Learn more about the Employee Management in India

Employee management is a term that encompasses all aspects of managing, developing, and communicating with employees. Thus, people management is about helping employees perform at their best every day in order to achieve the company’s overall goals. Therefore, good employee management ensures a good working relationship between the employer and the employees. The employment relationship is the legal bond between the employer and the employees. It exists when a person performs work under certain conditions receives a payslip. With Themis Partner, you can get all the legal document you need to manage your employees, such as an Employment Contract, a Warning Letter, an Employment termination letter and many others.

Table of contents

What is employee management in India?

Employee management in India is the management of subordinates in an organization. Often, in large organizations, many of these functions are performed by a specialized department, such as human resources, but all line managers are still required to supervise and administer the activities and ensure the employees’ well-being who report to them.

As such, personnel managers include those who head revenue-generating departments, such as accounting, customer service, or human resources. They play an advisory or support role by providing information and advice to the organization’s line managers. In addition, employee managers do not typically make operational decisions.

Finally, people management may involve the movement of a workforce and the use of human resources. There is also line management within personnel management, which includes the organization’s hierarchical system. Human resources and line management are often aligned because they both involve the employees of any organization.

What is the status of an employee in India?

An employee is a person who receives remuneration, a salary, in exchange for work.
All people employed by a factory are called “employees”. An employee can be a worker, a clerk, or a manager. All are placed in the category of employees. Therefore, a distinction is made between workers involved in the manufacturing process and workers who are outside of that process. An employee who is employed for a manufacturing process or any other type of work related to the manufacturing process is also called a “worker.” Thus, a clerk may only be placed on the employee list while a mechanic will be placed on both the employee and worker lists.

What is an employer in Indian labor law?

A person or company that employs one or more people, including for wages, is called an employer. An employer is an organization, a government entity, an agency, a company, a professional services firm, a non-profit association, a small business, or a store.

An employer is an authority that employs and pays employees for their work. It may be a single person or a corporation representing several people. In the relationship between employers and their employees, the employer is the party that usually sets the terms of employment and writes the contract. Then, they are required to provide workers with agreed-upon compensation for any work performed by them, which is contained in their contract’s terms. An employer is also a party legally responsible for the employment’s terms and conditions.

What are the laws governing employee management in India?

First and foremost, labor falls under the concurrent list of the Constitution of India, under which the central and state governments have the power to legislate on matters relating to labor and employment. Most central and state labor laws govern the working conditions of workers, while the employment conditions of non-workers are largely governed by private contracts.

Secondly, the main sources of Indian employment laws are:

➤ The Constitution of India
➤ Central and state statutes
➤ Judicial precedents
➤ Collective or individual contracts

Thirdly, the resolution of labor disputes in India must go through various stages. At the basic level, a dispute is brought before the conciliator to seek a solution. If the conciliation is successful, it is recorded in a written memorandum of understanding, which is binding on the parties. If not, the dispute is referred by the competent governmental body to the labor court, the labor council, or the national labor court. An award made by the competent industrial tribunal may be challenged before the relevant district court within its judicial jurisdiction. The relevant district court’s judgment may then be challenged before the Supreme Court by filing a special leave application.

Finally, labor laws in India fall into two categories, namely employer-employee relations and employee working conditions. Thus, laws such as the Industrial Disputes Act 1947 and the Industrial Employment Act 1946 deal primarily with employer-employee relations. Other statutes, such as the state-specific Shop and Business Establishment Acts, the Factory Act of 1948, and the Payment of Wages Act of 1936, deal primarily with the working conditions of employees. Laws such as the Employees’ Public Insurance Act of 1948, the Employees’ Provident Fund and Miscellaneous Provisions Act of 1952, and the Payment of Gratuity Act of 1972, among others, govern social security benefits for employees.

Who is responsible for enforcing Indian employment laws?

The main judicial bodies and government agencies responsible for the implementation and enforcement of employee management laws in India are as follows:

➤ Labor Courts, Industrial Tribunals, and the National Tribunal have jurisdiction to adjudicate labor disputes
➤ The Regional Commissioner is responsible for the wages payment’s enforcement, gratuities, contract labor, employees’ remuneration, and working conditions
➤ The Factory Management enforces the health and safety provisions in the factories
➤ The provident fund’s commissioner is responsible for the execution of the provident fund
➤ The Employees' State Insurance Corporation’s President is responsible for the enforcement of the Employees' State Insurance Act

What about the rules governing working hours and vacations in India?

The Factories Act of 1948 regulates the working hours of industrial enterprises with a workforce above a certain threshold. It provides that the employees’ weekly working hours may not exceed 48 hours and the daily working hours may not exceed nine hours. In addition, a break of at least half an hour is required for every five hours of work. Overtime is paid at double the usual rate of pay.

Night work is prohibited for young people between 7 pm. and 8 am., and for women between 7 pm. and 6 am. Employees are entitled to one day off per week, in principle on Sunday. In addition, an employee who has worked more than 240 days for one employer is entitled to paid leave, at the rate of one day off for every 20 days worked and one day off for every 15 days worked for young workers.

There are several vacation types for employees. Here are three vacation types:

1. Paid vacation: The legal minimum paid vacation in India is 21 days, although some managers may request additional leave;

2. Sick vacation: In India, employers are required to provide at least six days of paid sick vacation per year. Some employers offer an unpaid vacation for long-term medical conditions, but this is not required by law;

3. Maternity and paternity vacation: In India, female employees are entitled to 26 weeks of maternity vacation. The vacation can be taken up to eight weeks before the expected date of delivery, while the rest of the vacation can be taken after delivery. Female employees are also entitled to a medical allowance of 3,500 Indian rupees. If a woman is classified as a factory employee, maternity vacation is paid from the government’s social funds. Otherwise, the employer is responsible for paying for all maternity vacations. Although India does not require paternity vacation, some employers may offer it as a benefit.

What are the working conditions in India?

The Factories Act contains a series of provisions aimed at protecting employees’ safety and health at work. It imposes certain social measures on employers: a rest and catering room must be provided in companies employing at least 150 employees, a canteen in companies employing at least 250 employees, and a nursery if the company employs more than 30 women.

What is the minimum wage in India?

First and foremost, the Minimum Wages Act of 1948 set out the rules for minimum wages. Due to the wide disparities in India, it was never intended to set a uniform minimum wage applicable throughout the country and in all activities sectors.

Secondly, both the Union of India and the states have the option of setting industry-specific minimum wages. The federal legislation covers 46 industries, which are very finely differentiated, with minimum wages ranging from Rs. 67.43 to Rs. 107.78 per day.
However, as the federal government does not have the power to set a nationwide minimum wage, it is trying to promote the concept of a national minimum wage floor by encouraging Union states not to set a minimum wage below Rs. 66 per day.

Finally, minimum wages are reviewed at least every five years, after a consultative phase. As a result, the government may set up a committee to investigate and make recommendations to the government, or it may publish a proposal in the Official Gazette for an increase in the minimum wage, seek feedback from all interested parties and then make a decision based on this information.

What about regarding overtime and public holiday work in India?

First, any work performed more than the prescribed maximum work hours entitles employees to receive overtime pay. The Factories Act provides for two times the regular rate of pay for work performed beyond the standard maximum hourly limits. In addition, the Factories Act limits the amount of overtime that can be worked. For example, the Factories Act provides that the overtime hours total number may not exceed 50 in any three consecutive months.

Second, employees in India are entitled to 10 paid public holidays. However, these holidays vary by state, local custom, and religion. The government does not dictate which public holidays an employee must be paid. Rather, it is the employer who decides which 10 paid public holidays an employee gets.

How to terminate an Employment Agreement in India?

Firstly, employers face several legal risks because of unjustified terminations or failure to follow due process. They should therefore consider constructing contracts and human resources materials to ensure that senior management, human resources personnel, and employees are fully aware of their rights and responsibilities. If there is no employment contract or if the employment contract does not specify a method of termination, the employer must follow state law. In such a case, the employer must follow the separate and distinct labor laws of each state in India to terminate employment.

In most cases, employment contracts describe the termination process in detail. In this regard, terminations are mostly by mutual agreement, and in some cases, contractual employment is fixed for a specific period. For example, consultants to international organizations or interns in private organizations often have defined work periods. Employment is considered to be terminated after such a contract unless there is a new contract, or the original contract’s terms are changed. As in most countries, employees who are terminated by employers often receive one month’s notice or payment of one month’s salary instead of notice.

As noted above, any termination must comply with state and federal laws, as they take precedence over contractual provisions. The laws become particularly important when there is no defined process for termination. In this case, state law becomes the basic rule for terminating employment. It depends on the employer’s field of activity.

Secondly, we will examine the laws of various states relating to termination in several important investment destinations in India, including the Union Territory of Delhi, Maharashtra, Karnataka, and Tamil Nadu.

Labor Laws in the Union Territory of Delhi

Under the Delhi Shops and Establishments Act, 1954, an employer cannot dismiss an employee who has worked with the company for more than 3 months without giving him at least 30 days’ notice or pays instead of notice. If the reason for termination is gross misconduct, the employer does not need to give the employee notice. However, in these circumstances, the employee should be allowed to explain the basis behind the charges against him or her before the termination.

Labor law in Maharashtra

Under the Maharashtra Shops and Establishments Act of 1948, an employer cannot terminate an employee who has been with the company for more than one year without giving at least 30 days written notice. If the employee has been with the company for more than 3 months but less than a year, the employer must give the employee at least 14 days’ notice. Under the terms and conditions, notice is not required if the employee is terminated for gross misconduct.

Labor laws in Karnataka and Tamil Nadu

Under the Karnataka Shops and Establishments Act of 1961 and the Tamil Nadu Shops and Establishment Act of 1947, an employer may not dismiss an employee who has been with the company for more than six months unless “reasonable cause” is given. In addition, an employer must give one month’s notice. If gross misconduct is the reason for termination, no notice or refund is required.

Thirdly, the Industrial Disputes Act of 1947 applies to employees who do not work in management or administrative positions. The Act states that any employee in this category who has worked for more than one year may be dismissed only after permission has been granted by an appropriate governmental body. In addition, the employer must provide just cause for the dismissal and pay severance pay equivalent to 15 days of the average wage for each year of uninterrupted employment.

Fourthly, there are several causes for termination of the contract, including the following:

➤ If the employee is guilty of insubordination or disobedience
➤ Theft, fraud, or dishonesty
➤ Intentional damage to or loss of the employer's property
➤ Participation in bribes or illegal gratuities
➤ Unauthorized absence of more than 10 days
➤ Frequent lateness
➤ Improper conduct during working hours
➤ Habitual neglect of duty

Then, in the ordinary termination case, a 30-day notice is required. The employer will have to notify governmental authorities of the termination and the courts may require a fair hearing for the employee with the presence of lawyers. Therefore, this type of termination may be extended.

Finally, in the compensation pay case, this only applies to ordinary terminations if the employee has been with the company for at least 2 years and the reason for termination is because of excess staff. The compensation pay is calculated on a case-by-case basis, depending on the length of employment, results, and salary level.

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