes By Codes Of Labour Law

labour laws

The Second National Commission on labour submitted its report in 2002 stating that many of the labour laws are outdated and needed to be reformed. The Narendra Modi government in 2015 considered the plan to consolidate India’s 44 labour laws into four codes with the purpose to rationalize labour laws and improve ease of doing business. Those four codes are:

Code of Wages, 2019

This Act is a combination of the Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, and Equal Remuneration Act, 1976. It is one of the first out of the four codes which is now an Act. However, the rules under the Code are not yet notified.

Need

There are labour law acts that were made pre-independence and have compliances which are now irrelevant. Earlier acts would cover all workers. It was limited to workers falling under specific schedules or salary range. Therefore, the current Code is created to cover all workers and employees. It will apply to both the organized and unorganized sectors. Also, in different acts, similar terms are defined differently, which makes it challenging to understand the term to comply with it. There were more than a thousand types of minimum wages as specified in different acts which made compliance difficult. Therefore, with the help of Code, it is aimed to reduce the different kinds of minimum wages for easy compliance.

Changes

Firstly, definitions for essential terms like “employee”, “wages”, etc. are defined under this Code. All these definitions mention specifically what will and what won’t fall under the particular description. Under the definition of wages, it is specifically mentioned what is considered as wages.

It, however, suggests that any bonus; the value of any house-accommodation or of supply of light, medical attendances, or other amenities; contribution paid in pension or provident fund by the employee; conveyance allowance; house rent allowance; overtime allowance; commission payable; gratitude payable on termination and retirement compensation. In this Code the schedule does not define skills, to categorize the person as skilled or semi-skilled will now be determined by the employer.

By taking into account the minimum living standards of the workers “Floor wage” will be fixed by the Central Government. This is the most significant positive change brought by the Act. Now floor wages cannot be decided by states separately, which in many cases exploits workers when the floor wages are not in accordance with the minimum living standards. In many cases, employers pay less in cash than the minimum wages decide by the government because there is no record of cash payment.

It is easier to track the records. The Act makes it mandatory to pay in cheque or by bank transfer which waives off any scope of such fraud. The last change made through the Code is that instead of “inspectors” there will be an “inspector-cum-facilitator” who can file applications for claims. Earlier the period of filing application for the claim was between six months to 2 years which is now increased to increased three years from the date of which the claim is referred to.

Impact

The most important change was the deciding of floor wage at the national level. However, the concern is to what extend the minimum wages will be increased by the central government increase. In case when the central government increases minimum wage, it will impact the existing employment of states. The code benefits employer to ease the business as now there will be less compliance required. The minimum wage decided by the national government is Rs.178 which is much lesser than as demanded by the trade union and recommended by the seventh pay commission. This proves that there will always be a battle on the minimum wage either by the employers or the employees.

The Occupational Safety, Health And Working Conditions Code, 2019

It was introduced in Lok Sabha on the 23rd of July, 2019. It was then referred to the standing committee in October 2019. It is not yet converted into an act. This Code will substitute 13 labour law acts. The Code will be applicable to any establishment with at least 10 workers. Under the Code, civil courts are barred from hearing appeals under the matter.

Industrial Relations Code, 2019

The Code will substitute three labour law acts. Under the Code, both union and employer will have to give a minimum of 14 days’ notice for strike or lockout. The provision of fixed-term employment is set across the board under the Code. The retrenchment limit of 100 workers can be changed by central or State government through notification. The Code gives the government the power to reject, defer, or modify awards passed by Industrial Tribunal and National Industrial Tribunal.

Code On Social Security, 2019

This Code is most disputed. The Act gives the benefit of gratuity to fixed-term workers on a pro-rata basis. Under Provident Fund employee has the option of reducing their share from 12%, but the employer’s share will be fixed.

Above are all the changes that will take place upon the enforcement of the codes. However, none of the codes is applicable yet. Some of the changes made under all codes may be struck down at different stages of passing the bills.

Conclusion

Changes In Labour Laws

 “Worker’s right should be the central focus of development”

– Joseph Stiglitz.

Workers and employees are the most critical factors in the growth of the Country. All the changes in the legislation are planned in order to ease the business and benefit not only the employers but the employees as well. The Codes on labour Law will substitute 44 labour Law Acts into 4 Codes. For now, E.S.I. Act, E.P.F. Act, and SHOP Act will not be considered in these 4 codes. However, every change brings a new challenge along. The Code has regarded as all points for significant reforms for better conditions of working. The substitution of single definitions for one particular term will ease the compliance process.

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