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  • Coverage of all legalities involved with Labour Compliance for your business
  • Documentation for all required licences and authorisation from various agencies
  • Legal assistance for any issues in the application
  • Coordinating with governmental agencies in case of any queries

Overview of Labour Compliance laws in India

Labour, a concurrent subject, is under the ambit of the center and the states. India's existing labour compliance law broadly categorises industries into manufacturing units or factories and commercial establishments. The safety, health and working conditions of workers are regulated by the Factories Act of 1948. Also, the state-specific Shops and Establishments Acts generally regulate work conditions and employment conditions in non-manufacturing units.

Indian labour compliance laws can be broadly classified based on the aspects of workers and the workplace they regulate. For instance, rules governing the working hours, conditions of service, health, safety, equality, minimum wages, social security benefits, termination, reduction, and prevention of sexual harassment of women in the workplace have existed. Still, the numerous statutes regulating labour compliance proved rigorous for corporations and businesses to keep track of. Indian labour code can be broadly classified into the following heads based on the areas they regulate:

  • Conditions of service like working hours
  • Health and Safety
  • Minimum wages, equality and social security benefits
  • Retrenchment and termination
  • Prevention of sexual harassment of females in the workplace

Categorisation of Labour Compliance Laws in India

There are two categories of labour compliance and laws in India. The collective labour law relates to the tripartite relationship between employer, employee and union. On the other hand, labour law concerns employees' rights at work and throughout the work contract. Every organisation must comply with laws in both these categories to function without hindrance by the government after implementing the new labour law regime. Assistance and guidance from industry experts can make your business compliant with the existing laws and prepare it for all the changes that have been proposed.

Following is the list of categorisations of labour compliance laws in India -

  • Laws related to industrial relations, like the Trade Unions Act of 1926, Industrial Disputes Act of 1947 etc.
  • Laws that relate to wages, such as the Payment of Wages Act 1936, Minimum Wages Act, of 1948 etc.
  • Laws that relate to working hours, conditions of service and employment, such as the Factories Act, of 1948, Plantation Labour Act, of 1951, Mines Act, 1952 etc.
  • Laws related to disadvantaged and deprived sections of society, such as Bonded Labour System (Abolition) Act, 1976, Child Labour (Prohibition & Regulation) Act, 1986 etc.
  • Laws relating to Social Security include Workmen’s Compensation Act, 1923 Employees’ State Insurance Act, 1948 etc.

The Government of India has consolidated twenty-nine labour legislations of the 44 labour-related laws into four Labour Codes. This is done as there was a diversity of Labour Laws and related labour compliance rules in India. The categories of Acts mentioned above have been organised to fit into four categories.

Factors that define the applicability of Labour Compliance Laws

The workforce in India can be classified as employees and non-employees. While non-employees generally include interns, contract workers or third-party employees and consultants, an employee can be categorised into "workman" and "non-workman".Fromthe perspective of law, Indian laws protect the workers category thoroughly compared to the non-workmenclass.The standard labour laws that need adherence to labour compliance depend on the business type and the functioning period. Some of them have been explianed in detail below -

Contract LabourAct, 1970: Regulates the employment of contract labour in certain establishments and provides for its abolition in certain circumstances, like when the organisation has employed 20 or more workers as contract labour or businesses that employ 20 or more than 20 workers in the previousyear.

Minimum Wages Act, 1948: Applies to any employment if it has employed 1000 workers in the respective state. It ensures giving minimum wages to the workers in the organised sector. It empowers the state government to take steps to decide minimum wages and to revise salaries within five years.

Building and Other Construction Workers Act, 1996: The Act applies to organisations where ten or more workers are employed directly by the contractor on a construction site.

Registration process under Labour Compliance Laws

Under Labour compliance, many acts stated above require registration with appropriate state authorities subject to the fulfilment of certain conditions. For instance, the documents needed to be produced by the contractor to the employer for approval of employing contract labour are -

  • Copy of the report proving the legal status of the firm
  • Copy of receipt, insurance policy or cover note received
  • Photograph proof showing allotment of PF code number
  • Copy of challans showing remittance of security deposit
  • The applicable fee to receive the labour license

Newly proposed categorisation of LabourLaws

To simplify the multiple labour laws and labour compliance protocols, the Centre recommended that measures must be taken to streamline the filing of returns with the regulatory authorities under labour laws. The government also realised that the labour compliance regime under existing labour laws was detrimental to India's 50 crore workers that do not have the knowledge and understanding of their rights in the unorganised sector.

The government has tried to promote labour compliance through the following four labour codes. This is done to ensure that all workers benefit from labour laws. Now all employees in the organised and unorganised sectors will get minimum wages. A large section of workers in unorganised sectors would also get social security. The four labour codes that have been proposed are

  • The Code on Wages, 2019– This code subsumes the provisions of four laws — The payment of Wages Act, the payment of Bonus Act, 1965, the Minimum Wages Act, and the Equal Remuneration Act. Notified in August 2019, the code applies to all units and all employees in both organised and unorganised sectors. The Central Government will make salary-related decisions for employment and labour compliance, such as railways, mines, and oil fields. 
  • The Code on Social Security 2020 – This code subsumes nine existing laws. Furthermore, it empowers the Centre to notify social security schemes like the EPF, ESI or EPS to benefit workers in all sectors. The code will apply to any establishment by notification of the Central Government subject to the threshold specified. The code and the SS Code contain a unified definition of 'wage' that was earlier interpreted differently. The change in the definition of wage will requires employers, in some instances, to revamp the salary structure of the employees.
  • Industrial Relation Code, 2020: This code on Industrial Relations seeks to simplify the labour compliance process and promote ease of business in an establishment. It incorporates three provisions: the Trade Unions Act, 1926;the Industrial Employment (Standing Orders) Act, 1946; and the Industrial Disputes Act, 1947. The code applies to establishments as per the formation of committees and unions.
  • Occupational Safety, Working Conditions Code, 2020 - It seeks to regulate workers' health and safety conditions in a facility with ten or more workers and all mines and docks.

Though the President has given permission to the Central Government for all four Codes, but the Central Government hasn't announced an 'Effective date' for their implementation.

How will Enterclimate Assist You?

Solutions specific to your requirements

At Enterclimate, we provide one-stop support for your legal obligations under labour-related laws and labour compliance for all businesses.

Comprehensive coverage of legalities

Enterclimate is the ultimate solution for all your authorisation and compliance requirements mandated by the Central and respective governments.

Legal assistance throughout the journey

Our customised packages include legal assistance for your business's initiation and related compliances. Our team of expert lawyers, C.A.s and CS, deal with any issues raised during the application process.


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