India’s stringent labour laws

Laborers carry iron rods at the construction site of a flyover on the outskirts of Ahmedabad.

Laborers carry iron rods at the construction site of a flyover on the outskirts of Ahmedabad.

India has a slew of laws and rules that shape the labour market, regulating the terms of work, hiring and firing, and the working conditions.

While the regulations are meant to enhance the welfare of workers, companies say they often have the opposite effect by encouraging them to stay small or hire contract workers to circumvent legal restrictions.

The laws benefit only a fraction of the workforce, as 93 percent of workers are employed in informal sectors who lack any form of job or social security.

Newly elected Prime Minister Narendra Modi has set in motion the first major revamp of the archaic labour laws, part of a plan to revive the flagging economy, boost manufacturing and create millions of jobs.

Here are some prominent laws:

The Industrial Disputes Act of 1947

The law guides the hiring and firing rules of the industrial sector. It requires that any company employing more than 100 workers needs to get permission from the government before laying off workers, which is rarely granted.

In the event of dismissal, the law says, a worker has up to three years to file an unfair dismissal claim.

The law drives up costs for midsized firms and encourages companies to stay small.

The Factories Act of 1948

The law governs health and safety at factories and comes into effect when a firms hires its 10th worker, if it uses electricity or its 10th worker, if it does not use electricity.

The law includes some unusual requirements, including that every factory must provide “a sufficient number of spittoons in convenient places”.

The act forbids women from working at night and imposes other restrictions on their employment.

The Contract Labour Act of 1970

The law applies to businesses which employ 20 or more workers and mandates them to seek government approval before hiring contract labour.





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