Unit 4: Labour legislation
Industrial Relations and Labour Laws notes · PTU syllabus (BCOM 601-18)
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Unit summary
India's labour laws have been consolidated into four labour codes. This unit covers the emergence and objectives of labour laws, the Industrial Relations Code 2020 (introduced 2019), and an overview of the Factories Act, Industrial Disputes Act, Payment of Wages Act, Payment of Bonus Act, ESI Act, Payment of Gratuity Act, Minimum Wages Act, PF Act and Workmen's Compensation Act.
After this unit you can
- Explain the emergence and objectives of labour legislation
- Explain the main features of the Industrial Relations Code
- Summarise the key provisions of major labour laws
- Map older laws to the four labour codes
PTU syllabus topics
- Emergence and objectives of labour laws
- Industrial Relations Code 2019
- overview of the Factories Act
- Industrial Disputes Act
- Payment of Wages Act
- Payment of Bonus Act
- ESI Act
- Payment of Gratuity Act
- Minimum Wages Act
- PF Act
- Workmen's Compensation Act
Wages
Payment of Wages, Minimum Wages, Bonus → Code on Wages
Industrial relations
Trade Unions, Industrial Disputes → IR Code
Social security
PF, ESI, Gratuity, Maternity → Social Security Code
Safety
Factories Act → OSH Code
Topic 1
Emergence and objectives of labour laws
- Emergence: industrial revolution, exploitation of workers, factory accidents, child labour; ILO conventions (India a founder member, 1919); constitutional directives (Articles 38, 39, 41, 42, 43, 43A).
Protective
Hours, safety, health, child and women workers
Regulative
Relations between employers and unions, disputes
Wage-related
Minimum and timely wages, bonus
Social security
Insurance, PF, gratuity, compensation
Welfare
Canteens, crèches, housing
Industrial peace and productivity
Topic 2
The four labour codes
- 1Code on Wages, 2019
Payment of Wages, Minimum Wages, Payment of Bonus, Equal Remuneration Acts
- 2Industrial Relations Code, 2020
Trade Unions, Industrial Employment (Standing Orders), Industrial Disputes Acts
- 3Code on Social Security, 2020
EPF, ESI, Gratuity, Maternity Benefit, Employees' Compensation and 4 more Acts
- 4Occupational Safety, Health and Working Conditions Code, 2020
Factories Act and 12 other Acts
- 29 central labour laws were subsumed into four codes.
Industrial Relations Code (introduced 2019, enacted 2020)
- Standing orders compulsory for establishments with 300+ workers (earlier 100).
- Trade union recognition: negotiating union (51%) or negotiating council.
- Strikes and lockouts: 60 days' notice for all establishments.
- Lay-off, retrenchment, closure: government permission for 300+ workers.
- Fixed-term employment with benefits on par with permanent workers.
- Worker Re-skilling Fund: employer contributes 15 days' wages for retrenched workers.
- Grievance Redressal Committee for 20+ workers; Industrial Tribunals.
Topic 3
Overview of major labour laws (I)
| Act | Key provisions |
|---|---|
| Factories Act, 1948 (now OSH Code) | Applies to 10+ workers with power (20 without); health (cleanliness, ventilation, drinking water), safety (fencing, hazardous processes), welfare (canteen 250+, crèche 30+ women, welfare officer 500+); 48 hours a week, 9 hours a day; no child below 14; annual leave 1 day per 20 days worked |
| Industrial Disputes Act, 1947 (now IR Code) | Definitions of industry, workman, dispute; works committees, conciliation, courts and tribunals; strikes, lockouts, lay-off (50% compensation), retrenchment (15 days per year), closure |
| Payment of Wages Act, 1936 (now Code on Wages) | Timely payment — wage period up to one month; paid by 7th/10th day; authorised deductions only (fines, absence, damage, advances, tax) — total deductions up to 50% (75% for co-operative dues) |
| Minimum Wages Act, 1948 (now Code on Wages) | Fixing and revision (at least every 5 years) of minimum rates; Code on Wages adds a statutory floor wage and covers all employees |
| Payment of Bonus Act, 1965 (now Code on Wages) | Establishments with 20+ workers; minimum bonus 8.33%, maximum 20% of wages; eligibility — 30 days' work; salary ceiling ₹21,000 per month (calculation ceiling ₹7,000 or minimum wage) |
Topic 4
Overview of major labour laws (II)
| Act | Key provisions |
|---|---|
| Employees' State Insurance Act, 1948 (now Social Security Code) | Establishments with 10+ employees; wage limit ₹21,000 per month; contributions — employer 3.25%, employee 0.75%; benefits — sickness, maternity, disablement, dependants', medical, funeral |
| Employees' Provident Funds and Miscellaneous Provisions Act, 1952 | Establishments with 20+ employees; wage ceiling ₹15,000; employee 12%, employer 12% (8.33% to EPS); EDLI insurance; administered by EPFO |
| Payment of Gratuity Act, 1972 | 10+ employees; payable after 5 years of continuous service (1 year for fixed-term employees under the Social Security Code); 15 days' wages per completed year (wages × 15 × years ÷ 26); ceiling ₹20 lakh |
| Workmen's (Employees') Compensation Act, 1923 | Compensation for injury or death by accident arising out of and in the course of employment; death — 50% of monthly wages × relevant factor (minimum ₹1.2 lakh); permanent total disablement — 60% × factor (minimum ₹1.4 lakh) |
Example
Gratuity: last drawn basic + DA ₹52,000, service 20 years. Gratuity = 52,000 × 15 × 20 ÷ 26 = ₹6,00,000 (within the ₹20 lakh ceiling).
- Code on Social Security, 2020 extends coverage to gig and platform workers (aggregators contribute 1–2% of turnover) and unorganised workers (e-Shram portal registration).
Exam tip
Thresholds and ceilings are frequently revised — write "as per the current notification" alongside figures, and mention the code that now contains each Act.
Key terms
- Labour codes
- Four codes consolidating 29 central labour laws
- Standing orders
- Rules of service conditions certified for an establishment
- Fixed-term employment
- Employment for a fixed period with benefits on par with permanent workers
- Gratuity
- Lump-sum retirement benefit for long service
- ESI
- Social insurance scheme for health and sickness benefits
Quick revision
- Objectives: protective, regulative, wages, social security, welfare.
- Four codes: Wages, IR, Social Security, OSH.
- IR Code: 300-worker threshold for standing orders and retrenchment permission; 60 days' notice.
- Bonus 8.33–20%; PF 12% + 12%; ESI 3.25% + 0.75%; gratuity 15/26 × years, ₹20 lakh cap.
- Compensation for accidents arising out of and in the course of employment.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.State the objectives of labour legislation.
- Q2.Name the four labour codes.
- Q3.What are standing orders?
- Q4.What is the minimum and maximum bonus?
- Q5.How is gratuity calculated?
- Q6.What benefits are available under the ESI Act?
Long-answer questions
- Q1.Explain the emergence and objectives of labour laws in India.
- Q2.Explain the main features of the Industrial Relations Code.
- Q3.Explain the health, safety and welfare provisions of the Factories Act and wages-related laws.
- Q4.Explain the social security laws — ESI, PF, gratuity and employees' compensation.
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