Labour Legislation and Social Security in India
Labour Legislation and Social Security in India
This domain tests the legal architecture protecting workers and the main social-security schemes. Expect classification of statutes and benefit calculations.
Core framework
- Labour laws may be protective (Factories Act 1948), regulatory (Industrial Disputes Act 1947), wage-related (Minimum Wages Act 1948), welfare or social security.
- Social security includes Employees' State Insurance (ESI) for sickness, maternity and employment injury; Employees' Provident Fund (EPF) for retirement; Payment of Gratuity Act 1972; Maternity Benefit Act 1961; and Employee's Compensation Act 1923.
- ESI generally covers factories and establishments at the prescribed threshold; EPF applies to covered establishments; gratuity requires five years' continuous service, with exceptions for death or disablement.
- The Code on Social Security 2020 consolidates these laws when brought into force.
Worked example
An employee with 10 years' service and last drawn basic plus DA of ₹20,000 leaves. Gratuity is 15/26 × ₹20,000 × 10 = ₹1,15,384.62, subject to the statutory ceiling. If service were 4 years and 11 months, gratuity would not generally be payable unless an exception applies. The calculation uses wages, not total CTC.
Traps
Do not confuse ESI with EPF. Do not apply gratuity to every resignation under five years. Do not assume maternity benefit is always 26 weeks; it depends on surviving children and other conditions. Social security is not only provident fund.