India's new labour laws explained

India’s New Labour Laws, and What They Mean For Your Company

The Central Government on 23rd September passed three labour code bills. These bills merged 24 existing central labour laws. If you have been following the news you might have seen the story break headlines. It might also have you asking – “how does this affect me?” If that’s the question on your mind, this is the right place.  

We have read the entire release and are here to help you make sense of the new labour laws. Whether you are planning to start-up, already own a business or just working for a start-up, here are the things you need to know.  

Social Security Labour Laws

When you are doing your yearly taxes, you would have noticed some money going to the Employee’s Provident Fund (EPFO) and Employee’s State Insurance (ESIC). You also have benefits tied to gratuity and maternity. The new Code on Social Security 2020 merges all of this, while also extending the benefits to others not previously covered.  

Benefit Old Law New Law 
EPFO Limited to permanent employees Freelancers, self-employed and gig workers now covered 
ESIC Limited to permanent employees Freelancers, self-employed and gig workers now covered 
Gratuity Limited to those who served 5 years minimum Limited term contract employees also covered 
Life/disability insurance Limited to permanent employees Freelancers, self-employed and gig workers now covered 
Health/maternity benefits Limited to permanent employees Freelancers, self-employed and gig workers now covered 

The updates under the new labour laws will become mandatory for any company with over 20 employees. If you hire someone on a two-year contract, you are liable to pay them gratuity at the end of that contract, if it is not renewed. 

The new social security labour laws now cover more types of workers.

Health, Safety and Working Conditions 

The government has also made changes to the Occupational Safety and Health (OSH) code. The code will apply to any establishment with 10 workers or more. The changes introduced include: 

  • A mandatory issuing of an appointment letter 
  • Companies to provide free annual health check-ups to all employees above a certain age (not yet specified). 
  • Women will now be eligible to work in all types of jobs. They are now also eligible to work at night subject to consent.  
  • In case of an accident or death of a worker, the court can now order a company to pay up to 50% of the total penalty. 

The central government has also announced that it will soon roll out regulations regarding working hours. Labour laws on working hours for different types of companies will be set by the state, as well as the centre. In case an employee works overtime, he/she is eligible for pay at twice the rate of daily wages. Employees will also have to give prior consent for overtime work.  

The labour law also stipulates that no employee can work for more than six days a week. Employees are also eligible to receive one day of holiday for every 20 days worked in a year.  

Labour Laws on Industrial Relations 

This contentious code is targeted more at industries and factories, but there are still changes you need to be aware of. If you are an organisation with less than 300 employees, you can now fire workers (for economic reasons) without having to provide notice. Previous labour laws required a 30-90 day notice period for all organisations above 100 people. That is now applicable only for those with 301 employees or more. 

Workers will also have to now provide at least 60 days’ notice prior to striking. This is up from the previous notice period of two-six weeks. If proceedings are pending before a labour tribunal or the National Industrial Tribunal, workers cannot go on a strike for 60 days after they are concluded.  

We hope that helps clear up any confusion you may be having. The changes in labour laws have been brought to help businesses unlock their full potential. They are also aimed at bringing more employees under the social security code, and improving welfare. That’s what we at Onsurity also want to do – provide you and your team with the healthcare you deserve.  

We are a single platform for everything health related. Thanks to our partner ICICI Lombard, you can now get health insurance for you and your loved ones through your Onsurity membership. We also have tele-consultations and medicine ordering thanks to our partners 1md and Medlife.  

If that sounds impressive, check out our website today. No matter what your needs, we are sure to have a membership for you.  

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