Lowtax Network

Back To Top

India: Related Information

Labour Regulation

This page was last updated on 13 Dec 2018.

Despite a considerable body of law relating to employment, in practice it is quick and easy to find and hire staff in India, although there are certain sectors, such as outsourcing, where rapid growth has led to shortages. Overall statistics on employment and unemployment are next to useless, such is the regional and sectoral diversity of this enormous country.

Generally speaking, there is a large pool of available labour for office staff for managerial, supervisory, technical and clerical roles. Wage rates are generally very low compared with Western levels, although in certain specializations they may be comparable. Recruitment agencies flourish, and may well be the best first port of call for an intending employer. It is potentially misleading to quote figures, but an average office worker might expect to receive an annual salary equivalent to US$6,000; graduates would expect more; and it would be less in country areas. A 'dearness' or cost-of-living allowance can add significantly to the cost of lower-paid workers.

Almost all educated Indians (a minority of the population) speak English to an acceptable level. The Indian constitution allows both the central government and state governments to legislate on employment matters, leading to potential confusion as to applicable law in a given situation. Business practices also vary widely between regions.

Some of the more important federal laws governing employment are as follows:

  • The Workmen's Compensation Act, 1923, providing compensation for industrial accidents and occupational diseases.
  • The Payment of Wages Act, 1936, and the Minimum Wages Act, 1948, requiring timely payment of wages, and setting up sectoral bodies to determine minimum wage.
  • The Industrial Disputes Act, 1947, allowing reinstatement of workers by a court; there are grievance procedures; and establishments with more than 100 workers must establish codes of working conditions. A business employing more than 50 people needs government permission to make anyone redundant.
  • The Industrial Employment (Standing Orders) Act, 1959, requiring some types of plant to define conditions of employment.
  • The Maternity Benefit Act, 1961, doing what it says on the tin.
  • The Payment of Gratuity Act, 1972, requiring employers to pay a 'gratuity' to some low-paid workers on termination.
  • The Equal Remuneration Act, 1976, establishing equality in remuneration for men and women.
  • The Child Labour (Prohibition and Regulation) Act, 1986, regulating child labour.
  • The Trade Unions Act, 1926 providing for the registration of trade unions, but there is no requirement for employers to consult or involve them. Only 2% of the work-force is unionized.
  • The Employees Provident Fund Act applies to establishments with more than 20 workers; 12% of pay up to INR6,500 per month is applied to pension provision.

Under the Factories Act, 1948, a six-day 48-hour working week is normal; but in practice office employees work a five-day week of 37-38 hours. Work past nine hours a day counts as overtime, usually at double pay.

There is no statutory requirement for a written contract, but there are statutory norms which apply in the absence of a contract. There are laws requiring sick pay, maternity leave, bonuses and other benefits for workers, but they are not universally applied.


India: Related Information

India Labour Regulation »
Map of India »


Back to India Index »