Page 186 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 12: HRM in Small Business

Some of the labor laws in India are: Notes

Workmen’s Compensation Act of 1923

The Workmen’s Compensation Act compensates a workman for any injury suffered during the
course of his employment or to his dependents in the case of his death. The Act provides for the
rate at which compensation shall be paid to an employee. This is one of many social security
laws in India.

Trade Unions Act of 1926

This Act enacted the rules and protections granted to Trade Unions in India. This law was
amended in 2001.

Payment of Wages Act of 1936

The Payment of Wages Act regulates by when wages shall be distributed to employees by the
employers. The law also provides the tax withholdings the employer must deduct and pay to the
central or state government before distributing the wages.

Industrial Employment (Standing Orders) Act of 1946

This Act requires employers in industrial establishments to define and post the conditions of
employment by issuing so-called standing orders. These standing orders must be approved by
the government and duly certified. These orders aim to remove flexibility from the employer in
terms of job, hours, timing, leave grant, productivity measures and other matters. The standing
orders mandate that the employer classify its employees, state the shifts, payment of wages,
rules for vacation, rules for sick leave, holidays, rules for termination amongst others.

Industrial Disputes Act of 1947

The Industrial Disputes act 1947 regulates how employers may address industrial disputes such
as lockouts, layoffs, retrenchment etc. It controls the lawful processes for reconciliation,
adjudication of labor disputes.
The Act also regulates what rules and conditions employers must comply before the termination
or layoff of a workman who has been in continuous service for more than one year with the
employer. The employer is required to give notice of termination to the employee with a copy
of the notice to appropriate government office seeking government’s permission, explain valid
reasons for termination, and wait for one month before the employment can be lawfully
terminated. The employer may pay full compensation for one month in lieu of the notice.
Furthermore, employer must pay an equivalent to 15 days average pay for each completed year
of employees continuous service. Thus, an employee who has worked for 4 years in addition to
various notices and due process, must be paid a minimum of the employee’s wage equivalent to
60 days before retrenchment, if the government grants the employer a permission to layoff.

Minimum Wages Act of 1948

The Minimum Wages Act prescribes minimum wages in all enterprises, and in some cases those
working at home per the schedule of the Act. Central and State Governments can and do revise
minimum wages at their discretion. The minimum wage is further classified by nature of work,
location and numerous other factors at the discretion of the government. The minimum wage

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