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Industrial & Employment Laws

India provides for core labour standards of International Labour Organisation for welfare of workers and to protect their interests. India has a number of labour laws addressing various issues. Labour is a subject in the concurrent list of the Indian Constitution and is therefore in the jurisdiction of both central and state governments. Both central and state governments have enacted laws on labour issues. Some laws are made by the Central Government but administered by the State government.

Website of Ministry of Labour and Employment, Government of India is

The main central laws dealing with labor issues are given below:

Factories Act

Every industry in India proposing to carry on any manufacturing activity using electric power employing 10 or more workers is required get a license from the local state government under the factories law. Every factory will have to nominate one of its Directors as an “occupier” who will be responsible to administer the factories law. The factories law provides for various duties and responsibilities on the occupier including provision of various benefits like working hours, food, leave, medical, sickness, maternity etc. to the workers.

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Workmen’s Compensation Act 1923

The Workmen’s Compensation Act provides that compensation shall be provided to a workman for any injury suffered during the course of his employment or to his dependents in the case of his death. The Act provides for the rate at which compensation shall be paid to an employee.

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Minimum Wages Act 1948

The Minimum Wages Act prescribes minimum wages for all employees in all establishments or working at home in certain employments specified in the schedule of the Act. Central and State Governments revise minimum wages specified in the schedule.

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Payment of Wages Act 1936

The Payment of Wages Act regulates issues relating to time limits within which wages shall be distributed to employees and that no deductions other than those authorized by the law are made by the employers.

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Industrial Disputes Act 1947

The Industrial Disputes act 1947 provides for the investigation and settlement of industrial disputes in an industrial establishment relating to lockouts, layoffs, retrenchment etc. It provides the machinery for the reconciliation and adjudication of disputes or differences between the employees and the employers. Industrial undertaking includes an undertaking carrying any business, trade, manufacture etc.

The Act lays down the conditions that shall be complied before the termination/retrenchment or layoff of a workman who has been in continuous service for not less than one year under an employer. The workman shall be given one month’s notice in writing, indicating the reasons for retrenchment and the period of the notice that has expired or the workman has been paid, in lieu of such notice, wages for the period of the notice. The workman shall also be paid compensation equivalent to 15 days’ average pay for each completed year of continuous service. A notice shall also be served on the appropriate government.

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Employees Provident Fund and Miscellaneous Provisions Act 1952

This Act seeks to ensure the financial security of the employees in an establishment by providing for a system of compulsory savings. The Act provides for establishments of a contributory Provident Fund in which employees’ contribution shall be at least equal to the contribution payable by the employer. Minimum contribution by the employees shall be 10-12% of the wages. The employer also will have to contribute the matching amounts and this amount is payable to the employee after retirement and could also be withdrawn partly for certain specified purposes.

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Employees State Insurance Act

This Act seeks to ensure provide for medical, sickness, death and other insurance benefits to workers earning is less that certain limits. Unlike Employees Provident Fund, only employer required to contribute to the insurance premium.

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Payment of Bonus Act 1965

The payment of Bonus Act provides for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity. The Act is applicable to establishments employing 20 or more persons. The minimum bonus, which an employer is required to pay even if he suffers losses during the accounting year is 8.33% of the salary.

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Payment of Gratuity Act 1972

The Payment of Gratuity Act provides for a scheme for the payment of gratuity to all employees in all establishments employing ten or more employees to all types of workers. Gratuity is payable to an employee on his retirement/resignation at the rate of 15 days salary of the employee for each completed year of service subject to a maximum of Rs. 350,000 ($ 7778).

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Maternity Benefit Act 1961

The Maternity Benefit Act regulates the employment of the women in certain establishments for a prescribed period before and after child birth and provides certain other benefits. The Act does not apply to any factory or other establishment to which the Employees State Insurance Act 1948 is applicable. Every women employee who has actually worked in an establishment for a period of at least 80 days during the 12 months immediately proceeding the date of her expected delivery, is entitled to receive maternity benefits under the Act. The employer is thus required to pay maternity benefits and/or medical bonus and allow maternity leave and nursing breaks.

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Industrial Employment (Standing orders) Act 1946

The Industrial Employment Act requires employers in industrial establishments to clearly define the conditions of employment by issuing standing orders duly certified. Model standing orders issued under the Act deal with classification of workmen, holidays, shifts, payment of wages, leaves, termination etc.

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List of various central labour laws

Pollution Control Laws

There are various laws in India intended to control pollution and prevent discharge of hazardous wastes into the environment. Government has the powers to prevent, control and abate environmental pollution by specifying the standards for discharge of any pollutant. Before setting up and operating any industrial plant, it is required to obtain approval of the prescribed environmental authorities.

Environmental Clearances

Entrepreneurs are required to obtain Statutory clearances, relating to Pollution Control and Environment as may be necessary, for setting up an industrial project for 31 categories of industries in terms of Notification S.O. 60(E) dated 27.1.94 as amended from time to time, issued by the Ministry of Environment and Forests under The Environment (Protection) Act 1986. This list includes petrochemicals complexes, petroleum refineries, cement, thermal power plants, bulk drugs, fertilizers, dyes, papers etc.,

However, if investment in the project is less than Rs.1 billion (appox. $ 22.2 million), such Environmental clearance is not necessary, except in cases of pesticides, bulk drugs and pharmaceuticals, asbestos and asbestos products, integrated paint complexes, mining projects, tourism projects of certain parameters, tarred roads in Himalayan areas, distilleries, dyes, foundries and electroplating industries.

Setting up industries in certain locations considered ecologically fragile (e.g. Aravalli Range, coastal areas, Doon Valley, Dahanu etc.) are guided by separate guidelines issues by the Ministry of Environment and Forests.

Environmental Clearance (EC) Process in India: A new website:

Packaged Commodities

Certain special rules are applicable to all pre-packed commodities which are or intended to be –

a) sold, distributed or delivered or offered or displayed for sale, distribution or delivery; or
b) stored for sale, distribution or delivery.

Pre-packed commodity for this purpose means commodity which is placed in such a package that it cannot be altered or modified without opening the package. Every manufacturer or packer or distributor is required to ensure that certain information such as name of the commodity, name and address of the manufacturer, maximum sale price etc. are mentioned on the package.

Other approvals/clearances at State level

Land, Water, Electricity, Registrations etc.

For further details please refer the website of Ministry of Environment and Forests

While many of the laws relating to Industries and Employment are made by the Central government, most of them are administered by the respective State governments. In addition, each State government has also made several laws in this area. Therefore, this area becomes complex due to maze of laws applicable.

If you want to know more about laws in Karnataka, log on to the following websites:

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