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Indian Labour Law - Important Rights of Employees that Employers Need to Know About

Indian Labour Law is a cluster of different codes, acts, and norms applicable to the workers and employers across India. These laws cover almost all the industries in the country including the public and the private sector.

The private sector contributes over 22% of the GDP of India. The employees and the employers in the sector need to be aware of the applicable labour laws.

Important Rights of all Private Employees

Among many other things, here are some of the most important rights of employees that employers must know about –

Right to Leaves

The private sector employers must frame their leave policy for the employees as per the State legislation and rules. State-specific holidays vary from one state to the other. The employer shall preserve a minimum of 7 such holidays for national and state-specific festivals. All employers must give their employees three national holidays.

The employees are also entitled to the other leaves per Indian Labour Laws. Casual leaves, for instance, are the ones to meet unforeseen situations. Earned leaves are the ones carried over from the past year. Compensatory leaves, popularly known as comp- offs, shall be given to the employees if they work on the off days. The total number of leaves shall also have a share of sick leaves.

The employers can also provide leave without pay to the employees that have zero leaves left for the month/year. The daily wage will be deducted from the employee’s salary in such a case.

Right to Minimum Wage, Timely Salary, and Equal Pay

The employees are entitled to receive a minimum wage as part of the Minimum Wages Act. Employers cannot pay their employees’ wages below the acceptable limit as it will lead to the violation of Article 23.

The minimum wages can vary as per the type of employment, localities, classes of work, and age group.

The Act of Equal Remuneration, 1976 has the provision of equal pay for equal work for all employees irrespective of their gender. The private sector employers must abide by the legislation and pay the employees’ salaries on time. Employees with salaries of more than INR 18,000 can take civil action against their employer if the salaries are not paid on time.

Right to Benefits (Gratuity, Parental Leaves, Bonus)

The private employees shall also get several benefits from their employers. Employers need to ensure that they offer these benefits to their employees so that they made they meet the legal requirements and improve employee engagement.

  • Gratuity is one such benefit and it is the employer’s way of acknowledging and thanking its employee for the services and effort. The minimum tenure of the employee in the organization shall be 5 years to be eligible to receive gratuity. It is the lump sum given to the employee in case of retirement, resignation, or other events wherein the employee may not continue to provide the service to the organization.
  • The employees are also entitled to parental leaves. The current duration of maternity leaves is 26 weeks as per the Maternity Benefit Act, 1961. The employer cannot dismiss pregnant females on the grounds of their pregnancy.
  • That apart, employees are also entitled to bonus payments, and those may depend upon the profits made by the organization or an agreed-upon percentage. Private companies that are 5 or more years old and have 20 or more employees must pay a bonus as per the Payment of Bonus Act, 1965.

Provident Fund

Any public or private organization with 20 or more employees must register with the Employees Provident Fund Organisation of India (EPFO) to pay Provident Fund to its employees. The contribution for the PF comes equally from the employee and the employer and 12% of the employee’s total salary. It is a long-term savings scheme for the employees.

Prevention of Sexual Harassment in the Workplace

Indian Labour Laws protect the employees from any act of sexual harassment at the workplace. It is guaranteed as part of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013. The employers must know of the punishments applicable under the act to deal with such matters legally. As per this act, an organization with 10 or more employees must set up an internal Complaints Committee to handle the cases of sexual harassment. The criteria for the members of the committee are also present within the act.

The committee shall have:

  • Senior-level woman employee as the Presiding Officer of the committee
  • Two other employees with appropriate authority and social/legal knowledge
  • An external entity from a not-for-profit government organization working in the areas of women’s safety or issues around sexual harassment


The private sector employers shall know of the offenses that the act covers and identifies as cases of sexual harassment. For instance, if an employee makes sexually colored remarks, then the action is identified as a case of sexual harassment. Similarly, the employer shall have the awareness and knowledge of all such possible occurrences to effectively assist their employees in such matters.

The Indian labour law codes are defined to protect the rights of employees. It is essential for employers to know the codes and acts and comply with those. Connect with us if you need help with effortless labour law compliance.