1. Introduction

Over a period of time, the government has taken various legislative, administrative and e-governance initiatives in the field of labour laws to generate employment and to facilitate ease of doing business. Labour Law is the body of law which focuses on ensuring the protection of the rights of workers in India. It regulates employers, employees and trade unions through various compliances to secure the rights and interests of the employees and labours against exploitation by the employers. Labour Law Compliance is considered of great importance to any organization having a business place in India.

Currently, the various organisations are taking decisions of layoffs and paycuts amid this COVID-19 pandemic. In such time, the labour laws come to rescue of employees. For example, if an organisation has to lay people off, it has to give them proper notice & severance pay as well in some cases. In such circumstances, for employers out of compliance, employees have a right to file a complaint with the concerned authority.

2. Labour Laws in India

The various labour laws governing in India to protect employee benefits, termination and governing the rules and regulations set for employees are as follows:

2.1 Building and Other Construction Workers (Regulation of Employment and Conditions Services) Act, 1996 – The act applies to construction sites employing ten or more workers through a Contractor. The Act collects the cess from the construction sites, and use that money for registered workers welfare. However, the Act does not apply to the sites falling under the effect of the Factories Act, 1948 or Mines Act, 1952.

2.2 Contract Labour (Regulation and Abolition) Act, 1970, Equal Remuneration Act,1976 – The Act applies to establishments or contractors with 20 or more workers employed for 12 months as contract labours. It does not apply to those places which have casual nature of work and the employer cannot contact labours without getting registration under the Act.

2.3 Employees State Insurance Act, 1948 – The ESI Act, (1948) applies to the following categories of factories and establishments in the implemented areas:

  • Non-seasonal factories using power and employing ten(10) or more persons
  • Non-seasonal and non-power using factories and establishments employing twenty (20) or more persons.

The ESI scheme applies to all factories and other establishments as defined in the Act with 10 or more persons employed in such establishment and the beneficiaries’ monthly wage does not exceed Rs 21,000 are covered under the scheme.

2.4 Minimum Wages Act, 1948 – The objective of this Act is to ensure that every worker is paid the minimum amount of wage prescribed for a particular job. This reduces the chances of workers getting exploited in the hands of their employers. The provisions of the Minimum Wages Act are applicable on all the States of India, except Jammu & Kashmir on every employment that employs more than 1000 personnel in a State. Unless specifically consented by the Central Government, the provisions of this Act are not applicable on the employees of the undertaking owned by the Central Government or Railways.

The various other laws in this category have been enlisted as follows:

2.5 Law relating to Wages:

  • Payment of Wages Act, 1936
  • Minimum Wages Act, 1948
  • Payment of Bonus Act, 1965
  • Working Journalists (Fixation of rates of wages) Act, 1958

2.6 Laws relating to Equity and Empowerment of Women:

  •  Maternity Benefits Act, 1961
  • Equal Remuneration Act, 1976

2.7 Laws relating to social security:

  • Employee’s Compensation Act, 1923
  • Employees Provident Fund and Miscellaneous Provision Act, 1952
  • Payment of Gratuity Act, 1972
  • Employers Liability Act, 1938
  • Fatal Accidents Act, 1855

2.8 Laws relating to Prohibitive Labour Laws:

  • The Sexual Harassment at the Workplace (Prevention, Prohibition and Redressal) Act, 2013
  • Child Labour (Prohibition and Regulation) Act, 1986
  • Bonded Labor system (Abolition) Act, 1976
  • The Beedi and Cigar Workers (Conditions of Employment) Act, 1966

3. Importance of Labour Laws Compliance:

The scope of labour compliance is not limited to filing returns and maintaining statutory deposits and records by the employer but it covers the various other aspects as well. Here is the importance of Labour Law:

  • It improves the relation between the employer and employees thereby minimising the industrial disputes.
  • It is in the interest of the workers to prevent them from exploitation by their employees and management.
  • It helps workers in getting fair wages.
  • Reduction of conflicts and strikes etc.
  • Promotes healthy environment conditions in the industrial system.
  • Provides compensation to workers, who are victims of accidents.

Indian Labour Law consists of various acts covering every possible aspect for the protection of labour rights. The range of labour compliance is not restricted to filing returns and maintaining statutory deposits and records by the company. If the business or company, in any case, fails to make the industrial law compliance, there are strict penalties specified by the law.

4. Labour Laws Compliance Audit

Audit helps to detect non-compliance of labour and employment laws applicable to a business and take corrective measures to avoid any legal action by the regulators against the business and its management. Labour Law audit is a thorough check of the company’s policies and procedures to prevent prosecutions.

Though Labour Law Audit is not compulsory, but it is highly recommended to get this audit done as it helps to detect non-compliance of labour and employment laws applicable to a business and take corrective measures to avoid any legal action by the regulators against the business and its management.

4.1 Scope of Audit

While conducting the audit, the Labour Law Auditor must cover all labour legislation applicable to an establishment. Scope of the Labour Law audit differs from business to business. For Example, if a particular piece of labour law does not apply to a specific business, the same should be disclosed in the report of the auditor. Similarly, certain factories in remote areas may not have the facilities of Employees State Insurance Corporation. In such cases, there is no need to ensure compliance of the ESI Act.

4.2 Benefits of Audit

Benefits to the Employee:

  • Social Security of workers/employees will get increased.
  • It ensures timely payment of wages, gratuity, bonus, overtime, compensation etc. of the workers
  • It boosts the morale of the employees.

Benefits to Employer:

  • It helps to increase productivity. Higher productivity higher will be profits.
  • It also helps in preventing strikes by employees, lockouts etc.
  • Cooperation and understanding improve employer-employee relations.

4.3 Consequences of Non-Compliance

In the event of non-compliance of labour laws by the company, various penal provisions get attracted which include imprisonment, fine or both depending on the type of default. Hence, an independent audit shall limit this risk to a great extent.

5. Conclusion

Labour Law is so vast and deep that no business can afford the risk of non-compliance of labour law in today’s time and therefore this aspect of the business has become serious. To avert the adverse consequences of non-compliance, now most of the companies prefer opting for labour law consultants to manage their compliances.

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March 2021