Indian Wage Law and Social Security Benefits

Indian Labour Laws


Indian Labor Law-wages and social security benefits


1. The Wage Payment Law 1936 regulates payment of wages for employed workers

the payment of wages for employed workers in specific industries, and provides remedies for illegal wage deductions and unreasonable wage arrears. The Act applies to workers who are directly or indirectly (such as third-party labor dispatch units) employed by factories or other commercial organizations.


2. The Minimum Wage Law 1948 protects the interests of relevant workers by stipulating minimum wages for specific jobs

Employers/employers shall pay their employees according to the minimum wage standard (and subsequent amendments) stipulated by the government in the “Minimum Wage Law”.

3. Stores and Commercial Establishment Laws

The “Stores and Commercial Establishment Laws” of the various states stipulate the wages to be paid to employees and the employer’s responsibility to pay all wages.

The salary payment period shall be fixed and shall not exceed one month. Employers can deduct a corresponding amount of wages based on misconduct such as employees’ absence or damage to goods.


4. Minimum wage requirements for foreign employees

According to the requirements of the Indian Ministry of the Interior, if foreigners are engaged in employment in India, their annual minimum wage shall not be less than US$25,000 (this regulation is designed to protect the interests of low-skilled Indian workers.

There are 3 category of persons does not apply to the US$25,000 requirement:

  1. Chefs
  2. Teachers
  3. Translators in non-English languages, diplomatic personnel such as embassies and consulates).


5. What is Employees’ National Insurance Policy?

The “Employees’ National Insurance Law” applies to the payment of cash benefits for medical care and illness, maternity, and work-related injuries.


The insurance system stipulated by it based on social needs aims to protect workers’ rights and interests in terms of illness, maternity, temporary or permanent disability, and death due to work-related injuries.

 The monthly salary ceiling for eligible employees in this area has been raised from 10,000 rupees to 15,000 rupees.

The Act applies to all factories or other institutions with more than 20 employees, and requires registration to the relevant regional office within 15 days after reaching a quorum.


6. Whats is Employees Provident Fund?

The Provident Fund Law provides for provident fund institutions, family pension funds, and employee deposit-linked insurance funds, as well as long-term protection for employee pensions and subsistence allowances.

The “Provided Fund Law” stipulates that employees whose monthly salary reaches 15,000 rupees are entitled to provident fund rights.

Provident fund is divided into two parts, employers and employees, which are managed by the Central Committee of Provident Fund. Only officially employed employees are protected by the Provident Fund Law. Temporary workers do not fall within the scope of the Provident Fund Law.

The Provident Fund Act applies to all factories or other institutions with more than 20 employees, and requires mandatory registration according to the Act after reaching a quorum, and the voluntary principle is adopted for those with less than 20 employees.

The current provident fund ratio is: 13.61% for employers and 12% for employees.


7. What are the regulations on foreigners’ provident fund?

Foreigners working in India must also pay provident funds in accordance with regulations, unless the foreigner is an “Excluded Employee” as defined by the Act (as a dispatched employee who works in India and has paid the corresponding provident fund in his home country, and his home country India has signed a bilateral social security recognition agreement).

In order to balance the social security provident fund contributions of foreigners working in India and Indians working overseas, the Indian government has signed or is discussing the signing of relevant bilateral social security recognition agreements (“SSAs”) with many countries.

 Although India has signed the agreement with many countries, so far only the governments of Belgium, Germany, Luxembourg, France, Denmark, South Korea, the Netherlands and Switzerland have officially approved the agreement to enter into force.

In addition, the Indian government imposes restrictions on the withdrawal of provident funds for foreigners working in India.

According to current regulations, if foreigners working in India want to withdraw their provident fund, they can only withdraw in one case: that is, they are 58 years old, and not when their employment relationship is terminated.

However, if certain conditions are met, the provident fund can also be withdrawn in advance:

a) Retirement due to permanent or total incapacity caused by physical or mental weakness, and certification materials must be issued by regular medical personnel or registered physicians

b) The employment relationship is terminated due to tuberculosis, leprosy or cancer, and the employer agrees to terminate the employment relationship.

 c) Other circumstances specified in the relevant bilateral social security mutual recognition agreement.

In addition, according to the social security mutual recognition agreement with Belgium, Germany, Luxembourg, France, Denmark, South Korea, the Netherlands and Switzerland, foreigners from these countries who pay provident funds in India can withdraw their provident funds in advance without being the above 58-year-old age limit.


Indian Labor Law-Working Conditions


Indian Constitution and Labour Working Conditions

The Constitution of India gives the central government and local state governments the power to legislate on labor welfare, including working conditions, provident funds, employer responsibilities, work remuneration, and maternity leave.

Each state government basically has relevant legislation on the working conditions of workers employed in shops, commercial establishments and other public entertainment places and institutions.

Therefore, in addition to the provisions of the Indian Factory Act of 1948, each state has formulated its own “Store and Commercial Establishment Act” to regulate the welfare rights of workers.

The regulations on holidays are generally similar, but individual states will also differ according to local customs and specific business practices.



1. Holiday rules:

A) Weekly holidays

According to regulations, each institution or unit has at least one day off a week. According to industry habits, weekly holidays are usually placed on Sunday.

No unit or organization may require employees to work more than 9 hours a day, and no more than 48 hours a week.



B) National/Public Holidays

All institutions and units should have holidays on Republic Day January 26, Independence Day August 15 and Mahatma Gandhi Birthday December 2, or according to specific regulations of each state.

In addition, each employee should also enjoy 5 days of mandatory holidays each year. The number of days of other public holidays in various places is formulated, issued and revised by relevant government departments of various states.




C) Annual leave

According to regulations, every employee who has a full 12-month employment period (continuous) will be entitled to 18 days of paid annual leave in the next year.

The regulations on the number of days of annual leave in individual states will vary according to the specific conditions of the state: For example, Maharashtra states 21 days a year, Rajasthan states 30 days a year, and Madhya Pradesh states one month a year.



D) Sick leave or personal leave

According to the regulations, each employee can get 15 days of paid leave per year (may vary from state to state), based on illness, accident or other reasonable reasons. Leave that exceeds the corresponding number of days is unpaid leave.

Andhra Pradesh and Kerala have “special leave” regulations: Andhra Pradesh stipulates that every employee with at least 6 months of employment who has undergone ligation or fallopian tube resection shall be used for the remaining services.

The total number of “special leave” that does not exceed 6 days can be obtained during the period. Kerala stipulates that male employees who have undergone sterilization can receive 6 days of paid “special leave” and female employees 14 days.



E) Maternity leave

The maternity leave for female employees is 12 weeks, but it cannot exceed 6 weeks before giving birth. In case of miscarriage or termination of pregnancy due to medical reasons, a maximum of 42 days of leave can be obtained.

The Maternity Leave and Benefits Act 1961 provides for maternity leave and other benefits before and after childbirth, abortion or medical termination of pregnancy.

The employer/employer shall pay the maternity leave benefits based on the average daily wage during the maternity leave, up to 12 weeks.



F) Annual leave extension

Unused annual leave can be extended or accumulated up to 45 days (West Bengal state is 56 days, Tripura state is 112 days)




G) Regarding the number of vacation days

The number of vacation days specified in the relevant labor laws and regulations is only the minimum number of days. The employer can specify more vacation days in the labor contract or service contract, but it must not be less than the minimum number specified in the law.



2. Regulations on working hours

Depending on the nature of the relevant industry or organization, the law stipulates the maximum number of working hours per day or week.


The maximum working hours stipulated by the “Factory Law” and “Store and Commercial Establishment Law” are 9 hours a day and 48 hours a week.


The “Factory Law” stipulates that women are not allowed to work at night. In individual states, there are also exceptions for certain business practices, such as the information network industry, call centers, and so on. But to obtain specific permits and approvals.


According to the “Factory Act” and the “Store and Commercial Establishment Act” of some states, work that exceeds 9 hours a day or more than 48 hours a week is considered “overtime.”

Employees who work overtime should be paid twice the normal wage. Regarding the limitation of overtime hours, various states have different regulations, and the limits for overtime hours may be different every day, every month, every quarter, or every year.



3. Safety of female employees

In order to ensure the safety of female employees, some states have enacted relevant rules, such as employers/employers must provide night shift female employees with a means of transportation between their residence and work place.

In addition, according to the “Sexual Harassment (Prevention, Prohibition, and Appeal) of Female Employees in the Workplace Act 2013”, all units and agencies should formulate regulations for preventing sexual harassment of female employees in night shifts.



Author’s Bio

Name: Ajay Rastogi

Educational Qualification: LLB

Profession: Advocate / Lawyer

Work Experience: 20 Years of Legal Practice

Profile Link:



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