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DOCTRINE OF HIRING AND FIRING IN INDIAN LABOUR LAW

Authored by: Abhavya Rabra*

* 3rd Year BBA LLB (Hons), Jagran Lake City University, school of law, Bhopal

INTRODUCTION

According to Indian Labour and Employment Laws there are three main categories of employees:
government employees, employees in government controlled corporate bodies known as Public
Sector Undertakings (PSUs) and private sector employees. The rules and regulations governing
the employment of government employees are covered under the Constitution of India
Accordingly, government employees enjoy protection of tenure, statutory service contentions and
automatic annually salary increases. Public sector employees are governed by their own service
regulations, which either have statutory force, in the case of statutory corporations, or are based
on statutory orders. In the private sector, employees can be classified into two broad categories
namely management staff and workman.

There is no statutory provisions relating to their employment and accordingly in case of managerial
and supervisory staff/employee the conditions of employment are governed by respective contracts
of employment and their services can be discharged in terms of their contract of employment.
Many employees don’t know what are their rights and what the Indian laws says to protect their
rights, it’s very important to know the rights as an employees in any firm, people join firms but
they are unaware of the laws related to their hiring and firing, due to which many employers exploit
there employees, in government sector such cases are less but in privet sector they are many, this
paper focuses on the laws in India which were formulated to protect employees from illegal firing
and other legal aspects related to hiring and firing of employees.

While hiring employee whether on full time bases/directly hiring, or on permanent or fixed term
basis or on temporary period all the laws potentially be applicable. Till now there are no specific
laws in India, which could provide procedure or manner for hiring employees in private sector.
Organizations hire employees on permanent basis or contract basis, the employee could be hired
through newspaper advertisements, recruitment firms, online job portals, personal networks. A
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permanent worker can be terminated only for proven misconduct of for habitual absence from
work. The terms of the employment, either on contract basis or permanent employee basis, would
be governed by the contract between the organisation and the employee. However, the Local Shops
and Establishments Act also plays an important role for such provisions.

Over the years labour laws have undergone a change with regard to the object and scope. Early
labour laws were enacted to safeguard the interest of employers. It was governed by the doctrine
of laissez faire. Modern labour legislation, on the other hand, aims at protecting workers against
exploitation by employers. The advent of doctrine of welfare state is based on the notion of
progressive social philosophy which has rendered the old doctrine of laissez faire obsolete. The
theory of “Hire and fire” as well as the theory of “supply and demand” which found free scope
under the old doctrine of laissez faire no longer holds good. India has a slew of laws and rules that
shape the labour market, regulating the terms of work, hiring and firing, and the working
conditions.

While the regulations are meant to enhance the welfare of workers, companies say they often have
the opposite effect by encouraging them to stay small or hire contract workers to circumvent legal
restrictions. The laws benefit only a fraction of the workforce, as 93 percent of workers are
employed in informal sectors who lack any form of job or social security.

Productivity, customer service, cost-effectiveness, keeping to delivery schedules, technological up

gradation and modernization have emerged as the criteria for judging the quality of management
of companies, and labour reforms hold the key to increased competitiveness and investment flows
in all these respects. The need for introducing labour market flexibility and simplifying labour
laws has no doubt been emphasized by the President and Prime Minister of the country downwards
from time to time.

HYPOTHESIS

The Centre has proposed fixed-term contract hiring across sectors, providing companies the
flexibility to hire and fire according to their business needs. The advent of doctrine of welfare

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state is based on the notion of progressive social philosophy which has rendered the old doctrine
of laissez faire obsolete.

SOCIAL JUSTICE AND LABOUR LAWS

In the realm of labour laws there has been in reality continuous legislative activity by the Supreme
Court ever since the Constitution was promulgated. The Supreme Court has performed a
pioneering role in evolving first principles of industrial law which are so sound that they are largely
still followed today despite the dynamic nature of industrial law.

Social Justice connotes the balance of adjustments of the various interests concerned in the social
and economic structure of society. It aims at promoting harmony in Industrial relations upon an
ethical and economic basis, and its ultimate objective of peace in Industry. Thus, social justice is
an objective of peace in industry. Thus, social justice is an application in the field of labour laws
of the basic p Introduction to Labour Legislation Social Justice recognized that workers are in a
weak bargaining position vis-a-vis the employer, and it seeks to remedy this situation.

In J.K. Cotton Spinning &Weaving Mills v. Labour Appellate Tribunal 1, the Supreme Court
observed. "The development of industrial law during the last decade and several decisions of this
court in dealing with industrial matters have emphasized the relevance, validity and significance
of the doctrine of social, justice. The concept of social justice is not narrow or one-sided or
pedantic. Its sweep is comprehensive. It is founded on the basic ideal of socio-economic equality
and its aim is to assist the removal of socioeconomic disparities. Nevertheless in dealing with
industrial matters it does not adopt a doctrinaire approach and refuses to yield blindly to abstract
notions, but adopts a realistic and pragmatic approach. It therefore endeavors to resolve the
competing claims of employees by finding a solution which is just and fair to both parties with the
object of establishing harmony between labour and capital, and good relationship.

The ultimate object of industrial adjudication is to help the growth and progress of the national
economy, and it is with that ultimate object in view that industrial disputes are settled by industrial
adjudication. Social justice is not based on contract. .In fact it is an abridgement of the freedom of

1
AIR 1964 SC 737
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contract. The days of hire and fire are gone and the Industrial Court have power to intervene if it
is demonstrated that the contract of employment needs to be revised in the interests of social
Justice. In fact the Industrial Courts enjoy immense wide powers which no civil court possesses,
namely, to create new contracts, modify existing contracts,-and confer new rights and privileges."
However the principle of social justice does not permit the Industrial Courts to act as despots and
do anything they please.

The Industrial Court must follow Industrial law and decide the dispute on settled principles. The
Supreme Court has struck a note of caution that the need of the hour is more production,
consequently the Tribunal should not be unduly generous in the matter of granting leave. Similarly,
an Industrial Court cannot grant housing accommodation to the workers for this would impose too
heavy a burden on the employer.

In Patna Electric Supply v. Workers Union2, the Supreme Court observed: Social Security for the
weaker sections is of utmost importance. But then we cannot forget the limitations under which
we are living. While we should not forget our social goals, our purpose may be defeated if we do
not approach our problems in a pragmatic way. Thus, social justice requires the Industrial Courts
to strike a balance between the conflicting claims of employer and worker. While the employer
has a fundamental right to run his business, his right has to be adjusted with the employee’s right
to social justice. The former pertains to the realm of fundamental rights in our Constitution, the
latter to the realm of the Directive Principles. The Ultimate aim is to have peace in industry so that
production may increase and the national economy may grow.

THE EMPLOYERS' LIABILITY ACT, 1938

Even when the Workmen's Compensation Act, 1923 was on the statute book, the legislature in
1938 passed the Employers' Liability Act, providing that if personal injury is caused to a workman
by reason of the negligence of the employer or his servant, the suit of the employee for damages
will not be defeated on this account. Thus, the notorious doctrine of 'common employment' which

2
AIR 1959 SC 1036
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imputed to the worker an intention to assume certain risks of injury, especially those caused by
fellow-workers, was abolished by statute in India as far back as 1938,

The Act applies, in the first instance, to all factories other than seasonal factories, including
factories belonging to the government, but the appropriate government is authorized, in
consultation with the Employees' State Insurance Corporation, after complying with the needful
formalities, to extend the provisions of the Act to any other establishment or classes of
establishments- industrial, commercial, agricultural or otherwise. The definition of 'employee'
under the Act is wide so as to include within the ambit of the Act all persons employed in the
establishment of the employer, whether directly or through an intermediary and even taken on hire
from other employer.

There has also been notional extension of the definition to include all employee connected with
the administration of the factory or establishment covered by the Act including those concerned
with the sales or purchases relating to the factory or establishment.

In Kunnathunad C.S. Co-operative Society v. Regional Director3, it was held that a co-operative
society is a separate legal entity distinct from its members. Hence a society employing its members
for wage in manufacturing process is liable to be covered under the Act. Further, the branch office
of Brooke Bond engaged in buying the exporting tea was held to be covered by the definition of
shop for the purposes of notification under Section 1 (5) of the Act.17 The premises where the
businesses of undertaking electrical work contracts in the factories and other places of customers
was carried on is a shop and the Act applies by virtue of the notification issued by Karnataka
Government extending the provisions of the Act to shop.

THE MATERNITY BENEFIT ACT, 1961

The Maternity Benefit Act, 1961 provides for a scheme of maternity benefit to women employees
employed in factories, mines, plantations and establishments where person are employed for the
exhibition of equestrian, acrobatic and other performances. It may be extended by the state
government with the approval of the central government to other establishments, industrial,

3
E.S.I, C.16
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commercial, agricultural or otherwise. The benefits under the Act are available only to employees
in factories and other establishments to whom the provisions of the Employees' State Insurance
Act, 1948 do not apply.

To give the woman employee security of service during the period she is drawing benefit of
maternity leave, it is provided that if a woman absents herself from work in accordance with the
provisions of the Act, it shall be unlawful for her employer to discharge or dismiss her during, or
on account of, her absence, or to give notice of discharge or dismissal on such a day that the notice
will expire during such absence, or to vary to her disadvantage any of the conditions of her service.
Moreover, any discharge or dismissal of a woman at any time during her pregnancy shall not have
the effect of depriving her of the maternity benefit or medical bonus otherwise payable to her under
the Act.

Gratuity benefit Apart from the statutory provident fund and pension schemes provided for under
the aforesaid Act, demands had often been made by the workmen covered under the Industrial
Disputes Act, 1947, for additional benefit of gratuity in cases of retirement or premature
termination of their service, or even resignation after putting in a certain minimum period of
service. The industrial tribunals set up under the Industrial Disputes Act, 1947, considered such
demands on the basis of references made to them by the government, and granted the demand in
appropriate cases. The award of such a scheme by a tribunal depended, however, on whether the
financial capacity of the employer concerned permitted introduction of such a scheme, and also
whether such a scheme, existed in other units of the industry in the region. There was also no
uniform standard laid down to give guidance to the tribunals as to the quantum of gratuity payable,
or the contingencies in which such gratuity should be paid.

THE PAYMENT OF GRATUITY ACT, 19724

The Payment of Gratuity Act, 1972 applies to every factory, mine, oilfield, plantation, coal and
railway company, and to every shop or establishment within the meaning of any law for the time
being in force in relation to shops or establishments in a state in which 10 or more persons are

4
Available at http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan029043.pdf, online article (last
accessed on 26/10/2018)
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employed, or were employed, on any day of the preceding 12 months. In addition to this, the
provisions of the Act can also be extended by the central government to other establishments, or
class of establishments, in which 10 or more employees are employed.

The Act applies to only such employees whose wages do not exceed Rs. 1,000 a month and who
do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work. The Act
is wide enough to bring within its scope, the entire organized sector of industry and commerce. In
relation to its application to shop or establishment, in view of clause (b) of section 1(3) it applies
to every shop or establishment within the meaning of any law for the time being in force.

Termination of service or discharge simpliciter Under the Indian Contract Act, contract of service
or employment is the result of volitional act of the parties. Under the contract of employment
parties are also free to agree as to how the termination of contract of employment may be brought
about. Such termination may be without notice or by such notice as may be agreed upon. Section
11-A of the Industrial Dispute Act 1947 confers power on the labour court to evaluate the severity
of misconduct and to assess whether punishment imposed by the employer is commensurate with
the gravity of the misconduct. If the labour court after evaluating the gravity of the misconduct
held that punishment of termination of service is disproportionately heavy in relation to
misconduct and exercised its discretion, the Supreme Court in the absence of any important legal
principles would not undertake to re-examine the question of adequacy or inadequacy of material
for interference by labour court.

In Regional Manager, R.S.R.T.C. v. Ghanshyam Sbarmai5 the respondent was employed as

conductor by the appellant. He was charge- sheeted for not issuing tickets to the passenger. On a
reference being made to the labour court it directed his reinstatement without back wages, but the
single bench of the high court set aside the award, which was reversed by the division bench of
the high court. In appeal, it was held by the Supreme Court that the labour court was not justified
in interfering with the punishment of dismissal. Though under section 11-A the labour court has
jurisdiction and power to interfere with the quantum of punishment, but the discretion has to be
used judiciously. When the main duty or function of the conductor is to issue tickets and collect
fares and then deposit the same with the Road Transport Corporation and when he fails to do so,

5
S.L.P. (C) No. 18441 of 2000
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then it will be misplaced sympathy to order his reinstatement instead of dismissal. (ii) Retirement
on reaching the age of superannuation.

The services of an employee may also be dispensed with by the employer on reaching the age of
superannuation, provided there is a provision in that behalf in the contract of employment or
service rules or the certified standing orders. The tribunals set up under the Industrial Disputes Act
are, however, competent, and very often have either laid down the age of retirement for the first
time, or modified the age of retirement fixed under the contract of employment or service rules or
even under the certified standing orders. In deciding such disputes, the tribunals are mostly guided
by what has come to be termed 'the industry-cum-region basis' or 'the region-cum-industry basis'.
The gratuity was, however, determined by the court

HIRING THE EMPLOYEE

Legal Requirements

As to the form of Agreement Except for some State specific requirements by which an employer
is expected to issue a letter covering certain aspects of employment, there are no stipulated legal
requirements as to the prescribed form of an employment agreement. The prevailing practice is
either that the employer issues an appointment letter listing the terms and conditions of
employment, which is then signed by the employee; or the employer and employee enter into a
bilateral written agreement. An employment agreement can be in oral form. The acceptance of
such contract must be absolute and unqualified, be expressed in some usual and reasonable manner
as provided under the Indian Contract Act, 1872.

However, a written employment agreement is preferred to avoid disputes at a later stage.

Generally, for blue-collar employees, it used to be common for there to be no employment
agreement executed between the employer and employee, but instead, appointment letters were
issued. However, it is now increasingly common to produce formal employment agreements with
the employees.

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Mandatory Requirements

Trial Period

There is no legal requirement to provide for a trial period or a period of probation, in the case of
white-collar employees or blue-collar employees. Notwithstanding the above, depending upon the
applicability of Industrial Employment Standing Orders Act, 1948, the initial period of probation,
in case of blue-collar employees, could be three months. As a matter of practice companies do
have probation period and extension of probation period if required either in the Handbook/
Company Policy or in the Letter of Appointment.

Hours of Work

White-Collar Employees: The hours of work of any employee are ordinarily governed by the terms
of the employment agreement. Such employment agreements should conform with the Shops and
Establishments Acts enacted by individual states in India (or the Factories Act 1948, if an
employee works from an office located within a factory premises). As a result, conditions such as
hours of work may differ from state to state and also depending upon the nature of establishment.
The requirement of overtime, over a certain number of hours, may also change based on the Shops
and Establishments Acts, etc, as applicable. For instance, the Bombay Shops and Establishments
Act 1948 stipulates the maximum hours of work as 9 hours per day and 48 hours per week in
shops, commercial establishments, residential hotels, restaurants, eating houses, theatres or other
places of public amusement or entertainment.

Blue-Collar Employees: For blue collar employees working in non-manufacturing establishments

the hours of work will be governed by the State specific Shops and Establishments Act.

For blue collar employees working in manufacturing establishments, the Factories Act 1948
stipulates that an adult employee may be required to work for a maximum period of 9 hours per
day and 48 hours per week, excluding overtime, and 10 hours a day and 60 hours a week, including
overtime. Overtime work is subject to a maximum of 50 hours in any quarter. A child or adolescent
will not be allowed to work beyond a maximum period of 4½ hours per day.

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Earnings

White-collar employees: Earnings are mutually agreed upon by the employer and employee and
this clause forms an essential term of the employment agreement. Indian law entitles employees
to twice the ordinary rate of wages in respect of overtime work.

Blue-Collar Employees: The Central or State Government fixes the minimum rates of wages
payable to employees under the Minimum Wages Act 1948 and reviews such minimum rates of
wages every 5 years. For instance, depending upon the area of operation, the minimum rates of
daily wages may range from (or more): The Payment of Bonus Act 1965 entitles employees in
establishments (having 20 or more employees) to payment of a bonus on the basis of profits,
production or productivity. The Payment of Wages Act 1936 prescribes a time-limit within which
wages payable to employees must be disbursed by the employers and ensures that no un-authorized
deductions are made by employers.

Holidays / Rest Periods

White-collar employees: Depending upon where a person is working, the holiday entitlement is
generally governed by the holidays announced by the relevant State. Generally, an employee
would be entitled to mandatory weekly holiday, (eg. Sundays), national holidays (such as
Independence Day, Republic Day etc.) and State holidays.

In addition, employees may be entitled to paid leave for a number of days as stipulated in the Shops
and Establishments Acts of each state or Factories Act, as applicable. Rest periods are also
prescribed by the Factories Act or Shops and Establishments Acts, as applicable. For instance, the
Bombay Shops and Establishments Act 1948 stipulates that every shop and commercial
establishment shall remain closed on one day of the week, and a maximum of 5 hours of work
followed by an interval of at least one hour for rest and a maximum of 3 hours of overtime.

Blue-Collar Employees: For blue collar employees working in non-manufacturing establishments,

the holidays/rest periods will be governed by the State specific Shops and Establishments Act (and
also Industrial Employment Standing Orders Act, 1948, depending upon its applicability). For blue
collar employees working in manufacturing establishments, the Factories Act 1948 provides for a

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mandatory weekly holiday, compensatory holidays and specifies that no person will be required
to work for more than ten days consecutively without a holiday. This act further stipulates intervals
of rest of at least half an hour following a maximum of five hours of work and provides for annual
leave with wages. The Weekly Holidays Act 1942 provides for the grant of a weekly holiday to
blue-collar employees in shops, restaurants and theatres without any deduction or abatement of
wages.

Minimum/Maximum Age

White-collar employees: The minimum age for employment in any establishment is 15 years of
age in certain trades. However, in practice employees who are considered suitable for such
employment are at least 20 years old. Blue-Collar Employees: Any child who is younger than 14
years of age is statutorily barred from employment. Adolescents aged between 15 and 18 require
a certificate of fitness to be employed in certain trades. The maximum age for employment of
white collar or blue-collar employees is whatever age is stipulated by the employer.
Illness/Disability In case of illness, an employee (white-collar or blue-collar employee) is entitled
to paid sick leave, the duration of which varies from industry to industry or state to state.

Alternatively, white-collar employees are entitled to paid sick leave as specified in their
employment agreement or as per the Shops and Establishment Act or Factories Act, as applicable
to an establishment (factory or commercial establishment) and the jurisdiction where the
establishment is located, whichever is more beneficial to the employee. The Persons with
Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act 1995 provides
for encouragement of employment of persons suffering from specified disabilities.

Location of Work/Mobility

Location of work and mobility are mutually agreed by the employer and employee (white collar
or blue-collar employee) verbally or in the terms of the employment agreement.

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Types of Agreement

The various kinds of employment agreements may be categorized as:

Fixed-Term employment agreements: which have a fixed duration and expire on a designated
date or on completion of a project.

Full-time employment agreements: which contain compulsory terms governing employees who
work on a full-time basis.

Contracts of Apprenticeship

The Apprentices Act 1961 regulates the training of apprentices and governs the terms to be
incorporated in a contract of apprenticeship. This act is applicable to blue-collar as well as white-
collar employees, as apprentices are classified under the enactment as trade apprentices, graduate
and technician apprentices and technician (vocational) apprentices. Secrecy/Confidentiality
Almost every contract of employment in India contains a privacy and confidentiality clause. A
breach of confidentiality may serve as grounds for termination of employment.

An employee is duty-bound to maintain secrecy/confidentiality of sensitive information gathered

in the course of employment, whether or not the employment agreement contains a specific clause
to that effect. Ownership of Inventions/Other Intellectual Property (IP) Rights Generally,
ownership of inventions or other IP rights is contractually provided for in the employment
agreement. In the absence of any such express or implied contractual provision, ownership of IP
rights is governed by applicable laws.

Patents

The mere existence of an employment agreement does not, in itself, disqualify the employee from
obtaining a patent for an invention made by him during his term of service, even though:

• The invention may relate to subject-matter useful to the employer,

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• The employee may have used the employer’s time, servants and materials in completing his
invention, or

• The employee had allowed his employer to use the invention during his employment.

The Copyright Act 1957 lays down the general rule that the author of a work will be the first owner
of copyright therein. Further, this act stipulates that in case of a work made in the course of the
author’s employment or apprenticeship, the employer can be deemed to be the first owner of the
copyright therein, in the absence of any agreement to the contrary. It is however preferable that an
employee signs a specific assignment agreement in this respect. Both under the Copyright Act and
the Patents Act, any assignment has to be in writing. It has to identify the work, so strictly speaking
a blanket assignment or assignment of future work is not possible.

FIRING THE EMPLOYEE

Procedures for Terminating the Agreement

White-Collar Employees: The procedure for terminating employment will be governed by the
terms of the employment agreement. Such provision has to conform to the Shops and
Establishment Acts of each state. Generally, the Shops and Establishment Acts require a notice in
writing, or wages in lieu of such notice, to be given to the employee. For example the Bombay
Shops and Establishment Act requires at least 14 days’ notice to be given in writing, (in case of an
employee who has been in continuous employment for at least 3 months) or 30 days’ notice in
writing (in case of an employee who has been in continuous employment for at least a year) or
wages in lieu of such notice.

Blue-Collar Employees: No employee who has been employed for less than one year (240 days in
a year) can be fired unless he is given one or three months’ notice (as applicable depending upon
an establishment having up to 100 or more such employees) or payment in lieu thereof and
compensation as per the Industrial Disputes Act 1947. There may also be a requirement to notify
the government authorities, or to obtain prior government approval (depending upon an
establishment having less than 100, 100 or more than 100 such employees, respectively). The
employer may also be required to comply with the last-in-first-out rule. In both the cases, whether

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white-collar or blue collar employees, in case the terms of appointment letter or employment
contract provide longer notice period or better severance compensation, then such terms of
appointment letter or employment contract would prevail over law.

Instant Dismissal

White-Collar Employees: Dismissal of such employees will be governed by terms of the

employment agreement. In cases of a major breach of disciplinary rules, the employment of white-
collar employees may be terminated without notice provided it is not prohibited by the
appointment letter, employment agreement or company policy. Some state laws may require an
inquiry before such termination without notice.

Termination on Notice

White-Collar Employees: The law requires an employer to give notice in writing or pay salary in
lieu of such notice if he wishes to dismiss an employee. Such clauses are recorded in the
employment agreement but the employer could also follow the statutory right even if certain
aspects are not covered in the agreement.

Blue-Collar Employees: The Industrial Disputes Act, 1947 provides that no employee in any
industry, who has been in continuous service for not less than one year, can be dismissed unless
one month’s notice or payment in lieu of such notice is given.

Termination By Reason Of The Employee’s Age

The Employees’ Pension Scheme 1995 (applicable to blue-collar employees and white-collar
Government employees) states that superannuation or retirement benefits will be payable to an
employee on attaining the age of 58. The retirement age for white-collar or blue-collar employees
engaged in the private sector is not stipulated by law but by company policy.

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Automatic Termination In Cases Of Force Majeure

White-Collar Employees: Automatic termination in cases of force majeure is possible if provided

for in the employment agreement.

Blue-Collar Employees: No employee can be automatically dismissed. As per the Industrial

Disputes Act 1947 where an undertaking is closed down on account of circumstances beyond the
control of the employer (and not by reason of financial difficulties, losses, expiry of lease or
license) every workman who has been in continuous service for at least one year will be entitled
to compensation of a maximum of 3 months’ average pay.

Termination by Parties’ Agreement

The employment of any white-collar or blue-collar employee may be terminated at any time by
mutual agreement (in writing or verbal) between the employer and employee.

MAINTAINING THE EMPLOYMENT RELATIONSHIP

Changes in the Contract

In the case of both white-collar and blue-collar employees, the employer can make changes to the
employment agreement provided such changes are not unilateral or illegal. Otherwise, the
employer can change the terms of the agreement with the due consent of the employee. Depending
upon the level of work that a blue-collar employee is being engaged, either an employment
agreement or an appointment letter is entered into by the employer and blue-collar employee.

Change in Ownership of the Business

White-Collar Employees: In case of change of ownership of the business (transfer of a business

division from one company to another), the company policy and the arrangement between the new
company and the old company determines the employment, termination or retention of employees.
However, transfer would require consent of an employee.

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Blue-Collar Employees

In case of change of ownership of the business, every employee who has been in continuous service
for at least one year is entitled to receive one month’s notice and 15 days’ average pay as severance
payment (unless the contract provides for better terms and conditions) as if such a person had been
terminated. However, such notice or compensation may not be payable when the service of the
workman has not been interrupted by such change of ownership of business; and the terms and
conditions of service applicable to the employee after such change in ownership are not less
favorable than those applicable to him before such change of ownership of business. In such cases,
the old employer may terminate the employment of the employees without the need to comply
with giving notice or compensation and the new employer may hire on a continuity basis. It is
pertinent to note here that without consent, workmen cannot be forced to work under different
management and in that event workmen are entitled to retirement/retrenchment compensation in
terms of Industrial Disputes Act, 1947.

Social Security Contributions

Both white-collar and blue-collar employees are entitled to social security contributions, such as
provident fund and gratuity. The Employees’ Provident Funds and Miscellaneous Provisions Act
1952 provides for contribution by the employer as well as employee at the rate of 12% of the basic
wages, dearness allowance and retaining allowance, (if any) to the Employee’s Provident Fund
Scheme the wages for being eligible for the benefits under the Employees’ Provident Fund
Scheme, 1952 (EPF), Employees’ Pension Scheme, 1995 (EPS) and Employees’ Deposit Linked
Insurance Scheme, 1976 (EDLI).

Accidents at Work

White-Collar Employees: If an accident/death takes place in a workplace while the employee was
discharging his duties and if the employer had been negligent, then such employer is liable to pay
compensation.

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Blue-Collar Employees: The Employee’s Compensation Act, 1923 deals with accidents at work
for blue collar employees in certain employments. The Act states that the employer is liable to pay
compensation to employees for injuries suffered due to accidents at work if the accident took place
during the course of employment or if the employer had not maintained the machinery in good
working condition.

The employer will not be liable to pay compensation if the accident occurred while the employee
was intoxicated or did not follow safety measures as laid down by the employer. An employer is
responsible to pay compensation to the dependents of the employee, in the case of the death of an
employee in the course of the discharge of his employment duties. In some establishments, the
Employees State Insurance Act, 1946, may also be applicable to certain employees. This Act also
provides benefits in case of accidents at work for certain categories of employees (mostly blue-
collar employees). However, if certain employees are covered by this Act, then they are not eligible
to benefits under the Employee’s Compensation Act, 1923.

CONCLUSION

I would like to conclude that there are many laws in every sector ( public sector, private sector)
for the protection and welfare of different kind of workers, (permanent, contractual, part time) but
very less people know the proper use of it to avoid exploitation by the employer. Many workers
enter the contract agreement/bond without reading and without knowing the legal prospect and
conditions of the contract. To avoid the misuse of laws workers enter into trade unions which give
them a sense of security. But there is a need to make workers aware of their rights and laws, which
would affect them. If workers/employees would know laws related to termination then employers
would not fire employees unnecessarily.

There are 51 laws in India which are related to employees/workers and they cover all aspects
related to working condition, wages, welfare, social security. Usually it is seen that factory workers
are unaware of the firing laws and they are fired without any notice so there is a need to make them
aware of it. As very less literature is available related to hiring and firing topics the study became
short in providing the framework in laws. Hence the hypothesis proved to be right as the flexibility
to hire and fire is according to their business needs. The advent of doctrine of welfare state is based
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on the notion of progressive social philosophy which has rendered the old doctrine of laissez faire
obsolete.

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