A Detailed Opinion on How the Labour Laws in India Favour the Employees in an Establishment

Introduction

Labour law is also known as employment law which is the body of laws, administration, ruling and precedents which is to safeguard legal rights and put restrictions on working people and their organisation. It relates to many aspects such as trade unions, employees and employers.

As per the Indian Constitution, the central, as well as State governments, are empowered to enact legislations to protect the interest of employees and employers so that employment opportunities should be increased to a vast level. It totally depends on the nature of the work undertaken and the number of employees, location and remuneration of employees, etc.

Earlier, the Indian government at the central, as well as state levels, monitor the protection of workers, but in reality, it is far different because the word labor is subject in the Concurrent list of the Indian Constitution. Generally, labor law includes:

• Industrial Relations
• Workplace health and safety
• Employment standards, including general holidays, and annual leave. Working hours, unfair dismissal.

As we all know that India is in the process of introducing changes to labour law for the employment sector so that they can live with human dignity and prosperity and there are multiple reforms going on for this change.

The first is the recognition of the economic development of the country which is well predicted and well administered in labour laws. Not only this social security, social equity and an easy way of handling any business are some of the other policies of this reform.

Labour law was due for review for many years and now this review will take place from the four labour codes including wages, social security, occupational safety, health and working condition, and industrial relations which mainly focuses on the protection of the employers and these laws are authorised by International labour Organisation(ILO) standards and a well-known process involved various changes to be made.

Some of the main topics discussed are employees’ benefits, remuneration and base changes in the wage structure and time hours of work in an office, protection of workers’ rights and balancing of employees’ rights and employers’ duties.

Many acts have been accomplished and many new reforms have been reviewed and necessary changes be made such as the definition like that of a factory has been revised up to 20 workers from 10 workers.

Who is Employee as per Labour Law?

A person employed for ages by an establishment to do any skilled, semi- skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical or any other worker, whether the term employment be expressed or implied.

Definition of Employee

Section 2(e) in the payment of wages Act, 1936 ‘employee’ means any person employed on wages, any establishment, factory, mine, oilfield, plantation, port, railway company or shop to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the term of such employment is expressed or implied.

Section2(t) of OSHWC Code, 2020, define employee in respect of establishment as:

• A person other than the Apprentices Act, 1961 employed on wages by an establishment to do any skilled, semi-skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical, clerical or any other work, whether the terms of employment be express or implied; and
• A person is declared to be an employee by the appropriate Government.

However, members of the armed forces of the Union are excluded from the purview of term employees.

Indian labour laws are made to define clear-cut relations between employees and employers. Indian labour laws are made to safeguard the interest of employees or workers. A list of major labour law acts in India are –

1. Worker’s compensation Act, 1923
2. The Trade Unions Act,1926
3. Payment of Wages Act,1936
4. Industrial Employment Act, 1946
5. Indian Industrial Disputes Act,1947
6. Minimum wages Act,1948
7. Factories Act,1948
8. Maternity benefits Act, 1961
9. Payment of bonus Act, 1965
10. MRTU and PULP ACT,1971
11. The Payments of Gratuity Act,1972
12. Labour law compliance Rules
13. EPF
14. Employees state Insurance
15. Sexual harassment of Women at workplace Act,2013

There are many other International Acts and legislations, which are regulated for the purpose of protection and promotion of the workforce for their rights and interests at the workplace. The employment Equity Act is one of the most efficient Acts which regulates the rights of the workers and employees and ensures social security to them.

Accrual Benefits of Employee

The attempt made by the government from these reforms to provide wider social security coverage to all citizens of the country and also increased the quantum of social security benefits.  The proposed new labour codes in India require all employee benefits to be calculated on new reference ‘wages’ as defined under the labour codes as against the current practice of calculating on the basis of salary.

Under the new definition of ‘wages’ all salary components except specific exclusion are covered. Also, 50% of gross remuneration will now be covered under wages for all employee benefits calculations as this new definition will mean a higher quantum of benefits such as higher gratuity, overtime pay and leave encashment in the hands of employees, and is considered to be the largest benefit of the new labour codes.

However, in a cost-to-company structure, where benefits are part of the salary, higher benefits will mean reduced monthly take-home salary for employees.

However, even when benefits such as PF and Gratuity form part of CTC of an employee, benefits such as leave encashment and overtime, which are over and above CTC will increase the cost for employers as both recurring and retrospective so this show how Indian labour law focusing improvement in employees benefits not on employers.

There may be a significant retrospective impact on gratuity costs for employers in the labour codes, which may impact accounting provisions for the past service period. The increase in employee costs would impact hiring plans and future increments thereby impacting the creation of employment opportunities.

Protection of Employees’ Rights

Under the labour codes, all organisations will need to classify their employee population as ‘employees’ or ‘workers’. While all individuals employed in an organisation will be employees, individuals who do not have managerial or supervisory roles may potentially be employees.

With this, even individuals in so-called white-collar jobs working in an office may qualify as workers if they are not managers or supervisors. If an individual is worker, under the labour codes, he will be eligible for additional from employers such as overtime for working beyond 8 hours or any day or 48 hours in a week and leave encashment for un- availed leave at the end of the year as employers will also need to set up a grievance redressal committee where workers can file a complaint on any matter.

From the perspective of employers, it may be quite challenging to identify workers given that the definition lacks clarity. Tracking overtime, especially in alternative work arrangements may be challenging for employees as well. Annual leave encashment will be counter-productive, as employees may not avail leave to receive a higher payout at the end of the year.

Balancing of Employee Rights and Employers Duties

Labour law aims to correct the imbalance of power between the employee and employers to prevent the employer from dismissing the worker without good cause; to set up and preserve the processes by which employees are recognized as ‘equal’ partners in negotiating about the working conditions etc.

Employee Rights

1. Right to keep copies of documents that employees have signed as it gives both parties a sense of security.
2. Right to complain or protest about working conditions provided by the Factories Act, 1948.
3. Right to get equal pay for equal work as according to the Equal Pay Act 2010, every employee whether a man or a woman should not be discriminated against on the basis of their gender, caste etc.
4. Right against sexual harassment at the workplace where the vishaka guidelines set out rules to prevent these activities and the employers are responsible to take steps if any report has been registered.
5. Right to gratuity as an organisation is supposed to pay gratuity to its employees who have worked for a continuous period with the organisation for 5 years and if the employer cannot provide it to its employee then the employer can face the punishment of imprisonment for a maximum term of 2 years.
6. Right to have leave and holidays such as sick leave, casual leave, and paid leave.
7. Right to maternity benefits as The maternity benefits Act 1961 provides this right to women to maintain a balanced family and work life.
8. Right to timely salary to run their houses and encouraging them to show their efficiency and maintain a sense of security among them.

Employer Duties

1. To assess risks under health and safety law by identifying work activities that could cause injury or illness and taking action to eliminate the hazard.
2. Provide earlier information about risk involvement and must be protected and instructed to deal with those risks involved.
3. Consult employees before starting any hazardous activity and it may be directly done with the safety representative that is either elected by the workforce or appointed by the trade union.
4. Employers are permitted to maintain all registers and records digitally under the labour codes.
5. Employers have to perform full and final settlement of wages within two working days of employees leaving.

Are Employees Protected Against Discrimination?

 The Indian Constitution grants Indian people several constitutional rights, such as the right to quality, the state’s prohibition against discrimination on the ground of religion, caste, sex or place of birth and allows the state to frame laws that favour them.

The ER Act has been introduced to eradicate gender bias and ensure an equal salary for men and women for the same work. Likewise, the Maternity Benefits Act of 1961 and the Sexual harassment of Women at Work Act of 2013 protect the rights may include women workers in India. The applicability of this Act differs from private to public entities.

Therefore, any discrimination that is not based on ability or merit and that is not exercised to uplift any category or any class but merely to inflict bias to one party is deemed to be unlawful.

How Do Employees Enforce Their Discrimination Rights?

 Employees may approach courts or tribunals on the basis of the nature of discrimination and file lawsuits to enforce their rights of discrimination. In some situations, the concerned workplace may have labour policies in place that allow these discriminated-related grievances. In most cases, the employer can settle disputes before or after a lawsuit has been filed.

Employees Privacy 

The Draft Personal Data Protection Bill, 2018 was released on 27 July, 2018 by the Ministry of IT, Government of India, along with a report from the committee of exports under Justice B.N. Srikrishna’s chairmanship. Currently, the privacy of employees working in corporate institutions is regulated by the IT established under the IT Act,2000 which has become progressively inadequate.

Important Case Laws

1. Kirloskar Pneumatic Co. Ltd. v. ESI Corporation 1987– Employees engaged in the principal employer’s repairs, site clearing, building constructions, etc. are employees within section 2(9( of the Act.
2. ESI Corporation v. Bhag Singh– the ESI Corporation is given the power to recover the employer’s contribution arrears along with damage on the contribution that remained due. It is therefore under an obligation to pay the arrears of benefits to the insured employees or their dependents with interest.

The article has been contributed by Ishika Agarwal, a student of Uttaranchal University, Law College, Dehradun.