Evolution of Indian Labour Legislations
The Indian Labour Legislations owe its existence to the British Raj. Most of the labour legislations were enacted prior to India’s independence. The post independence enactment of important legislations in the areas of employee security and welfare derive their origin partly from the vision of independent India’s leaders and partly from the provisions in the Indian Constitution and international conventions like the International Labour Organization (ILO). The labour legislations were also enacted keeping in mind the international standards on Human Rights and United Nations Protocols.
Historical Perspectives on Indian Labour Legislations.
Initial periods of imperialism were based on exploitation of the worker class. With the emergence of ILO at an international level and with the inhumane treatment meted out to workmen being replaced with an outlook of dignity of labour, the whole scenario of labour legislations began in pre independence India.
After independence legislations related to worker welfare like Provident Fund Act, Employee State Insurance Act, Payment of Bonus Act and Payment of Gratuity Act were enacted with the intention of providing security and retirement benefits to workmen.
Over a period of time several amendments have been made to the existing labour legislations as per the needs of the industry. The case in point is the latest amendment to the Factory Act whereby women worker is allowed to work between 7pm and 6am. Such amendments have been done after industry associations like NASSCOM and ASSOCHAM recommendations to the labour ministry. Now BPO and IT sector which employs a large women workforce during its nightshifts benefits tremendously from this amendment to the Factory Act.
Following table timelines the evolution of HR thoughts in India:
Emphasis on “People"
Slavery due to imperialism
Exploitation of labour
Master – slave relationship
Workmen status defined by acts
Employer – employee relationship established. Wages paid
Legal recognition of workmen. End of slavery.
Trade union’s were organizing workers
Trade unions being recognised by workers and factory managers
Collective bargaining. Workers movements.
Independent India believed in a socialist society.
Worker welfare by labour officers. Laws like EPF, ESIC, minimum wages, and bonus act.
Beginning of labour welfare administration and personnel function
Trade unions – mgt conflicts – COD, MOU, etc.
Productivity bargaining. Workers participation in management
Empowerment of workers – upliftment of workers status and role.
Globalization, international markets, new economy.
Developing “people" as a key resource
HRD replaces personnel management
Advent of the “Knowledge Era". Growth of service sector.
Rightsizing of organizations to compete globally.
Managing “human assets" with a long term strategic focus on “development and retention"
“People management" need replaces HRD with HRM. Hr is aligned to business goals. HRM to SHRM
HRD – Human Resources Development
HRM – Human Resources Management
SHRM – Strategic Human Resources Management
HCM – Human Capital Management
Labour Welfare / Industrial Relations
Relationship between the employer and the employee representatives i.e.: Unions, for establishing working relationships and for regulating the working conditions
The most effective use of people to achieve organizational and individual goals. It believes more in control mechanisms than employee empowerment
HRD - Empower people by developing them for their current and future roles
HRM – Leveraging the systems approach to the HR function. Integrating HR functions with other organizational functions
SHRM – Align the HR goals to the organizational goals
HCM – Human Capital Management
From the above figure we see that today HCM encompasses Labour Welfare along with its role of providing a strategic intent to Human Resources.
Role of India’s Constitutional Framework on Indian Labour Laws.
The relevance of the dignity of human labour and the need for protecting and safeguarding the interest of labour as human beings has been enshrined in Chapter-III (Articles 16, 19, 23 & 24) and Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India keeping in line with Fundamental Rights and Directive Principles of State Policy.
Under the Constitution of India, Labour is a subject in the concurrent list where both the Central and State Governments are competent to enact legislations. This categorization is listed as follows:
(a) Labour laws enacted by the Central Government, where the Central
Government has the sole responsibility for enforcement
1. The Employees’ State Insurance Act, 1948
2. The Employees’ Provident Fund and Miscellaneous Provisions Act,
3. The Dock Workers (Safety, Health and Welfare) Act, 1986
4. The Mines Act, 1952
5. The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines
Labour Welfare (Cess) Act, 1976
6. The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines
Labor Welfare Fund Act, 1976
7. The Mica Mines Labour Welfare Fund Act, 1946
8. The Beedi Workers Welfare Cess Act, 1976
9. The Limestone and Dolomite Mines Labour Welfare Fund Act, 1972
10. The Cine Workers Welfare (Cess) Act, 1981
11. The Beedi Workers Welfare Fund Act, 1976
12. The Cine Workers Welfare Fund Act, 1981
(b) Labour laws enacted by Central Government and enforced both by
Central and State Governments
13. The Child Labour (Prohibition and Regulation) Act, 1986.
14. The Building and Other Constructions Workers’ (Regulation of
Employment and Conditions of Service) Act, 1996.
15. The Contract Labour (Regulation and Abolition) Act, 1970.
16. The Equal Remuneration Act, 1976.
17. The Industrial Disputes Act, 1947.
18 The Industrial Employment (Standing Orders) Act, 1946.
19. The Inter-State Migrant Workmen (Regulation of Employment and
Conditions of Service) Act, 1979.
20. The Labour Laws (Exemption from Furnishing Returns and
Maintaining Registers by Certain Establishments) Act, 1988
21. The Maternity Benefit Act, 1961
22. The Minimum Wages Act, 1948
23. The Payment of Bonus Act, 1965
24. The Payment of Gratuity Act, 1972
25. The Payment of Wages Act, 1936
26. The Cine Workers and Cinema Theatre Workers (Regulation of
Employment) Act, 1981
27. The Building and Other Construction Workers Cess Act, 1996
28. The Apprentices Act, 1961
(c) Labour laws enacted by Central Government and enforced by the
29. The Employers’ Liability Act, 1938
30. The Factories Act, 1948
31. The Motor Transport Workers Act, 1961
32. The Personal Injuries (Compensation Insurance) Act, 1963
33. The Personal Injuries (Emergency Provisions) Act, 1962
34. The Plantation Labour Act, 1951
35. The Sales Promotion Employees (Conditions of Service) Act, 1976
36. The Trade Unions Act, 1926
37. The Weekly Holidays Act, 1942
38. The Working Journalists and Other Newspapers Employees
(Conditions of Service) and Miscellaneous Provisions Act, 1955
39. The Workmen’s Compensation Act, 1923
40. The Employment Exchange (Compulsory Notification of Vacancies)
41. The Children (Pledging of Labour) Act 1938
42. The Bonded Labour System (Abolition) Act, 1976
43. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
(d) There are also Labour laws enacted and enforced by the various State Governments which apply to respective States.
Impact of International Labour Organization (ILO) on Indian Labour Laws
India is a founder member of the International Labour Organization, which came into existence in 1919. At present the ILO has 175 Members. A unique feature of the ILO is its tripartite character. The membership of the ILO ensures the growth of tripartite system in the Member countries. At every level in the Organization, Governments are associated with the two other social partners, namely the workers and employers. All the three groups are represented on almost all the deliberative organs of the ILO and share responsibility in conducting its work. The three organs of the ILO are:
International Labour Conferences: - General Assembly of the ILO – Meets every year in the month of June.
Governing Body: - Executive Council of the ILO. Meets three times in a year in the months of March, June and November.
International Labour Office: - A permanent secretariat.
The work of the Conference and the Governing Body is supplemented by Regional Conferences, Regional Advisory Committees, Industrial and Analogous Committees, Committee of Experts, Panels of Consultants, Special Conference and meetings, etc.
International Labour Conference
Except for the interruption caused by the Second World War, the international Labour Conference has continued, since its first session in 1919 to meet at least once a year. The Conference, assisted by the Governing Body, adopts biennial programme and budget, adopts International Labour Standards in the form of Conventions and Recommendations and provides a forum for discussing social economic and labour related issues. India has regularly and actively participated in the Conference through its tripartite delegations.
The Governing Body of the ILO is the executive wing of the Organization. It is also tripartite in character. Since 1922 Indian has been holding a non-elective seat on the Governing Body as one of the 10 countries of chief industrial importance. Indian employers and workers’ representatives have been elected as Members of the Governing Body from time to time.
The Governing Body of ILO functions through its various Committees. India is a member of all six committees of the Governing Body viz. (i) Programme, Planning & Administrative; (ii) Freedom of Association; (iii) Legal Issues and International Labour Standards; (iv) Employment & Social Policy; (v) Technical Cooperation and (vi) Sectoral and Technical Meetings and Related issues.
The International Labour Office
The International Labour Office, Geneva provides the Secretariat for all Conferences and other meetings and is responsible for the day-to-day implementation of decisions taken by the Conference, Governing Body etc. Indians have held positions of importance in the International Labour Office
International Labour Standards - ILO Conventions: -
The principal means of action in the ILO is the setting up the International Labour Standards in the form of Conventions and Recommendations. Conventions are international treaties and are instruments, which create legally binding obligations on the countries that ratify them. Recommendations are non-binding and set out guidelines orienting national policies and actions.
The approach of India with regard to International Labour Standards has always been positive. The ILO instruments have provided guidelines and useful framework for the evolution of legislative and administrative measures for the protection and advancement of the interest of labour. To that extent the influence of ILO Conventions as a standard for reference for labour legislation and practices in India, rather than as a legally binding norm, has been significant. Ratification of a Convention imposes legally binding obligations on the country concerned and, therefore, India has been careful in ratifying Conventions. It has always been the practice in India that we ratify a Convention when we are fully satisfied that our laws and practices are in conformity with the relevant ILO Convention. It is now considered that a better course of action is to proceed with progressive implementation of the standards, leave the formal ratification for consideration at a later stage when it becomes practicable. We have so far ratified 39 Conventions of the ILO, which is much better than the position obtaining in many other countries. Even where for special reasons, India may not be in a position to ratify a Convention, India has generally voted in favour of the Conventions reserving its position as far as its future ratification is concerned.
Core Conventions of the ILO: - The eight Core Conventions of the ILO (also called fundamental/human rights conventions) are:
Forced Labour Convention (No. 29)
Abolition of Forced Labour Convention (No.105)
Equal Remuneration Convention (No.100)
Discrimination (Employment Occupation) Convention (No.111)
(The above four have been ratified by India).
Freedom of Association and Protection of Right to Organised Convention (No.87)
Right to Organise and Collective Bargaining Convention (No.98)
Minimum Age Convention (No.138)
Worst forms of Child Labour Convention (No.182)
(These four are yet to be ratified by India)
Consequent to the World Summit for Social Development in 1995, the above-mentioned Conventions (Sl.No. 1 to 7) were categorised as the Fundamental Human Rights Conventions or Core Conventions by the ILO. Later on, Convention No.182 (Sl.No.8) was added to the list.
As per the Declaration on Fundamental Principles and Rights at Work and its Follow-up, each Member State of the ILO is expected to give effect to the principles contained in the Core Conventions of the ILO, irrespective of whether or not the Core Conventions have been ratified by them.
Under the reporting procedure of the ILO, detailed reports are due from the member States that have ratified the priority Conventions and the Core Conventions every two years. Under the Follow-up to the ILO Declaration on Fundamental Principles and Rights at Work, a report is to be made by each Member State every year on those Core Conventions that it has not yet ratified.
Source: Ministry of Labour – GOI.
Role of the National Commission on Labour
Labour legislations have also been shaped and influenced by the recommendations of the various National Committees and Commissions such as First National Commission on Labour (1969) under the Chairmanship of Justice Gajendragadkar, National Commission on Rural Labour (1991), Second National Commission on Labour (2002) under the Chairmanship of Shri Ravindra Varma etc. and judicial pronouncements on labour related matters specifically pertaining to minimum wages, bonded labour, child labour, contract labour etc.
The First National Commission on Labour was constituted on 24.12.1966 which submitted its report in August, 1969 after detailed examination of all aspects of labour problems, both in the organised and unorganised sector. The need for setting up of the Second National Commission on Labour was felt due to vast changes occurring in the economy during the last three decades especially in the nineties due to globalization, liberalization and privatization.
The Second National Commission on Labour was given two point terms of reference:
i) To suggest rationalization of existing laws relating to labour in the organised sector; and
ii) To suggest an umbrella legislation for ensuring a minimum level of protection to the workers in the unorganised sectors;
The Commission submitted its Report to the Government on 29.06.2002. The Commission has comprehensively covered various aspects of labour and given recommendations relating to review of laws, social security, women & child labour, wages, skill development, labour administration, unorganized sector etc.
The recommendations of Second National Commission on Labour inter-alia, included – (i) introduction of umbrella legislation for workers in the unorganized sector and agricultural labour, (ii) emphasis on up-gradation and development of skill of workforce by training/retraining of workers, (iii) encouragement of small scale industries, agri-business and rural sector for higher employment generation, (iv) bringing attitudinal change and change in the mindset and work culture where the employer and the worker work as partners with emphasis on participative management, (v) consolidation of social security legislations and establishment of social security system, (vi) abolition of child labour , etc.
The Ministry of Labour had held consultations and interactions with the workers representatives, employers’ organizations, experts, professionals etc. The recommendations of the Commission were discussed in the 38th Session of Indian Labour Conference held on 28-29 September 2002, a National Seminar on Unorganized Sector Workers held on 7-8 November 2002, Tripartite Committee meeting held on 18-19 February 2003, and Consultative Committee Meetings of Ministry of Labour held on 07.02.2003 and 30.4.2003. The recommendations had again been discussed in the 39th Session of Indian Labour Conference held on 16-18 October, 2003. While carrying out the amendments in labour laws, the recommendations of Second National Commission on Labour are also taken into consideration.
Source: The Planning Commission of India
Indian Labour Laws – Review by ASSOCHAM
Even after 17 years of globalization, India has yet to dismantle Inspector Raj for SSI sector where the numbers of inspectors have rather increased from 20 to about 40 by end of 2008, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM). Incidentally, liberalized and Reformed `Red Books’ now provide for 50% curtailment in numbers of inspectors for other sector but SSIs which generate large employment, contribute substantially to exports cover 38% and manufacturing is highly regulated by inspectors and cause maximum harassment to them, ASSOCHAM analysis further unveils. The Chamber cited an example of food processing industry which used to be regulated by 100 inspectors 17 years ago, their numbers have reduced to 46. The unified Food Law which is composition of 9 laws, enacted in 2007 is primarily responsible for hugely reducing the number of inspectors for food processing industry for which the credit should go to the Ministry of Food Processing and its Minister, Subodh Kant Sahay.
The Factory Act of 1948 would provide for taking mandatory licensing even if an entrepreneur wanted to commence manufacturing at tiny scale, today there is no such condition and this happened mainly because of transition process of liberalization remained industry-friendly, pointed out the ASSOCHAM. Another case for example is again food processing industry in which before enactment of Unified Food Law, the industry would be subjected to multiple inspectors such as Weighing Inspector and Inspectors for ISI, Corporation, Health, Hygiene and even Medical etc. Today, these sectors are examined by not more than 2 inspectors. On the contrary, the SSI sector which would brave as many as 20 inspectors over 17 years ago is now subjected to inspectors monitoring whose number have gone beyond 40, says the ASSOCHAM analysis. 17 years ago is now subjected to many other inspections which include one separate inspector to monitor their register of employees, accounts, balance sheet and on taxation fronts particularly the service tax inspector. Likewise, many more areas were added in which the SSI sector is subjected to tedious inspections.
However, the SSI sector continues to remain under the tight grip of inspector raj which was supposed to be come out with advancement of liberalization. This did not happen because most of states govern the SSI sector and governments never took especial initiatives for reducing the number of inspectors. The analysis is based on feedback coming to Chamber Secretariat directly from its members, be it manufacturing, food processing and SSIs. Even obtaining of licence is no longer required to commence industrial operations in any sector other than those enlisted in the sensitive list which include defence, strategic alliances and to some extent telecom, civil aviation and insurance. This change has taken place as government brought about various notifications and amendments in some sense to prototype laws. The SSI sector which would go through inspections from excise, customs, banks, insurance, PF, PPF and record inspectors, 16 years ago is now subjected to many other inspections which include one separate inspector to monitor their register of employees, accounts, balance sheet and on taxation fronts particularly the service tax inspector. Likewise, many more areas were added in which the SSI sector is subjected to tedious inspections.
Besides, the Factory Act 1948, Minimum Wages Act 1948, Payment of Bonus Act 1965, Employment Exchange Compulsory Notification of Vacancies Act 1959, Air (Prevention & Control of Pollution) Act 1981 jointly provide empowerment to government departments and various state governments to still regulate the SSI sector.