Labour laws in India

The trade performance of India is influenced by productivity changes in the manufacturing sector, recovery of global economy and world trade, continued trade promotion and trade facilitation efforts of the government, and an apprizing Indian Rupee against the US dollar.


Numerous labour laws are made which regulates employment in India for the smooth functioning of industrial relations in the country. There over fifty national laws and many more state-level laws.

The GDP growth for quarter 1 of FY2021-22 (April-June) was at 20.3 per cent, for quarter 2 (July-September) at 8.5 per cent, for quarter 3 (October-December) at 5.4 per cent, and quarter 4 (January to March this year) at 4.1 per cent.

For the full year (April 2021 to March 2022), the country's economic growth of 8.7 per cent was lower than the 8.9 per cent the government had projected three months back. First, the Covid-induced curbs and then the war in Ukraine added to higher commodity prices and a supply squeeze.

Though female participation in the workforce varies in rural area from that in urban areas women constitute a significant proportion of the labor force. 

The female labor participation rate in India had fallen to 20.3% in 2019 from more than 26% in 2005. According to the Census 2011, the total number of female workers in India is 149.8 million and female workers in rural and urban areas are 121.8 and 28.0 million respectively. Out of total 149.8 million female workers, 35.9 million females are working as cultivators and another 61.5 million are agricultural laborer's.
While conforming to the essentials of the laws of contracts, a contract of employment must adhere also to the provisions of labor laws and the rules contained under the Standing Orders of the establishment.

The Minimum Wages Act 1948 has classified workers as:
  • Unskilled
  • Semi-skilled
  • Skilled
  • Highly skilled
Conventionally union and state government ensure a high degree of protection for workers. It can be seen as a permanent worker can be sacked only for proven misconduct or for habitual absence like in Uttam Nakate case, the Bombay High Court gave a decision that dismissing an employee for repeated sleeping on the factory floor was illegal. The labour law may be collective or individual.

Collective labour law

  • The Industrial Disputes Act (1947) requires companies employing more than 100 workers to seek government approval before they can fire employees or close down. In practice, permissions for firing employees are rarely granted.
  • Trade Unions Act 1926

Individual labour law

There are more than 55 central labour laws and over 100 state labour laws according to All India Organization of Employers.
  • The Contract Labour Act (1970) prohibits companies from hiring temporary workers. Women are not permitted to work at night shifts.
  • Minimum Wages Act 1948
  • Weekly Holidays Act 1942
  • Beedi and Cigar Workers Act 1966
In 2008, the World Bank has criticized the complexity, lack of modernization and flexibility in Indian regulations.

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