Indian Government is untiringly working towards making India as one of the top spots in Ease of Doing Business global rankings. The World Bank’s ‘Doing Business’ assessment covers aspects of business regulation and their implications for firm establishment and operation sin about 190 countries. India had jumped 30 positions to reach the top 100 most business friendly nations in the list in the current year’s index.

During 2016/17, India carried out eight specific reform measures to become the only economy in South Asia to make it to the list of 10 top improvers.

> The list of reforms that helped India last year:

  • Faster mechanism to start a business
  • Reduction in number of procedures and time required to obtain construction permits
  • Improved access to credit by amending the rules on priority of secured creditors
  • Minority investor protection measures
  • Administrative measures easing compliance with corporate income tax
  • Reduction in import border compliance time
  • Enforcement of contracts made easier by introducing the National Judicial Data Grid
  • Adoption of new insolvency and bankruptcy code

Understanding the need of the hour, present Union Government has decided to make existing Industrial, Labour and Welfare laws logical in context of 21st Century, and because of this strong will, India continue to achieve at global stage to make its mark in terms of business friendly nations.

> Out of the several reforms the most significant industrial reforms were:

  • the extension of maternity leave to 26 weeks, placing India among the top three countries in generosity of maternity benefits;
  • the implementation of the Rights of Persons with Disabilities Act, 2016, which recognizes 21 types of disabilities and complies with the principles of the United Nations Convention on the Rights of Persons with Disabilities; and
  • raising the salary threshold for eligible employees under the Employees’ State Insurance Act, 1948 to provide coverage to more employees.
  • introduction of ‘Fixed Term Employment’ in all industries under Industrial Employment (Standing Orders) Act, 1946.
  • extending the coverage of Gratuity to workers under Fixed Term Employment under Gratuity Act, 1972.
  • full reimbursement of the employer’s contribution by the Government for specified category of employees for three years under Employees Provident Fund Act, 1952.
  • doubling the exemption limit of tax free gratuity under Gratuity Act, 1972.
  • Government of India reduced from 56 to 5 the number of registers employers are required to keep under nine different federal labour laws.
  • the number of forms and returns employers are required to file under three federal labor laws has been reduced from 36 to 12 by eliminating redundancies and duplications.
  • several administrative and e-governance initiatives have been undertaken by the federal and state governments to generate employment and facilitate ease of doing business. These include launching an online platform for registration under five central laws5 and providing online availability for registration of establishments for the purpose of provident fund (social security) and employees’ state insurance contributions.

> Future of Factories Act in the time to come

The Factories (Amendment) Bill, 2016 was passed by the lower house of parliament on Aug. 10, 2016. The bill would significantly expand the powers of state governments in the regulation of employment:

  • State governments would be permitted to prescribe rules on a range of matters, including double employment, details of adult workers to be included in the factory’s register, and exemptions for certain workers.
  • State governments would have authority to regulate overtime hours as long as total overtime hours do not in most cases exceed 100 in a quarter. The current limit is 50. The federal government can also regulate overtime.
  • State governments could make rules allowing adult employees to work up to 115 hours in a quarter under exceptional circumstances. The current limit is 75.
  • The federal or state governments could extend the 115-hour limit on overtime in a quarter to 125 hours in cases of excessive work load or if the public interest requires it.

However, Bill is still pending before the Upper House for its approval and signing by the Hon’ble President.

Further, Government of India as part of labour reforms has undertaken drive to rationalize 38 Labour Acts through

◊ Code on Wages

The Code on Wages Bill, 20178 proposes to replace four federal labor laws: The Minimum Wages Act, 1948; The Payment of Wages Act, 1936; The Payment of Bonus Act, 1965; and The Equal Remuneration Act, 1976.


1. The revised code will ensure minimum wages for all employees and timely payment of wages.

2. The Wage Code will introduce a national minimum wage to be administered by the federal government

3. The central or state governments can set the number of hours that constitute a working day

4. Employers may make deductions from employee wages only for specified purposes.

5. Penalties for violations of the Wage Code will be progressive based on the seriousness of the offense.

◊ Code on Social Security (provident fund & gratuity)

The Employees’ Provident Fund & Miscellaneous Provisions Act, 1952 is one of India’s most important social security laws. There are proposals to amend the act by:


1. reducing the employee number threshold for coverage from 20 to 10.

2. allowing small establishments employing up to 40 workers to contribute at the rate of 9 percent to 12 percent of wages instead of the standard 12 percent.

3. increasing the wage threshold for coverage from the current 15,000 rupees per month to 21,000 rupees

 ◊ Code on Industrial Relations &

◊ Code on Occupational Safety

Such steps of the Government to codify the labour laws will help in eliminating multiplicity of definitions and authorities leading to ease of compliance without compromising wage security and social security to workers.

”Hope to witness a new beginning”

Author Bio

Qualification: CS
Company: N/A
Location: DELHI, New Delhi, IN
Member Since: 31 Mar 2018 | Total Posts: 7
Deepak Bhardwaj is a legal consultant in the field of Industrial, Labour ,Allied Laws, Compliance Audits and other legal issues. He is having a good exposure in handling compliance of manufacturing plants w.r.t preparation and execution of compliance deadlines. View Full Profile

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June 2021