India Labor Management QA

Email: bom4ww@evershinecpa.com
A-16, 1st Floor, Aruna Asaf Ali Marg, Qutub Institutional Area, New Delhi, 110067, India
Manager Punit Singh Negi, speak Indian and English.
Skype: cspunitnegi

LRC – India Labor Regulations

LRC-CA-20.10
What must be included in the contents of a labor contract in India?

Evershine RD:
Employment contracts or letters commonly include the following information:

•  name and address of the employer and the employee
•  title of the job or nature of the work (or a job description)
•  place of work
•  probationary period, if any, and its terms
•  date of commencement of employment
•  salary and benefits
•  type of contract (permanent or fixed term)
•  notice required for termination of employment
•  leave entitlement
•  conditions under which the employer can terminate the contract

LRC-CA-20.11
Does India arrange labor contract in the fixed term?
What should be the length of the labor contract in India?

Evershine RD:
Fixed-term employment contracts are permitted in India if the employer is employing the person for a short-term requirement.
There is no maximum length of fixed term contracts provided under the labor laws.

LRC-CA-20.20
What is the minimum age for hiring a new employee in India?

Evershine RD:
According to Child Labor Prohibition Act, 1986, No. 61.
The minimum legal age for employment in India is 14.

LRC-CA-20.40
Is it a requirement for employer in India to conduct a pre-employment background check?

Evershine RD:
There is no law governing background checks in India.
Employers should obtain consent from candidates before conducting background checks if the information sought is personal or sensitive.

LRC-CA-20.50
Is the Non-Competition indemnity clause in labor contract in India has legal effect?

Evershine RD:
According to Indian Contract Act, 1972, No. 9, S 27.
Under Indian law, non-competition agreements that operate during the employment relationship are valid and enforceable, but those that extend beyond the employment relationship are not.
Nevertheless, it is common practice to include noncompetition clauses in employment contracts that cover both pre-and post-termination.

LRC-CA-40.05
What are the regulations on Gender Discrimination in employment specifically for female workers in India?

Evershine RD:
According to Equal Remuneration Act, 1976, No. 25, S 4, and Sexual Harassment of Women at the Workplace, 2013, No. 14.
The Act provides for equal compensation for men and women and prohibits discrimination in employment based on sex.
Under the act, an employer is required to

•  provide a safe working environment
•  form an ICC at all workplaces
•  adopt a written policy prohibiting sexual harassment in the workplace
•  organize workshops and awareness programs at regular intervals to educate employees about the provisions of the act and other issues involving sexual harassment
•  provide facilities to the ICC/LCC and assistance in conducting investigations
•  treat sexual harassment as misconduct and take disciplinary action against a harasser
•  monitor annual ICC reports and comply with reporting obligations
•  conspicuously display at the workplace the legal consequences of sexual harassment and the order constituting the ICC
•  provide assistance if the aggrieved woman wants to file a complaint against her alleged harasser under the Indian Penal Code.

LRC-CA-50.10
Can the employer in India collect, or process data transmitted by employees over the internet?

Evershine RD:
Employers have a right to monitor employees when it is within reasonable limits and for the purpose of protecting the legitimate interests of the employer.
An employer can monitor employees’ phone calls and e-mails to protect its business interests and ensure discipline in the workplace.
However, the monitoring must be limited to a work phone and cannot be performed on an employee’s personal phone.

LRC-CA-60.10
What are the regulations on working hours in India?

Evershine RD:
Under the Factories Act 1948, daily work hours cannot exceed 9, weekly work hours 48.
Some state governments allow only 8 working hours per day.
In the case of shops and commercial establishments, working hours are governed by the state-specific Shops and Establishments Act and in the case of manufacturing facilities by the Factories Act.

LRC-CA-60.30
What are the regulations on overtime hours in India?
What is the overtime premium rate in India?

Evershine RD:
According to Factories Act, 1948, No. 63, S 59, and Minimum Wages Act, 1948, No. 11, S 14.
Employees covered by the Minimum Wages Act are entitled to hourly payment rate at twice the normal rate of pay per hour.
Similarly, the Factories Act mandates that any work beyond 9 hours per day or 48 hours per week is considered overtime and is entitled to overtime pay.
The maximum number of overtime hours an employee can be required to work is 50 in a quarter.

LRC-CA-60.50
Is it common to pay 13^th month’s salary in India?

Evershine RD:
According to Payment of Bonus Act, 1965, No. 21, S 10, and Payment of Bonus (Amendment) Act, 2015, No. 6, S 3.
The Payment of Bonus Act of 1965 mandates the bonus must be paid within 8 months of the end of the financial year to which the bonus corresponds.
A minimum bonus of 8.33% of a worker’s annual wages, which must be paid even if a business is making no profit or running losses.
The maximum bonus allowed under the law is 20% of annual salary, and the percentage the employer applies must be the same for all eligible staff.

LRC-CA-70.10
What are the regulations on general leave policy for employees in India?

Evershine RD:

According to The Delhi Shops Act, 1954, S 22, The Bombay Shops Acy, 1948, S 35(1), and Factories Act, 1948, No. 63, S 79.
Vacations—commonly referred to as “annual” or “privilege” leave—in any organization (other than a factory) are governed by the provisions of the relevant state-specific Shops and Establishments Act.
These laws may differ from state to state. For example, in Maharashtra employees are entitled to 21 days of annual leave and may accrue up to 42 days.
Manufacturing employers are covered by the Factories Act, 1948, and are required to provide employees with 19 days of annual leave and allow them to accrue up to 30 days’ leave.
In some sectors Indian workers are entitled to one vacation day for every 20 days of work after working for an employer for at least 240 days in a 12-month period.
The total number of days that can be carried forward to a succeeding year cannot exceed 30.

LRC-CA-70.20
What are the public holidays in India?
What is the overtime premium rate during public holiday in India?

Evershine RD:
According to The Bombay Shops Act, 1948, S 35(4).
India observes the following three national holidays

•  Jan. 26: Republic Day
•  Aug. 15: Independence Day
•  Oct. 2: Birthday of Mahatma Gandhi

In addition, an employer is required to provide 5 to 9 festival holidays, the number depending on the state in which operations are located.
Generally, a list of holidays is published by the state government every year, and employers are required to choose the holidays they will observe.
In certain states, employers are required to display the list of holidays in a conspicuous location in the workplace.
Employees who are required to work on a public holiday are entitled to double pay.

LRC-CA-70.30
What is the maternity leave policy for female employees in India?

Evershine RD:
According to Maternity Benefit Act, 1961, No. 53, SS 5(2), 6(2), 9, 10, 12 and Maternity Benefit Amendment Act, 2017, SS 2-4.
Employers with 10 or more employees must provide the followings:

Adoptive mothers are entitled to paid leave only if the adopted child is less than 3 months old.
All eligible female employees entitled to maternity benefits are also entitled to a medical bonus of 3,500 rupees in cases where the employer does not provide free of cost pre-confinement and postnatal care to the employee.

LRC-CA-70.40
What is the paternity leave policy for male employee in India?

Evershine RD:
There is no legal entitlement to paternity leave.

LRC-CA-70.50
What are the provisions on sick leave, bereavement leave and personal leave for employees in India?

Evershine RD:
According to The Delhi Shops Act, 1954, S 22.

Sick leave
Casual (personal) and sick leave is generally governed by the state-specific Shops and Establishments Act.
Not all states separately define casual and sick leave, and the number of days of such leave to which employees are entitled varies from 7 to 12 depending on the state in which the workplace is located.
In the manufacturing sector, casual/sick leave is governed by the Industrial Employment (Standing Orders) Act, 1946, under which employees are entitled to up to 10 days of leave.
Casual/sick leave cannot be accumulated or cashed out.

Bereavement leave

While there is no legal entitlement to paid bereavement leave, an employer cannot refuse employees time off under these circumstances.
The employer can offer bereavement leave as a separate benefit or as an option under casual or annual leave.

LRC-CA-70.60
What are the regulations on pension benefits and social security insurance benefits for employee in India?

Evershine RD:

According to Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, No. 19, SS 1, 7Q, Employees’ State Insurance Act, 1948, No. 34, and Payment of Gratuity Act, 1972, No. 39, S 4(2).
There is no nationwide retirement age.
States are free to establish their own criteria.
India’s social security system covers the following types of programs:

•  pension
•  medical
•  disability
•  gratuity

Some of the social insurances require employer contributions from all companies, some from companies with 10 or more employees, and some from companies with 20 or more employees.

LRC-CA-70.70
What are the regulations on Workers’ Compensation for employee in India?

Evershine RD:

According to Workmen’s Compensation Act, 1923.
The EC Act – which covers employees in factories, mines, plantations, construction, and certain other hazardous occupations— provides compensation to workers and their dependents in cases of work-related accidents resulting in disability or death.
The amount of compensation depends on the nature of the injury and on the employee’s age and average monthly wages.
The rate of contribution varies from state to state.

LRC-CA-80.05
Can the employee in India join labor union?

Evershine RD:
The Trade Unions Act provides for the recognition and registration of trade unions, providing legality to labor organizations and collective bargaining.
In the case of shops and commercial establishments, conditions of employment are governed by the state-specific Shops and Establishments Act and in the case of manufacturing facilities by the Factories Act and the Industrial Employment Act.

LRC-CA-80.06
How to handle labor dispute in India?

Evershine RD:
According to Industrial Disputes Amendment Act, 2010, No. 24 S 9C.
The Industrial Disputes (ID) Act requires that every industrial establishment with 20 or more employees have an internal process for grievance redressal or set up one or more grievance redressal committees to resolve workplace disputes.
The ID Act provides for the following authorities for the resolution of labor disputes:

•  The appropriate government, central or state, has the power to constitute a board of conciliation for the settlement of an industrial dispute. The board of conciliation can have either 2 or 4 members, appointed in equal numbers by the parties to a dispute, and an independent chairman. The board functions like an arbitral tribunal.
•  Conciliation officers are government officials appointed by the labor department to mediate and promote the settlement of industrial disputes between employees and their employers. The powers of conciliation officers are neither judicial nor quasi-judicial but administrative in nature.
•  Labor courts have been set up by the government in all states for the purpose of adjudicating industrial disputes regarding (for example) discharge or dismissal and the legality of strikes and lockouts.
•  Industrial tribunals adjudicate industrial disputes relating to such matters as wages, hours of work, bonuses, downsizing and closures. The functions and duties of the industrial tribunals are quasi-judicial in nature.
•  National tribunals adjudicate disputes that in the opinion of the government involve questions of national importance or matters that affect industrial establishments in more than one state.

LRC-CA-90.10
What are the regulations on workplace safety and health for employee in India?

Evershine RD:
According to The Delhi Shops Act, 1954, SS 25 – 27.
Various measures regarding safety, health, and security—including cleanliness, proper disposal of waste, proper ventilation, temperature control and enclosure of dangerous machinery—are required of employers.

LRC-CA-100.10
What are the circumstances that an employer can terminate an employee in India?

Evershine RD:
According to The Delhi Shops Act, 1954, S 30.
The following are considered just cause for dismissal:

•  theft
•  habitual negligence of duty
•  disorderly behavior
•  bribery
•  lack of capability
•  financial irregularities
•  insubordination.

A dismissal is considered unfair if the following:

•  if provisions for retrenchment or dismissal have not been properly followed
•  where the employee has not had an adequate opportunity to defend him/herself
•  during sickness or maternity leave
•  in retribution for filing a complaint
•  for taking part in peaceful trade union activities
•  because of discrimination.

LRC-CA-100.11
What is the notification period for terminating an employee in India?
How much is the severance pay?

Evershine RD:
State laws generally provide for 1 month’s written notice of termination or salary in lieu of notice.

LRC-CA-100.12
What is the reporting requirement for employer in India to notify the termination of employees to the competent authority?

Evershine RD:
There is no specific or standard to report termination of employee to the competent authority in India.
An employee may be terminated according to terms laid out in the individual labor contract signed between the employee and the employer.
The Industrial Disputes Act requires that factories employing 100 or more workers obtain permission from state governments before laying off any employee or closing an operation.

LRC-CA-100.20
What are the regulations on mass layoffs in India?

Evershine RD:
According to Industrial Disputes Act, 1947, No. 14, SS 25F – 25FFA.
Under Indian law, “layoff” is defined as the failure, refusal, or inability of an employer to employ a worker because of a shortage of power or raw material, the accumulation of stock, the breakdown of machinery or a natural calamity.

If a worker who has worked for the same employer for 240 continuous days in a year is laid off, whether continuously or intermittently, he or she is entitled to 15 days’ average pay for every completed year of service or any part thereof more than 6 months.
In the case of a business closing, the employer must give 60 days’ notice to the labor authorities.
If a worker is laid off for more than 45 days in 12 months, employer and employee may agree to end layoff compensation. Alternatively, layoff for more than 45 days in 12 months can be reasonable grounds for employer downsizing (retrenchment).

For economic redundancies, in the absence of any agreement between the employer and dismissed worker, the employer should dismiss the worker who was the last person to be employed in the category.

LRC-CA-100.30
What is the time limit for employer in India to pay employees upon termination?

Evershine RD:
Employers may settle employee claims at any time after they are initiated.
For claims raised by workmen, employers may record the terms of settlement by way of a settlement agreement.

Contact Us

Email: bom4ww@evershinecpa.com
A-16, 1st Floor, Aruna Asaf Ali Marg, Qutub Institutional Area, New Delhi, 110067, India
Manager Punit Singh Negi, speak in Indian and English.
Skype: cspunitnegi

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