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The basic principle of labor laws is to protect the interest of the employees by saving them from exploitation and harassment on the one hand and providing enough leverage and stick of good governance to employers so as to have conductive work culture on the other hand. This archaic labor law does not suit to the tempo of modern life where speed and efficiency are of utmost importance.  However a gist of certain vital labor laws has been depicted here under:




The act has been enacted to regulate holidays, hours of work, payment of wages and leaves of persons employed. The act is applicable to shops and establishments and such other classes of shops and commercial establishments as the state government may, by notification, specify in this behalf.

As per Sec 2(2) of the act commercial establishment means “an advertising, commission, forwarding or commercial agency or a clerical department of a  factory or of a industrial or commercial undertaking, and insurance company, joint stock company, bank, broker’s office or exchange and establishment which carries on any business, trade or profession or any work in connection with, on incidental or ancillary to any  business, trade or profession and includes an establishment of any legal practitioner……..”. On interpretation of the above section it is clear that where any business, trade or profession is undertaken by a concern and such other class or classes of concerns as the state government may notify comes under the purview of commercial establishment. Likewise the term ‘shop’ has been defined under this act to bring within its ambit office, store rooms, godowns or warehouse used in connection with sale of service/article or storage of goods.    

1.1.HOLIDAYS : Section 5 of the act lays down that in each week every shop or commercial establishment shall remain entirely closed on and every person employed in a shop or an establishment shall be allowed as a holiday, at least one day and a half day next preceding or next following such day.


1.2.HOURS OF WORK : No employee shall be required or permitted to work  for more than eight hours and a half in one day or for more than forty-eight hours in a week or after the hour of closing of such establishment. If the employee is required to work more than eight and half hours in a day, he may be required or permitted to work overtime up to the maximum period of 10 hours in one day and the total numbers of hours worked over time by him shall not exceed one hundred and twenty hours in any year.


1.3.LEAVE: A person employed shall be entitled to a privilege leave of fourteen days which is accumulated up to a maximum period of not more than twenty eight days, sick leave for fourteen days on half day accumulable upto the maximum of not more than fifty six days and casual leave of ten days with full pay. The casual leave shall not be accumulated. Above it, the women employed shall be entitled to the maternity leave.


An employee desiring to avail of any privilege leave shall make an application in writing at least ten days prior to the date of intended commencement of such leave and the employer shall issue order on the application within a week of its submission.


1.4.PAYMENT OF WAGES: The wages shall be paid not later than the tenth day of the month immediately succeeding that in respect of which such wages is payable.


1.5.NOTICE OF TERMINATION OF SERVICE: The service of a person employed in any establishment, who has been in continuous service for not less than one year in such establishment, shall not be terminated without giving him one month’s notice, in writing showing the reasons of such termination and until the period of notice has expired or until he has been paid, in lieu of such notice, wages for the period of such notice.


1.6.REGISTRATION: On receipt of an application accompanied by the requisite fee, the registering authority, register the establishment and issue a certificate of registration in Part II of Form B.


1.7.REGISTER OF EMPLOYEE: Every employee shall maintain a register of employee in Form W


1.8.LETTER OF APPOINTMENT: Every employer shall furnish all persons employed with letters of appointment in Form X.





The act applies to factories which employ twenty or more persons and are engaged in the manufacturing of the items as mentioned in Schedule of the  Act. Apart from factories, the act also applies to other establishment wherein  twenty or more persons are employed. The establishment to which this Act  applies shall continue to be governed by this Act, even if the number of employees falls below 20 at a later date. However If any of the establishment is not satisfying the eligibility conditions for coverage and if the employer and majority of the employees are willing, the Act may be applicable to such establishment ( voluntary coverage under section 1(4) ). 


An employer has to make a matching contribution of 10% and 12% (as revised w.e.f 22-9-1997) of employees’ pay to Provident Fund Account. The rate of contribution towards the employees’ pension fund is 8.33% of pay, ie., basic wages with D.A, retaining allowance and cash value of food concession admissible, if any.


The employer must pay the contribution payable both the employees’ contribution as well as his own every month before 15th of the following month.


The employer shall, in the first instance, pay both the contribution payable by himself and also on behalf of the member employed by him directly or by or through a contractor, the contribution payable by such member. It shall be the responsibility of the principle employer to pay both the contributions payable by himself in respect of the employees directly employed by him and also in respect of the employed by or through a contractor and also administrative charges.


The employer shall prepare a contribution card in form 3A in respect of every employee.


An employer shall send to the commissioner within fifteen days of the close of each month return –


a.  In form 5, of the employee qualifying to become members of the fund for the first time during the preceding month together with the declaration in form 2 furnished by such qualifying employees.

b.  In form 10, of the employees leaving service of the employer during the preceding month


Every employee shall maintain an inspection note book in such form as the commissioner may specify, for an inspector to record his observations on his visit to the establishment.


An employee can avail of his non refundable withdrawals/advances for construction of house, sickness, marriage of self/dependents and higher education of his children etc.




Membership of the scheme is compulsory for all provident fund subscribers. No additional contribution is payable for employees’ pension scheme. 8.33% of subscribers Pay is being diverted from employer’s share of provident fund contributions and 1.1/6 % of subscribers’ pay shall be paid by the government as government contribution.




The employees’ pension scheme 1995 provides for following benefits:



o Pension payment for life on retirement/superannuation

o Pension payment for life on invalidation during employment

o Lump Sum payment to the members by way of commutation of pension upto 1/3rd pension amount on optional basis.

oCapital return on option formula basis upon cessation of member’s pension payment.




o To spouse for life or until marriage

oTo children (two at a time) till they attain the age of 25 years additionally along with pension payment to spouse:

For total and permanent disabled children pension for life

o Orphan person to children at higher rate upon cessation of pension payment to spouse

o To nominee/dependent parents for life in case member is unmarried or having no eligible family member.





The act aims to provide social security for individual workers in India. The scheme is devised to protect workers in contingencies such as illness, long term sickness or any other health risks due to exposure to employment injury or occupational hazards.


The act is applicable to non seasonal factories using power and employing 10 or more persons and also to factories not using power and establishments employing 20 or more persons. As of now employees of the covered factories and establishment earning wages upto Rs. 15,000 per month comes under the purview of the scheme.



As per ESI Act where the act is applicable to any factory or establishment, the same shall continue to be governed by this act notwithstanding that the numbers of persons employed therein at any time falls below the limit specified by or under this act or the manufacturing process therein ceases to be carried on with the aid of power.




Employee engaged by a contractor squarely to be covered under ESI Act.




The Supreme Court has held that a partner engaged for the work of the factory or establishment and being paid monthly will not come within the purview of an employee.


4.4.A managing director of the company will be covered under the act of the salary is below prescribed ceiling.


4.5.Casual or temporary employees will be liable to be covered under the act from the date of their joining the service.




The amountof contribution for a wage period shall be as follows:-

· Employers contribution, a sum equal to 4.75% of the wage payable to an employee

· Employees’ contribution, a sum equal to 1.75% of the wages payable to an employee.




· Medical treatment without any charges is offered to an insured person and his family from the day he enters into insurance employment.

· About 7/12th of employees normal wage will be payable to him by ESI during sickness.

· Maternity benefit for 12 weeks of which not more than 6 weeks should be preceding confinement.

· Injury during/in course of employment resulting in temporary/permanent disablement entitles the insured employee to a regular payment to substitute his lost wages.

· Death during course of employment entitles specified dependants to a regular payment.

· Onetime payment of Rs. 3000 to help meet funeral expenses of the insured person




This article covers in brief few labor laws, however there are several other laws that regulates the behavior, nature, manner, terms etc. of the employer-employee relationship namely.,


· The Apprentices Act, 1961

· Contract Labour (Regulation and Abolition) Act, 1970

· Child Labour Act, 1986

· Employers’ Liability Act, 1938

· Equal Remuneration Act, 1976

· Factories Act, 1948

· Industrial Dispute Act, 1947

· Minimum Wages Act, 1948

· Payment of Bonus Act, 1965

· Payment of Gratuity Act, 1972

· Payment of Wages Act, 1936

· Trade Union Act, 1926



Rahul Poddar

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Rahul Poddar
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