Labour Law Questions and Answers in India

Employment in India is regulated by the Industrial Disputes Act, 1947, the Shops and Establishments Act of each state, the Payment of Wages Act, 1936, the Payment of Gratuity Act, 1972, the Employees' Provident Funds Act, 1952 and the POSH Act, 2013, now being consolidated into four labour codes.

Employees ask about wrongful termination and what notice they are owed, unpaid salary, full-and-final settlement and gratuity, whether a non-compete can be enforced, and how to raise a workplace harassment complaint. Employers ask about lawful termination procedure, contractor versus employee classification, and POSH committee obligations.

Gratuity becomes payable after five years of continuous service under the Payment of Gratuity Act, calculated on last drawn basic and dearness allowance, and is due within thirty days of it becoming payable. Delay attracts interest. Full-and-final settlement, including unused leave encashment, is governed largely by the applicable state Shops and Establishments rules.

Whether a termination is lawful turns partly on whether the employee is a 'workman' under the Industrial Disputes Act, which depends on the nature of the duties rather than the job title. For workmen in establishments above a size threshold, retrenchment requires notice, compensation and in some cases government permission. For others, the contract and the state legislation govern.

Under the POSH Act, 2013 every workplace with ten or more employees must constitute an Internal Committee, and a complaint must ordinarily be filed within three months of the incident, extendable at the committee's discretion. The inquiry is time-bound and the employer must report annually.

A point worth knowing: post-employment non-compete clauses are generally unenforceable in India under Section 27 of the Indian Contract Act, 1872, even where an employee has signed one. Confidentiality and non-solicitation obligations are treated differently.