It is important to observe these rules of labour law in India
Indian labour law is constantly changing. If you are employing or hiring staff in India, it is important to be informed about developments in this area. We would like to give you a little insight into Indian labour law.
Indian labour law
In India, both the federal and state governments have the power to legislate in the areas of employment and industrial relations. Many Indian states have enacted a Shops and Establishments Act. Here, the local government has enacted its own specific laws or adjustments to federal regulations. National rules, therefore, do not apply in these countries, which can sometimes make it difficult for foreign companies to comply.
Indian labour law divides “industry” into two broad categories, namely factories (production units) and enterprises (non-production units). Workers are also divided into two broad categories: workers and non-workers. Workers are defined as a person carrying out manual, unskilled, skilled, technical, industrial, or administrative work.
Therefore, the applicability of the different laws and the protection afforded may vary on a case-by-case basis. Employers must also take into account the number of employees they employ in India. Becausemany laws apply based on the number of employees working for a company. Laws governing employment relationships prescribe minimum working conditions such as working hours, wages, leave entitlement, dismissal rights, health and safety standards, etc. The law requires the employer to grant the employee the minimum rights. The employment contract should include all working conditions.
Customization of work documentation in India
It is essential for European companies to have work documentation drawn up that is suitable for the intended purpose. Companies tend to opt for consistency. Therefore, templates that have already been used in other countries are typically copied. As a result, companies are at risk of not fully complying with Indian laws. A thorough review of labor contract documentation, including company policies and manuals by an Indian lawyer, is strongly recommended to comply with India’s labor laws.
The three labour laws of 2020
Since 2014, the Indian government has been trying to bring more structure to India’s labor laws by reducing the 44 federal laws to four overarching laws. However, after years of opposition, the introduction of three new codes in September 2020: the Industrial Relations Code, the Social Security Code, and the Code on Occupational Safety, Health, and Working Conditions. The purpose of the codes is to simplify the country’s outdated labour laws and boost economic activity without compromising workers’ rights.
Industrial Relations Code
This code makes it easier for companies to hire and lay off employees. Whereas previously companies with more than 100 employees had to obtain permission from the state government of the company headquarters to hire and lay off employees. The new law exempts companies with up to 300 employees from this obligation.
In addition, companies with fewer than 300 employees no longer need “standing order”. There are the detailed rules of conduct for workers working in industrial enterprises. To enter and leave the premises, working hours, wages, shift schedules, leave and attendance, provisions on misconduct, etc. However, under the new code, industrial companies should have one or more complaints committees to resolve disputes arising from employee complaints with more than 20 employees. Also, they have to set up a fund for the retraining of employees.
Social Security Code
With this code, the Indian government is responding to the rapid development of the “gig economy”. The “unorganized sector”, which consists of migrant workers, freelancers, and gig workers, can now also fall back on the social security system. Gig workers are workers who perform short jobs through online platforms, such as.B. delivery drivers who work for companies like Zomato and Swiggy, or taxi drivers who drive for Ola and Uber.
Such companies now have to pay one to two percent of their annual turnover and pay into a Social Security fund for their employees. The government manages the fund. In addition, the period that an employee must have been employed before he can claim benefits has been reduced from five to one year.
Code on Occupational Safety, Health, and Working Conditions
This code focuses on the working conditions of employees and lays down rules on working hours, holidays, etc. It gives employers the flexibility to employ workers for certain periods of time, which was previously more difficult to achieve. However, this law also stipulates that temporary workers have the same social security rights and must earn the same salary as their colleagues on fixed contracts. No employee may work more than 8 hours per day or more than 6 days per week in a company. In the case of overtime, an employee must receive twice his or her salary. The law also brings more equality for migrant workers, transgender people and women.
Protection of women
The prevention of sexual harassment in India is a part of corporate health and safety policy, which includes preventive and punitive measures. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013″ sets out the necessary direction in dealing with such issues. This act requires employers to set up an independent complaints committee. In the event of a complaint in each office or branch of an organization with ten or more employees. If an employer fails to set up an internal complaints committee or violates the law, a fine of INR 50,000, or about €600 is applicable. A repeated infringement may be punishable by doubling the fine, decommissioning the company, or withdrawing the company’s legal business licenses.
In addition, most federal laws prohibit women from working at night for safety reasons. If a woman wants to work at night, the company has to take special permission from the relevant government authority. The employer must also offer door-to-door transport and meet a number of safety-related requirements.
Privacy and data protection in India
The concept of privacy and data protection is still in its infancy in India. Especially in comparison to the plethora of rules and laws in Western countries. In India, the Information Technology Act 2000 requires companies with sensitive personal data or information to implement and maintain appropriate security practices and procedures. The express consent of the employees is necessary for collecting, storing, or transferring the data in accordance with the applicable regulations.
India is heavily regulated because labour laws focus on protecting workers. It is therefore advisable to seek legal advice before drawing up employment contracts and conditions. It is also advisable to seek practical advice on best practices to ensure that the work policy in your Indian company is not only legally compliant but also personnel-friendly. Many foreign companies are facing high staff turnover in India. You can prevent it by providing adequate wages and social benefits in accordance with Indian regulations. Do you have any doubts about your policy or are you unsure whether you are complying with Indian regulations? Our local legal and human resources specialists are always up-to-date and will be happy to help you find the right solutions to your specific problem. Please contact us!