There is a view that the Indian Labour Legislation has vowed its commitment to the welfare of workers alone. Despite numerous legislations, the enforceability always seemed to lack in India, thus defeating the very purpose. Labour market flexibility is a very important factor that influences the flow of foreign direct investment in any country. A need was seen for having fewer laws, like a unified labour code and ensuring better enforcement.
This approach has not only made India's rank in World Bank's ranking of countries for "Ease of Doing Business" better, but it has also been in furtherance of the 'Make in India' campaign by the Prime Minister.
In order to make India a business friendly nation in line with changing market conditions, initiatives have been undertaken by the government since 2014, and have been going on; with the most recent amendment in maternity and child labour law and some are in the pipeline, simplifying and consolidating laws dealing with industrial relation, wages, social security, industrial safety and welfare.
These reforms have given a breather to industry and have drawn many foreign investors.
I. The Maternity Benefit (Amendment) Act, 2017
The Maternity Benefit (Amendment) Act, 2017 has come into force on March 28, 2017 after receiving the assent from the President on March 27, 2017. The major changes brought by the amended Act, compared with the provisions of the earlier Act, are given hereunder:
Particulars The Maternity Benefit (Amendment) Act, 2017
Duration of maternity leave
Increases the duration of the maternity leave from 12 to 26 weeks which can be availed prior to 8 weeks from the date of expected delivery (earlier it was 6 weeks prior).
From third child onwards, maternity leave to be for 12 weeks which can be availed 6 weeks prior1.
The following new provisions have added by the amendment:
Maternity leave for adoptive and commissioning mothers
Maternity leave of 12 weeks to:
Adoptive mothers (adopts a child below 3 months of age);
Commissioning mother2 .
This period to be calculated from the date the child is handed over to the said mothers.3
To be provided by an establishment with 50 or more employees within a prescribed distance. 4 visits in a day to crèche should be allowed.
Option to work from Home
Employer to permit a woman to work from home, if the nature of work permits her to do so and the same can be availed after the completion of her maternity leave for a duration mutually decided.4
Employer to inform the woman of maternity benefits
Woman to be informed at the time of appointment, of the maternity benefits available, either in writing or electronically.5
It is anticipated that as now the employer will have to pay full wages for 26 weeks. The aforesaid amendments may have an adverse impact on job opportunities for women. The amendment is silent on paternity leave. The women who work in the unorganised sectors are not covered due to their unstructured employment conditions.
II. The Child Labour (Prohibition and Regulation) Amendment Act, 2016
The Child Labour (Prohibition and Regulation) Amendment Act, 2016 has come into force on July 30, 2016. The major changes brought by the amended Act compared with the provisions of the earlier Act, are given hereunder:
Particulars The Child Labour (Prohibition and Regulation) Amendment Act, 2016
New Category of person called "Adolescent"
A person between 14 to 18 years of age6.
Prohibition 7 of employment in any hazardous occupations and processes as specified in the Schedule.
Definition of child
A person who is less than 14 years of age or of age given under the Right of Children to Free and Compulsory Education Act, 2009, whichever is more.8
Prohibition of employment of children in any occupation and process.
Prohibits employment of a child in all occupations except where the child helps his family after school hours.
Power of Central Govt.
To add or omit any hazardous occupation and process from the list as included in the amendment.10
Regulation of work Conditions of Adolescent
Provides for regulation of work conditions viz. working hours limited to 6 hours in a day, 1 hours rest after every 3 hours of work, no overtime etc.
Enhanced penalty for violation of the provisions of the amended Act:
Imprisonment: 6 months to 2 years (earlier it was 3 months to 1 year)
Fine: INR 20,000 to 50,000 (earlier it was INR 10,000 to 20,000)
Schedule- List of hazardous occupations and processes
As per the amendment:
Prohibition is only on occupations related to mining and explosives/inflammable substances. (earlier the list contained 18 occupations).
Hazardous processes as mentioned under the Factories Act, 1948 (earlier the list contained 65 processes).
Regulation will be a challenge as the amendment does not provide the criteria to determine if an enterprise is a family enterprise or not.
Amendment legalises child labour in "family business" and is silent on regulation of working hours, overtime, weekly holidays etc. for such child labour, thereby, making this provision exploitable for employment of child labour.
III. The Employees' State Insurance (Central) Amendment Rules, 2016
The Employees' State Insurance Rules, 1950 ensure implementation of the provisions of the Employees' State Insurance Act, 1948. The Rules have been amended 4 times since June 2016.
The major changes brought by the various amendments are as under:
Amendments with effect from Particulars Change by Amendment
June 14, 2016 Employee exempted from contribution
An employee whose average daily wage is upto INR 137 is exempted from contribution (earlier it was INR 100).11
October 6, 2016 Rates of employer's and employee's contribution
In areas where the Act is implemented for the first time, the rates of contribution for initial 24 months:
Employer - 3% of the wages
Employee - 1% of the wages.12
December 22, 2016 Wage limit for coverage of an employee
Wage limit for coverage of an employee has been enhanced from INR 15,000 to 21,00013
January 20, 2017 Insured Mother
Includes a commissioning mother and an adopting mother.14
Amendments to have a financial impact on employer's contribution as they cover more employees due to increase in the wage limit and the benefits will have to be provided to insured women as well.
IV. The Payment of Wages (Amendment) Act, 2017
The Payment of Wages (Amendment) Act, 2017 changes the method of payment of wages to the employees. Now the employer can pay wages to its employees by the following modes without obtaining written authorisation (as required earlier):
in coin or currency notes; or
by cheque; or
by crediting them into his bank account.
The relevant government may notify establishments, whereby the employer should pay the wages only by cheque or crediting the wages in employees' bank account (and not through cash).15
V. 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:
Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
Contract Labour (Regulation and Abolition) Act, 1970
Equal Remuneration Act, 1976
Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
Mines Act, 1952
Minimum Wages Act, 1948
Payment of Wages Act, 1936
Sales Promotion Employees (Conditions of Service) Act, 1976 and
Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955
VI. Other initiatives by the Central Government16
In furtherance to the "Ease of Doing Business" initiative, the Government of India is keenly following the benchmarks set by Doing Business Project of the World Bank to improve the business environment in India. The Ministry of Labour & Employment has introduced online registration process for the Employees' Provident Fund Origination ("EPFO") and the Employee's State Insurance Corporation ("ESIC"), with no registration cost and manual intervention. Also, on the discretion of the employer, registration for both EPFO and ESIC can be done through the common registration form which is available at the e-Biz Portal of Department of Industrial Policy and Promotion ("DIPP") since March 9, 2016. Establishments can also file online a common Electronic Cum Challan Receipt ("ECR") for both EPFO and ESIC on Shram Suvidha Portal.
The Ministry has also launched common registration service on the e-biz Portal of DIPP for 5 Central Labour Laws including Employees Provident Fund & Miscellaneous Provisions Act, 1952, Employees State Insurance Act, 1948, Building & Other Construction Workers (Regulations of Employment and Conditions of Service) Act, 1996, Contract Labour (Regulation and Abolition) Act, 1970 and Inter-State Migrant Workmen (Regulations of Employment and Conditions of Service) Act, 1979.
Further, single online common Annual Return under 9 Central Labour Acts has been made operational on Shram Suvidha Portal since April 24, 2015 to ensure simplified filings of the single online return by the establishments instead of filing separate returns, under the said 9 Acts.
* These amendments are only Central Amendments and do not include the State Amendments
1 Section 5(3)
2 Biological mother who uses her egg to have a surrogate child
3 Section 5(4)
4 Section 5(5)
5 Section 11A
6 Section 2 (ia)
7 Section 3A
8 Section 2 (ii)
9 Section 3
10 Section 4
11 Rule 52
12 Rule 51B
13 Rule 50
14 Rule 2 (6A)
15 Section 6
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Labour Law Amendments 2016-2017* - Employment and HR - India