India: Labour Law Amendments 2016-2017*

Last Updated: 11 September 2017
Article by Namita Chadha, Rahul Chadha and Savita Sarna

INTRODUCTION

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:
    1. Adoptive mothers (adopts a child below 3 months of age);
    2. Commissioning mother2 .
  • This period to be calculated from the date the child is handed over to the said mothers.3
Crèche facilities
  • 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

Analysis:

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.
  • Prohibition7 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.9
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.
Penalty
  • 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).

Analysis:

  • 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

Analysis:

  • 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):

  1. in coin or currency notes; or
  2. by cheque; or
  3. 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:

  1. Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
  2. Contract Labour (Regulation and Abolition) Act, 1970
  3. Equal Remuneration Act, 1976
  4. Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
  5. Mines Act, 1952
  6. Minimum Wages Act, 1948
  7. Payment of Wages Act, 1936
  8. Sales Promotion Employees (Conditions of Service) Act, 1976 and
  9. 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.

Footnotes

* 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

16 http://www.labour.nic.in/sites/default/files/Ease%20of%20Doing%20Business‐%20MoLE%20initiatives‐09.03.2017.pdf

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
Vaish Associates Advocates
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Vaish Associates Advocates
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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