Corporate Employees and Labour laws by Advocate Aarti Bhalla

Author - Advocate Aarti Bhalla and Associate Bhavana

India places high importance to the protection of its workforce from various external factors, and this is reflected in the comprehensive labour laws and their continuous reform in order to suit the emerging needs of employees in the contemporary world. Increased maternity benefits, increased insurance coverage, simplifying the labour laws, are some of the recent developments that took place in this regard. These and a few more laws pertaining to employees in the corporate sector are going to be discussed here.

Payment of Wages Act, 1936

The Payment of Wages Act 1936 imposes certain obligations upon the employer. They are:

The responsibility of payment of wages is primarily upon the employer. The employer must decide the wage time period (per day, week or month) but it must not exceed one month in any case.

The employer must ensure the timely payment of wages. If an employee is being terminated from his job, then wages must be paid within a time period of two days of termination date.

The wages may be paid by the employer in the form of cash, cheque or by crediting in employee’s bank account, after obtaining written consent from the employee on the method of payment of wages.

Minimum Wages Act, 1948

The Minimum Wages Act provides that minimum wages must be paid to all employees in all companies. Central and State Governments revise minimum wages specified in the schedule. The Minimum Wages Act 1948 classifies employees as unskilled, semi-skilled, skilled, highly skilled. This minimum wage is not consistent for all sectors across all regions in the country. Both the Central Government and State Government have the authority to decide the minimum wages based upon various factors such as type of work, location, cost of living, capacity of the employer and the amount of working hours. This rate of minimum wage is notified for each industry separately by the concerned Government in the Gazette.

The Employees’ State Insurance Act, 1948

The ESI Act is a scheme of Social Security planned to execute the job of protecting the ‘employees’ in the organized sector against sickness, disability, maternity and death due to injury in the course of employment and also to give medical protection to the employee and his immediate family members.

It is mandatory for the employer under Section 2-A of the ESI Act, to register the company under the ESI Scheme within 15 days from the date of its applicability to them.

It was recently amended to increase the statutory employee insurance wage limit coverage from Rs.15,000 to Rs.21,000.

Maternity Benefit Act, 1961

The Maternity Benefit Act controls the work of women in certain companies for a given period during the time of pregnancy and after childbirth and gives other such benefits. Every women who was employed in the company for a time period of minimum 80 days in the 1 year immediately before her due date, is eligible to receive maternity benefits as provided by the act. The business is in this way required to pay maternity benefits or medicinal bonus and permit maternity leave and nursing breaks.

The Maternity Benefit Act, 1961, had been amended by the parliament last year to elongate the mandatory maternity leave for mothers with less than 2 children from a period of 12 weeks leave to 26 weeks leave. The amendment likewise accommodated adoption and surrogacy leave to 12 weeks. In accordance with the change, businesses having at least 50 workers are mandated to give crèche facilities to women employees who come back from maternity leave.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

This Act guarantees financial security of the employees in a company by accommodating a system of mandatory savings. The Act provides that the contribution of the employee to the provident fund is at least equal to that contributed by the employer. The contribution of the employees should be at least 10-12% of their wages. This money is payable to the employee after retiring from the job and could likewise be utilized partially for certain specific purposes.

An employer cannot deduct the whole of Employees' provident fund(EPF) contribution from an employee’s salary. If such a thing happened, then it is against the Act, and the employee can file an application against this in the PF Appellate Tribunal. It is not compulsory to contribute to the provident fund, but this is subject to a few conditions. An employee earning more than Rs 6,500 a month, can anytime choose not to contribute towards EPF. But, this can only be done at the beginning of the employees' career. If he has taken part in EPF even once, then he cannot stop contributing to EPF.

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Act provides that it is the duty of the employers to make sure that their employees, especially female employees, are protected when they are working. Any incident of sexual harassment, regardless of the gravity of the offence, must be taken seriously by the employers or managers, responding quickly and appropriately. The Act makes any such offence punishable under the Indian Penal Code.

The law mandates that it is the duty of the employers to formulate policy, which is a part of the company’s service regulations, to provide a protected and healthy workspace environment. The policy should enumerate what acts exactly constitute sexual harassment at the workplace. The policy must include the establishment of an internal complaint committee which must have at least one woman, and the committee must be fair and impartial.

Payment of Gratuity Act, 1972

Gratuity is a primal type of social security which is looked at as a form of gratitude shown by the employer to his employee for the work that was contributed by to his company, in the form of money payable to the employee at the time of his retirement, resignation, death, or cessation of his employment. It is one of many benefits received to the employee upon retirement.

The Payment of Gratuity Act provides that gratuity must be paid to the employee who has been working continuously for a period of 5 years in a company, upon the cessation of his employment at the rate of 15 days salary of the employee for each year of service rendered to the company, which is subject to a maximum of Rs. 10,00,000.

Employment laws are constantly updated, and the current government even promised to consolidate all the labour laws into four comprehensive labour codes, to review and mitigate the multiplicity of employment laws, and keep the laws up to date with the evolving market.



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