Understanding Labor Laws: How to Determine if Your Manufacturing Unit Follows Central or State Rules?

Dear Seniors,

I seek help on the matter as stated in the subject. How would I come to know whether my manufacturing unit is covered by central rules (labour laws) or state rules? I have searched in the citeHR, but all the answers were related to the Contract Labour Act (in central and state rules conversation).

Need urgent help.

Thanks,
Amit

Hi,

Please indicate the geographical location of your industry. However, note that all labor statutes have specific state rules under them. There are exceptions (only a few) for Jammu and Kashmir, for which individual acts need to be referred to regarding applicability. In specific cases of the cement, sugar, and steel industries, specific wage standards apply. You may approach your jurisdictional labor office to obtain a written clarification.

Kind regards,

Dayanand L. Guddin

It depends upon the factual legal position as to which government is designated as the "Appropriate Government" under the particular enactment applicable to your industrial establishment. As you are aware, labor is a subject matter of the concurrent list of the Constitution enabling both the Central and State Governments to legislate appropriate laws. The term "Appropriate Government" specifically mentioned in certain labor legislations enacted by the Central Government refers to the "Government" vested with the responsibility of administration/enforcement of the concerned laws over certain establishments by virtue of their constitution or specific activity or location.

Examples of Appropriate Government Designation

For example, the Industrial Employment (Standing Orders) Act, 1946, the Industrial Disputes Act, 1947, the Contract Labor (Regulation & Abolition) Act, 1970, the Payment of Gratuity Act, 1972, the Equal Remuneration Act, 1976, the term appropriate government is defined. For the sake of quick and easy understanding, if an industrial establishment is created by a specific Central Legislation or it is a Central Government undertaking, the appropriate government to that establishment is the Central Government - e.g., Indian Railways, L.I.C of India, Unit Trust of India, BHEL, BEL, Nationalized Banks, etc.

Criteria for Determining Appropriate Government

The next criterion is with reference to the specific activity such as Postal and Telecommunications, mining, exploration of oils and minerals, etc.; yet another criterion is with reference to the territorial jurisdiction of administration - e.g., establishments situated in Union territories. For all other establishments, it is the State Governments within whose territorial jurisdiction they are functioning.

Regards, Amit

If your operations spread across the country, all central legislations would apply. If the operations are confined to a particular state, such as MP or Tamil Nadu, all the state legislations would apply. For every central legislation, there is a corresponding state legislation. An example is The Payment of Wages Act, 1936, and the Maharashtra Payment of Wages Rules, 1963.

It may please be noted that the compliance under both legislations is almost the same with slight variations. I would suggest that if you are responsible for compliance under various legislations, you should read the Act and the Rules to be familiar with the basics.

Regards,
N Ramesh

Hi Umakanthan.M,

Could you please explain the following situation? We have received an order for O&M in the Central Jurisdiction organization in West Bengal. We are confused about whether to pay HRA (as the WB HRA act mandates paying 5% HRA) while there is no such requirement at the central level. Can you elaborate on whether we need to pay HRA in the situation mentioned above?

Thank you.

Thank you for your query as it gave me the opportunity to browse through the West Bengal Workmen's House Rent Allowance Act, 1974, for the first time. However, I was unable to find all the notifications under Section 8 of the Act regarding exemptions granted thus far. Therefore, my response will be a general one without prejudice to any specific exemptions that may have been granted under the Act to Government Undertakings, both Central and State.

According to Section 1(2)(4) of the Act, as of today, it applies to every industry where 20 or more workmen are employed. The Act defines the term "industry" as provided under Section 2(j) of the Industrial Disputes Act, 1947, with the exception of a plantation industry. When defining the term "employer," the Act includes Undertakings of the State Government, Local Bodies, and all others. Consequently, the Act will be applicable to Central Government Undertakings located in the state of West Bengal.

Therefore, my conclusion is that if the House Rent Allowance (HRA) paid by you exceeds the 5% prescribed by the State Act, there is no issue. However, if there is no HRA or the rate is less than 5%, you must adhere to the State Act as you are also governed by the specific State Law concerning HRA. I encourage members from West Bengal to join the discussion and provide further insights!

Thank you.

Dear Vaishnav,

It depends on state government licenses and registrations in the corresponding government body. Only then the central government is able to provide other necessary licenses or registrations such as EPF, ESIC, Factories Departments, etc. Furthermore, every department has its own Acts (like EPF Act, ESIC Act, Factories Act, etc.) to cover companies, manufacturing units, or establishments.