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Labour Policies

Trade Policy
Foreign Direct Investment Approval
NRI Investment Approval
Foreign Investment Regulations
Labour Policies
Policy for Tiny Sector, Village Industries
Development of Backward Areas
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Credit Policy
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Labour Policies

The Factories Act, 1948


  • To ensure adequate safety measures and to promote the health and welfare of the workers employed in factories.
  • To prevent haphazard growth of factories through the provisions related to the approval of plans before the creation of a factory.

Scope and coverage

  • Regulates working condition in factories.
  • Basic minimum requirements for ensuring safety, health and welfare of workers.
  • Applicable to all workers.
  • Applicable to all factories using power and employing 10 or more workers, and if not using power, employing 20 or more workers on any day of the preceding 12 months.

Main provisions

  • Compulsory approval, licensing and registration of factories.
  • Health measures.
  • Safety measures.
  • Welfare measures.
  • Working hours.
  • Employment of women and young persons.
  • Annual leave provision.
  • Accident and occupational diseases.
  • Dangerous operations.
  • Penalties.
  • Obligations and rights of employees.

When to consult and refer

  • On starting a factory.
  • Throughout the life of the factory.

The Minimum Wages Act, 1948

To determine the minimum wages in industry and trade where labour organisations are non-existent or ineffective.

Scope and coverage

  • Applicable to all employees engaged to do any work, skilled, unskilled manual or clerical, in a scheduled employment, including out-workers.
  • Fixation of minimum wages.

Main provisions

  • Fixation of minimum wage of employees.
  • Procedure for fixing and revising minimum wages.
  • Obligation of employees.
  • Rights of workers.

When to consult and refer
At the time of fixation of salary of new/existing employees.

The Payment of Wages Act, 1936

To ensure regular and prompt payment of wages and to prevent the exploitation of a wage earner by prohibiting arbitrary fines and deductions from his wages.

Scope and coverage

  • Application for payment of wages to persons employed in any factory.
  • Not applicable to wages which average Rs 1600/- ($35.83) per month or more.
  • Wages include all remuneration, bonus, or sums payable for termination of service, but do not include house rent reimbursement, light vehicle charges, medical expenses, TA, etc.

Main provisions

  • Responsibility of the employer for payment of wages and fixing the wage period.
  • Procedures and time period in wage payment.
  • Payment of wages to discharged workers.
  • permissible deductions from wages.
  • Nominations to be made by employees.
  • Penalties for contravention of the Act.
  • Equal remuneration for men and women.
  • Obligations and rights of employers.
  • Obligations and rights of employees.

When to consult and refer
Deciding wages and salary administration at all times.

The Employees Provident Funds and Misc. Provisions Act, 1952


  • To make provisions for the future of the industrial worker after he retires or for his dependents in the case of his early death.
  • Compulsory Provident Fund
  • Family Pension
  • Deposit linked insurance

Scope and coverage

  • Application to factories and establishments employing 20 or more persons.
  • Can be made applicable by central government to establishments employing less than 20 persons or if the majority of employees agree.
  • Excludes establishments employing 50 or more persons or 20 or more persons but less than 50 persons, until the expiry of three years in the case of the former, and five years in the case of the former, and five years in the case of the latter, from the date of setting up of establishment.
  • Applicable to all persons who are employed directly or indirectly through contractors in any kind of work.

Employees drawing pay not exceeding Rs. 3500/- ($78.37) per month.


  • Apart from terminal disbursal of non-refundable withdrawals for Life Insurance Policies
  • House building
  • Medical treatment
  • Marriage
  • Higher education
  • Family pension
  • Retirement-cum-withdrawal benefits
  • Deposit linked insurance Amount equal to the average balance in Provident Fund of deceased subject to a maximum of Rs. 25,000/- ($559.79).

Workmens Compensation Act, 1923

To provide compensation for workmen in cases of industrial accidental / occupational diseases in the course of employment resulting in disablement or death. Coverage for persons employed in Factories, Mines, Plantations, the Railways and others mentioned in Schedule II of the Act.


Compensation for Death
    - Minimum - Rs. 20,000 ($447.83) Maximum - Rs. 1,14,000 ($2,552.62)
Compensation for Permanent disablement
    - Minimum - Rs. 24,000 ($537.4) Maximum - Rs. 70,000 ($1567.4)
Temporary disablement
    - 50% of wages for a maximum period of 5 years.

The Contract Labour (Regulation & Abolition) Act, 1970

  • Not to be required to work beyond 9 hours between 6 A.M. and 7 P.M.
  • with the exception of midwives and nurses in plantations.

The Inter-state Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979

  • Separate toilets and washing facilities to be provided in employment covered by the 3rd and 6th laws.

Maternity Benefit Act, 1961

  • Maternity benefits to be provided on completion of 80 days working.
  • Not required to work during six weeks immediately following the day of delivery or miscarriage.
  • No work of arduous nature, long hours of standing likely to interfere with pregnancy/normal development of foetus or may cause miscarriage or likely to affect health to be given for a period of one month immediately preceding the period of six weeks before delivery.
  • On medical certificate, advance maternity benefit to be allowed.
  • Rs. 250 ($5.6) as medical bonus to be given in case when no prenatal confinement and post-natal care is provided free of charge.

Equal Remuneration Act, 1976

  • Payment of equal remuneration to men and women workers for same or similar nature of work protected under the Act and also under the provisions at ISMW Act, mentioned above.
  • No discrimination permissible in recruitment and service conditions except where employment of women is prohibited or restricted by or under any law.

The Children (Pledging of Labour) Act, 1933

  • Any agreement to pledge the labour of children is void.

The Bidi and Cigar Workers (Conditions of Employment) Act, 1966

  • Employment of children under 14 years of age prohibited under the laws at Sl. Nos. 2 to 5.
  • Except in the process of family based work or recognised school-based activities, children not permitted to work in occupations connected with: Passenger, goods mail transport by Railway Cinder picking, cleaning of ash pits Building operations, construction Catering establishments in Railway premises or port limits Beedi making Carpet weaving Cement manufacturing Cloth printing Dyeing, weaving Manufacture of matches, explosives, fireworks Mica cutting, splitting Wool cleaning
  • In occupations and processes other than the above mentioned, work by children is permissible only for six hours between 8.00 A.M. and 7.00 P.M. with one day's weekly rest.
  • Occupier of establishment employing children to give notice to local Inspector and maintain prescribed register.

The Payment of Gratuity Act, 1972

To provide for payment of gratuity on ceasing to hold office

Factories, Mines, Oil fields, Plantations, Ports, Railway Companies, Shops & Commercial Establishments and to other establishments to which the Government extends the law.

Employees drawing wages not exceeding R. 3500/- ($78.37) per month.

15 days wages for every completed year of service or part thereof in excess of six months subject to a maximum of Rs. 50,000 ($119.58)

Employees State Insurance Act, 1948

To provide for health cover, Medical care and Cash benefits for

  • Sickness
  • Maternity
  • Employment injury
  • Pensions to dependents in case of Death (or) Employment injury

Employees drawing wages not exceeding Rs. 3000/- ($67.17) per month


  • Compensation for Death Minimum - Rs. 20,000 ($447.83 Maximum) - Rs. 1,14,000 ($2552.62)
  • Compensation for Permanent disablement Minimum - Rs. 24,000 ($537.4) Maximum - Rs (70,000) $1,567.4
  • Temporary disablement 50% of wages for a maximum period of 5 years.

The Payment of Bonus Act, 1965

To provide statutory obligations for payment of bonus to persons employed in certain establishments on the basis of profits or productivity.

Scope and Coverage

  • Applicable all over India to factories under the Factories Act and to other establishments employing 20 or persons on any day during a year.
  • Government can extend its coverage to establishments employing between 10 and 20 workers.
  • Covers all workers including supervisors, managers, administrators, technical and clerical staff employed on salary or wages not exceeding Rs 2,500 ($55.97) per month.

Main Provision

  • Eligibility for bonus.
  • Payment of minimum and maximum bonus.
  • Time limit for payment of bonus.
  • Deductions from bonus.
  • Computation of gross profits and available allocable surplus.
  • Rights of employees.

When to Consult And Refer

  • When the factory if registered under the Factories Act.
  • When the number of employees in the establishment reaches 20 or above.
  • When calculating the bonus.

The Shops and Establishments Act, 1953

To provide statutory obligation and rights to employees and employers in the unorganised sector of employment, i.e., shops and establishments.

Scope and Coverage

  • A state legislation; each state has framed its own rules for the Act.
  • Applicable to all persons employed in an establishments with or without wages, except the members of the employer's family.
  • State government can exempt, either permanently or for a specified period, any establishments from all or any provisions of this Act.

Main Provisions

  • Compulsory registration of shop/establishment within thirty days of commencement of work.
  • Communications of closure of the establishment within 15 days from the closing of the establishment.
  • Lays down the hours of work per day and week.
  • Lays down guidelines for spread-over, rest interval, opening and closing hours, closed days, national and religious holidays, overtime work.
  • Rules for employment of children, young persons and women
  • Rules for annual leave, maternity leave, sickness and casual leave, etc.
  • Rules for employment and termination of service.
  • Maintenance of registers and records and display of notices.
  • Obligations of employers.
  • Obligations of employees.

When to Consult And Refer

  • At the time of start of an enterprise.
  • When framing personnel policies and rules.

The Trade Unions Act, 1926

To confer a legal and corporate status on registered trade unions.

Scope and Coverage

  • Applicable to unions of workers as well as associations of employers.
  • Extends to the whole of India.
  • A central legislation but administered and enforced by the state governments.

Main Provisions

  • Defines trade union.
  • Registration of a trade union by any seven or nine workers of an establishment on applying with a copy of the rules of the union, the name and address, and the list of office bearers.
  • Cancellation and dissolution of trade unions.
  • Obligations of registered trade unions.
  • Rights of registered trade unions.

When to Consult And Refer

  • At the time of start of an enterprise.
  • Throughout the running of the enterprise.

The Industrial Disputes Act

To provide a machinery for peaceful resolution of disputes and to promote harmonious relation between employers and workers.

Scope and coverage

  • Applicable to all industrial and commercial establishments
  • Covers all workers and supervisors drawing salaries up to Rs. 1600/- ($35.82) per month.
  • Not an applicable to person employed in managerial and administrative capacities.

Main provisions

  • Defines industry, industrial dispute, layoff, lockout, retrenchment, trade union, strike, wages. workman, etc.
  • Provides machinery for investigating and settling disputes through works committees, conciliation officers, boards of conciliation, courts of enquiry, labour courts, tribunals and voluntary arbitration.
  • Reference of dispute for adjudication.
  • Awards of labour courts and tribunals.
  • Payment of wages to workers pending proceedings in High Courts.
  • Rights of appeal.
  • Settlements in outside conciliation.
  • Notice of change in employment conditions.
  • Protection of workmen during pendency of proceedings
  • Strike and lockout procedures.
  • Lay-off compensation.
  • Retrenchment compensation.
  • Proceedings for retrenchment.
  • Compensation to workmen in case of transfer of undertakings.
  • Closure procedures.
  • Reopening of closed undertakings.
  • Unfair labour practices.
  • Recovery of money due from employer.
  • Penalties.
  • Obligations and rights of employees.

When to consult and refer

  • When a dispute arises with the workers' union.
  • When you plan changes in employment conditions.
  • When there is a strike.
  • When there is a lockout.
  • When retrenchment of workmen.
  • When undertaking is being transferred
  • On closure of an establishment.
  • On re-opening establishment.