Labour Laws FAQs

1. What are Industrial Disputes?

Industrial Dispute means any dispute or differences between employers and employers or between
employers and workmen or between workmen and workmen, which is connected with the
employment or non-employment or the terms of employment or with the conditions of labour of
any person
2. Who can raise an Industrial Dispute?
Any person who is a workman employed in an industry can raise an industrial dispute. A workman
includes any person (including an apprentice) employed in an industry to do manual, unskilled,
skilled, technical, operational, clerical or supervisory work for hire or reward. It excludes those
employed in the Army, Navy, Air Force and in the police service, in managerial or administrative
capacity. Industry means any business, trade, undertaking, manufacture or calling of employers and
includes any calling, service, employment, handicraft, or industrial occupation or avocation of
workmen.
3. Who are Conciliation Officers and what do they do?
The Organization of the Chief Labour Commissioner (Central) acts as the primary conciliatory
agency in the Central Government for industrial disputes. There are the Regional Labour
Commissioners (Central) and Assistant Labour Commissioners (Central) who on behalf of the
Chief Labour Commissioner (Central) act as Conciliatory Officers in different parts of the country.
The Conciliation Officer make efforts to resolve the dispute through settlement between the
workmen and the management
4. Are there any provisions for Prohibition of Strikes and Lockouts?

No workman who is employed in any industrial establishment shall go on strike in breach of contract
and no employer of any such workman shall declare a lockout:
(a) During the pendency of conciliation proceedings before a Board and seven days after the conclusion
of such proceedings,
(b) During the pendency of such proceedings before a Labour Court, Tribunal or National Tribunal
and 2 months after the conclusion of such proceedings.
(c) During the pendency of arbitration proceedings before an Arbitrator and 2 months after the
conclusion of such proceedings, where a notification has been issued
(d) During any period during in which a settlement or Award is in operation in respect of any of the
matters covered by the settlement of Award

5. What are the different type of employment contracts permitted (permanent contracts, short
term contracts, temporary workers, etc.)?
Employers and Employees are free to agree to any length of contract either for a fixed term or an
indefinite term, terminable on notice as stipulated in the contract. If the contract is not for a fixed
term and does not state the period of notice required, the contract can be terminated by giving
reasonable notice.

6. Is short term employment legally possible? Is there any limitation regarding the period of such
employment?
Yes, short term employment is legally permissible. There is no restriction on employment on a
series of short term contracts. However, someone employed on a series of or a single short term
contract on a specified term for a period of 240 days of more may nevertheless establish continuity
of employment, and if employed in the same job under these circumstances might plead that the
job is of a permanent nature thus rending the company liable to permanently employing that person
or going through the retrenchment procedure involving various government authorities.

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7. Are there any minimum age requirements applicable to hiring an employee?
The minimum age of employment is 14 completed years under the Factories Act 1948 and 15
completed years under the Shops and Establishment Act

8. Do all establishments have to be registered under Contract Labour (Regulation and Abolition)
Act?
Every principal employer of an establishment which employs 20 or more contract workers has to
register under this Act. The Act is not applicable to establishments performing work only of an
intermittent or casual nature. Work is deemed to be of an intermittent nature if it is of a seasonal
character and is performed for not more than 60 days in a year, or in other cases if it was performed
for not more than 120 days in the preceding 12 months

9. What is the liability of the principal employer for the payment of wages to contract labour?
If a contractor fails to make payment of the wages, the principal employer will be liable to make
payment of wages to the contract labour. The principal employer can recover such expenses from
the contractor

10. What is the object of the Minimum Wages Act, 1948?

The Minimum Wages Act was formulated to provide for fixing minimum rates of wages in
certain employments. The Act also governs certain service conditions such as working hours,
weekly rest days and payment of overtime for employees covered under the act.

11. To whom does the Minimum Wages Act apply?

The Minimum Wages Act extends to whole of India and applies to all establishments employing
one or more persons and engaged in any of scheduled employments. It covers every employee
who is engaged in any scheduled employment, including an out worker to whom materials are
given out for manufacturing or processing at his own premises. Please refer the schedule to the
Act for list of Scheduled Employment

12. What components of Wages are included in calculating the Minimum Wage?
Wages is defined as all remuneration, capable of being expressed in terms of money, which
would, if the terms of the contract of employment, express or implied, were fulfilled, be payable
to a person employed in respect of his employment or of work done in such employment, and
includes house rent allowance, but does not include-
(i) the value of-
(a) any house-accommodation, supply of light, water, medical attendance, or
(b) any other amenity or any service excluded by general or special order of the appropriate
Government
(ii) any contribution paid by the employer to any Pension Fund or Provident Fund or under any
scheme of social insurance
(iii) any travelling allowance or the value of any travelling concession
(iv) any sum paid to the person employed to defray special expenses entailed on him by the
nature of his employment
(v) any gratuity payable on discharge

13. What is the time taken for disposal of the application in the Provident Fund office?
The claims received complete in all respects are disposed off within a maximum period of 30
days from the date of receipt of claims in the office. In case the member is not hearing anything
about his application within 30 days, he can approach the Public Relation Officer.

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14. How would I know my PF balance and other details?
PF office sends an annual statement through the employer which gives details about the PF
accumulations. The statement contains details like, Opening balance, amount contributed during
the year, withdrawal during the year, interest earned and the closing balance in the PF account

15. What constitutes sufficient cause for dismissal?

In general, what conduct amounts to sufficient cause for discipline is a matter for the employer in
the light of work rules and disciplinary procedure the employer has established. However, if the
employer acts unreasonably, this could lead to the employee having claims against the employer
and in case of a workman, the decision could be set aside in court leading to the employee being
reinstated with full back wages and seniority. In case of a manager, civil courts cannot reduce or
mitigate the quantum of punishment thus awarded but can award suitable compensation thereof.
For a dismissal to be justified, the dismissal must be for a potentially fair reason. These include
a) Capability
b) Conduct
c) Integrity issues or fraud as can be proved beyond doubt in a court of law
d) Any other substantial reason as could justify dismissal
It is also essential that the employer follows with diligence the due procedure as established by
work rules and common law taking into account the principles of natural justice to avoid the
dismissal order being set aside on technical grounds

16. Can an employee be dismissed for disciplinary reasons? What indemnities or severance pay
is he/she entitled to?
An employee may be dismissed for disciplinary reasons relating to conduct or performance.
In case of non-workmen staff, the employer is free to award any punishment for disciplinary
infringements and any indemnity or severance pay will be only as per contract of employment.
In case of workmen and borderline cases where employees could be held to be workmen, it is
essential that the employer follows with diligence the due procedure as established by standing
orders and common law taking into account the principles of natural justice to avoid the dismissal
order being set aside or the quantum of punishment being reduced on technical grounds in case the
employee takes recourse to legal action. If an employee is dismissed without notice, then he/she is
not entitled to any pay or severance compensation. In case of dismissal with notice, then the
contractual rights for the period of notice upto the date of dismissal will apply. The employee is
also entitled to his bonus under the Payment of Bonus Act unless his dismissal is due to fraud,
riotous or violent behaviour, or theft, misappropriation or sabotage of any property of the
establishment. In case of gratuity payable to an employee under The Payment of Gratuity Act, the
gratuity of an employee who has been dismissed for wilful omission or negligence causing damage
or loss to the employer’s property can be reduced to the extent of such damage or loss. The gratuity
may be wholly or partly forfeited if the termination of services is due to an employee’s riotous or
disorderly conduct or any other act of violence or an offense involving an act of moral turpitude
committed in the course of employment. In the case of an employee’s provident fund, the amount
to the credit of an employee including the employer's contribution cannot be attached, assigned or
charged under any circumstances including dismissal

17. What process should be followed in terminating an employee?

Though no disciplinary procedure is laid down in statutory law, the company should follow a
disciplinary procedure which ensures fairness to the employee and follows the principles of
natural justice before terminating his/her services. The essential elements of a disciplinary
process are as follows:
a) Preliminary enquiry or investigation - this step is not essential but is ideal to determine on a
prima-facie basis whether grounds for carrying out the disciplinary process exist. This step can be

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 eliminated in case of gross misconducts
b) Issuance of a Charge Sheet - A critical step in the process, the objective being to provide the
employee an opportunity to understand the nature of his offense and give him an opportunity to
explain his conduct and prepare his defence
c) Domestic Enquiry - A proceeding enabling both sides to present their case. The company
should for this proceeding, remind the employee of his rights under the procedure e.g. the right
for representation. The enquiry should be conducted by someone other than those involved in the
investigation or in the incident. The principles of natural justice should also be followed in the
enquiry.

These include the following:

I. The employee should know what is alleged against him
II. The employee should have reasonable time and opportunity to defend himself
III. All documents and evidence should be recorded in the employee’s presence and no material
should be relied upon against the employee without giving him/her an opportunity to defend
him/herself.
IV. The employee should have an opportunity to cross examine witnesses brought against
him/her.
V. The employee should have an opportunity to bring in evidence of his/her choice to defend
him/herself.
The enquiry officer has to submit his report, a copy of which must be forwarded to the employee.

d) Decision - If the employer considers the case is made out on consideration of the balance of
probabilities involved, he must decide the appropriateness of the penalty by reference to the
disciplinary procedure, past practice, the individual factors of the case and principles of common
law in such matters. The decision should then be served on the employee in writing.
If the decision is to dismiss, it is advised that the employer take appropriate legal opinions in the
matter before serving the decision. It is also recommended that the decision be reviewed by
management at a level at least one level higher than the dismissed employee or the employees
conducting the disciplinary procedure.

e) Appeal: An employee should be given the right to appeal the decision and the management
should appoint a high-level appellate authority, not involved in the disciplinary process for this
purpose. Dismissal need not be delayed until after the appeal, although it must remain possible to
reinstate the employee after the appeal is successful

18. What are the legal consequences if a termination is not handled properly? What are the
potential penalties for a wrongful termination?
A union may legally challenge a termination by raising an industrial dispute in the appropriate
forum. Individual employees may also approach a labour court to challenge a termination order.
The potential penalties for a wrongful termination in a labour court are
i) reinstatement of the wronged employee with full seniority and benefits
ii) full back wages for the period he was wrongfully terminated.
In case of a civil court, the employer is liable to pay compensation for damages suffered by the
employee due to wrongful termination. There are no guidelines for such awards which are left to
the discretion of the judge

19. To whom does the Bonus act apply?

The Payment of Bonus Act extends to the whole of India and is applicable to every factory and to
every establishment wherein 20 or more workers are employed on any day during an accounting
year.

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 The Central/State Government can however, extend its provisions to any establishment employing
less than 20 but more than 10 employees.
For the purpose of calculating the number of employees for applicability of the Act, part-time
employees are also included.
Every employee not drawing more than Rs.10000 per month who has worked for not less than 30
days in an accounting year, shall be eligible for bonus.
Any establishment which has been covered under the Act once shall continue to be governed by
the Act even if the number of persons employed therein at any time falls below 20.

20. Which employees are eligible for Bonus under the Act?
All employees drawing a salary or wages up to Rs. 10,000 per month and who has worked for a
minimum period of 30 days in a year is entitled to bonus. Salary is defined as Basic Wage + DA
and does not include allowances

21. What is the time limit for an employer to pay the bonus?
Bonus must be paid within a period of 8 months from the close of the accounting year. In case
there is a dispute regarding bonus, bonus must be paid within 30 days of settlement of the dispute.

22. Can an employer hold or deduct the bonus payable to an employee.

Any customary or festival bonus paid in advance to employees can be deducted from their bonus
amount.
Bonus can be held in cases of misconduct causing financial loss to the company

23. What is gratuity?

Gratuity is a lump sum amount that your employer pays you when you retire or resign from the
organization.
An Employee does not contribute any portion of his salary towards this amount.
Gratuity is paid out at the time of superannuation (if you retire at the age of 58), when you retire
(at any other age) or resignation, and in the event of your death or being rendered disable because
of an accident or illness. In the event of your death, the gratuity will be paid to your nominee

24. When does an employee become eligible for gratuity?

Gratuity is applicable to a permanent employee who completes 5 years of continuous service with
the organisation. After the ruling of Madras High Court an employee is deemed to have
completed 5 years if he has completed 240 days of service in the 5th year

25. Can an employee claim Gratuity even before completion of 5 years?

Yes, An employee or nominees can claim gratuity even before completion of 5 years in
followings cases: Death or Disablement

26. When does an employee forfeit gratuity?

If the services of such employee have been terminated for his riotous or disorderly conduct or any
other act of violence on his part, or if the service of such employee have been terminated for any
act which constitutes an offense involving moral turpitude, provided that such offense is
committed by him in the course of his employment

27. Is a retrenched employee entitled to gratuity?

Yes, a retrenched employee is also entitled to gratuity

28. What is the maximum Gratuity payable to an employee?

Maximum Gratuity payable to an employee is Ten Lakhs only

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29. By when should gratuity dues be paid?
Within 30 days of the employees date of leaving

30. What is the purpose of the Maternity Benefit Act?

The Maternity Benefit Act aims to regulate the employment of women in certain establishments
for certain periods before and after child-birth and to provide for maternity benefits including
maternity leave, wages, bonus, nursing breaks etc.

31. Which employees are entitled to receive Maternity Benefit?

This act is applicable to woman employees who are employed whether on regular employment or
on casual basis. Woman employees are defined as 'A woman employed, whether directly or
through any agency, for wages in any establishment'.
Every woman employee who has worked in the establishment for a period of at least 80 days in
the 12 months preceding date of expected delivery is entitled to receive Maternity Benefit. Days
of paid leave/lay off are included in the 80 days

32. What are the restrictions on work for Pregnant Women?

No woman
a) is allowed to work in an establishment during the six weeks immediately following the day of
her delivery, miscarriage or medical termination of pregnancy
b) Is required to perform strenuous activity or work which can interfere with her pregnancy or her
health during
i) the month preceding the period of six weeks before the expected date of delivery
ii) Any time during the six weeks prior to the expected date of delivery for which the employee
does not avail of maternity leave

33. What are the maternity benefits a woman is entitled to?

On receipt of a notice from an employee under the Maternity Act, if the employee has worked in
the establishment for at least 80 days in the twelve months preceding the expected date of
delivery,
a) provide the employee maternity leave at her request of upto 12 weeks of which not more than
six weeks shall precede the expected date of delivery
b) pay the employee in advance the amount of maternity benefit for the period preceding the
expected date of delivery on production of proof of pregnancy
c) on receipt of proof of delivery, pay the maternity benefit due for the subsequent maternity
period within 48 hours
d) Pay the employee a medical bonus if pre natal confinement and post natal care is not provided
free by the employer

34. What is the entitlement of a woman in case of MTP (Medical Termination of Pregnancy)?
In case of MTP (Medical Termination of Pregnancy) a woman is entitled to leave with wages at
the rate of maternity benefit for a period of 6 weeks immediately following the date of MTP

35. Is a woman entitled to leave with wages for miscarriage?

In case of miscarriage a woman is entitled to leave with wages at the rate of maternity benefit for
a period of 6 weeks immediately following the date of miscarriage