Labor Laws and Employee Benefits in India

Posted on Dec 11, 2024 in Law & Jurisprudence

Labor Policy in India

India’s labor policy aims to promote social justice, economic development, and the welfare of the labor force. The Constitution of India, the Preamble, the Fundamental Rights, and the Directive Principles of State Policies are the basis for the government’s labor policies. Some of the main provisions of India’s labor policy include:

  1. Working hours: Adults (over 18 years of age) cannot work more than 48 hours per week or 9 hours per day.
  2. Safety and health: Factories must be registered, licensed, and approved. There are also measures to protect workers from occupational diseases and accidents.
  3. Social security: Social security measures include the Workmen’s Compensation Act, 1923, the Trade Union Act, 1926, and the Employees State Insurance Act, 1948.
  4. Labor rights: The Constitution of India’s articles 14-16, 19(1)(c), 23-24, 38, and 41-43A directly relate to labor rights. For example, Article 14 states that everyone is equal before the law, and Article 23 prohibits forced labor and trafficking.

Provisions Regarding Safety and Labor Welfare

There are several laws in India that address safety and labor welfare, including:

  • The Occupational Safety, Health and Working Conditions Code, 2019: This code covers topics such as:
    • Work hours: The central or state government notifies work hours for different classes of employees and establishments.
    • Overtime: Workers must be paid twice their daily wage for overtime work, and they must give their consent before working overtime.
    • Leave: Workers cannot work more than six days a week, and they must receive one day of leave for every 20 days of work per year.
  • The Factories Act, 1948: This act covers topics such as:
    • Welfare provisions: Factories must provide facilities for storing and drying protective clothing, sitting arrangements, first-aid appliances, canteens, shelters, rest rooms, lunch rooms, creches, and welfare officers.
    • Safety provisions: Factories must ensure the safety and health of workers by providing information, instruction, training, and supervision. They must also maintain places of work in a safe condition and provide safe access to and egress from those places.
    • Working hours: The act restricts working hours, including weekly hours, weekly holidays, compensatory holidays, night shifts, and overtime.
    • Penalties: The act provides penalties for contravening its provisions, including imprisonment and fines.

Employees Deposit Linked Insurance Scheme

The full form of EDLI is Employees’ Deposit Linked Insurance Scheme, and it is an insurance cover provided by the Employees’ Provident Fund Organization (EPFO). A nominee or legal heir of an active member of EPFO gets a lump sum payment of up to Rs. 7 lakh in case of death of the member during the service period. All organizations covered under Employees’ Provident Fund (EPF) and Miscellaneous Provisions Act, 1952 get enrolled for EDLI automatically. This EDLI scheme works in combination with EPF and EPS.

Standing Committee

The Standing Committee is the statutory executive organ of the Corporation. The members are drawn from the main body of the Corporation by nomination and election. The nominated members include three members each of the Central Govt. and State Governments. Further, three members each representing employers and employees and one each representing parliament and the medical profession are elected from amongst the members of the Corporation through a voice vote. Secretary, Ministry of Labour, Govt. of India functions as the Chairman of the Standing Committee. Director General, ESI Corporation is also an ex-officio member of the Standing Committee. The Standing Committee is vested with powers to administer the affairs of the Corporation, exercise any of the powers and perform any functions of the Corporation subject to the overall control and superintendence of the Corporation. Standing Committee is also empowered to constitute any non-statutory sub-committees for specific purposes as the need be.

History and Evolution of Labor Laws in India

The history of labor laws in India is closely tied to the country’s history of British colonialism and the independence movement:

  1. Early labor laws: The first labor law in India was the Apprentice Act of 1850, which allowed orphans to find work at age 18. The Bombay Factory Act of 1864 was the first labor legislation in British India.
  2. Factories Act of 1883: This law was passed by the British Parliament to make India more expensive for labor, which would benefit British textile manufacturers. The law established an eight-hour workday, prohibited child labor, and restricted women from working at night.
  3. Trade Union Act of 1923 and Industrial Disputes Act of 1929: These acts were passed after World War I to regulate the relationship between workers and employers. They allowed workers to form unions and bargain collectively.
  4. The Constitution: The Constitution of India includes Articles 38, 39, 41, 42, and 43, which are considered the “Magna Carta” of industrial law. These articles require the government to ensure social order and living wages.
  5. The Workmen Compensation Act of 1923: This act covered accident recovery for employees.
  6. The Maternity Benefit Act: This act provided pregnant employees with 90 days of paid leave.
  7. The Child Labour (Prohibition and Regulation) Act of 1976: This act prohibited children under the age of 14 from working in factories and other dangerous jobs.

Objectives and Scope of Employees Provident Fund Act, 1952

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is a social security law that aims to provide financial security to employees and their dependents. The Act’s objectives and scope include:

  1. Compulsory contributions: The Act requires both the employer and employee to contribute to the fund. The employer’s contribution is 12% of the employee’s basic wage, dearness allowance, and retaining allowance, up to a maximum of ₹6,500. The employee can also contribute voluntarily.
  2. Provident fund: The Act establishes a provident fund for employees to contribute to. The fund is collected and distributed by the Employee Provident Fund Organization (EPFO), a statutory body set up by the Central Government.
  3. Pension fund: The Act establishes a pension fund for employees. The Employees’ Pension Scheme is a contributory pension scheme that provides a monthly pension to disabled or permanently disabled employees.
  4. Deposit-linked insurance fund: The Act establishes a deposit-linked insurance fund for employees. The Employees’ Deposit-Linked Insurance Scheme provides life insurance cover to employees.
  5. Scope: The Act applies to establishments that employ 20 or more people, including factories, hotels, restaurants, cinema theaters and hospitals. The Central Government can apply the Act to all trading or commercial establishments, whether or not they are factories.

Employees’ State Insurance (ESI) Fund

The Employees’ State Insurance (ESI) Fund is a self-financing health insurance scheme that provides social security to employees and their families:

  1. Funding: The ESI Fund is funded by contributions from employees and employers, as well as state governments:
    1. Employees: Contribute 0.75% of their wages
    2. Employers: Contribute 3.25% of their wages.
    3. State governments: Contribute 1/8th of medical benefit costs, up to a per capita ceiling of Rs. 1,500 per year.
  2. Benefits: The ESI Scheme provides a range of benefits, including:
    1. Medical care
    2. Cash benefits for sickness, disablement, dependents, and maternity.
    3. Funeral expenses.
    4. Unemployment allowance
    5. Vocational rehabilitation allowance
    6. Physical rehabilitation

Factories Act 1948: Definition and Concepts

The Factories Act of 1948 in India defines a factory as a premises where at least 10 workers are employed, or were employed in the previous 12 months, and where a manufacturing process is being carried out. The act also includes contract labor in its definition of a factory. The Factories Act of 1948 aims to ensure the health, safety, and welfare of factory workers. The act includes provisions for:

  1. Working hours: Adult workers cannot work more than 48 hours per week, and women cannot work before 6 AM or after 10 PM.
  2. Child labor: Children under 14 cannot work in a factory.
  3. Safety: The act includes provisions for protective equipment, dangerous fumes, explosions, and fires.
  4. Inspection: The Inspector of Factories can request drawings and specifications of a factory’s machinery, building, or plant if they believe it may be dangerous.

The act was amended in 1987 to provide additional protections for workers involved in hazardous processes.

Employees’ Insurance Courts Under ESI Act, 1948

The Employees’ State Insurance Act, 1948 (ESI Act) establishes Employees’ Insurance Courts to settle disputes and claims:

  1. Establishment: The State Government notifies the establishment of an Employees’ Insurance Court in the Official Gazette. The number of judges on the court is determined by the State Government.
  2. Eligibility: To be a judge, a person must be a legal practitioner with at least five years of experience or a former judicial office.
  3. Multiple courts: The State Government may appoint one court for multiple local areas or multiple courts for the same local area.
  4. Business distribution: If there are multiple courts for the same local area, the State Government can regulate how business is distributed between them.
  5. Claims: The Employees’ Insurance Court decides claims such as:
    1. Recovery of contributions from the principal employer.
    2. Recovery of contributions from an immediate employer by the principal employer.
    3. Recovery of benefits received by someone who is not lawfully entitled to them.
    4. Recovery of any benefit admissible under the act.

Employees’ Provident Fund (EPF)

EPF (Employees’ Provident Fund) is a retirement benefits scheme provided by the Employees’ Provident Fund Organization (EPFO). The employee and the employer contribute to the EPF India scheme on a monthly basis in equal proportions of 12% of the basic salary and dearness allowance. EPF is a tax-saving instrument that offers relatively higher interest rates on investments. A part of the employer’s contribution (8.33% out of 12%) is directed towards the Employees’ Pension Scheme (EPS). Read on to know all about the EPF scheme, interest rate, eligibility, contribution, withdrawal and managing your EPF account online.

Objectives of the EST Foundation

The Foundation’s main goals are the following:

  1. Conduct scientific research and engineering, to facilitate the development and consolidation of the European Solar Telescope (EST), ensuring that the design of the EST meets scientific and technical requirements.
  2. Contribute to the EST project for the general benefit of society and improve industrial competitiveness by generating technological knowledge, carrying out R+D+i activities and developing their applications.
  3. Collaborate with public research organizations (including Founders) and exploit results of their activities in research, development, transfer and promotion of science, technology and education related to EST.
  4. Support the education and training of personnel in all fields of science and engineering linked to EST.
  5. Contribute to setting up the EST European Research Infrastructure Consortium (ERIC), or the most appropriate alternative organisation, as the legal entity that will be in charge of the construction and operation phases of EST.
  6. Foster relations with the national and international scientific and business communities.