EVOLUTION OF LABOUR LEGISLATION IN INDIA

“EVOLUTION OF LABOUR LEGISLATION IN INDIA”

FINAL DRAFT SUBMITTED IN THE PARTIAL FULFILENT OF THE COURSE

TITLED-

LABOUR LAW -1

Submitted by: Submitted to:

AMISHA PRAKASH Ms. Pallavi Shankar

ROLL NO:2005 (4THSemester) ( Faculty of Law)

B.B. A, LL. B, (CNLU, PATNA)

Academic session-2018-2023

CHANAKYA NATIONAL LAW UNIERSITY

Nyaya Nagar, Mithapur,Patna 80001

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 EVOLUTION OF LABOUR LEGISLATION IN INDIA

DECLARATION

I Amisha Prakash declare the work entitled “EVOLUTION OF LABOUR

LEGISLATION IN INDIA” being submitted to Chanakya National Law University for the
project in the subject of “Labour Law” is original and where the text is taken from the
authenticated books, articles or web articles, appropriate reference is given. It is true in my
best of knowledge.

Amisha Prakash

Roll No : 2005

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 EVOLUTION OF LABOUR LEGISLATION IN INDIA

CERTIFICATE

This is to certify that the project entitled “EVOLUTION OF LABOUR LEGISLATION

IN INDIA” submitted by Ms. Amisha Prakash for the project work in the subject of
Evidence Law embodies independent and original research work carried out by him under my
supervision and guidance.

To the best of my knowledge and belief, it is his original work submitted to fulfill the project
assignment for the of fourth semester of B.A.LL.B. Programme during the academic year
2020-21

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 EVOLUTION OF LABOUR LEGISLATION IN INDIA

TABLE OF CONTENTS
1) INTRODUCTION.................................................................................................................5
1.1)RESEARCH METHODOLOGY....................................................................................6
1.2) RESEARCH QUESTIONS............................................................................................6
1.3)HYPOTHESIS.................................................................................................................7
1.4) AIMS AND OBJECTIVES............................................................................................7
2) HISTORICAL BACKGROUND OF LABOUR LAWS IN INDIA.....................................7
3).CONSTITUTIONAL PROVISIONS WITH REGARD TO LABOUR LAWS...................8
4) LABOUR LAWS IN INDIA................................................................................................9
5) CONCLUSION AND SUGGESTIONS..............................................................................14
BIBLIOGRAPHY....................................................................................................................16

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 EVOLUTION OF LABOUR LEGISLATION IN INDIA

1) INTRODUCTION
The term ‘labour’ means productive work especially physical work done for wages. Labour
law also known as employment law is the body of laws, administrative rulings, and
precedents which address the legal rights of, and restrictions on, working people and their
organizations. There are two broad categories of labour law. First, collective labour law
relates to the tripartite relationship between employee, employer and union. Second,
individual labour law concerns employees’ rights at work and through the contract for work.
The law relating to labour and employment in India is primarily known under the broad
category of "Industrial Law". The prevailing social and economic conditions have been
largely influential in shaping the Indian labour legislation, which regulate various aspects of
work such as the number of hours of work, wages, social security and facilities provided.
The labour laws of independent India derive their origin, inspiration and strength partly from
the views expressed by important nationalist leaders during the days of national freedom
struggle, partly from the debates of the Constituent Assembly and partly from the provisions
of the Constitution and the International Conventions and Recommendations. The relevance
of the dignity of human labour and the need for protecting and safeguarding the interest of
labour as human beings has been enshrined in Chapter-III (Articles 16, 19, 23 & 24)1 and
Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India 2 keeping in
line with Fundamental Rights and Directive Principles of State Policy. The Labour Laws
were also influenced by important human rights and the conventions and standards that have
emerged from the United Nations. These include right to work of one’s choice, right against
discrimination, prohibition of child labour, just and humane conditions of work, social
security, protection of wages, redress of grievances, right to organize and form trade unions,
collective bargaining and participation in management. The labour laws have also been
significantly influenced by the deliberations of the various Sessions of the Indian Labour
Conference and the International Labour Conference. Labour legislations have also been
shaped and influenced by the recommendations of the various National Committees and
Commissions such as First National Commission on Labour (1969) under the Chairmanship

1
http://www.aaptaxlaw.com/constitution-of-india/fundamental-rights-article---16---19---23-24- of-
india.html( Accessed on 14th February 2020 ; 8:10pm)
2
https://shodhganga.inflibnet.ac.in/bitstream/10603/77961/9/09_chapter%2004.pdf (Accessed on 14th February
2020 ; 8:50pm)

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 EVOLUTION OF LABOUR LEGISLATION IN INDIA

of Justice Gajendragadkar,3 National Commission on Rural Labour (1991), 4Second National

Commission on Labour (2002) under the Chairmanship of Shri Ravindra Varma 5 etc. and
judicial pronouncements on labour related matters specifically pertaining to minimum wages,
bonded labour, child labour, contract labour etc. Under the Constitution of India, Labour is a
subject in the concurrent list where both the Central and State Governments are competent to
enact legislations. As a result , a large number of labour laws have been enacted catering to
different aspects of labour namely, occupational health, safety, employment, training of
apprentices, fixation, review and revision of minimum wages, mode of payment of wages,
payment of compensation to workmen who suffer injuries as a result of accidents or causing
death or disablement, bonded labour, contract labour, women labour and child labour,
resolution and adjudication of industrial disputes, provision of social security such as
provident fund, employees’ state insurance, gratuity, provision for payment of bonus,
regulating the working conditions of certain specific categories of workmen such as
plantation labour, beedi workers etc.

1.1)RESEARCH METHODOLOGY
Mostly doctrine sources and primary method of research was adopted in the making of this
project. Few primary and secondary methods were used. Some literary works and books and
articles were referred and the internet through various websites were used extensively for the
collection of data which was required for the study needed for this research In the present
study it has been the endeavour of the researcher to make use of different approaches as per
requirement of the study of different facets of labour policy and its effectiveness from time to
time.

1.2) RESEARCH QUESTIONS

1. Examine the various periods through which Indian labour law has evolved up to the
present time?

2. Up to what extent the labour law system can be seen to have fulfilled its two core
objectives?

3. Whether labour has extensive legislation providing for minimum standards of employment,
social security, occupational, health and safety and so on?
3
https://casi.sas.upenn.edu/sites/default/files/iit/National%20Commission%20on%20Labour%20Report.pdf
(Accessed on 14th February 2020 ; 9:13pm)
4
https://www.indianlabourarchives.org/bitstream/123456789/190/1/Report%20of%20the%20National
%20Commission%20on%20Rural%20Labour.pdf (Accessed on 15th February 2020 ; 8:00pm)
5
http://www.doccentre.org/docsweb/LABOURLAWS/IIlabourcomm.htm

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4. What induces employer to organize and establish labour welfare for their employees?

1.3)HYPOTHESIS
Despite the efforts made by every successive government, it has not proved effective to the
desired extent and has left much to be desired.

1.4) AIMS AND OBJECTIVES

To identify the shortcomings in the existing labour policy and its effectiveness and to make
suggestion to improve upon the existing labour policy and to visualise the future of labour
legislations in the 21st century.

2) HISTORICAL BACKGROUND OF LABOUR LAWS IN INDIA

The law relating to labour and employment is also known as Industrial law in India. The
history of labour legislation in India is interwoven with the history of British colonialism.
The industrial/labour legislations enacted by the British were primarily intended to protect the
interests of the British employers. Considerations of British political economy were naturally
paramount in shaping some of these early laws. Thus came the Factories Act. It is well
known that Indian textile goods offered stiff competition to British textiles in the export
market and hence in order to make India labour costlier the Factories Act was first introduced
in 18836 because of the pressure brought on the British parliament by the textile magnates of
Manchester and Lancashire. Thus India received the first stipulation of eight hours of work,
the abolition of child labour, and the restriction of women in night employment, and the
introduction of overtime wages for work beyond eight hours. While the impact of this
measure was clearly welfares the real motivation was undoubtedly protectionist.

The earliest Indian statute to regulate the relationship between employer and his workmen
was the Trade Dispute Act, 1929 (Act 7 of 1929). Provisions were made in this Act for
restraining the rights of strike and lock out but no machinery was provided to take care of
disputes. The original colonial legislation underwent substantial modifications in the post-
colonial era because independent India called for a clear partnership between labour and
capital. The content of this partnership was unanimously approved in a tripartite conference
in December 1947 in which it was agreed that labour would be given a fair wage and fair
working conditions and in return capital would receive the fullest co-operation of labour for
uninterrupted production and higher productivity as part of the strategy for national economic
6
https://www.nationalarchives.gov.uk/education/resources/1833-factory-act/ (Accessed on 3rd March 2020 ;
5:10pm)

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development and that all concerned would observe a truce period of three years free from
strikes and lockouts. Ultimately the Industrial Disputes Act (the Act) brought into force on
01.04.1947 repealing the Trade Disputes Act 19297 has since remained on statute book.

3).CONSTITUTIONAL PROVISIONS WITH REGARD TO LABOUR LAWS

The relevance of the dignity of human labour and the need for protecting and safeguarding
the interest of labour as human beings has been enshrined in Chapter-III (Articles 16, 19, 23
& 24) and Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India
keeping in line with Fundamental Rights and Directive Principles of State Policy. Labour is a
concurrent subject in the Constitution of India implying that both the Union and the state
governments are competent to legislate on labour matters and administer the same. The bulk
of important legislative acts have been enacted by the Parliament.

Constitutional Status8

Union List Concurrent List

Entry No. 55: Regulation of labour and Entry No. 22 :Trade Unions: Industrial and
safety in mines and oil fields labour disputes.
Entry No. 61 : Industrial disputes Entry No. 23: Social Security and
concerning Union employees Insurance, employment and unemployment
Entry No. 65 Union agencies and Entry No. 24: Welfare of about Including
Institutions for “Vocational ....training....” conditions of work, provident funds,
employers “ Invalidity and old age pension
and maternity benefit.

The legislations can be categorized as follows:

 Labour laws enacted by the Central Government, where the Central Government has
the sole responsibility for enforcement.
 Labour laws enacted by Central Government and enforced both by Central and State
Governments.
 Labour laws enacted by Central Government and enforced by the State
Governments.

7
https://labour.gov.in/industrialrelations/acts-administered-irpl-section (Accessed on 3rd March 2020 ; 5:50pm)
8
https://labour.gov.in/constitutional-provision(Accessed on 4rd March 2020 ; 5:00pm)

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 Labour laws enacted and enforced by the various State Governments which apply to
respective States.

The Constitution of India provides detailed provisions for the rights of the citizens and also
lays down the Directive Principles of State Policy which set an aim to which the activities of
the state are to be guided. These Directive Principles provide:

 for securing the health and strength of employees, men and women;
 that the tender age of children are not abused;
 that citizens are not forced by economic necessity to enter avocations unsuited to their
age or strength;
 just and humane conditions of work and maternity relief are provided; and e. that the
Government shall take steps, by suitable legislation or in any other way, to secure the
participation of employee in the management of undertakings, establishments or other
organisations engaged in any industry.

4) LABOUR LAWS IN INDIA

The history of labour legislation in India is naturally interwoven with the history of British
colonialism. Considerations of British political economy were naturally paramount in shaping
some of these early laws. In the beginning it was difficult to get enough regular Indian
workers to run British establishments and hence laws for indenturing workers became
necessary. This was obviously labour legislation in order to protect the interests of British
employers. Then came the Factories Act. It is well known that Indian textile goods offered
stiff competition to British textiles in the export market and hence in order to make India
labour costlier the Factories Act was first introduced in 1883 because of the pressure brought
on the British parliament by the textile magnates of Manchester and Lancashire. Thus we
received the first stipulation of eight hours of work, the abolition of child labour, and the
restriction of women in night employment, and the introduction of overtime wages for work
beyond eight hours. While the impact of this measure was clearly welfares the real
motivation was undoubtedly protectionist to date, India has ratified 39 International Labour
Organisation (ILO) conventions of which 37 are in force.9

9
https://labour.gov.in/lcandilasdivision/india-ilo (Accessed on 4rd March 2020 ; 6:10pm)

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 EVOLUTION OF LABOUR LEGISLATION IN INDIA

The Labour Laws of India originated and express the socio-political views of leaders such as
Nehru from pre-1947 independence movement struggle.10 These laws were expanded in part
after debates in Constituent Assemblies and in part from international conventions and
recommendations such as of International Labour Organisation. The current mosaic of Indian
laws on employment are thus a combination of India’s history during its colonial heritage,
India’s experiments with socialism, important human rights and the conventions and
standards that have emerged from the United Nations. The laws cover the right to work of
one’s choice, right against discrimination, prohibition of child labour, fair and humane
conditions of work, social security, protection of wages, and redress of grievances, right to
organize and form trade unions, collective bargaining and participation in management. India
has numerous Labour Laws such as those prohibiting discrimination and Child Labour, those
that aim to guarantee fair and humane conditions of work, those that provide social security,
minimum wage, right to organise, form trade unions and enforce collective bargaining.

India also has numerous rigid regulations such as maximum number of employees per
company in certain sectors of economy, and limitations on employers on retrenchment and
layoffs, requirement of paperwork, bureaucratic process and government approval for change
in labour in companies even if these are because of economic conditions.

Indian Labour Laws are considered to be very highly regulated and rigid as compared to
those of other countries in the world. The intensity of these laws have been criticised as the
cause of low employment growth, large unorganised sectors, underground economy and low
per capita income. These have led many to demand reforms for Labour market flexibility in
India. India has over 50 major Acts and numerous laws that regulate employers in matters
relating to industrial relations, employee unions as well as who, how and when enterprises
can employ or terminate employment. Many of these laws survive from British colonial
times, while some have been enacted after India’s independence from Britain.

India is a federal form of government. Labour is a subject in the concurrent list of the Indian
Constitution and therefore labour matters are in the jurisdiction of both central and state
governments. Both central and state governments have enacted laws on labour relations and
employment issues. Some of the major laws relevant to India are:

Workmen’s Compensation Act of 192311

10
http://www.bbc.co.uk/history/british/modern/partition1947_01.shtml(Accessed on 5th
March 2020 ; 4:00pm)
11
https://labour.gov.in/sites/default/files/TheWorkmenAct1923(1).pdf (Accessed on 6th March 2020 ; 6:00pm)

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The Workmen’s Compensation Act compensates a workman for any injury suffered during
the course of his employment or to his dependents in the case of his death. The Act provides
for the rate at which compensation shall be paid to an employee. This is one of many social
security laws in India.

Trade Unions Act of 1926 12

This Act enacted the rules and protections granted to Trade Unions in India. This law was
amended in 2001.

Payment of Wages Act of 193613

The Payment of Wages Act regulates by when wages shall be distributed to employees by
the employers. The law also provides the tax withholdings the employer must deduct and pay
to the central or state government before distributing the wages.

Industrial Employment (Standing orders) Act of 194614

This Act requires employers in industrial establishments to define and post the conditions of
employment by issuing so-called standing orders. These standing orders must be approved by
the government and duly certified. These orders aim to remove flexibility from the employer
in terms of job, hours, timing, leave grant, productivity measures and other matters. The
standing orders mandate that the employer classify its employees, state the shifts, payment of
wages, rules for vacation, rules for sick leave, holidays, rules for termination amongst others.
Industrial Disputes Act of 194715

The Industrial Disputes act 1947 regulates how employers may address industrial disputes
such as lockouts, layoffs, retrenchment etc. It controls the lawful processes for reconciliation,
adjudication of labour disputes. The Act also regulates what rules and conditions employers
must comply before the termination or layoff of a workman who has been in continuous
service for more than one year with the employer. The employer is required to give notice of
termination to the employee with a copy of the notice to appropriate government office
seeking government’s permission, explain valid reasons for termination, and wait for one
12
https://archive.india.gov.in/business/legal_aspects/trade_unions.php(Accessed on 6th March 2020 ; 7:05pm)
13
https://paycheck.in/career-tips/women-paycheck/women-legislation/payment-of-wages-act-1936(Accessed on
6th March 2020 ; 5:00pm)
14
https://clc.gov.in/clc/acts-rules/industrial-employment-standing-orders-act-1946 (Accessed on 7th
March 2020 ; 5:10pm)
15
https://indiacode.nic.in/handle/123456789/2169?locale=en (Accessed on 7th March 2020 ; 6:05pm)

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month before the employment can be lawfully terminated. The employer may pay full
compensation for one month in lieu of the notice. Furthermore, employer must pay an
equivalent to 15 days average pay for each completed year of employee’s continuous service.
Thus, an employee who has worked for 4 years in addition to various notices and due process
must be paid a minimum of the employee’s wage equivalent to 60 days before retrenchment,
if the government grants the employer permission to layoff.

Minimum Wages Act of 194816

The Minimum Wages Act prescribes minimum wages in all enterprises and in some cases
those working at home per the schedule of the Act. Central and State Governments can and
do revise minimum wages at their discretion. The minimum wage is further classified by
nature of work, location and numerous other factors at the discretion of the government. The
minimum wage ranges between ₹143 to 1120 per day for work in the so-called central
sphere. State governments have their own minimum wage schedules.

Industries (Regulation and Development) Act of 195117

This law declared numerous key manufacturing industries under its first Schedule. It placed
many industries under common central government regulations in addition to whatever laws
state government enact. It also reserved over 600 products that can only be manufactured in
small scale enterprises, thereby regulating who can enter in these businesses, and above all
placing a limit on the number of employees per company for the listed products. The list
included all key technology and industrial products in the early 1950s, including products
ranging from certain iron and steel products, fuel derivatives, motors, certain machinery,
machine tools, to ceramics and scientific equipment.

Employees Provident Fund and Miscellaneous Provisions Act of 195218

This Act seeks to ensure the financial security of the employees in an establishment by
providing for a system of compulsory savings. The Act provides for establishments of a
contributory Provident Fund in which employees’ contribution shall be at least equal to the
16
https://labour.gov.in/sites/default/files/TheMinimumWagesAct1948_0.pdf (Accessed on 7th March 2020 ;
8:10pm)
17
http://legislative.gov.in/sites/default/files/A1951-65.pdf (Accessed on 7th March 2020 ; 9:05pm)
18
https://indiacode.nic.in/handle/123456789/2152?view_type=browse&sam_handle=123456789/1362
(Accessed on 8th March 2020 ; 9:13pm)

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contribution payable by the employer. Minimum contribution by the employees shall be 10-
12% of the wages. This amount is payable to the employee after retirement and could also be
withdrawn partly for certain specified purposes.

Maternity Benefit Act of 196119

The Maternity Benefit Act regulates the employment of the women and maternity benefits
mandated by law. Any woman employee, who worked in any establishment for a period of at
least 80 days during the 12 months immediately preceding the date of her expected delivery,
is entitled to receive maternity benefits under the Act. The employer is required to pay
maternity benefits, medical allowance, maternity leave and nursing breaks.

Payment of Bonus Act of 196520

This Act, applies to an enterprise employing 20 or more persons. The Act requires employer
to pay a bonus to persons on the basis of profits or on the basis of production or productivity.
The Act was modified to require companies to pay a minimum bonus, even if the employer
suffers losses during the accounting year. This minimum is currently 8.33 percent of the
salary.

Payment of Gratuity Act of 1972 21

This law applies to all establishments employing 10 or more workers. Gratuity is payable to
the employee if he or she resigns or retires. The Indian government mandates that this
payment be at the rate of 15 days salary of the employee for each completed year of service
subject to a maximum of ₹1000000.

The Contract Labour (Prohibition and Regulation) Act 197022

This act provides a mechanism for registration of contractors (if more than twenty workers
are engaged) and for the appointment of a Tripartite Advisory Board that investigates
particular forms of contract labour, which if found to be engaged in areas requiring perennial
19
https://labour.gov.in/sites/default/files/TheMaternityBenefitAct1961.pdf(Accessed on 9th March 2020 ;
3:10pm)
20
https://labour.gov.in/wageboard/information-payment-bonus-1965(Accessed on 9thMarch 2020 ; 3:15pm)
21
https://clc.gov.in/clc/sites/default/files/PaymentofGratuityAct.pdf (Accessed on 9th March 2020 ; 4:13pm)
22
http://labour.bih.nic.in/Acts/contract_labour_regulation_and_abolition_act_1970.pdf (Accessed on 10th
March 2020 ; 12:10pm)

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work connected with the production process, then the Board could recommend its abolition.
A tricky legal question has arisen as to whether the contract workers should be automatically
absorbed or not after the contract labour system is abolished. Recently a Constitutional Bench
of the Supreme Court held that there need not be such automatic absorption – in effect this
‗abolishes’ the contract labourer and has given rise to a serious anomaly.

5) CONCLUSION AND SUGGESTIONS

India’s rigid labour laws and excessive regulations assumed to protect the labour are the
cause of slow employment growth in high paying, organised sector. India’s labour-related
acts and regulations have led to labour-market rigidity. This encourages shadow economy for
entrepreneurs, an economy that prefers to employ informal labour to avoid the complicated
and opaque laws. In particular, Indian Labour Legislation such as the Industrial Disputes Act
of 1947 added rigid Labour Laws and one sided trade union laws. Although the Act does not
prohibit layoffs and retrenchments, it does require entrepreneurs and companies to get the
permission from government officials to fire an employee for absenteeism, retrench
employees for economic reasons, or to close an economically nonviable company. This
bureaucratic process can stretch into years, and the government officials have consistently
and almost always denied such permission. As a result, the scholars argue that India’s
inflexible labour laws have created a strong disincentive to formally register new companies
and hire additional workers in existing organised sector companies. Unlike China, Indian
businesses have avoided substituting India’s abundant labour for export or domestic
opportunities, or use labour instead of expensive equipment for quality control or other
operations.

SOME SUGGESTIONS ARE:

The researcher concluded the entire research work and has the following suggestions to offer
through this research work:

 In addition to codification and simplification of Labour Laws it is also suggested for

creating online single window system for making compliance as user friendly, simple
and for bringing transparency. Employers can seek the registration, license etc. online
and can also file returns etc. online

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 There should be some method for resolving disputes and it should not always be
through slogan shouting, strikes etc. Issues should be solved through goodwill and not
with confrontation.
 Due to already overburdening of judicial system, a separate independent judicial
system for labour issues may be created, instead of handing over power to Labour
Department
 Labour laws should be applied universally and there should not be categorization like
applicable to 5-10 or 20 employees
 There should be a law for migrant labours. Migrant workers are not provided even
minimum wages and they should be protected.

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BIBLIOGRAPHY
1) Websites;
 https://www.mondaq.com/india/Employment-and-
HR/631074/A-Brief-Guide-To-Labour-And-Industrial-Laws-
Of-India
 https://www.thebetterindia.com/99413/india-employees-labour-laws/
 https://www.ikigailaw.com/summary-of-key-labour-law-legislations/
 https://www.vskills.in/certification/blog/labour-laws-in-india/
 https://www.india-briefing.com/news/due-process-terminating-employee-
india-14363.html/
 https://www.lexology.com/library/detail.aspx?g=fa2fb547-5828-419a-
bd3b-4ef01b612643
2) Books;

 Labour and Industrial Laws- by P. K. PADHI (Originally

published: 2007)
 Obligations of Employers Under Labour Laws – by H.L
Kumar
 Industrial Relations and Labour Laws Paperback – 30 Aug
2008-by B. D. Singh (Author)
 Taxman’s Labour Laws with Code on Wages (2020 Edition)
Paperback – 2019 by Taxman Publication Pt. Ltd. (Author)
 Compliances Under Labour Laws - A User's Guide to
Adhere with the Provisions Under Various Employment
Related Acts Paperback – 21 Sep 2017 by H L Kuma
3) Statues;
 The Industrial Disputes Act, 1947
 Workmen Compensation act, 1923
 Constitution of India, 1947

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