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India
 


Source and scope of regulations - 2019    

References
  • The Industrial Disputes Act, Act No. 14 of 1947 as last amended by the Act No. 24 of 2010
    Date: 18 Aug 2010; view website » (view in NATLEX »)
  • Workmen's Compensation Act, 1923,as last amended on 8 December, 2008
    Date: 08 Dec 2008; view website » (view in NATLEX »)
  • Industrial Employment (Standing Orders) Central Rules, 1946, as last amended on May 22, 1971 (Model Standing Orders (MSO))
    Date: 22 May 1971; view website » (view in NATLEX »)
  • Maternity Benefit Act, 1961 (No. 53 of 1961), as last amended by Act No. 15 of 2008
    Date: 01 Apr 2008; view website » (view in NATLEX »)
  • Industrial Employment (Standing Orders) Act, 1946 (Act No. 20 of 1946) As Amended by Acts Nos. 3 of 1951, 36 of 1956, 16 of 1961, 39 or 1963, 51 of 1970 and 18 of 1982
    Date: 17 May 1982; view website » (view in NATLEX »)
  • Payment of Gratuity Act, 1972, as last amended by Act No. 25 of 1984
    Date: 18 May 1984; view website » (view in NATLEX »)
Scope
Size of enterprises excluded (≤):
Remarks:
  • Chapter VB of the Industrial Disputes Act ‘Special Provisions Relating to Lay-Off, Retrenchment and Closure in Certain Establishments’ establishes the threshold of 100 workers.
    Other than that each Act has a different threshold – most often the threshold is 20 workers and above (in cases of establishments without electric power), otherwise 10 workers and above.

Workers' categories excluded: police; army; managerial / executive positions; prison personnel
Remarks:
  • Section 2(s) of the IDA that defines “workman” expressly excludes military personnel, officers of the police service or employee of a prison and persons employed in managerial capacity. In addition it expressly excludes persons employed in a “supervisory capacity” who draw wages in excess of the amount specified in the Act (presently specified as Rs. 1,600 per month)

Types of employment contracts - 2019    

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Maximum probationary (trial) period: no limitation

Remarks:
  • However, sec. 2 (a) MSO lists the following categories of workers ("classification of workmen"):
    (1) permanent,
    (2) probationers,
    (3) badlis,
    (4) temporary,
    (5) casual,
    (6) apprentices.
    A definition of a "probationer" given in the sec. 2(c) MSO states that a probationer is a worker employed to fill in a permanent vacancy and has not yet completed three months' service therein.

Fixed term contract (FTC):
  • FTC regulated: Yes
  • Valid reasons for FTC use: objective and material reasons
    Remarks:
    • Sec 2(e) MSO reads as follows: a temporary workman is a workman who has been engaged for work which is of an essentially temporary nature likely to be finished within a limited period.
  • Maximum number of successive FTCs: no limitation
  • Maximum cumulative duration of successive FTCs: no limitation

Substantive requirements for dismissals (justified and prohibited grounds) - 2019    

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Obligation to provide reasons to the employee: Yes
Remarks:
  • Sec. 13 MSO and Sec. 25F IDA.
    NOTE: The Model Standing Orders (MSO) are a default not a mandatory rule i.e. the employer may adopt them as provided but employers are permitted to derogate/amend them on a case by case basis.


Valid grounds (justified dismissal): worker's conduct; economic reasons
Remarks:
  • Sec. 150B IDA reads as following:

    "1*[(oo)"retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include--
    (a) voluntary retirement of the workman; or
    (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
    2*[(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or]
    (c) termination of the service of a workman on the ground of continued ill-health;] "


    Sec. 17 MSO provides for an exhaustive list of the instances when dismissal for the reasons of misconduct is justified:

    (a) Theft, fraud, or dishonesty in connection with the employer's business or property.
    (b) Taking or giving of bribes or an illegal gratification whatsoever in connection with the employer's
    business or his own interests.
    (c) Willful insubordination or disobedience, whether alone or in conjunction with another or others, or of
    any lawful or reasonable order of a superior. The order of the superior should normally be in writing.
    (d) Habitual late attendance and habitual absence without leave or without sufficient cause.
    (e) Drunkenness, fighting or riotous, disorderly or indecent behaviors while on duty at the place of work.
    (f) Habitual neglect of work.
    (g) Habitual indiscipline.
    (h) Smoking underground within the area in places where it is prohibited.
    (i) Causing willful damage to work in progress or to property of the employer.
    (j) Sleeping on duty.
    (k) Malingering or showing down work.
    (l) Acceptance of gifts from subordinate employees.
    (m) Conviction in any Court of Law for any criminal offence involving moral turpitude.
    (n) Continuous absence without permission and without satisfactory cause
    for more than ten days.
    (o) Giving false information regarding one's name, age, father's name,
    qualification or previous service at the time of the employment.
    (p) Leaving work without permission or sufficient reason.
    (q) Any breach of the Mines Act, 1952, or any other Act or any rules,
    regulations or bye-laws there under, or of any Standing Orders.
    (r) Threatening, abusing or assaulting any superior or co-worker.
    (s) Habitual money-lending.
    (t) Preaching of or inciting to violence.
    (u) Abetment of or attempt at abetment of any of the above acts of
    misconduct.
    (v) Going on illegal strike either singly or with other workers with out giving 14 day's previous notice.
    (w) Disclosing to any unauthorized person of any confidential information in regard to the working or
    process of the establishment which may come into the possession of the workman in the course of his work.
    (x) Refusal to accepted any charge-sheet or order or notice communicated in writing.
    (y) Failure or refusal to wear or use any protective equipment given by the employers


Prohibited grounds: pregnancy; maternity leave; trade union membership and activities
Remarks:
  • The IDA (Fifth Schedule) on Unfair Labour Practices - these include prohibition of dismissal based on: trade union activity or membership and taking part in a strike which is not deemed to be illegal according to the IDA.
    Further, the Fifth Schedule of the IDA states that the Unfair Labour Practice shall be the following:
    "5. To discharge or dismiss workmen:
    (a) by way of victimisation;
    (b) not in good faith, but in the colourable exercise of the employer's rights;
    (c) by falsely implicating a workman in a criminal case on false evidence or on concocted evidence;
    (d) for patently false reasons;
    (e) on untrue or trumped up allegations of absence without leave;
    (f) in utter disregard of the principles of natural justice in the conduct of domestic enquiry or with undue haste;
    (g) for misconduct of a minor or technical character, without having any regard to the nature of the particular misconduct or the past record or service of the workman, thereby leading to a disproportionate punishment."

    Sec. 12 of the Maternity Benefit Act: Dismissal during absence or pregnancy

    Art. 16.2 of the Constitution of India on Equality of opportunity in matters of public employment, states that: "No citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect of, any employment or office under the State". NOTE: This applies only in relation to public employment.


Workers enjoying special protection: workers' representatives; pregnant women and/or women on maternity leave
Remarks:
  • Schedule Five of the IDA
    Art. 12 of the Maternity Benefit Act


Procedural requirements for individual dismissals - 2019    

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Notification to the worker to be dismissed: written

Remarks:
  • Sec. 13 MOS
    Also IDA – section 25F (chapter V-A) and 25N (chapter V-B)

Notice period:
Remarks:
  • Sec. 13(1) MOS states that permanent monthly paid workers are entitled to one month's notice, while other types of permanent workers shall be given two week's notice.

    Sec. 9 of IDA sets one month's notice for employer who proposes to retrench workers.

    Also, Sec. 25N IDA states that(applies in case of retrenchment to establishments with 100 or more workers):
    (1) No workman employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until,
    (a) the workman has been given three months' notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; and

    Sec. 25F (applies in case of retrenchment to establishments with 50 or more workers) provides that before retrenching an employee employed for a period of continuous period of not less than one year he/she must be has been given one months notice in writing.

    Pay in lieu of notice: Yes

    Remarks:
    • Sec. 13(1) MSO provides for the one month's pay in lieu for the monthly rated worker and two month's pay in lieu for other workers under the permanent contract. Workers under fixed term contract, probationary period or badli are not entitled to pay in lieu (sec. 13(2) MSO)

    Notification to the public administration: No

    Notification to workers' representatives: No

    Approval by public administration or judicial bodies: Yes

    Remarks:
    • Sec. 25N IDA (applicable only to industries with 100 or more workers) prescribes for the prior permission of the appropriate Government in case of the retrenchment of the worker who has been in continuous service with the employer for not less than one year.

    Approval by workers' representatives: No

    Procedural requirements for collective dismissals for economic reasons (redundancy, retrenchment) - 2019    

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    Definition of collective dismissal (number of employees concerned):
    No quantitative definition. The Industrial Disputes Act deals with dismissals due to retrenchment.

    Sec 2[(oo) states: retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include--
    (a) voluntary retirement of the workman; or
    (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
    2*[(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or]
    (c) termination of the service of a workman on the ground of continued ill-health;] "

    Prior consultations with trade unions (workers' representatives): No

    Notification to the public administration: Yes

    Remarks:
    • This is applicable only in the case of industries employing more than 50 workers.

      Sec. 25FFA IDA states the following:
      (1) An employer who intends to close down an undertaking shall serve, at least sixty days before the date on which the intended closure is to become effective, a notice, in the prescribed manner, on the appropriate Government stating clearly the reasons for the intended closure of the undertaking:

      Provided that nothing in this section shall apply to:
      (a) an undertaking in which:
      (i) less than fifty workmen are employed, or
      (ii) less than fifty workmen were employed on an average per working day in the preceding twelve months,
      (b) an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work or project.

      Also see section 25-O providing for 90 days notice) i.e. for establishments covered by Chapter V-B (100 workers or more).

    Notification to workers' representatives: No

    Approval by public administration or judicial bodies: Yes

    Remarks:
    • Sec. 25N IDA (applicable only to industries with 100 or more workers) prescribes for the prior permission of the appropriate Government in case of the retrenchment of the worker who has been in continuous service with the employer for not less than one year.

    Approval by workers' representatives: No

    Priority rules for collective dismissals (social considerations, age, job tenure): Yes

    Remarks:
    • Sec. 25G IDA states the following: "Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman"

    Employer's obligation to consider alternatives to dismissal (transfers, retraining...): No

    Priority rules for re-employment: Yes

    Remarks:
    • Sec. 25H IDA reads as following: "Where any workmen are retrenched, and the employer proposes to take into his employ any persons he shall, in such manner as may be prescribed, give an opportunity to the retrenched workmen who are citizens of India to offer themselves for reemployment, and such retrenched workmen who offer themselves for reemployment shall have preference over other persons".

    Severance pay and redundancy payment - 2019    

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    Severance pay:
    Remarks:
    • Sec. 6 of the Payment of Gratuity Act states:
      "Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:
      (a) on his superannuation, or
      (b) on his retirement or resignation, or
      (c) on his death or disablement due to accident or disease:

      Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement.

      Disablement means such disablement which incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement. [Section 4(1)].

      (2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned:

      Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:

      Provided further that in the case of an employee employed in a seasonal establishment, the employer shall pay the gratuity at the rate of seven days' wages for each season."
      Redundancy payment:
      Remarks:
      • Sec. 25F IDA provides that in case of retrenchment employees with one or more than one year of service shall be given compensation equivalent to fifteen days' average pay for every completed year of continuous service, " or any part thereof in excess of six months"
      • tenure ≥ 1 year: 15 day(s)
      • tenure ≥ 2 years: 30 day(s)
      • tenure ≥ 4 years: 60 day(s)
      • tenure ≥ 5 years: 75 day(s)
      • tenure ≥ 10 years: 150 day(s)
      • tenure ≥ 20 years: 300 day(s)

      Avenues for redress (penalties, remedies) and litigation procedure for individual complaints - 2019    

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      Compensation for unfair dismissal - free determination by court: Yes

      Remarks:
      • Sec. 11A of the IDA states:
        "Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and, in the course of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct re-instatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require:
        Provided that in any proceeding under this section the Labour Court, Tribunal or National Tribunal, as the case may be, shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter"

      Compensation for unfair dismissal - Are there legal limits?: No

      Reinstatement available: Yes

      Remarks:
      • Sec. 11A IDA

      Preliminary mandatory conciliation: No

      Competent court(s) / tribunal(s): labour court

      Remarks:
      • Sec. 7 IDA

      Existing arbitration: Yes

      Remarks:
      • Sec. 10A IDA reads as following:

        "Voluntary reference of disputes to arbitration-(1) Where any industrial dispute exists or is apprehended and the employer and the workmen agree to refer the dispute to arbitration, they may, at any time before the dispute has been referred under section 10 to a Labour Court or Tribunal or National Tribunal, by a written agreement, refer the dispute to arbitration and the reference shall be to such person or persons (including the presiding officer of a Labour Court or Tribunal or National Tribunal) as an arbitrator or arbitrators as may be specified in the arbitration agreement.

        (1A) Where an arbitration agreement provides for a reference of the dispute to an even number of arbitrators, the agreement shall provide for the appointment of another person as umpire who shall enter upon the reference, if the arbitrators are equally divided in their opinion, and the award of the umpire shall prevail and shall be deemed to be the arbitration award for the purpose of this Act.]

        (2) An arbitration agreement referred to in sub-section (2) shall be in such form and shall be signed by the parties thereto in such manner as may be prescribed.

        (3) A copy of the arbitration agreement shall be forwarded to the appropriate Government and the conciliation officer and the appropriate Government shall, within '[one month] from the date of the receipt of such copy, publish the same in the Official Gazette.

        (3A) Where an industrial dispute has been referred to arbitration and the appropriate Government is satisfied that the persons making the reference represent the majority of each party, the appropriate Government may, within the time referred to in sub-section (3), issue a notification in such manner as maybe prescribed; and when any such notification is issued, the employers and workmen who are not parties to the arbitration agreement but are concerned in the dispute, shall be given an opportunity of presenting their case before the arbitrator or arbitrators.

        (4) The arbitrator or arbitrators shall investigate the dispute and submit to the appropriate Government the arbitration award signed by the arbitrator or all the arbitrators, as the case may be.

        (4A) Where an industrial dispute has been referred to arbitration and a notification has been issued under sub-section (3A), the appropriate Government may, by order, prohibit the continuance of any strike or lock-out in connection with such dispute which may be in existence on the date of the reference.

        (5) Nothing in the Arbitration Act, 1940 (10 of 1940) shall apply to arbitrations under this section."

      Burden of proof: worker

      Remarks:
      • There is no presumption in favour of employment status. The burden of proof lies on the person claiming the status of “workman” under the Act (See: Supreme Court, Workmen of Nilgiri Cooperative Marketing Society)