The essence of employment contracts in India

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Employment laws are specific to each nation. It is imperative to acquire knowledge about employment laws before opening a business in any country. Here is a short synopsis of the employment laws in India.

Relevant Acts

Some of the Acts that determine, regulate, and protect the welfare and the interests of employees in India are:

• Industrial Disputes Act 1947 or the ID Act

• Factories Act 1948

• Shops and Establishment Acts (S&E Act)

Additionally, four new Labour Codes have been defined and drafted by the Government of India in 2019-2020. These are:

• Wages Code 2019

• Social Security Code 2020

• Health and Working Conditions Code 2020

• Industrial Relations Code 2020

These four Labour Codes have been passed by both the Houses of Parliament in India and have also received the formal assent of the President. However, the legislation has yet to be enforced, and the notification towards the same is being awaited at the moment.

Relevance of Employment Contracts in India

It is common in India's corporate sector to execute a written employment contract even though it is not mandatory by the law yet. The contract can be written or oral and expressed or implied. However, in India, both the Centre and State governments can enact employment legislation for employee-employer welfare. In line with this, the Delhi and Karnataka governments have made it obligatory for the employers in these states to offer written employment contracts to their employees.

Do the Employment Laws in India protect employees against discrimination?

As per the written clause in the Indian Constitution, employers cannot discriminate against their employees based on sex and religion. Additional laws have been put into effect to prohibit discrimination of employees on the grounds of disability, transgender people (Transgender Persons Protection of Rights Act 2019), and HIV-positive people (Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act 2017. Over a period, several amendments have been done to the laws to include various other provisions to stop employers from discriminating against employees. For example, one iconic inclusion came in the Maternity Benefit Act 1961, where would-be mothers are given paid maternity leaves. It protects women employees from being dismissed from work due to their condition, and also, her service should not be subjected to any disadvantages on the grounds of pregnancy.

As per the Equal Remuneration Act 1976, not just employment, discrimination in remuneration at the workplace is also not permitted based on sex and gender (Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) 2013) famously called PoSH Act. The Rights of Persons under the Disability Act 2016 specifically stops employers from discriminating against disabled employees.

Another key feature of the PoSH Act is that it prohibits sexual harassment at the workplace, and it is mandatory to have an anti-sexual harassment policy in the workplace. It mandates the formation of an Internal Committee for redressal by all businesses with at least ten or more employees working. Regular training programs need to be organized by employers to help educate employees about the PoSH Act. 


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