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Labour Laws in India

Paper Type: Free Essay Subject: Human Rights
Wordcount: 1500 words Published: 2nd Oct 2017

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Labor law is also known as the Employment Law. The Indian Constitution provides basis of laws to regulate the employment in India. These laws are collectively known as the Labor Laws or the Industrial Laws. In other words it is the “body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations”.

These set of laws provide the basis for any sort of interaction or mediation between the employers and the trade unions. It defines the legal boundary of the rights of both the employers and the employees at the workplace.

The labor laws widely cover the following:

a. Industrial Relations

b. Health and Safety at Work Place

c. The standards which the employers should adhere to which includes but is not limited to holidays, leaves, dismissals, minimum wage and the like.

This study is primarily based on the Industrial Relation aspect of the Labor Laws.

If we look into the history of labor laws we see that the need to formulate labor laws arose because of the employees demanding better working conditions and the simultaneous demands by the employers to restrict the powers of the employees in the organization. The employers feared that the trade unions may transcend the industrial disputes and gain unsolicited political powers. The ILO or the International Labor Organization was the first official body to deal with these problems. It was established as an agency of the League of Nations following the Treaty of Versailles, which was an indication of the end of the World War I.

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Now we focus on the Industrial Relation aspect of the Labor Laws. Industrial Relations, as the name suggests primarily deals with the employees and the management which result directly or indirectly from the employer-employee relationship. It particularly deals with the relationship between the organization and a group of workers generally known as the Trade Unions. It pertains to the study of free collective bargaining, trade unionism, and the labor-management relationships.

As per the Industrial Disputes Act of 1947 Industrial Relations can be defined as the relation between employer and employees, employees and employees and employees and trade unions.

Labor relations can be realized at any level of the work place like the shop floor, regional level or at the national level.

Few characteristics of Industrial Relations:

a. It is non-existent if the parties involved i.e. trade union and the employer are absent.

b. It may include both conflict and co-operations.

c. It may cover important environmental issues like a country’s technology prowess, socio-political environment, economic environment etc.

d. It incorporates the laws made by the government to govern the employer-employee relationship, awards of courts, and the interference patterns of the judiciary on the labor-management relations regulations.

In reality the concepts involved in Industrial Relations come from a wide variety of fields ranging from disciplines like humanities, social sciences, behavioral sciences, laws etc.

Industrial Relations in India:

In the pre-1991 era the conflicts and disputes in the organization were addressed through excessive labor legislations. The laws were protective in nature and covered all the aspects of the workplace like layoffs, wage issues, incentives etc. In due course of time it was realized that these laws were protective in nature and that they led to organizational inefficiency. With the advent of globalization the protective nature of these laws proved inadequate for the Indian industry to remain competitive as it was very rigid and did not allow the Indian manufacturers to compete in the global market.

Post liberalization the laws favored the industrialists and they began schemes like employee reduction and the voluntary retirement schemes. Thus we can distinctively notice that globalization brought some symbolic changes in the Industrial Relations in India. They may be summed up briefly as follows:

a. Decentralization the collective bargaining in almost all the sectors.

b. During an expansionary phase of the economy there is a shortage of able managers and skilled labor.

c. The number of unions has increased significantly but their influence has diminished.

d. In the banking sector, for example, some unions are putting up a united front.

e. Internal Unions are being pushed by employers which essentially imply that no external affiliation is being sought for.

f. Training and skill development are seen as an important part of work place.

Aim of Industrial Relations:

The major aim of Industrial Relations is to safeguard the interest of the labors and the employees as a whole by a sense of mutual agreement and understanding between the two parties. It helps to reduce conflicts and strife between the parties for a harmonious existence of the Indian industry. It also ensures that a high level of productivity is ensured. They also help to reduce the strikes, lock-outs and other forms of blockades by facilitating mutual understanding and consent. The Industrial Relations policies also ensure that an environment of Industrial Democracy is maintained for the benefit of the industry and the country as a whole. More government control in order to regulate the sectors which are at loss so that public interest at large can be safeguarded. Socializations or rationalization of industries by making the state a major employer in itself.

Ill Effects of Poor Industrial Relations:

Poor industrial relations policies hinder the normal functioning of the industry thereby affecting the entire economy as a whole. It may be noted that the direct loss to a particular plant may not be huge due a conflict but the cumulative loss to the economy is enormous. If we do not have a robust policy in place then there would be rigidity to change in this dynamic situation. As a matter of fact every employee works not only to earn but also to satisfy his egoistic and social needs. Poor industrial relations policies take a heavy toll on human behavior in terms of tension. Thus proper policies need to be in place to maintain cordiality and avoid social tension.

Contract Labor in India:

An employee is called a contract laborer when he is hired through a contractor. They can be termed as indirect employees who are essentially hired, supervised and paid by a contractor. The contractor is paid in turn by the establishment who needs these contract laborers. However, contract laborers must not be employed when the work is perennial and will continue on a daily basis, when the work is enough to employ full time workers.

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The Contract Labor (Regulation and Abolition) Act came into being in 1970 and the Contract Labor Central Rules came into effect in the year 1971. The main objectives of these laws were to regulate the employment of Contract Laborers and to provide for its abolition under certain circumstances. The law lays certain rules and regulations with regard to hiring of contract labor, their wages, working conditions etc.

As per the guidelines the law is applicable to any industry which engages more than 20 workers on a contract basis. The steps involved in hiring the contract labor are:

  1. Enquiry
  2. Offers
  3. Comparative Statement
  4. Negotiation
  5. Award the Contract

The Act also has provisions that define certain amenities that need to be provided to the contract laborers. These may be the establishment of canteens, rest room arrangements, sufficient drinking water facilities, and first aid. It is to be noted that these amenities are made obligatory by the Act. If the contractor fails to pay the wages to the workers the Principal Employer is liable to make the payment. The system of contract labor has allowed firms tremendous flexibility to choose what is in their best interests. If it were not present companies would have to go for technological restructuring which in turn would mean less number of permanent employees.

The Trade Unions however opposed this act as this meant reduction in permanent employment. Also, as the contract laborers belong to the weaker sections of the society they may be deprived of the benefits. The amount of time consumed in coordinating with the contractors and the sub-contractors would also be much more as compared to the regular employment.


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