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Employment and Labour Law

With the changing economic scenarios, the Indian Government is slowly and steadily working on the improvement of employment and labour laws in the country. Labour and employment laws are listed under the Concurrent List in the Constitution, making central and state equally powerful to make laws regarding employment and labour in India. 

We can divide the various labour and employment laws among India as:-  

  • Employer-Employee Relations- the Industrial Act, 1947, the Trade Unions Act 1926, the Industrial Employment (Standing Orders) Act, 1946 (the “IESO Act”) and Contract Labour (Regulation & Abolition) Act, 1970 (the “CLRA Act”) are the legislations that focuses on employer-employee relations.
    • Service Or Working Conditions- the Factories Act, 1948 (the “FA Act”), the Payment of Wages Act, 1936 (the “Wages Act”), the Minimum Wages Act, 1948 (the “MW Act”) the various Shops and Commercial Establishments Act (the “S&E Act”), and the Payment of Bonus Act, 1965 (the “Bonus Act”), Workmen’s Compensation Act 1923 are the legislations that focuses on service conditions of employees. Other than this, there is legislation that provides for certain social security benefits to employees for example the Employees State Insurance Act, 1948 (the “ESI Act”), the Payment of Gratuity Act, 1972, (the “PGA Act”), and the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (the “EPF Act”).

In the new development, certain other legislations which serves for the employee rights and benefits are – The Maternity Benefit (Amendment) Act, 2017 [that amended the Maternity Benefit Act, 1961 (the “MB Act”)], The Rights of Persons with Disabilities Act, 2016 (the “RPD Act”), The Payment of Gratuity (Amendment) Act, 2018. 



  • The principal act governing the employment and labour laws in India is “Industrial Disputes Act, 1947”. Industrial law provides a better understanding of the relationship between employers, workmen, and the government, with the determination of employment terms and conditions of the workers in India. 
  • Who is “Workman”? Section 2(s) of the ID Act defines a workman as a person who is employed to do any manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward.
    • The definition however excludes the following persons:
    • those who are employed mainly in a managerial or administrative capacity;
    • those who, being employed in a supervisory capacity, draw a salary exceeding INR 10,000 per month or
    • those who exercise, either by the nature of the duties attached to the office or because of the powers vested in them, functions mainly of a managerial nature. 

  • Section 2(j) of the act defines Industry and the definition of ‘Industrial Dispute’ in section 2(k), can be divided into two parts viz :  

  • 1. Dispute or difference
    • Between employers and employers
    • Between employers and workmen
    • Between workmen and workmen
  • 2. Subject matter of dispute.
    • Connected with the employment or non-employment
    • The terms of employment
    • With the condition of labour.


The Trade Union Act aims to bring the registration of trade unions under its ambit. It provides for the rights and obligations of a registered trade union. The registration of trade unions in the territory of India comes under Section 3 to Section 14 of Chapter 2 of the Act. 

Section 2(h) of the Trade Unions Act, 1926 has defined a trade union as follows:

 “Trade union means any combination, whether temporary or permanent, formed primarily for the purpose of (a) regulating the relations (1) between workmen and employers, or (2) between workmen and workmen, or (3) between employers and employers; or (b) for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more trade unions.”

 To apply for the registration of the trade union the minimum number of persons required is 7; however, a trade union cannot be registered unless at least 10% of the workmen or 100 workmen (whichever is lesser, and subject to a minimum of 7 workmen), employed in an establishment are its members (Section 9A). 

The essential feature of the trade union act is Collective bargaining. It refers to the negotiation and fixing of the terms of employment by way of bargaining. A registered union can enter into an agreement with the employer for collective bargaining for the betterment of working conditions and the rights of the workers. The purpose served by collective bargaining is that the trade unions can raise their complaints and grievances, disputes between employer and workmen can be solved amicably, mutual agreements on the futures contracts, and smooth and peaceful functioning of the organization. 


A.Workmen’s Compensation Act 1923

The act was enacted in 1924. It compensates employees who are injured as a result of an accident. It covers both the unorganized and the organized sectors not covered by the Employees State Insurance Scheme.

Under this Act, according to Section 3(1), the employer is liable to pay compensation when: (a) the injury is caused to a workman by accident and (b) the accident arises out of and in course of employment.

To determine the claim for compensation Section 4 of the act is to be read with schedule IV. 

The Schedule divides the cases for claiming compensation provided under the Act as (1) Death; (2) Permanent Total Disablement; (3) Permanent Partial Disablement; (4) Temporary Disablement.

There are two ways to claim compensation by an injured workman, he cannot approach both :

  1. Civil Suits for damage
  2. Compensation Claim under the Act. 

An injured person cannot claim compensation under the act if he files a civil suit, according to Section 3(5) of the Act. He cannot file a civil suit if he has filed a claim for compensation under the act or if an agreement between the employer and the worker for compensation claims has been signed.

B. Employees Provident Fund and Miscellaneous Provisions Act, 1952

The act is one of the major social security benefit schemes for the employee. It aims at the welfare of the employees. Under the Act, Section 1(h) defines “Fund” as the provident fund established under a Scheme. 

Section 5 of the act deals with the “Employees’ Provident Fund Schemes” and its contributions are stated in Section 6 of the Act. 

PF Contribution Rate

Both the employer and the employee contribute equally to the national fund, at a rate of 12% of an employee’s basic pay plus dearness allowance + retaining allowance. It is also directed to the pension fund, which earns 9.5 per cent interest per year and pays the accumulated amount to the employee upon retirement, along with the interest earned. Employees in businesses with fewer than 20 employees are only required to contribute 10% for both employee and employer contributions. 

The entire 12% of your contribution goes into your EPF account along with:

  •  3.67% (out of 12%) from your employer,
  • while the balance 8.33% from your employer’s side is diverted to your EPS (Employee’s Pension Scheme); and 
  • the balance goes into your EPF account.

The breakup of EPF Contribution

The employee contributes 12% of his or her salary to the EPF. The employer contribution, on the other hand, is 13.61 per cent. The employer is responsible for the premium and management fees, with a maximum limit of 0.5 per cent of Rs.15, 000.

The employer’s contributions are divided as below:

  • 67% contribution goes towards the EPF
  • 33% contribution goes towards the EPS
  • 5% contribution goes towards the EDLI
  • 1% contribution goes towards the EPF administration charges
  • 01% contribution goes towards the EDLI administration charges

C. The Maternity Benefit (Amendment) Act, 2017

The Maternity Benefit (Amendment) Act, 2017 is an amendment to the Maternity Benefit Act, 1961. The act aims to provide maternity benefits to female employees as well as their rights, which include pay, compassion, and various privileges from the employer during pregnancy.

Section 4 of the states that the employer knowingly cannot employ a woman in any establishment during the six weeks immediately following the day of her delivery or her miscarriage. Maternity Leave refers to the paid leave for being absent from work to take care of a newborn child. Amendment 2017 has raised the maternity leave from 12 weeks to 26 weeks.

Eligibility for Maternity Leave

To be eligible under this act, a woman should have completed working for 80 days in the establishment in the last 12 months.

Benefits of Maternity Leave

  • Women employees get paid while they are on maternity leave.
  • The compensation is calculated as average daily earnings over 3 months as soon as the leave begins.
  • No pregnant employee should be given difficult tasks that may affect both mother and child, 10 weeks up to the date of delivery. 
  • In an establishment of 50 employees, a woman has a right to the creche facility when she returns to her job after maternity leave.
  • 12 weeks maternity leave for adopting mothers from the date of adoption, for a baby below three months old. 
  • A medical bonus of Rs. 3500 and a benefit of Rs. 6000/- under the National Food Security Act 2013.
  • An employer cannot dismiss or discharge a woman employee during the period of maternity leave

Section 21 of the Act deals with the Penalty for contravention of Act by employers. The employer can be imprisoned for up to a year or fine of Rs. 5000, or both. 

D. The Payment of Gratuity (Amendment) Act, 2018

The Payment of Gratuity (Amendment) Act, 2018 came into force on March 29, 2018, which amended the Payment of Gratuity Act, 1972. The act applies to those who are working in mines, oilfields, railways, factories, shops, ports, or establishments. It is one of the retirement benefits given to the worker. Black Law Dictionary defines “Gratuity” as something voluntarily given in return for a favour or especially a service. It can be paid by the employer in two ways:

  • From employers account;
  • From a group gratuity insurance plan. 

Eligibility for Gratuity:

Under the Gratuity Act 1972, An organization with a workforce of 10 individuals and above is liable to pay gratuity. Even if the employee strength falls below ten, any organization subject to this Act must still pay a gratuity.

Section 4 of the Act addresses gratuity payments. A gratuity is paid to an employee upon termination of his employment after he has worked for at least five years, either (a) on his superannuation, (b) on his retirement or resignation, or (c) on his death or disablement as a result of an accident or disease.

Calculation of Gratuity:

1. Employees covered under the Act :

Gratuity = (15 x last drawn salary [basic + DA] x number of completed years of service) / 26

NOTE : (a) Any year, where an employee works for more than 6 months, will be counted as a completed year of service.

(b) if he/she works for less than 6 months in a particular year, then that year is to be excluded from the gratuity calculation. 

2. Employees not covered under the Act 

Gratuity = [15 x average salary for the last 10 months (basic + DA + commission) x number of years employed] x 30

NOTE: the number of years employed is only taken into account based on completion.

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What amount of funding is required, the longevity of the case?

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Who are the legal experts and their track record of bringing the claim to a successful conclusion? Also, what is the strategy made for the case?

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