Fundamentals of Labour Laws in India

Labour law appertains to the relationship between employees and employers and between trade unions and employers. Labour Laws in India cover almost all kinds of industries. Different Labour Laws are enacted for different type of industries according to those industries (as for Coal Mines Workers, Dock Workers and Plantation Workers etc. There are different laws to regulate their employment to their respective industries and conditions of service).

Historically, different Labour Laws were also enacted for different subjects, such as the Payment of Wages Act and the Payment of Bonus Act for wages and bonus, the Workmen’s Compensation Act for compensation, the Employees’ State Insurance Act for medical and sickness benefit, and the Maternity Benefit Act for maternity benefit to women. India has now consolidated this scattered framework into four Labour Codes — the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 — which came into force on 21 November 2025 and together subsume around 29 of these earlier central labour laws (including the Payment of Wages, Payment of Bonus, Maternity Benefit, Employees’ State Insurance and Workmen’s Compensation Acts). The maternity benefit provisions have been retained, and now provide for 26 weeks of paid maternity leave following the 2017 amendment.

Every person employed in an organization or industry is not “LABOUR” under Labour Laws. There are many exceptions:

1. A person employed in Supervisory or Managerial position is not treated as labour.

2. A person who is taking salary which is more than the prescribed in that certain Act is not covered under Labour Law Acts.

3. In many laws, a person is entitled to get a benefit even if he/she exceeds the salary limit, but in that case the benefit is calculated on the limit prescribed in that Act. For example, under the law on payment of bonus the eligibility ceiling is Rs. 21,000 per month (raised from Rs. 10,000 by the Payment of Bonus (Amendment) Act, 2015), while the bonus itself is calculated as if the salary were Rs. 7,000 per month or the applicable minimum wage, whichever is higher. Bonus is now also governed by the Code on Wages, 2019.

4. Many Labour laws have conditions of having a certain number of employees in industry- organization for their execution in that industry – organization (For example: Employees State Insurance Act is applicable where 10 or more employees are employed).

Generally, Most of the small industries or organizations are not under Labour Laws. In brief, most of the Labour Laws are for the person working in junior level or lower category which government feels can be easily exploited, so the government tries to protect those employee. However, Indian Labour Laws have many provisions that regulate their discipline, employee’s unauthorized absenteeism and even any punishment for breaking discipline.

Labour laws are to give labour reasonable opportunity of defense and to prevent unauthorized termination of service. Otherwise that termination becomes illegal. However, in some circumstances, during termination without any punishment, require no compensation to pay.

As per labour laws, Labour should get minimum fixed wages. It should get salary at fixed time as well as they have the right to get others legal benefit like PF, BONUS, PF, GRATUITY, ESI etc as applicable. It is also include paid holidays and leave. Duty or working hours are also should be fixed.

Apart from that, employer can also go against Labour in labour court and labour laws have provisions to safeguard employer. A labour can also go against other labour in labour court.