Labour Law Compliances and Audit

Basic principles of labour laws and their reforms lies in the Preamble of theConstitution of India and Directive Principles of State Policy enshrined therein. We the people of India in the Constituent Assembly on 26^th Day of November, 1949 have solemnly resolved inter alia to secure all its citizens “JUSTICE, social, economic and political”. Directive Principles of State Policy enshrined in Part IV of the Constitution of India have guided the Governments to follow the principles in making its policies for maximum welfare of itscitizines. Few relevant are hereinafter discussed in brief:

Article 38(2):

The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations.]

Article 39:

The State shall, in particular, direct its policy towards securing— (a) that the citizens, men and women equally, have the right to an adequate means of livelihood; (d) that there is equal pay for equal work for both men and women; (e) that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength;  (f) that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment.

Article 42:

The State shall make provision for securing just and humane conditions of work and for maternity relief.

Article 43:

The State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities

Article 43A:

The State shall take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organisations engaged in any industry.

Legislative Framework requiring Compliance ofLabour Laws

To achieve the above, Central Government and State Governments have framed various legislations. There is plethora of laws applicable to different industries based on employee strength/nature of business/location etc. Few relevant to most of the industries/establishments/employees are summarized below:

Dealing with Industrial Relation matters:

The Industrial Disputes Act, 1947

The Industrial Employment (Standing Orders) Act, 1946

The Trade Unions Act, 1926

Dealing with Industrial Safety  and Health matters:

The Factories Act, 1948

The Mines Act, 1952

Dealing with Child and Women Labour matters:

The Child and Adolescent Labour (Prohibition & Regulation) Act, 1986

Equal Remuneration Act, 1976

Dealing with Social Security matters:

The Payment of Gratuity Act, 1972

The Personal Injuries (Emergency) Provisions Act, 1962

The Personal Injuries (Compensation Insurance) Act, 1963          

The Maternity Benefit Act, 1961

Employees liability act 1938

The Employees’ Provident Fund & Miscellaneous Provisions (Amendment) Act, 1996

The Employees State Insurance Act, 1948

The Employees Compensation Act, 1923

Dealing with Wages Matters:

The Payment of Wages Act, 1936             

The Payment of Bonus Act, 1965

The Minimum Wages Act, 1948

Dealing with Labour Welfare Matters:

The Bonded Labour System (Abolition) Act, 1976

The Unorganised Workers Social Security Act 2008

The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979

The Contract Labour (Regulation & Abolition) Act, 1970 

Dealing with Labour welfare and Training Matters:         

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959   

LegilativeLabour Law Reforms/Inititatives

Government of India has from time to time framed the relevant laws, rules for implementation and amended the legislations in line with the needs of the economy,to generate employment and to facilitate ease of doing business. Presently Government is in process to bring in to place following new legislations:

1.       SOCIAL SECURITY CODE, 2019: When enacted, 1. the Employees‘ Compensation Act, 1923; 2. The Employees‘ State Insurance Act, 1948; 3. The Employees‘ Provident Funds and Miscellaneous Provisions Act, 1952; 4. The Maternity Benefit Act, 1961; 5. The Payment of Gratuity Act, 1972; 6. The Cine Workers Welfare Fund Act, 1981; 7. The Building and Other Construction Workers Cess Act, 1996; and 8. The Unorganized Workers‘ Social Security Act, 2008 shall stand repealed.

2.       THE OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS CODE, 2019: This is to replace (a) The Factories Act, 1948; (b) The Mines Act, 1952; (c) The Dock Workers (Safety, Health and Welfare) Act, 1986; (d) The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; (e) The Plantations Labour Act, 1951; (f) The Contract Labour (Regulation and Abolition) Act, 1970; (g) The Inter-State Migrant workmen (Regulation of Employment and Conditions of Service) Act, 1979; (h) The Working Journalist and other News Paper Employees (Conditions of Service and Miscellaneous Provision) Act, 1955; (i) The Working Journalist (Fixation of rates of wages) Act, 1958; (j) The Motor Transport Workers Act, 1961; (k) The Sales Promotion Employees (Conditions of Service) Act, 1976; (l) The Beedi and Cigar Workers (Conditions of Employment) Act, 1966; (m) The Cine Workers and Cinema Theatre Workers Act, 1981.

3.       THE CODE ON WAGES, 2019:The Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 shall stand repealed by this Code.

It is clear that approximately twenty four legislations are being re-codified. This historical change shall not only repeal the old laws but also make them contemporary, relevant to present economy needs and instrumental in protecting interest of labourand at the same time will result in ease of doing business& compliance.

Need of Labour Law Audit

As understanding and implementing of various laws requires expert knowledge, interpretation skills and legal acumen,it is always difficult for a layman to execute the laws in the organization in letter and spirit. Any instance of non compliance, may attract avoidable litigation on organization & its Officers besides attracting penalties and bad fame. To achive harmonious industrial relations, organization reputation, build & maintain sound employer-employee relations, minimize idle time in resolving industrial disputes, minimize employee resentments & separations, to implement long term growth policies, to retain the talent & skilled manpower, organizations should adopt Labour Law audit voluntarily. Labour Law audit if implemented in line with internal audits may be more instrumental in achieving its objectives. In the beginning, such audit reports should be placed as consultative function before the Board of Directors and thereafter may be implemented mandatorilyphasewie. .

Opportunity for Company Secretaries:

Similar to Company law, compliance of labour laws also needs dedicated professional to ensure the Compliances of the labour laws. Concept of Labour Law officer in the organizations having threshold manpower may be introduced.Here opportunity lies with the Company Secretaries. At the ICSI level Labour Law Auditing Standards may be issued as recommendatory initially. Compliance List of different actions of each applicable law may be prepared. Company Secretaries may be trained and specialized with practical aspects of such laws on case study basis. Labour Law audit would also becritical for the Secretarial Audit when the Practising Company Secretary has to certify in Secretarial Audit Report that the “Company has complied with all applicable laws”.Company Secretaries being well conversant with various labour, industrial and corporate laws in its academics, are best suited to take up these challenges before others start thinking on it. Besides, new labour law reforms may also offer opportunities for mediation and conciliation of labour disputes.

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Source/referenc:https://labour.gov.in/

Different other websites and basic understanding.

FDI in Retail, How Far Needed???

Recently the Govt of India has announced to open doors for FDI upto a certain limit in single brand and multi brands. Its natural to rise a question whether it is good?, if yes to what extent???

If, define FDI, it is Foreign Direct Investment through Automatice Route i.e. investment by foreigners which do not require prior approval of Govt of India and/or the Reserve Bank of India, under the Foreign Exchange Management Act, 1999.

Consequently, it will inspire for investors to invest in India in retail sector. It will enhance our fund of foreign exchange, strengthen exchange rate of Indian Rupee, supply of products will balance the demand and supply hence there could be a sufficient decline in prices or say inflation.

To some extent it will create ample of job opportunities by way of constructions, marketing, management, information technologies, manufacturing, transportation of goods and many more (or say for the infrastructure which the upcoming markets will need). Simultaneously it will enhance Govt revenue by way of indirect taxes viz. sales tax, custom duties etc. Moreover having sufficient volume of funds of foreign exchange will make it easy for the country to import more essential products and technologies.

Again, its natural to arise a question, if all above are the benefits of the said FDI initiative, why it was not taken earlier?? A general response to the question is enough that until the things don't go beyond control, we need not to go to our neighbour to ask him to come to us and help. In present situation inflation and prices of all essential commodities are at the sky. Situation is day by day going beyond control. Hence, it has become a compulsion over the Govt to find out an immediate solution and to go for such a  welcome move before elections.

On the other hand, this move has its' demerits also. It may harm to some extent native retail markets, small scale industries may have to go out of the markets as the people having small retail business are arguing with their protest. Moreover there may be chances of dumping into our markets which in long run increase the prices of concerned products and may have adverse effect over the jobs etc.

Still, there is an understanding among WTO members that the member countries will try to make the Globe as free trade economy. The present move although has it's demerits yet the merits are more and it is need of the hour. At this moment, we don't have any other choice except welcoming this move. Of course, the Govt, should impose appropriate restrictions & conditions and continuously review it as and when the time and economy demands for.

Business by the Government

Some scholar in ancient times had told-'Doing business is not business of the Government. Government should work only for the good of public and regulate the state.'

In present scenario it has several meanigs which can be opposed by the public. First, business should be given only to the private sector..It results in to capitalism like in US and easily not acceptable in India where socialism is always a demand. Further, it may result in to high prices, monopoly, consumer exploitation and less revenue to the Government.

Presently, Govenment is also operating business through Public Sector Undertakings and PPPs with proper care by consituting regulatory bodies. Obvously it gives revenues to the Government so as to meet the expenditure, form and implement the plans, create ample of job opportunities, upgrading living standard of people, decentralisation of money.

Concluding, there is nothing wrong in business by the Government. Though a well balance should be maintained between public and private sector in the growing Indian Economy.