Staff in India: you must comply with these labour laws

Indian Labour Law

In India, both the federal and state governments have the power to make legislation on employment and industrial relations. Many Indian states have Shops and Establishments Acts, where local governments have enacted their own specific laws or modifications of the federal rules. That means in practice that the national rules apply differently state by state. This can make it difficult for foreign companies to comply.

A unique feature of Indian labour law is that there are different rules for different categories of industries and workers. Indian labour law divides “industry” into two broad categories, namely factories (manufacturing units) and establishments (non-manufacturing units). Workers are also divided into two broad categories, workers and non-workers, where a worker is defined as a person who performs manual, unskilled, skilled, technical, operational or administrative work.

The applicability of the various laws and the protections provided may therefore vary from case to case. Employers must consider the number of employees they employ in India as many laws apply based on the number of employees working for a specific company. Laws regulating employment relationships prescribe minimum employment conditions such as working hours, wages, leave entitlement, notice and termination rights, health and safety standards, etc. Employers are required to provide the legally required minimum rights to employees. It is recommended to include all important labour conditions in the employment contract.

Employment documentation is tailor-made in India

It is crucial for foreign companies to have employment documentation drawn up that is fit for purpose. The tendency is often to opt for consistency. As a result, templates that have already been used in other countries are often copied. As a result, foreign companies may run the risk of not fully complying with Indian labour law. A thorough review of contractual employment documentation, including company policies and manuals by an Indian lawyer is highly recommended to comply with Indian labour law.

The Four Labour Codes of 2021

1. The Code of Wages
The Code of Wages, as the name suggests, focuses on wages. Currently, Indian states still determine minimum wages, which means that for the same job, different minimum wages apply in each state. The Wage Code solves this problem by setting a so-called floor wage requirement. In addition, the Wage Code stipulates that men, women and other gender identities should receive the same remuneration for the same position or for a similar amount of work.

2. The Industrial Relations Code
This code makes it easier for companies to hire and fire workers. Previously, companies with more than 100 employees had to seek permission from the state government where the company was located to hire and fire workers. In addition, companies with less than 300 employees no longer need to have a standing order. These are the detailed rules of conduct for workers in industrial establishments, such as entry and exit from the premises, working hours, wages, shift schedules, leave and attendance, provisions for misconduct, etc.

3. The Social Security Code
With this code, the Indian government is expanding the social security system and is responding to the rapid development of the ‘gig economy’. The SS Code introduces several important new terms such as “Aggregator” which is defined as a digital intermediary or a marketplace, through which a buyer or user of a service comes in contact with the seller or service provider.

4. The Code on Occupational Safety, Health (OSH) and Working Conditions
This code consolidates several important pieces of legislation relating to the labour conditions of workers into one comprehensive law. The OSH Code provides an overview of the obligations of every employer with regard to his employees and the workplace. According to the OSH Code, the employer must ensure welfare activities for the employees outside the workplace.

Protection of Women

Prevention of sexual harassment must be a part of the Occupational Health and Safety policy of companies in India, including preventive and, if necessary, repressive measures. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act 2013”) provides the necessary guidance in dealing with such issues. Under this law, employers are required to establish an independent complaints committee in every office or place of business of an organization with ten or more employees in the event of a complaint. If an employer fails to establish an internal complaints committee or violates the law, he can be fined INR 50,000, which is approximately EUR 600. A repetition of the offense can be punished by doubling the fine, writing off the entity or canceling the legal business licenses of the entity.