Recent Developments

In order to improve compliance, catalyze job creation and ensure ease of doing business while safeguarding the health, safety, and social security of workers in both the organized and unorganized sectors, the Central and State Governments have initiated various labor reforms.

Some of the Central Government’s labor reforms are highlighted below:

Legislative Initiatives

• Under the Payment of Bonus Amendment Act, the eligibility limit for payment of bonus has been enhanced from INR 10,000 to INR 21,000 per month and the Calculation Ceiling enhanced from INR 3,500 to INR 7,000 or the minimum wages.
• The Payment of Wages (Amendment) Act, 2017 now enable payment of wages to employees by cash or cheque or crediting it to their bank account.
• The Child Labour (Prohibition and Regulation) Amendment Act, 2016, provides for a complete ban on employment of children below 14 years in any occupation or process.
• The Maternity Benefit Amendment Act, 2017, increases the paid maternity leave from 12 weeks to 26 weeks.
• The Employee Compensation (Amendment) Act, 2017, seeks to rationalize penalties and strengthen the rights of the workers under the Act.
• The Ministry of Commerce and Industry issued the Special Economic Zones (Fifth Amendment) Rules, 2022 vide notification dated 8 December 2022 ("SEZ Amendment Rules"), under which certain permitted category of employees of establishments within SEZs (Units). These apply to employees of Units providing Information Technology (IT) and IT-enabled services, working from home or any place outside the SEZ, until 31 December 2023. Additionally, they also apply (subject to conditions) to employees of Units who are temporarily incapacitated, travelling, and working off site that are also permitted to work from home.
• The Ministry of Labor and Employment, vide press release dated 3 April 2023, announced that they have launched the ‘e-Shram portal’, a national database for unorganized workers between the age group of 16 (Sixteen) – 59 (Fifty Nine) interlinked with Aadhaar. The Ministry of Labor and Employment has taken several steps to increase registration on the e-Shram portal such as providing a multi-channel registration facility to unorganized workers across the country. The Common Services Center, which is a special purpose vehicle along with its more than 4,00,000 (four hundred thousand) village level entrepreneurs have been on boarded to provide registration facilities at the village level. In addition, the e-Shram portal has been integrated with the Unified Mobile Application for New-age Governance (UMANG) mobile application to provide on-the-go registration and updation facilities to unorganized workers.
• The Payment Of Gratuity (Amendment) Act, 2018, provides flexibility to the Central Government firstly to increase the ceiling limit of gratuity to such amount as may be notified from time to time and secondly to enhance the calculation of continuous service for the purpose of gratuity in case of female employees who are on maternity leave to such period as may be notified from time to time. Vide Notification dated 29 March 2018, the ceiling limit of gratuity has been increased from INR 1 million to INR 2 million.

Governance Reforms

• The Ministry has notified “Ease of Compliance to maintain Registers under various Labour Laws Rules, 2017” on 21 February 2017, which has, in effect replaced the 56 Registers/Forms and 9 Central Labor Laws and Rules with 5 common Registers/Forms. This will save efforts, costs and lessen the compliance burden by various establishments.
• A Model Shops and Establishments (RE&CS) Bill, 2016, has been circulated to all States/ Union Territories for adoption with appropriate modification. The said Bill inter alia provides for freedom to operate an establishment for 365 days in a year without any restriction on opening/ closing time and enables employment of women during night shifts if adequate safety provisions exist
• Under the Industrial Employment (Standing Orders) Act, 1946, the category, i.e., fixed-term employment, with all statutory benefits, has been extended to all sectors to impart flexibility to an establishment to employ people to meet the fluctuating demands, vide the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018.
• The Ministry has also notified the Rationalization of Forms and Reports under certain Labour Laws Rules, 2017 on 28 March 2017 for the reduction of the number of Forms/Returns under the 3 Central Acts/Rules from 36 to 12 by reviewing redundant and overlapping fields.
• Unified Annual Return - Unified Annual Returns have been made mandatory in respect to Central Labor Acts (the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Maternity Benefit Act, 1961, the Payment of Bonus Act, 1965, the Industrial Disputes Act, 1947) on the Shram Suvidha Portal.

The Occupational Safety, Health and Working Condition Code, 2019

The Code on Occupational Safety, Health and Working Condition Bill was introduced in the Lok Sabha by the Labor Ministry, with the aim of extending safety and healthy working conditions to the entire workforce of the country. The Code is set to enhance the ambit of provisions of safety, health, welfare and working conditions for all establishments having 10 or more employees.

Increase in the rate of interest under the Employees Provident Fund Scheme

There has been a revision in interest rates being paid under the Employees Provident Fund Scheme, 1952. The Ministry of Labor & Employment has revised the interest rates on EPF to 8.5% for FY 2020.