
Labour law compliance is an important aspect of any business since it offers strict adherence to legal frameworks in the employer-employee relationship with a focus on providing working rights for workers, fair treatment inside and outside the job arena, and prevention of various exploitation. Compliance, by contrast is a bit a little complex since the laws differ according to jurisdiction, industry, or just the nature of employment. SKMC Global specializes in providing the tools, guidance, and support businesses may need for them to navigate the labor law compliance landscape.
Compliance of Labour Law
Labour law compliance requires a business to adhere to the statutory and regulatory stipulations set by local, regional, as well as national governments. It thus covers employment contracts, working conditions, wages, discrimination, health and safety, as well as dispute resolution for failure in compliance, which would have legal penalties, reputational damage, and costly lawsuits.
Labour laws seem to be aplenty and differ significantly from place to place. Most of the jurisdictions place these laws under the purview of governmental agencies, like the Department of Labour or Ministry of Employment. When dealing with an international business organization, compliance is much more complicated because every country has different standards.
Key Features of Labour Law Compliance
- Labour Contract and Record Requirements
- Legislation on Working Hours and Overtime Conditions
- Health and Safety Standards
- Anti-Discrimination and Equal Employment Opportunity
- Termination and Severance
a) Labour Contract and Record Requirements
Probably the most important ingredient of labor law compliance is that employment contracts are valid and contain all the details that should be. These will include terms of employment, job duties, hours of work, wages, and benefits and end the contract procedure. Many jurisdictions require more documents from an organization, such as pay slips, tax returns, and statements of benefits, which the organization must be available with.
Compliance to the wage and benefits law is one of the core practices. The employer has to ensure that they at least meet their minimum wage threshold and pay their employees in the right manner concerning overtimes, bonuses, and leave entitlements. Labour regulations are also rules of employee benefits: health insurance, paid leave, retirement contributions, and maternity/paternity benefits. Violation of these attracts fines and back-pay obligations.
b) Legislation on Working Hours and Overtime Conditions
Labor legislation usually dictates the legal maximum hours of work for a week and have further laws defining overtime pay. Workers are entitled to overtime compensation when it falls on holidays or weekends in any given economy. Failures to adhere to regulations on working hours plunge the business into the judicial wrings and contribute to staff low morale and lower productivity.
c) Health and Safety Standards
Another key aspect of labor law compliance is providing protection on occupational health and safety. An employer should provide a safe workplace by adhering to occupational health and safety acts. Occupational health and safety regulation advise employers to have appropriate equipment, carry out some form of risk assessment, and train employees to avoid accident cases and injuries. The failure to adhere to these regulations may have extreme outcomes, including organizational accidents, fines, and businesses being closed.
d) Anti-Discrimination and Equal Employment Opportunity
Most countries' labor laws prohibit discrimination on the basis of gender, race, age, disability, sexual orientation, and other protected characteristics. Therefore, a company should articulate its anti-discrimination policies, allow diversity and inclusion practices, and actively participate in shaping equal work settings. Lack of adherence to these legal regulations ends in lawsuits, penalties, and public mistrust.
e) Termination and Severance
Termination of employment shall be compliant with procedures under the law. This includes proper notice, just cause in dismissing the employee, and compensation in accordance with severance requirements. If improper process is involved in the dismissal of an employee, then it is considered unlawful and wrongfully terminated employees are entitled to a claim of wrongful termination. That would lead to expensive legal cases against the employer.
Labour Laws in India: Overview
While all other developed countries group labour laws under one category, the labour laws in India are categorized into central and state legislations. The enactments involving wages, work hours, working conditions, industrial disputes, and social security were all associated with legislations concerning labour laws. The primary labour laws that were applied in India are as follows:
- Factories Act, 1948
- It deals with the health, safety, welfare, and hours of work of the employees working in the factories. It refers to making conditions of work safe and the employment of young persons and women needs to be regulated.
- Minimum Wages Act, 1948
- This Act defined what minimum wages were that employers had to pay to the workers in specific industries and local areas so as not to take advantage of them.
- Employees' Provident Fund and Miscellaneous Provisions Act, 1952
- The act makes the employer liable for contribution toward the retirement of the employees in a provident fund.
- Maternity Benefit Act, 1961
- Maternity benefit and leave were provided under the Act to women employees with protection to their rights from pregnancy after childbirth.
- Payment of Gratuity Act, 1972
- This act compels the gratuity payout on the workers in case of retirement or dismissal of an employee after five years and in case of long duration of service rendered by an employee.
- Industrial Disputes Act, 1947
- The act is very much linked to industrial disputes between employers and employees and offers services regarding redressal of such issues due to provisions under this act related to strikes, lockouts, and layoffs.
Amendments in Indian Labour Legislations: New Labour Code Introduced
In the earlier times, the working class was entangled in a web of multiple labour legislations. For this, the Central Government has taken the literal step of codifying 29 laws were composite and simplified into 4 Labour Canons viz, The Code on Wages, 2019, The industrial relations law, 2020, the Occupational Safety, Health & Working Conditions Code, 2020 and, The Code on Social Security 2020.
Ministry of Labour and Employment, Government of India on 28 December 2024, said in Year End Review 2024 that it's anticipated all 36 States/ UTs of India shall finish pre-publication the draft of rules and harmonizing under four Labour Codes- Code by 31st March, 2025.
Four major Labour Codes legislated by the Indian Government have completely changed labour laws in all corners of this country, enabling this country's legal system to come duly streamlined and streamlined.
Various acts were submerged for the new canons to come into actuality.
New Labor Code | Acts Submerged Under the Code |
---|---|
Code on Wages, 2019 | 1. The Payment of Wages Act, 1936 2. The Minimum Wages Act, 1948 3. The Payment of Bonus Act, 1965 4. The Equal Remuneration Act, 1976 |
Code on Industrial Relations, 2020 | 1. The Industrial Disputes Act, 1947 2. The Trade Unions Act, 1926 3. The Employment Exchanges Act, 1959 4. The Standing Orders Act, 1946 5. The National Tribunal (Amendment) Act, 1956 |
Code on Social Security, 2020 | 1. The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 2. The Employees' State Insurance Act, 1948 3. The Employees' Compensation Act, 1923 4. The Maternity Benefit Act, 1961 5. The Payment of Gratuity Act, 1972 6. The Unorganized Workers' Social Security Act, 2008 7. The Cine Workers Welfare Fund Act, 1981 8. The Building and Other Construction Workers Welfare Cess Act, 1996 9. The Social Security for Unorganized Workers Act, 2008 |
Code on Occupational Safety, Health, and Working Conditions, 2020 | 1. The Factories Act, 1948 2. The Mines Act, 1952 3. The Dock Workers (Safety, Health and Welfare) Act, 1986 4. The Plantation Labour Act, 1951 5. The Working Journalists and Other News Paper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 6. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966 7. The Motor Transport Workers Act, 1961 8. The Sales Promotion Employees (Conditions of Service) Act, 1976 9. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 10. The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981 11. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 12. The Contract Labour (Regulation and Abolition) Act, 1970 13. The Employment of Children Act, 1938 |
New Labour Codes in India: Overview
- Code on Wages, 2019: The code provides for universal minimum wages across employments in the organized and unorganized sector. The code requires fixing floor wages, which is done by the Central Government. Some Key Reform Measures introduced by this code are:
- Generalize minimum wages and timely payment of wages provisions.
- Removes multiplicity of definitions and authorities.
- Changes the part to Inspector cum Facilitator of an Inspector.
- Code on Social Security, 2020: Under this Code, the labour laws relating to social security are amalgamated with the wider goal to provide social security benefits to all employees and workers. This Code brings, within itself the self-employed workers, home workers, wage workers, migrant workers, the workers in the unorganised sector, gig workers, and platform workers for the purpose of social security schemes.
- Code on Industrial Relations, 2020: The purpose of the code on Industrial Relations is to amend and consolidate the laws relating to Trade unions, conditions of employment, and investigating and settlement of industrial disputes.
- Code on Occupational Safety, Health, and Working Conditions, 2020: Under this act, laws relating to the occupational safety, health, and working conditions of the persons employed in an establishment and for matters connected therewith are consolidated and brought together.
Opposition and Challenges Faced While Implementing the New Labor Codes
- Impact on labour rights in India: This is criticized since the new Codes ostensibly impair worker's rights, especially toward the recognition of trade unions, dispute resolution, and employment security.
- Exemption for Small Enterprises: The Codes have bestowed some exemptions to small enterprises with less than 300 employees, which has been defined by the critics to dilute the job security of workers working in small enterprises.
- Reduction in Social Benefits: Some provisions will reduce the social benefits of some members, for instance, amendment of provident fund contributions.
- Inconsistent application across sectors: The new labour code has been designed to cover a broad range of industries but their application seems to be inconsistent. Sectors like IT and manufacturing are quicker to adopt these changes but other industries like agriculture and construction might lag behind due to the informal nature of the workforce.
Benefits of New Labour Codes
- Consolidated Labour Laws: New Codes of labour have consolidated cumbersome labour laws, which makes compliance of labour laws much easier for businesses.
- Better Social Security: Extending social security covers to the informal sector is one step in the direction of better welfare for all workers.
- Increased Flexibility: The hire and fire flexibility shall help modernize the management of the labour force in a dynamic economic climate.
How SKMC Global Can Help You?
Labour law compliance in India cannot be thought of without the mastery of legal frameworks and their implications on businesses. We, at SKMC Global, will be able to ensure that such business transactions are in conformity with relevant labour laws to minimize the chances of non-compliance. Our services include:
- Legal Audits and Risk Assessments: It makes an in-depth legal audit of your company's current compliance position. It identifies key gaps or risks and recommends actions to minimize exposure.
- Review and Drafting of Contracts: We help in drafting well-articulated, legally compliant employment contracts with the responsibilities of employers and employees clearly outlined. Our team delivers contracts that meet your unique business needs and comply with relevant laws.
- Legal Expertise: We have a team well-versed in labour law for employers as well as employees and regulations, holding a profound knowledge about the same who can help with expert guidance for your organization not only understand but also adhere to the laws applicable.
- POSH Compliance: SKMC Global has an internal complaints committee and a well-versed HR policy to ensure compliance with the Prevention Of Sexual Harassment at workplace (POSH).
- Compliance Support and Ongoing Process: Labour law compliance should not only be a one-time exercise but rather an ongoing process. We are here to support you as regards keeping oneself up-to-date on any changes to the laws and regulations affecting your operations.
- Labour Welfare Fund (LWF): SKMC Global ensures that the companies contribute to the labour welfare fund as required by the State Governments, providing assistance with the fulfillment, submission, and compliance of the same.
- Dispute Resolution and Representation: SKMC Global offers legal consultancy and assistance in the event of disputes and other contentious matters. We assist clients in addressing complaints, mediations, and all other forms of litigations related to labor law breaches.
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