Ministry of Labour and Employment

Ministry of Labour and Employment is responsible to protect and safeguard the interests of workers, and to promote a healthy work environment for higher production and productivity. It implements labour laws along with the state governments as labour is a subject in the concurrent list.

Associated Organisations:

Employees Provident Fund Organisation (EPFO) is tasked to assist the Central Board of Trustees, a statutory body, to administer a compulsory Provident Fund Scheme, a Pension Scheme, and an Insurance scheme for the workforce engaged in the organised sector in India.

Employees’ State Insurance Corporation (ESIC) is a statutory, autonomous organisation that implements the ESI scheme, which is a comprehensive social security scheme designed to cover workers against financial distress arising out of sickness, disablement, or death due to employment related injuries. The ESI Act applies to premises where 10 or more persons are employed, and covers employees with wages upto Rs 21,000 a month (revised in 2017 from the earlier limit of Rs 15,000 a month).

In June 2019, the government reduced the rate of contribution for medical care under the ESI Act to 4% from 6.5% of the employee’s wage – the first such revision since 1997. This 4% comprises of employer’s contribution of 3.25% and employee’s contribution of 0.75%.

EPF (Employees’ Provident Fund Scheme 1952) and EPS (Employees’ Pension Scheme 1995) are two different retirement saving schemes under Employees’ Provident Funds and Miscellaneous Provisions Act 1952, meant for salaried employees. In both EPFO and ESIC, the employer and the employee contribute an equal amount.


PM-SYM. Launched in 2019.

Pradhan Mantri Shram Yogi Maandhan (PM-SYM) is a pension scheme for unorganised workers. Anyone who is 18-40 years old, earns less than 15000 per month, and is not covered under other pension schemes, can enroll for this scheme. The scheme provides assured pension of rupees 3000 per month after attainment of 60 years age.

Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) is an scheme to incentivise formalisation of employment, whereby the government will be paying 8.33% of EPS contribution of the employer for new employees, so as to reduce the exclusion of workers from coverage of the social security benefits available for formal or organised sector workforce.

Facilitatory web-based portals:

  • Shram Suvidha Portal – is a unified web portal serving as a interface between employers, employees, and labour law enforcement agencies. A unique Labour Identification Number (LIN) has been issued to each inspectable unit, and inspection authorities are required to transparently submit their reports without harassing the business owners.
  • Samadhan portal for resolution of industrial disputes between workers and employers has been launched in 2019.
  • National Career Services (NCS) is an ICT based job portal connecting job seekers to job providers.

Labour reforms undertaken:

Governance reforms:

  • Ease of compliance to maintain registers under various labour laws.
  • Rationalisation of forms and reports under certain labour laws.
  • Enabling flexibility to employ people in all sectors – by allowing Fixed Term Employment.

Legislative actions:

  • Child Labour (Prohibition and Regulation) Amendment Act, 2016 bans employing children (below 14).
  • Maternity Benefit Amendment Act, 2017
    • It increased paid maternity leave from 12 to 26 weeks.
    • It stipulates mandatory creche facility for establishments employing 50 or more employees.
    • Criticism-
      • Informal sector not covered.
      • Costs to be borne wholly by the employees. This will hurt the demand for female labour.
  • Code on Wages Bill – 
    • It proposes a national minimum wage, and amalgamates provisions of four labour laws: The Minimum Wages Act 1948, The Payment of Wages Act 1936, The Payment of Bonus Act 1965, The Equal Remuneration Act 1976.

Fixed Term Employment allowed for all sectors

In 2018, the government made an amendment, to the Industrial Employment (Standing Orders) Central Rules 1946, which makes fixed term employment permissible in all sectors. The move is a step towards liberalisation, and will make it easier for companies to hire workers based on seasonal trends, along with reducing the role of middlemen. It will also help workers to get formal jobs and enjoy social security benefits. The trade unions however opposed the move, and registered their protest that permitting FTE for all sectors will end the system of hiring permanent workmen, and temporary contracts will become the norm.

Fixed Term Employment Workman Vs. Permanent Workman Vs. Temporary Workman

According to Industrial Employment Central Rules 2018, a fixed term employment (FTE) workman is a workman who has been engaged on the basis of a written contract of employment for a fixed period. Beyond this period, the workman turns into a temporary workman, who can be fired at will with no notice of termination of employment necessary. Permanent workmen cannot be converted into FTE workman after Mar 16, 2018. FTE workmen will get equal work hours, wages, allowances and other benefits as that of a permanent workman.

Related Information:

Opinion: India’s onerous labour regulations make labour artificially more expensive, which is not reflective of its abundance. A holistic labour policy is required to substitute rigid controls with transparency while ensuring protection of basic rights of the labour force, to make labour market competitive. Influential Labour Unions are sometimes seen as impeding labour reforms as their membership includes only formal employment, leaving interests of informal sector workers unattended and unconcerned by the unions.

Also See:
Child Labour
Bonded Labour Rehabilitation Scheme
Safety, Health and Environment at Workplace; Sexual Harassment at Workplace.

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