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Introduction

Indian employment law

The Constitution of India (“Constitution”) is the cornerstone of individual rights and liberties, and provides the basic framework within which all laws in India, including laws relating to labour and employment, must operate. The Constitution guarantees certain fundamentalrightsto individualssuch asthe rightto life, privacy, equality before the law and prohibition of discrimination in public education and employment on the basis of religion, sect, gender and caste. The Constitution recognises the ‘right to livelihood’ as an integral part of the fundamental right to life.

In addition to fundamental rights, the Constitution also envisages certain ‘directive principles’ which serve as a guide to the legislature towards fulfilling social and economic goals. Given India’s history, social justice has always been at the forefront of a number of Indian regulations, specifically labour and employment laws. It is important to note that several labour laws in India have been designed from a worker emancipation perspective – including those relating to factories, mines, plantations, shops and commercial establishments, as well asthose relating to payment of wages,regulation of trade unions, provision ofsocialsecurity, industrial safety and hygiene.

However, given changing economic requirements in recent times, especially in light of the ongoing COVID-19 pandemic, the Indian Government has been increasingly conscious of the needs of businesses as well. In the last 6 months, the Indian Government has already brought in certain significant changes in labour laws with the aim of improving the ease of doing business in India. Further, there are several other big-ticket reforms in the pipeline, which we hope will see the light of day in the near future.

 

Key Points

  • Labour and employment laws are listed under the Concurrent List in the Constitution, which means that the Union Parliament (federal legislature) and State Legislatures have co-equal powers to enact laws relating to all labour and employment matters in India. Typically, the Union Parliament enacts a Central law, while the States formulate rules thereunder. Additionally, States often enact standalone legislation as well.
  • One of the central principles of Indian labour and employment law is that they distinguish between employees who are defined as ‘workmen’ and those who are in management / supervisory / administrative roles (‘non-workmen’). Most of the legislation regulates the service conditions of workmen, which are subject to far greater statutory protections. The service conditions of non-workmen are typically governed by the terms of the relevant employment contracts and the internal policies of the organisation. Determining whether a particular employee is a workman or not, has to be undertaken on a case[1]by-case basis.
  • India does not generally recognise employment[1]at-will. Further, in terms of the Indian Contract Act, 1872 (“Contract Act”), which is the principal legislation governing contracts in India, agreements that restrain trade, business or one’s profession are void – this could have an impact on employment bonds, and on non-compete and non-solicit covenants in employment contracts.
  • Trade unions are typically restricted to the more traditional forms of business, such as 1. Introduction The Constitution of India (“Constitution”) is the cornerstone of individual rights and liberties, and provides the basic framework within which all laws in India, including laws relating to labour and employment, must operate. The Constitution guarantees certain fundamentalrightsto individualssuch asthe rightto life, privacy, equality before the law and prohibition of discrimination in public education and employment on the basis of religion, sect, gender and caste. The Constitution recognises the ‘right to livelihood’ as an integral part of the fundamental right to life. In addition to fundamental rights, the Constitution also envisages certain ‘directive principles’ which serve as a guide to the legislature towards fulfilling social and economic goals. Given India’s history, social justice has always been at the forefront of a number of Indian regulations, specifically labour and employment laws. It is important to note that several labour laws in India have been designed from a worker emancipation perspective – including those relating to factories, mines, plantations, shops and commercial establishments, as well asthose relating to payment of wages,regulation of trade unions, provision ofsocialsecurity, industrial safety and hygiene. However, given changing economic requirements in recent times, especially in light of the ongoing COVID-19 pandemic, the Indian Government has been increasingly conscious of the needs of businesses as well. In the last 6 months, the Indian Government has already brought in certain significant changes in labour laws with the aim of improving the ease of doing business in India. Further, there are several other big-ticket reforms in the pipeline, which we hope will see the light of day in the near future. | 4 employment law overview an alliance of employers’ counsel worldwide 2021-2022 / india the manufacturing sector; however, in recent times there has been some unionisation in the Information Technology (“IT”) sector as well. The Trade Unions Act, 1926 (“Trade Unions Act”) provides for registration of a trade union and the rights and liabilities of a registered trade union. It is also proposed to recognise certain trade unions both at the Central and State Government levels, which would then participate in policy-making.
  • The Industrial Disputes Act, 1947 (“ID Act”) is the key legislation that governs industrial relations in India. The ID Act aims at securing industrial peace and harmony by providing the process for settlement of industrial disputes arising between two or more employers; between employers and workmen; and disputes among workmen.
  • The Equal Remuneration Act, 1976 (“ERA”), mandates the payment of equal remuneration to male and female workers who undertake similar tasks. The Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”) is another major legislation that pertains to regulating contract labour in India.

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