Labor Laws in India

Labor laws of India are almost similar to laws in any other country. India offers lot of potential for outsourcing IT functions, KPO and BPO operations because of availability of highly skilled and economical resources. So whenever someone thinks about setting up a subsidiary company in India, the first question is about labor laws in India. In this article we try to explain the most important and relevant labor laws present in India to help you make the descision. Deatiled labor laws can be found here.

Working Hours:

The working hours are defined in every state law. In Bangalore and almost all the big cities in India the law mandates that working period of any employee should not exceed 48 hours and 58 hours including extra working hours.

Our comments: Generally companies work 5 days a week. Each day its eight hours of work with 1 hour break for food.

Work Timings:

 Any establishment shall not run its business before and after following hours.

  • In Bangalore city; Morning before 6 am and Night after 9 pm.
  • The women employee are not allowed to work after 8 PM.
There is a exemption for IT, BPO and KPO to work after 9 PM. Also the women employees are permitted to work, in that case the employer must offer door-to-door transport and meet some security-related requirements. Thus the companies who provide support functions to the companies outside India are allowed to work after 8 PM.

Leave Policy in India as per labor laws in India

Under The Karnataka Shops & Commercial Establishments Act, 1961

Earned Leave/Paid Leve @ 1 Day for every 20 Days work Performed-maximum 18 days Per Annum on Calendar year Basis 

Accident Leave Cum Sick Leave 12 days Per Annum (Calendar Year) 

10 days National festival Holiday under Karnataka National & Festival Holidays Rules

 1 Weekly Holiday


Termination of Employment as per labor laws of India

A 30 to 90-day notice period applies in order to terminate ‘workmen’ (as defined in the Industrial Disputes Act, 1947) – that is, employees whose role is not primarily supervisory, administrative or managerial) for convenience, with 15 days’ pay due for every year worked. In the case of manufacturing units, plantations and mines with 100 or more workmen, termination for convenience requires prior government approval; in other sectors, it requires only government notification.

For IT and other companies there is no specific law which defined the notice period. Generally in India companies enforce 7-60 day notice period

Insurance Scheme for employees

As per the labor laws in India its not mandatory to provide health insurance benefits for the employees. But generally employees demand that health insurance benefits be provided. Its very simple to get the health insurance benefits for the employees

Is the employment agreement in india same as in any other country

Yes, its the same. You can find the sample agreement here –

Below are the key points:

  • State labor laws in India generally provide for about 15 days of earned/regular leave a year. Employees also benefit from up to 10 days of sick leave and a possible 10 additional days of ‘casual leave’. This is generally more than what most organisations would ideally like to provide.
  • Indian labor laws provide for ‘casual leave’ – the employee can opt not to come to work that day without applying for leave in advance. Many organisations find this disruptive.
  • Most state labour laws in India restrict women from working at night; if women are to work at night, specific approval must be obtained. This exemption is granted only to limited business sectors (eg, IT sector). Further, the employer must offer door-to-door transport and meet some security-related requirements.
  • Most state labour laws in India prescribe overtime for any hours worked beyond 48 hours in a week.
  • Indian law regulates and in some cases prohibits the use of contract workers. To engage contract workers, the contractor must hold a licence and the employer must be registered as a ‘principal employer’.
  • Non-compete agreements are not enforceable under Indian law, while non-solicitation clauses can be enforced only in limited ways.
  • While the ‘work for hire’ principle applies under the Indian copyright regime, it does not apply under the Indian patent regime; employees must thus provide formal assignments.
  • Indian labor laws require employers to maintain a plethora of registers and notices. Compliance with such requirements is difficult and full compliance is rare. We can assist you with payroll processing and labour law services in India.

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