India: Employment Law Updates

Last Updated: 12 September 2016
Article by Harsimran Singh

Most Read Contributor in India, September 2016

Model Shops and Establishments (Regulation Of Employment And Conditions Of Service) Bill, 2016 – an outline

Recently (end of June 2016), the Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, 2016 ("Model Bill") was finalized and approved by the central government. The salient features of the Model Bill are as under:

* Applicable to establishments employing ten or more workers (except manufacturing units);

* Provides for freedom to operate 365 days in a year and opening/closing time of establishment. Due to enhanced working hours, more job opportunities would be created;

* Women to be permitted during night shift, if the provision of shelter, rest room ladies toilet, adequate protection of their dignity, transportation and such other amenities are available. This is aimed to enhance the gender diversity at work places and will also do away with the "protective discrimination" faced by women, who were exempted from working in night shift. The establishments will have to ensure safety and better working conditions for female employees by providing facilities such as late-night drops and crèches;

* Absolutely no discrimination against women in the matter of recruitment, training, transfer or promotions;

* Introduction of one common online registration through a simplified procedure;

* Adequate provisions on provisioning of clean and safe drinking water;

* A progressive step for providing lavatory, crèche, first aid and canteen by group of establishments, in case, it is not possible due to constraint in space or otherwise by individual establishment;

* It provides for paid holidays for the workers which will be 18 days Earned Leaves, 8 days Causal Leaves, weekly holiday and 5 festival leaves in addition to National holidays;

* Exemption of highly skilled workers (e.g. workers employed in IT sector, R&D divisions etc.) from daily working hours of 9 hours and weekly working hours of 48 hours subject to maximum 125 overtime hours in a quarter. This flexibility will enable the establishment to better services to respective clients / international customers especially in the IT sector.

Without a doubt, the Model bill is intended to, including without limitation, (i) improving the working conditions of workers (ii) creating many more job opportunities for women along with safer working environment and (iii) providing favorable environment for doing business. At the moment almost all states have and follow modified and adopted version of the central Shops & Establishment Act and rules made thereunder. Likewise, the States have the discretion to either adopt the Model Bill or modify its provisions based on practical requirements or otherwise. Having said that, in case the Model Bill is adopted as it is by the states, the uniformity in legal provisions across states will enable the employers to have uniform human resource policies / manuals for all of its establishments in different states. This will also promote and improve the governance and ease of doing business across nation.

The Model Bill is expected to generate competitive and challenging spirit amongst the States and create an environment which is conducive for large scale employment generation at every level, especially in smaller and medium towns. It will also give a boost to employment opportunities to women as they will be permitted to work during night shifts with adequate safety and security provisions. Hailed as a welcome legislation the Model Bill is intended to encourage trade and commerce and bring uniformity in the varied laws applicable to establishments across all states and encourage conducive employment conditions across the Indian jurisdictional landscape.

Another underlying / indirect benefit from the Model Bill is the elimination of the licensing bureaucracy (since introduction of online registration) and therefore a lot of interaction with officials and/or procedural delays are done away with. This could be particular interest to foreign companies having or planning to have business operations in India.

The Model Bill is also seen as a medium for the State governments to accelerate economic activity(ies) and generate higher revenues; hence the law should be adopted immediately. Having said that, few areas that need attention for proper implementation of Model Bill may include:

  1. Steadfast, capable and trustworthy public transport;
  2. strong law enforcement;
  3. security arrangements to ensure safe travel;
  4. apt health care support (by way of standalone or group insurance policies), etc.

It is sincerely hoped that these issues will be tackled by the government agencies while adopting the Model Bill in letter & spirit.

Definitely issued in 'public interest', this piece of legislation is very promising and should uplift the working standards and make better the existing procedural mechanism; hence favorable to both employees and employers.

The Maternit y Benefit (Amendment) Bill, 2016 – Highlights

Council of States being the upper house of the Parliament of India (or Rajya Sabha) recently passed the Maternity Benefit (Amendment) Bill, 2016 (the "Bill") for amending the Maternity Benefit Act, 1961 (the "Act").

The Act regulates the employment of women in certain establishments (including factory, mines, plantations, shops and other establishments), employing ten or more persons (except employees covered under Employee's State Insurance Act, 1948), for certain periods before and after child-birth and to provide for maternity benefit and certain other benefits.

The key amendments as per the Bill include as under:

  1. The maternity benefit leaves are proposed to be increased from 12 weeks to 26 weeks;
  2. The above leaves are now proposed to be availed eight weeks prior instead of earlier period of six weeks prior to the date of expected delivery. However, in case of a female employee who has two or more children, the maternity benefit will continue to be 12 weeks, which cannot be availed before six weeks from the date of the expected delivery;
  3. A new provision has been introduced under the Bill for granting 12 weeks of maternity leave to:
  1. a female employee who legally adopts a child below three months of age; and
  2. a commissioning mother, i.e. a biological mother who uses her egg to create an embryo implanted in another female employee;**

** In case of adoptive or commissioning mother, the 12-week period of maternity benefit leaves will be calculated from the date the child is handed over to such mother.

  1. The Bill also introduces a provision that provides for an employer to permit a female employee to work from home; subject to nature of work assigned to the female employee permits her to work from home. Further, work from home option can be availed after the period of maternity benefit leaves for such duration as is mutually decided between the employer and the female employee.
  2. Another provision introduced by the Bill requires every establishment with 50 or more employees to provide crèche facility within a prescribed distance, either separately or with common facilities. And that the female employee will be allowed four visits to the crèche in a day which visits will include rest interval available to her.
  3. The Bill mandates every establishment to inform (in writing and electronically) female employees at the time of appointment regarding available maternity benefits.

On a different note, below are details of maternity benefits of a few countries1


Length Of Maternity Leave (In Weeks)

United States
















United Kingdom


The Bill definitely puts India (with proposed 26 weeks for maternity benefit leaves) way up in the above chart. The Bill will come into effect from the date that it is notified in the Official Gazette after being passed by the Lok Sabha and receiving Presidential assent. There are reports that until the Bill is notified the proposed changes may be introduced in the form of an ordinance in order to bring earliest reprise to female employees.



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