2018

Recent Amendments
in Labour Laws
An Employment Law Project Report
Submitted to: Prof. Parul Gupta

Submitted by: Group 1 (28/11/2018)

18PGHR01 AAKASH KHURANA

18PGHR06 ADHIRAJ SINGH

18PGHR24 FARAAZ SAEED

18PGHR33 PRATIKA GAMBHIR

18PGHR38 RITU SURANA

18PGHR42 SARANSH GARG

 Acknowledgement

We would like to express our deepest appreciation and gratitude to all those who helped us
to complete this report. This project has helped us in gaining immense knowledge of the various labour
laws.

A special gratitude we give to Prof. Parul Gupta, Professor, Employment Law, MDI Gurgaon, whose
contribution in stimulating suggestions and guidance have helped us to successfully complete our
project.

We would also like to thank the institute for having given us this opportunity to do this project. Also as
a team, we appreciate the efforts put in by the group members to make this project successful.

Lastly, we would like to thank all our friends and colleagues who helped us in completion of
this project wherever the need be.

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 Executive Summary

During the course of our project we have covered various amendments that have been made
to different labour laws in order to gain an insight into the various Indian Labour Laws.

We have covered the following amendments to laws

- Payment of Wages, 1936

- Payment of Gratuity, 1972
- The Maternity Benefit Act, 1961
- The Child Labour (Prohibition & Regulation) Act, 1986
- The Employees’ State Insurance (ESI) Act, 1948
- The Factories Act, 1948
- Industrial Employment (Standing Orders) Central Rules, 1946

The project report also gives insights about the Ease of Compliance Rules, 2017

This project was a great learning experience and helped us attain greater clarity on the workings of
the Indian Labour Laws.

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 Table of Contents

1. Introduction 5

2. Payment of Wages, 1936 5

3. Payment of Gratuity, 1972 7

4. The Maternity Benefit Act, 1961 9

5. The Child Labour (Prohibition & Regulation) Act, 1986 11

6. The Employees’ State Insurance (ESI) Act, 1948 14

7. The Factories Act, 1948 15

8. Industrial Employment (Standing Orders) Central Rules, 1946 17

9. Ease of Compliance Rules, 2017 19

10. Conclusion 20

11. References 21

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1. Introduction

Labour law mediates the relationship between workers, employing entities, trade unions and
the government. Collective labour law relates to the tripartite relationship between employee,
employer and union. Individual labour law concerns employees' rights at work and through the
contract for work. Employment standards are social norms for the minimum socially acceptable
conditions under which employees or contractors are allowed to work. Government agencies
enforce labour law. Traditionally, Indian governments at federal and state level have sought to ensure
a high degree of protection for workers, but in practice, legislative rights only cover a minority of
workers.

Some of the amendments to the major laws are listed in this project report.

2. Payment of Wages Act, 1936

With the growth of industries in India, problems relating to payment of wages to persons employed in
industry took an ugly turn. The industrial units were riot making payment of wages to their
workers at regular intervals and wages were not uniform. The industrial workers were forced to raise
their heads against their exploitation.

In 1926, Government of India wrote to local governments to ascertain the position with regard to the
delays which occurred in the payment of wages to the persons employed in Industry. Material so
collected was placed before the Royal Commission on Labour which was appointed in 1929. On the
report of the Commission, Government of India re-examined the subject and in February, 1933 the
Payment of Wages Bill, 1933, was introduced in the Legislative Assembly and circulated for the
purpose of-eliciting opinions. A motion for the reference of the Bill to a Select Committee was tabled
but the motion could not be passed and the Bill lapsed. In 1935 the Payment of Wages Bill, based upon
the same principles as the earlier Bill of 1933 but thoroughly revised was introduced in the
Legislative Assembly on 15th February, 1935. The Bill was referred to the Select Committee.
The Select Committee presented its report on 2nd September, 1935. Incorporating the
recommendations of the Select Committee, the Payment of Wages Bill, 1935 was again introduced in
the Legislative Assembly.

Key Amendments:

1. Section 1(6): The Central Government is empowered to enhance the wage-limit for applicability
of the Act, after every five years, on the basis of the Index of Consumer Expenditure Survey brought
out by the National Sample Survey Office of Ministry of Statistics Programme Implementation, by
notification in the Office Gazette. The existing wage limit for applicability of the Act has been
enhanced from Rs.18000/- per month to Rs.24,000/- per month vide Gazette Notification S.O. No.
2806 (E) dated 28th August, 2017.

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2. Section 6: All wages shall be paid in current coin or currency notes or by cheque or by crediting
the wages in the bank account of the employee, provided that the appropriate Government may, by
notification in the Official Gazette, specify the industrial or other establishment, the employer of
which shall pay to every person employed in such industrial or other establishment, the wages only
by cheque or by crediting the wages in his bank account.

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3. Payment of Gratuity, 1972
Gratuity Act is a statutory benefit paid to the employees who have rendered continuous service for at
least five years. It is a lump sum amount paid to an employee based on the duration of his total service.
The benefit gratuity is payable to an employee on cessation of employment (either by resignation,
death, retirement or termination, etc) by taking the last drawn salary as the basis for the calculation.

Payment of Gratuity Act, 1972 provides for a scheme for the payment of gratuity to employees
engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other
establishments.

Key Amendments:

1. The present upper ceiling on gratuity amount under the Act is Rs. 10 Lakh. The provisions
for Central Government employees under Central Civil Services (Pension) Rules, 1972 with regard
to gratuity are also similar. Before implementation of 7th Central Pay Commission, the ceiling
under CCS (Pension) Rules, 1972 was Rs. 10 Lakh. However, with implementation of 7th Central
Pay Commission, in case of Government servants, the ceiling now is Rs. 20 Lakhs effective from
1.1.2016.

2. Section 4(3): The maximum amount of gratuity payable changed from 3.5 lakh rupees to 10 lakh
rupees.

3. Section 7(3a): This amendment imposition a penalty on employers for the non-payment of
gratuity within the specified period. It accounts for a penalty of 10 percent per annum as the rate of
simple interest payable for the time being.

4. Section 2(e): The definition of employee covering only those performing manual, semiskilled
skilled, unskilled, supervisory technical or clerical or managerial or administrative work to include
any person, employed to do any kind of work. Thus earlier a person who is not performing any of the
above said categories of work like a teacher was not covered as an employee but after the
amendment, the definition has been broad based as to include any person, employed to do any kind
of work. Thus the definition includes a teacher as an employee under the Act.

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4. The Maternity Benefit Act, 1961
Maternity Benefit Act, 1961 regulates the employment of women during the period of child birth,
and provides maternity benefits. The Act applies to factory, mines, plantations, shops and other
establishments.

The Act extends to the whole of India and is applicable to:

1. Every factory, mine or plantation (including those belonging to Government) and

2. An establishment engaged in the exhibition of equestrian, acrobatic and other performances,

irrespective of the number of employees, and

3. Every shop or establishment wherein 10 or more persons are employed or were employed on any
day of the preceding 12 months.

The Maternity Benefit (Amendment) Bill 2017,an amendment to the Maternity Benefit Act, 1961,
was passed in Lok Sabha on March 09, 2017 , in Rajya Sabha on August 11, 2016 and received an
assent from President of India on March 27,2017. The provisions of The Maternity Benefit
(Amendment) Act, 2017 is effective from April 01, 2017. However, provision on crèche facility
(Section 11 A) shall be effective from July 01, 2017.

Key Amendments:

1. Section 5 (Duration of maternity leave): The Act states that every woman will be entitled to
maternity benefit of 12 weeks. The Bill increases this to 26 weeks.

a. Under the Act, this maternity benefit should not be availed before six weeks from the date
of expected delivery. The Bill changes this to eight weeks.

b. In case of a woman who has two or more children, the maternity benefit will continue to
be 12 weeks, which cannot be availed before six weeks from the date of the expected
delivery.

2. Section 3 (Maternity leave for adoptive and commissioning mothers): The Bill introduces a
provision to grant 12 weeks of maternity leave to: (i) a woman who legally adopts a child below
three months of age; and (ii) a commissioning mother. A commissioning mother is defined as a
biological mother who uses her egg to create an embryo implanted in another woman.

3. Section 5 (Option to work from home): The Bill introduces a provision that states that an employer
may permit a woman to work from home. This would apply if the nature of work assigned to the
woman permits her to work from home. This option can be availed of, after the period of maternity
leave, for a duration that is mutually decided by the employer and the woman.

4. Section 11A (Crèche facilities): The Bill introduces a provision which requires every establishment
with 50 or more employees to provide crèche facilities within a prescribed distance. The woman will
be allowed four visits to the crèche in a day. This will include her interval for rest.

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 a. Informing women employees of the right to maternity leave: The Bill introduces a
provision which requires every establishment to intimate a woman at the time of her
appointment of the maternity benefits available to her. Such communication must be in
writing and electronically.

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5. The Child Labour (Prohibition & Regulation) Act, 1986
The Child Labour (Prohibition and Regulation) Amendment Act, 2016 receives the assent of the
President on 29th July, 2016. The Act came into force in order to amend Child Labour (Prohibition
and Regulation) Act, 1986. Mentioned below are following amendments which have taken place due
to the amendment Act.

SL Before the amendment After the amendment Impact

No

1. Child below 14 years Child below 14 years Complete ban to ensure

permitted to be employed in completely prohibited to be every child below 14 years
occupations and processes employed in any occupation is in school as per RTE Act.
except for 18 occupations and process
and 65 processes

2. No provision of help after
school hours as child allowed
to work below 14 years
A child allowed to help in
family or family enterprise if it
is non-hazardous and only
after school hours or during
vacations
This would allow children to
learn their traditional skill
and also develop life values
like a sense of discipline,
responsibility, decision
making etc

3. Child below 14 years allowed
to work in family enterprise
both hazardous and non-
hazardous
Child below 14 years permitted
to help in his family’s family
enterprise and that too if the
family enterprise is non-
hazardous.
Protect the health and
ensure children’s well being
as now child not allowed to
work in both hazardous and
non- hazardous family
enterprises.

4. A child can work in the family
enterprise which is not
necessarily of the child
The child can help after school
hours in his own family’s
enterprise, if it is non-
hazardous.
This help in child’s own
families’ non-hazardous
family enterprise will lead
to his learning of skills and
values of life.

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5. No prohibition on
employment of persons
above 14 years
6. No provision of regulation of
working of persons between
14-18 years in terms of
working conditions, hours etc
7. Schedule of 18 occupations
and 65 processes ( called as
certain occupations and
processes) applicable for a
child and tells where a
cannot work
8. No schedule of hazardous
occupation and processes
where an adolescent cannot
work
9. No provision of providing a
positive list of occupations
where an adolescent can
work
10. Contravention of provisions
non-cognizable offence
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Persons above 14 to 18 years
categorized as adolescents and
prohibited to work in
hazardous occupations and
processes
The working conditions of
adolescents allowed to work
in non-hazardous occupations
regulated for the first time
A child cannot work in any
occupation and process, so the
list of prohibited occupations
made infinite as complete ban
on employment
Schedule of hazardous
occupation and processes
provided where an adolescent
cannot work. The Schedule
Government may provide a
positive list of non-hazardous
occupations where an
adolescent can work and child
can help
It is cognizable offence
This would ensure
protection of physical and
mental health of the
adolescents
Regulation of working
conditions would ensure
non exploitation of the
adolescents working in non-
hazardous occupations
Complete ban on work and
not only on 18 occupations
and 65 processes.
Protection of adolescent’s
health.
The enabling provision to
allow Government to
restrict employment of
adolescents in prescribed
non- hazardous
occupations
No need of approval of
District Magistrate for
taking action on the FIR on
violation of child labour
Law prohibiting
employment.
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 6. The Employees’ State Insurance (ESI) A ct , 1948
The Employees’ State Insurance (ESI) Act, 1948 stipulates the rules and regulations that govern the
functioning of the Employees’ State Insurance Corporation (ESIC), which in turn manages the
ESI fund. ESIC is, therefore, an autonomous statutory body, and comes under the Ministry of Labour
and Employment.

Following its promulgation in 1948, the ESI Act seeks to provide social security coverage for workers in
contingencies such as “sickness, maternity leave, temporary or permanent physical disablement, and
death due to employment injury resulting in loss of wages or earning capacity. The Act also
guarantees reasonably good medical care to workers and their immediate dependents.”

The Rules have been amended 4 times since June 2016.

Amendments with Particulars Change by Amendment

effect from
(rule/section)

June 14, 2016 Employee An employee whose average daily wage is up to INR
(Rule 52) exempted from 137 is exempted from contribution (earlier it was INR
contribution 100)

October 6, 2016 Rates of employer's In areas where the Act is implemented for the first
(Rule 51B) and employee's time, the rates of contribution for initial 24 months:
contribution Employer - 3% of the wages
Employee - 1% of the wages

December 22, 2016 Wage limit for Wage limit for coverage of an employee has been
(Rule 2 : Section 6A) coverage of an enhanced from INR 15,000 to 21,000
employee

January 20, 2017 Insured Mother Includes a commissioning mother and an adopting
(Section 6) mother

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7. The Factories Act, 1948
The Factories Act 1948 was an Act of Parliament passed in the United Kingdom by the Labour
government of Clement Attlee. It was passed with the intention of safeguarding the health of
workers and adopted by India.

The Factories (Amendment) Bill, 2016 was introduced in Lok Sabha on August 10, 2016 by the
Minister for Labour and Employment, Mr. Bandaru Dattatreya. The Bill amends the Factories
Act,
1948. The Act regulates the safety, health and welfare of factory workers. The Bill amends provisions
related to overtime hours of work.

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its ex-post facto
approval for amendment of Section 64 and section 65 and consequential amendment of section 115
of the Factories Act, 1948 by introducing the Factories (Amendment) Bill, 2016 in the Parliament.

The approved amendments will give boost to the manufacturing sector and facilitate ease of doing
business with an aim to enhance employment opportunities.

These amendments relate to increase in overtime hours from the existing 50 hours per quarter to
100 hours (Section 64) and existing 75 hours per quarter to 125 hours (Section 65).

Key Amendments:

1. Section 2 (Power to make rules on various matters): The Act permits the state government
to prescribe rules on a range of matters, including double employment, details of adult workers to be
included in the factory’s register, conditions related to exemptions to certain workers, etc. The Bill
gives such rule making powers to the central government as well.

a. Powers to make rules for exemptions to workers: Under the Act, the state government may
make rules to (i) define persons who hold management or confidential positions; and (ii)
exempt certain types of adult workers (e.g. those engaged for urgent repairs) from fixed
working hours, periods of rest, etc. The Bill gives such rule making powers to both, the
central and state governments.

b. Under the Act, such rules will not apply for more than five years. The Bill modifies this
provision to state that the five-year limitation will not apply to rules made after the
enactment of this Bill.

2. Section 64 (Overtime hours of work in a quarter): The Act permits the state government to make
rules related to the regulation of overtime hours of work. However, the total number of hours of
overtime must not exceed 50 hours for a quarter. The Bill raises this limit to 100 hours. Rules in this
regard may be prescribed by the central government as well.

3. Section 65 (Overtime hours if factory has higher workload): The Act enables the state government
to permit adult workers in a factory to work overtime hours if the factory has an exceptional work load.
Further the total number of hours of overtime work in a quarter must not exceed 75. The Bill
permits the central or state government to raise this limit to 115.

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4. Overtime in public interest: The Bill introduces a provision which permits the central or
state government to extend the 115-hour limit to 125 hours. It may do so because of (i) excessive work
load in the factory and (ii) public interest

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8. Industrial Employment (Standing Orders) Central Rules, 1946

The Industrial Employment (Standing Orders) Act, 1946 require employers to define conditions of
employment in their industrial establishments. The item one of the schedule to the Act classifies the
workman (a) Permanent (b) Temporary (c) Apprentice (d) Casual (e) Probationer (f) Badlis.

The list in this schedule is not exhaustive. The nature of industrial establishments may be a factor to
decide the classification of the workmen. Example:- a seasonal establishment, intermittent working
establishment, work of the establishment. The Central Government can add any other matter in the
schedule and in the rules under the powers given in section 15 of the Act.

The Fixed Term Employment introduced in Apparel Manufacturing sector in Industrial Employment
(Standing Order) Act via Notification dated 10th February, 2017 of Ministry of Labour and
Employment. The decision would facilitate employment of workers in Apparel manufacturing on
fixed term basis in the backdrop of seasonal nature of sector and would also ensure same working
conditions, wages and other benefits for fixed term employee in the sector as a regular employee.

Objective for permitting Fixed Term Employment in Apparel Manufacturing Sector

- The seasonal nature of Textile sector results in fluctuation of demand and hence
requires flexibility in employing worker.
- The working conditions in terms of working hours, wages, allowances and other statutory
dues of a fixed term employee would be at par with permanent workmen.
- A fixed term worker will also be eligible for all statutory benefits available to a permanent
workman proportionately according to the period of service rendered by him even though his
period of employment does not extend to the qualifying period of employment required in the
statute.
- The employer can directly hire a worker for a fixed term without mediation of any
contractor.
- The worker employed for short period will get better working and service conditions
as compared to a contract worker.

Impact of inclusion of the term

On the termination of fixed term employment of the workman the workman is not entitled to any
notice or pay in lieu thereof. However, by proposed inclusion of the Fixed Term Workman as one of
the category of workman in the classification of workman in the Industrial Employment (Standing
Orders) Act, 1946., the Ministry intends to make such workman on fixed term employment eligible
for all statutory benefits available to permanent workman proportionately accordingly to the period
of service rendered by him.

This step would ultimately benefit the workers as their working conditions would be at par
with the regular employees including social security and other benefits. It would, on the one
hand provide flexibility to the employers and on the other hand improve the working
conditions of the workers already working for some fixed tenure only by way of contracts.
It would also provide prescribed format of contract for engaging workers on fixed term
employment, thereby avoiding any exploitation of such workers. The inclusion in the IE (SO)
Act would define formally the conditions of employment on which the workman would be
engaged for Fixed Term.

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9. Ease of Compliance Rules, 2017
In order to facilitate the ease of doing business in India, the Ministry of Labour and Employment has
notified the Ease of Compliance rules to maintain registers under various labour laws, which have been
in effect since February 21, 2017.

Prior to the aforesaid amendment, almost every labour statute required the employer to maintain
registers providing details of employees, working hours, overtime, wages, leaves, etc. Thus,
compliances under every statute resulted in multiple efforts by the employer in maintaining
separate registers, which was a major drawback under the Indian Labour Laws. Therefore, in order to
avoid overlapping/ redundant fields and to save costs and efforts, maintenance of combined
registers was introduced by way of these new rules, thereby ensuring better compliances of labour
laws.

Further, the rules provide that combined registers may be maintained either electronically or
otherwise, without obtaining any prior permission. The enactments on which these rules would be
applicable are:

i. Building and Other Construction Workers (Regulation of Employment and Conditions of

Service) Act, 1996

ii. Contract Labour (Regulation and Abolition) Act, 1970

iii. Equal Remuneration Act, 1976

iv. Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act,
1979

v. Mines Act, 1952

vi. Minimum Wages Act, 1948

vii. Payment of Wages Act, 1936

viii. Sales Promotion Employees (Conditions of Service) Act, 1976 and

ix. Working Journalists and Other Newspaper Employees (Conditions of Service) and
Miscellaneous Provisions Act, 1955

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11. Conclusion
In the past years many amendments have been made to the Indian Labour Law and through
this project of ours we tried to gain an insight into them.

We noticed that the recent amendments in labour laws have simplified the laws and promote ease of
doing business. Though some amendments might hurt the pockets of corporate in the short run, these
amendments will lead to a better industrial environment in the long run.

We also gained an insight into the effort which is being put into making the lives of workforce better
with all the amendments and how they have or will have an impact on the labour force.

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12. References
http://www.labour.nic.in/

http://www.citehr.com/

https://en.wikipedia.org/wiki/Labour_in_India

http://www.prsindia.org/billtrack/the-employees-compensation-amendment-bill-2016-4363/

http://economictimes.indiatimes.com/news/politics-and-nation/lok-sabha-passes-employees-
compensation-amendment-bill-2016/articleshow/53618872.cms

http://timesofindia.indiatimes.com/city/delhi/Govt-introduces-Employees-Compensation-Bill-in-
LS/articleshow/53559569.cms

http://www.dnaindia.com/india/report-employees-compensation-amendment-act-2016-passed-by-
lok-sabha-employee-s-to-get-higher-compensation-on-injury-2243264

http://www.business-standard.com/article/news-ians/lok-sabha-passes-factories-amendment-bill-
2016-116081001776_1.html

http://www.mondaq.com/india/x/520662/Employee+Benefits+Compensation/Everything+You+Nee
d+To+Know+About+The+Recent+Maternity+Benefit+Amendments

http://www.epfindia.com/site_en/AboutEPFO.php

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