Hire in India

Labor laws and taxes

Labor laws

Roughly 90% of India’s labor force works in the “unorganized,” or informal, sector and until 2020, it was not protected by minimum wage and social security laws and other benefits enjoyed by workers in the formal sector.

In 2020, India passed the Labour Reforms Bill, which consolidated 29 existing laws into four labor codes:

• The Code on Wages (encompassing four laws)

• Industrial Relations Code (encompassing three laws)

• Occupational Safety, Health, and Working Conditions Code (encompassing 13 laws)

• Code on Social Security (encompassing nine laws)

The four codes seek to ensure that all workers in India enjoy the same protections. The codes must be implemented within India’s states, but interpretation of the codes may hamper implementation. The Code on Wages, for example, defines “worker” and “employee” differently and provides different provisions for each.     

Many acts are subsumed under these codes. For example, subsumed laws under the Code on Wages include the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; and the Payment of Bonus Act, 1965.  

Overall, India’s labor laws cover topics such as:  

• Minimum wages 

• Working hours 

• Working conditions  

• Termination 

• Social security contributions 

• Trade union rights  

• Equality  

• Child labor  

With HR and legal experts based in India, Safeguard Global manages compliance with labor laws so you don’t have to. Contact us to learn more about how our EOR handles compliance in India.