India: Roundup Of Recent Changes To Indian Employment Laws

Last Updated: 14 February 2017
Article by Trilegal .

1. State Amendments to the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA)

The CLRA is a central statute that regulates engagement of contract labour/agency workers in India. It imposes various obligations in relation to registration, health and safety, etc., on both the service provider and the service recipient. Even though the CLRA is a central statute, State governments have the ability to amend certain provisions of this statute. On this basis, the Maharashtra and Karnataka State governments have recently introduced/proposed certain amendments to the CLRA.

Applicability threshold of CLRA in Maharashtra increased

The CLRA prescribes a minimum threshold for the application of the statute to establishments and contractors engaging contract labour. With effect from 5 January 2017, the Maharashtra State government has increased this threshold for application of the CLRA from 20 to 50 workmen. Accordingly, in Maharashtra, the CLRA is now applicable to establishments engaging, and contractors providing, 50 or more workmen on any day in the previous 12 months.

With this amendment, the obligations under the CLRA would no longer be triggered for establishments and contractors engaging between 20 to 50 workmen. There are certain other States (such as Haryana) where there have been discussions on similarly changing this threshold, which may be implemented in the near future.

Women contract workers in Karnataka may be permitted to work at night

The government of Karnataka has amended the CLRA Rules permitting employment of female contract labour from 7:00 pm to 6:00 am, provided prescribed conditions are complied with. The amendment is not yet in force and will be effective upon its publication in the State's Official Gazette.

The conditions prescribed under the amended CLRA Rules, include providing transport facilities from and to the workplace, providing security guards in the transport vehicles and the workplace, engaging employees on rotation basis, etc.

While the amendment to the CLRA Rules permits engaging women contract workers at night without any special approval, the position under the S&E Act is quite different. The Karnataka Shops and Commercial Establishments Act, 1961 (S&E Act) prohibits the employment of women employees at night. Only IT/ITeS establishments are exempt from this restriction, subject to prior government approval. The term "employee" is defined broadly under the S&E Act and could be read to include a contract worker. Consequently, this amendment to the CLRA Rules creates ambiguity in the interplay between the provisions of these two statutes in Karnataka.

Since "employees" under the S&E Act can be interpreted to include women contract workers, it is not clear whether IT/ITeS organizations, would still need to obtain an approval under the S&E Act with respect to women contract staff at night or would they be allowed to engage them without approval on account of the changes to the CLRA Rules. Similarly, for non-IT/ITeS establishments, it is unclear whether the CLRA Rules amendment will allow them to now engage women contract labour at night or the prohibition under the S&E Act will continue to apply.

We understand that various representations have been made before the labour department around the ambiguities arising out of this amendment, which will hopefully be clarified.

2. New legislation providing rights for persons with disabilities enacted

The Central government has enacted the Rights of Persons with Disabilities Act, 2016 (Disabilities Act) which received the assent of the President on 27 December 2016. The Disabilities Act is not yet in force and will come into effect on the date notified by the Central government in the Official Gazette.

The primary purpose of the Disabilities Act is to give effect to the United Nations Convention on the Rights of Persons with Disabilities. The Disabilities Act imposes an obligation on the government to take steps towards ensuring equality of opportunity for persons with disabilities and preventing discrimination on the basis of disabilities. The Disabilities Act replaces the existing Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (PWD Act), which will be repealed once the Disabilities Act is brought into force.

The PWD Act was limited in its scope, and did not impose any specific obligations on private employers. The Disabilities Act, however, has a wider scope and imposes the following obligations in relation to private employers:

Every establishment must notify an equal opportunity policy, detailing measures proposed to be taken by it for skill development and employment of persons with disabilities;

A copy of the establishment's equal opportunity policy must be registered with the authority appointed under the Disabilities Act; and

Every establishment must maintain records of persons with disabilities in relation to their matters of employment, facilities provided and other necessary information as prescribed.

All private employers are expected to comply with these conditions, in accordance with rules that are yet to be prescribed by the Central government. Based on one's discussions with relevant authorities, we understand that they are in the process of drafting rules for the implementation of the Disabilities Act. The Disabilities Act will only be notified once these rules are ready.

3. Amendments to the Industrial Disputes Act, 1947 and Payment of Wages Act, 1936 in Haryana

Applicability of Chapter V-B of Industrial Disputes Act, 1947 (ID Act) in Haryana increased to 300 or more workmen

Chapter V-A and V-B of the ID Act deal with conditions for retrenchment of workmen and closure of establishments. Establishments that are covered under Chapter V-B are required to seek permission from the government before giving effect to any retrenchment or closure. However, Chapter V-B applies only to factories, mines and plantations (Covered Establishments) that employ more than the prescribed threshold number of workmen. The Haryana State Government has increased the threshold for applicability of Chapter V-B of the ID Act from 100 to 300 workmen. Therefore, Covered Establishments with less than 300 workmen on an average over the last 12 months will now be covered by Chapter V-A of the ID Act, and not by Chapter V-B. The amendment has been brought into effect from 3 November 2016.

The impact of this amendment is twofold:

(a) Relaxed retrenchment norms: Covered Establishments engaging between 100 to 300 workmen are no longer required to seek prior government permission or give 3 months' notice to retrench workmen. Instead, the requirement to give 1 months' notice of retrenchment and only intimate the government under Chapter V-A of the ID Act would apply.

(b) Relaxed norms around closure of establishment: The requirement to seek prior government permission at least 90 days before the closure of the establishment would no longer be applicable to Covered Establishments engaging 100 to 300 workmen. Instead, such establishments would only need to provide 60 days' notice of closure to the government under Chapter V-A of the ID Act.

Threshold for applicability of Payment of Wages Act, 1936 (PW Act) removed in Haryana

The PW Act is a central statute that prescribes obligations around the mode and timeline for payment of wages, and imposes restrictions on an employer's ability to make deductions from an employee's wages. The PW Act, in the first instance, only applies to employees working in factories, railways, mines, plantations, motor transport services, air transport services, etc. and earning wages up to INR 18,000 per month. While this is a central statute, State governments have the ability to amend this legislation in relation to its applicability. Accordingly, the Haryana government has recently deleted the wage threshold for applicability of the PW Act to employees in Haryana. This amendment has been brought into effect from 15 September 2016.

Further, in some States, the PW Act has also been extended and made applicable to shops and commercial establishments. In Haryana, the Shops and Commercial Establishments Act (Haryana S&E Act) specifically states that restrictions relating to deductions from wages under the PW Act would be applicable to commercial establishments. Since the Haryana S&E Act does not prescribe any wage threshold for its applicability, it remained unclear whether all employees working in a commercial establishment, even if they earned more than INR 18,000 per month, would benefit from the provisions prohibiting/limiting wage deductions under the PW Act. Haryana's recent amendment deleting the wage threshold has helped clear this confusion, as it is now clear that an employer's obligations as well as limitations on deductions from wages under the PW Act would apply to all employees of commercial establishments in Haryana irrespective of their wages.

4. Amendments in the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act) and Employees' Provident Funds Scheme, 1952 (EPF Scheme)

Instances for transfer of Provident Fund (PF) amounts to inoperative account amended

The Central government has amended the circumstances in which PF amounts of a member under the EPF Scheme are transferred to an inoperative account. Prior to the amendment, accumulation in respect of a member who had either ceased to be employed or died but not preferred a claim within 3 years was transferred to an inoperative account. With the amendment, transfer to the inoperative account is only permitted in respect of a member who has died or retired from service after attaining the age of 55 years or migrated abroad permanently. As a result, accumulations of members who merely 'cease to be employed' will not be transferred to such account. This amendment has been brought into effect from 11 November 2016.

To appreciate the intent behind this amendment, it is relevant to note that currently amounts in the inoperative account do not accrue interest. As a result, prior to the amendment, accumulations of any member who ceased to be an employee and did not claim such amounts within 3 years stopped accruing interest. However, through the amendment, the government has limited the circumstances in which such amounts would be transferred to the inoperative account and thereby stop accruing interest. This change will not have an impact on companies that make contributions to the Employees' Provident Fund Organization (EPFO) since the cost towards interest is borne by the EPFO.

Nepalese and Bhutanese nationals to be treated as Indian Workers for PF purposes

In 2008, the social security schemes provided under the EPF Act were extended to an 'International Worker' (IW). The definition of an IW includes a foreign national working for an establishment in India to which the EPF Act applies. Nepalese and Bhutanese nationals were therefore treated as IWs for the purposes of the EPF Act. However, through a recent amendment to the EPF Act, the government has introduced a deeming fiction, allowing Nepalese and Bhutanese nationals working in India to be treated as Indian workers for the purposes of the EPF Act. This amendment has been brought into effect from 2 November 2016.

The basic wages on which PF contributions for Indian workers are made is currently capped at INR 15,000. On the other hand, contributions in respect of IWs are not capped and have to be paid on the entire 'basic wages'. Therefore, as a result of this amendment, the contribution for Nepalese and Bhutanese nationals working in India can now be capped at 'basic wages' of INR 15,000 and will no longer have to be paid on the entire 'basic wages'.

Since a sizeable workforce in the country (largely blue collar) hails from Nepal and Bhutan, this change would go a long way in incentivizing Indian employers to continue to hire Nepalese and Bhutanese nationals. However, it is unclear as to why the government has introduced this amendment allowing Nepalese and Bhutanese nationals to be treated as Indian workers for the purpose of the EPF Act, while Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs), who are in fact of Indian heritage, continue to be classified as IWs by the EPFO. In most situations organizations are unaware that an employee is in fact an OCI/PIO, since these individuals do not need an employment visa to enter and work in the country. Such organizations routinely face adverse assessments from the PF department for failing to contribute uncapped PF for OCIs/PIOs.

5. Amendment to the time period for filing returns under the Payment of Bonus Act, 1965 (Bonus Act)

The timeline for uploading annual returns under the Payment of Bonus Rules, 1975 has been amended. All employers are now required to upload annual returns in respect of the preceding year on the web portal of the Ministry of Labour and Employment before 1 February of each year. Prior to this amendment, employers were required to upload the returns within the time period specified for payment of bonus under Section 19 of the Bonus Act, i.e. within a period of 8 months from the close of the accounting year (30 November).

This amendment has been brought into effect from 6 December 2016.

6. Department of Personnel Training issues Guidelines on Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SH Act)

The Department of Personnel Training (DoPT) has issued fresh guidelines on certain processes that are required to be complied with by government ministries and departments in connection with the SH Act. These guidelines recommend that an inquiry by the Internal Complaints Committee be completed within 30 days and in any case, within a maximum of 90 days from the date of the complaint. In addition to this, government ministries and departments are now required to submit monthly progress reports on the implementation of the SH Act to the Ministry of Women and Child Development. The guidelines also recommend including brief details of the implementation of the SH Act by the department/ministry in the Annual Report prepared under the SH Act. These guidelines are only applicable to ministries and departments of the government and not to private employers.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions