On 16 October 2014 Narendra Modi, the Indian Prime Minister,
proposed a number of labour reforms. These aim to create a more
favourable environment for industrial development by making it
easier for businesses to operate in India and at the same time, to
provide benefits for employees.
The proposed reforms, summarised below, form part of the Prime
Minister's "Make in India" campaign, which is
designed to encourage global businesses to manufacture goods in
Shram Suvidha Portal
This measure will make it easier to comply with Indian labour
laws. It will allow the online registration and filing of
self-certified single online returns for 16 of the 44 labour laws.
Where factory owners previously had to fill out 16 different forms
to comply with these laws, they will now just be required to
complete a single online form.
The difficulty of complying with a multitude of labour laws has
always been cited as an impediment to industrial development in
India. This new system is a step forward in reducing bureaucracy
for businesses operating in India.
Labour Inspection Scheme
This scheme will use technology to randomly select units for
inspection to eliminate individual discretion in the selection
process. Inspection reports must then be uploaded within 72 hours
of the inspection.
An inspection scheme is also being developed to ensure
transparency, with the following features:
Serious matters are to be covered under the mandatory
A computerised list of inspections will be generated randomly,
based on pre-determined objective criteria
Complaints-based inspections will be determined centrally,
following examination based on data and evidence
There will be an emergency list for the inspection of serious
cases in specific circumstances
Universal account number scheme
This scheme will allow approximately forty million employees to
have portable, universal access to their provident fund accounts
and to consolidate all their previous accounts (approximately INR
270 billion is currently held by the Employees' Provident Fund
Organisation in inoperative accounts).
Apprentice Protsahan Yojana
This proposal aims to support apprentices, manufacturing units
and other businesses by increasing the minimum salary for
apprentices, restructuring apprentices' basic training
component and reimbursing 50% of the salary paid by businesses to
apprentices during the first two years of their apprenticeship.
Revamped Rashtriya Swasthya Bima Yojana
This measure will introduce a smart card for workers in the
"unorganised sector" (i.e. unlicensed, self-employed or
unregistered economic activity such as owner-manned general stores,
rural traders and farmers). The card will contain details of at
least two social security schemes.
What these reforms mean for employers
The reforms will make it easier for employers to do business in
India. In particular, when the portal system is in force, it will
ease the compliance burden on businesses and speed up the
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On 31 December 2015 the President gave his assent to certain amendments to the Payment of Bonus Act, 1965. The amendments have increased the wage threshold for determining applicability of the Act from INR 10,000 to INR 21,000 per month.
The Payment of Bonus Act, 1965 provides for the payment of statutory bonus to eligible employees. The bonus payable is to be determined on the basis of profits or on the basis of production or productivity of the establishment.
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