William Baumol, author of “Macroeconomics”, explains that the employment rate and economic growth are linked. As employment contributes a lot to the economic growth of a country, several laws are enacted by the government for the protection of employment. In this article, various laws are examined which secure employment and protect employee rights.
The term employment is an agreement where an individual has entered into some form of verbal or written commitment with an entity, that stipulates the terms and conditions, payment terms, and responsibilities regarding the work. Employment is an important part of the social, economic, and environmental development of any country as it provides financial freedom and decisions making power to an employed person. An employed person also contributes to the Gross Domestic Product and per capita income of an economy. As an employer contributes to the economic growth of the country, several laws are enacted by the legislature for the protection of employment and recognition of employee rights.
Employment protection refers to the protection of the rights of the employee in a company, it also includes the laws, rules, plans, etc. that protect employee rights. The legislation which protects the rights of the employee are called employment protection legislation, which is commonly defined as regulation which governs the hiring and firing as well as working hours, health and safety, and worker representation rights.
Conditions of Employment
Based on the condition of employment economic activities are classified into:
- Organized Sector
- Unorganized Sector
- The organized sector covers those enterprises or places of work where the term of employment is regular and therefore people have assured work it means that people working in the organized sector are paid for the entire year, also they can not be fire from the office without any prior notice or any genuine reason. So, workers in an organized sector enjoy the security of employment.
- Such institutions are registered with the government and have to follow the rules and regulations which are given in various laws for employment protection such as the Minimum Wages Act.
- The organized sector also ensures fixed numbers of hours to work in the office, this way the rights of the worker are safeguarded in the organized sector
- The worker of an organized sector also gets several benefits from such employment, such as paid leaves, payment during holidays, provident fund, gratuity, etc.
- People employed in the organized sector tend to get medical benefits as under the law, besides the factory or office manager has to ensure facilities like clean drinking water and a safe working environment.
- The unorganized sector is characterized by small and scattered units which are largely outside the control of the government. This sector includes a large number of people who are employed on their own doing a small job such as selling on the street or doing repair work.
- There are rules and regulation but that is not followed under the unorganized sector.
- Jobs are low paid in unorganized sector and offers lower salary, in unorganized sector people are often not paid for the entire year, employment is also not secured, workers may be asked to leave without any reason or any prior notice.
- There are no provisions for holidays, paid leaves, over-time, etc.
- Working hours under an unorganized sector are also not fixed, it depends on the will of the employer.
Employment Protection legislation
The Constitution of India provides various provisions to secure the rights of labour. This subject i.e. labour falls under the Concurrent List under the Constitution of India where both the Central and the State Governments can make laws regarding the protection of labour rights. As per an estimate, there are over 200 state laws and 50 central laws which regulate different aspects of employment.
Broadly all these laws tend to address the following aspects of the employment i.e.:
- Conditions of work
- Wages and remuneration
- Social security
- Employment security & Industrial relation
- Equality and Empowerment of Women
1) Law relating to Conditions of work
To safeguard the interest of the worker, protect them from exploitation, and secure the employment conditions conducive to their health and safety, various Acts passed by the central as well as state government. Some crucial Acts are:
i) Factories Act, 1948
The Factories Act, 1948, covers all manufacturing processes using power & employing 10 or more workers on any days of the preceding 12 months.
The Factories Act covers all aspects regarding factories namely:
- approval, licensing and registration of factories,
- the inspecting authorities,
- health, safety, welfare, working conditions, working hours,
- employment of workers- adults and young children,
- annual leave and penalties, etc.
ii) Contract Labour (Regulation & Abolition) Act, 1970
This Act applies:
- To every establishment
- in which 20 or more workmen are employed or where employed on any days of the preceding 12 months as contract labor;
- To every contractor
- Who employees or who employed on any day of the preceding 12 months 20 or more workmen
The main objective if this Act is to (a) prohibit the employment of contract labor; and (b) regulate the working conditions of the contracted labor, where such employment is not prohibited.
2) Law relating to wages and remuneration
Every employer to whom the law relating to wages and remuneration is applicable shall be responsible for the payment of wages or remuneration to their employee as per the provisions of the Act.
i) Minimum Wages Act, 1948
The main objectives of this Act are:
- to provide minimum wages to the workers working in the organized sector;
- to stop the exploitation of the worker;
- to empower the government to take steps for fixing minimum wages and to revising it on time;
- to apply this law to most of the sections in the organized sector.
ii) Payment of Bonus Act, 1965
The Payment of Bonus Act, 1965, is the principal act for the payment of the bonus to the employee. As per the Act, the employees have a statutory right in the share of profit earn by their employer.
The objectives of this Act are:
- To maintain peace and harmony between employees and employers;
- To recommend the maximum percentage of bonus to be paid in case of profit;
- To prescribe a minimum bonus to be paid in case of losses.
3) Law relating to Social security
It is the social obligation of the employer to provide social security to employees. Various Acts introduce to secure the life of the employee for rendering services to the organization. These are:-
i) Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
The Employees’ Provident Funds and Miscellaneous Provision Act,1952, applies to all the establishment employing 20 or more persons to provide for the institution of provident funds, pension funds, and deposit- linked insurance fund for employees.
ii) Payment of Gratuity Act, 1972
It is the payment made to any employee by the employer at the time of retirement, resignation, superannuation, death, disablement, or termination of service after continuous service of 5 years.
4) Law relating to Employment Security and Industrial relation
Employment security means protecting the stability of employment conditions of the worker, several laws that provide job security, and stable the employer-employee relationship.
i) Industrial Disputes Act, 1947
Industrial Disputes Act, 1947, has been enacted for the investigation and settlement of industrial disputes in any industrial establishment to secure industrial peace and to enrich the conditions of workmen in industry.
ii) Trade Unions Act, 1926
The Trade Union Act deals with the registration of trade unions, their responsibilities, rights, and liabilities. It also ensures that the funds of the trade union are utilized properly. This Act provides the legal status to the registered trade unions. This Act also protects from the civil and criminal prosecution, so that the unions carry their legitimate activities for the benefits of the workers.
5) Laws relating to Equality and Empowerment of women
The quality of women’s employment is very important and depends on several factors. The foremost being equals access to education and other opportunities for skill development. several laws that deal with the empowerment of women as well as the creation of awareness among them about their legal rights and duties.
i) Equal Remuneration Act, 1976
The Equal Remuneration Act, 1976 provides for payment of equal remuneration to men and women workers for the same work or work of similar nature without any discrimination and also prevents discrimination against women employees while making recruitment for the same work or work of similar nature.
In Kamani Metals & Alloys Ltd. v. their Workmen, Supreme Court held that minimum wages must be paid in any event. The first principle is that there is a minimum wage which, in any event, must be paid, irrespective of the extent of profits, the financial condition of the establishment, or the availability of workmen on lower wages. The minimum wage is independent of kind of industry and applies to all, big or small alike. It sets the lowest limit below which wages cannot be allowed.
In ONGC v. Sham Kumar Sahegal, Court held that if an employee is prevented from working and subsequently re-employed in service, the employer’s statutory liability for a bonus cannot be said to have been lost. Nor the employer refuse for such a bonus.
Employment protection laws in India cover several aspects which include all the rights and obligations between the employer and employee relationship. Being a founder member of the International Labour Organization, which objective is to secure decent employment; create greater opportunities for women and enhance the coverage and effectiveness of social protection for all, the ministry of labor and employment to create a healthy work environment and providing social security not only in organized sector but also in unorganized sector implemented various labor laws.
Question 1: What is employment protection?
Question 2: What is employment protection legislation?
Question 3: What are the sectors of employment based on the condition of employment?
Question 4: What are the aspects in which employment protection legislation addresses?
Question 5: What are the various laws that regulate employment protection in India?