Development of Labour Laws in India

By | May 17, 2020
Development of Labour Laws in India

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Development of Labour Laws in India Overview

The development of Labour Laws in India can be mapped back to the formulation of ILO in the year 1919. Labour Policy in India has been very dynamic and continuously adapting and catering as a stimulant to the environment and suits the requirements of social justice and economic development

Labour legislations facilitated to serve to the economic and social challenges of the modern era needs to satisfy three basic roles, which encloses a legal system that caters productive individuals, collective employment relations and productive economy, by delivering a framework within which employers, workers along with their representatives can communicate in relation to work-related issues, it caters as an important conveyance for reaching harmonious industrial relation.

However, these laws can function efficiently only when an active response is initiated by the labour legislation to the conditions in the labour markets and the needs of the parties are involved. The most effective way that the account of concerns is addressed is when there are a close association and linkage of the issues with the legislation, which can be achieved through active communication. The participation of stakeholders is of great importance in steadily formulating a broader basis of support for labour legislation and in catering its implementation within and beyond just the sector of the economy which is just limited to a formal structure. [1]


The development of ‘Law of Employment’ or Labour Laws can be mapped back to the formulation of ILO (International Labour Organisation), in the year 1919. It a forum where workers, government and employers from different countries and member states come together, for the setting carefully scrutinized standards, development of policies and devise programmes, promote decent work and health conditions for both men and women.

India has been a permanent member in the governing body of ILO since the year 1922, which served as a major background for progressive labour legislation in the land of diversity.

The history of labour legislation in India can be traced intertwined with the chronicle of British colonialism. British political economy had a significant impact in moulding the early laws in India. In the initial days, there was difficulty in accessing Indian workers to run British establishments, hence laws for indenturing the workers became of great importance. These were the labour legislation in order to conserve and protect the interests of British employers. [2]

Labour Policy in India has been very dynamic and continuously adapting and catering as a stimulant to the environment and suits the requirements of social justice and economic development, hence it is necessary to know the development and the origin of labour laws, to be assured that any new developing legislation or future policy is not in conflict with the parent labour legislation and further helps in promoting the objectives such as industrial peace and welfare of labour force, helping in bring out the essence of the Constitution of ILO.

Developments of Labour Laws in India

  • Pre-1920s

The advent of industrialisation has seen a steady shift in the labour force from the rural areas to the cities, the organisation of work was not paid much heed by the colonial authorises apart from the penal provisions present at that time, which was formulated for labour supply and discipline for emerging industries. Most of the Regulations of the Britishers in relation to workers, majorly revolved around “forced labour”.

The Workmen’s Breach of Contract Act 1859[3], was considered significant legislation. This Act not only demanded fines in cases where there was a breach of employment contracts but also allowed orders for specific performance of service. [4]

These provisions were extensively used for labour discipline. It was significant that in the same time labour organisation was also about family, land, regulation in relation of culture, master and servant relationship laws and the concept of “contract” of employment with the traditional format of regulations instilled in the earlier customs and ways were complex.

From the 1880’s there was a legislative intervention of the government, with regards to the employment of women and children, and working hours of work in factories and mines. Most of the legislation is an outcome of different government enquiries.[5] The legislation, however, was not fairly implemented in the working practices by these industries; hence the impact was very minimal and selective. The Factories Act of 1881, for example, only concerned with a premise with 100 or more employees, using electrical power. The Factories Act of 1891 considered 50 or more employees in the premise. [6]

  • Post-World War I and the 1920s

Various factors had mixed up the industrial and political portrait, this is inclusive of the emergence of a strong nationalist movement, the trade unions were growing rapidly (this led to the establishment of All India Trade Union Congress in 1920), and the beginning of the Communist influence in the labour movement. At that very time, the newly created ILO (International Labour Organisation) began to influence the policies in relation to workers.

The protective legislation in this period included Factories Act 1922, the Mines Act 1922, and the Workmen’s Compensation Act 1923.  This period witnessed the emergence of a modern outlook, with regards to the industrial relations, the formulation of The Trade Union Act of 1926 and the Trade Dispute Act of 1929 came into being which is formally still continued to be used by present-day India.

The Trade Dispute Act of 1926, extended trade unions the legal status and few protections against civil and criminal liability, this legislation (the unregistered unions were excluded from such protection) however did not provide any aid to the ‘collective bargaining’ system, the employers were not entitled to bargain with these registered or unregistered unions, and no support was provided in the path of the industrial dispute nor was there any obligation legally to bargain in good faith.

The Trade Dispute Act of 1929, put forth various restrictions and boundaries regarding the right to strike and conditioned on the compulsory reference of the industrial dispute to a court of enquiry, however, the conclusions to the same were not binding upon the parties. The All India Trade Union Congress (AITUC), criticised both legislations. [7]

  • The 1930s

There was a spur in unemployment due to the world economic depression, in this period there was constant distress for Indian Independence within which the All India Trade Union Congress played a major role. The Mass dismissal was escorted by a surge of strikes, especially with the economic depression.

The British government founded the Royal Commission on Labour in India in 1929.[8] This commission was rejected or boycotted by the Indian Labour movement, the AITUC strongly criticised by vocalising that the establishment of the Commission was an “open and brutal attack upon the trade union movements by using repressive legislation” and the lack of “bona fides”. The industrial unrest, reduction in wages, reduced jobs continued to exist.

However, during the 1930s, there was an advent of two conclusions from the Report of the Royal Commission. Firstly, the central and provincial government introduced a few new labour legislations. These laws mostly revolved around mines regulation and protective factory, the subjects were to do with hours of work, compensation, wages.

Secondly and the most significant development which emerged out of the Government of India Act, 1935, which under new constitutional arrangement gave rise to newer expectations that increased “labour” or “union” friendly policies would further be catered in the provincial government level.

This further led to a period of extensive strike actions. Prior to the act of 1935, several provincial governments had started finding ways while discovering contributions, that could be made and implemented for better working conditions at the workplace.

The introduction of Trade Disputes (Conciliation) Act 1934 by the provincial government of Bombay was encapsulated with the changes in the collective labour relations by designating a Labour Officer to act as a representative of the workers by putting forth their interest and grievances.

The establishment of the Industrial Dispute Act, 1938 introduced by the Bombay Provincial Government had a significant impact as it made it legally obligatory on the part of the employers to acknowledge the trade unions. However, these measures were limited and did not possess a general acceptance by the Indian trade Union Movements. The Bombay bill of 1938, was described as “uncalled for, reactionary, prejudicial and harmful to the interest of the workers” and “calculated to create slave unions” by the AITUC.[9]

  • World War II and the Pre-Independence Period

Policies and regulations during this phase were continuously under industrial unrest and strikes in relation to the conditions. These legislations were aimed at bringing the central and state-level coordination among the labour force.

Section 49 A of the Bombay Industrial Dispute Act of 1941, provided the Bombay Government to address to the disputes in relation to industries in compulsory arbitration by the Industrial Courts and banned all strikes and lockdown prior to the arbitration. Such limiting legislation was continued after the war ended as Bombay Industrial Relations Act 1946.

Other important legislation would be the Essential Services Act 1941, and the Defence of India Rules (Rule 81-A, introduced in 1942, and Rule 56-A, introduced in 1943). Most of the provisions laid down restrictions against strikes and other industrial issues and also inclusive of industrial action on part of the employers. In addition to this, Political and general strikes were also targeted.

The Industrial Dispute Act of 1947, applied mostly to the “workmen” in “industries. Various categories of workers were excluded in “workmen” mentioned in the Act, such as workers who have specific occupations, or managerial and administrative capacity. The term “industry” has also been understood in a broad term now, various kinds of employment such as employment in the department of the government and services whereas the agricultural workers and domestic workers are still not mentioned.

The Trade Dispute Act of 1929, along with the Trade Disputes Act 1947 and the legislations of the Bombay Act of 1934, was threaded in a manner so as to enable the government agencies to evaluate disputes of the arises during the employment and to settle these issues.  But it was observed that these legislations were more inclined towards control of labour rather than to be willing to settle the grievances.

After constant and consistence efforts made in the Bombay Industrial Disputes Act 1938, resulted in the formulation of the successor, Bombay Industrial Relations Act 1946, recognised various unions and provided such unions the right to represent the workers in a particular industry or area. There was a steady and uninterrupted application of the protection provided through the regulations to the individual workers.

Industrial Employment (Standing Orders) Act 1946, mandated the employers to give the employees, transparent terms and condition in relation to their employment, as demanded by the Schedule of the Act and the concerned authorities.

The other significant statues of this phase were the Factories Act 1948 and the Minimum Wage Act 1948. Most of these regulations, had a system analogous to the Industrial Disputes Act of 1947, restricted its application to only certain kinds of business establishments.

  • Post- Independence, 1948 Onwards

Subsequently, after the Indian Independence, it was consented that the Indian Central government would be solely responsible for the legislation in relation to labourers by working for their interests, reflecting a five-year plan of development, of ‘dealing with every phase in a labours life, housing, welfare, good working conditions and wages’.[10]

Most of these ethical and social values were formulated in the Constitution of India, 1950, mostly in relation to economic, political and social justice in the Preamble, and national development.

The Dock Workers (Regulation of Employment) Act 1948, eliminated employment of casual dock labours, the Employees’ State Insurance Act 1948, helped in enabling workers to access insurance in cases of health sickness, maternity, any injury or death, the Plantations Labour Act 1951, provided welfare procedures for employment industries of rubber and tea plantations, in case of legislations in relation to social security the  Employees’ Provident Fund and Miscellaneous Provisions Act 1952 was present.[11]

Further, the steady and continuous labour laws in India followed the already discovered dual pattern. In favour of the state planned and organised economy. The disputes were largely fixed on the model set by the legislation which was brought forth from 1926 to 1947, were still regulating the functioning of the trade unions, this resulted in certain implications. Whereas the trade unions were legally sanctioned, collective bargaining was recognised and strikes and lockdowns were legal, importance was given to support “industrial peace”.

The amendment of the Industrial Disputes Act of 1947 in the year 1982, encapsulated with legislations that outlawed various practices of the unions, workers, employers which were in any way designed to disrupt the legalised method of dispute settlement. The denial by the employer to bargain collectively in good faith was categorised as an unfair trade practice.

Initially, the termination or dismissed of employment was not a suitable subject of individual ‘industrial dispute’, in Industrial Disputes Act 1947 there was a restriction on the end of the employer to terminate the employment of the employee as it saw fit, nor did the legislations place limitations upon the same.

In further amendment of the Industrial Disputes Act in 1953, 1976 and 1982 the Central government started slowly fostering the new regulations in relations to retrenchments, lay-offs, and plant and industry closures.

The Industrial Disputes Act amendment in 1965, inculcated in its legislation the right of the individual worker to notify an ‘industrial dispute’ regarding the individual’s discharge, dismissal or termination from the employment, even though he/she is not represented by a trade union. [12] Amendment in 1971, gave power to the industrial tribunals and labour courts to instigate dismissal of employees and made necessary orders including reinstatement and compensation, in cases where the dismissal was found to be unjust.

Significant legislation was introduced in 1970, legislations by the Central Government, which strictly limited and regulated the use of contract and agency labour.[13]In addition to this, the Industrial Disputes (Amendment) Act of 1982, mentioned certain behaviours of both employer and unions, it went on to say that hiring practices which dealt with the continuation of employment of workers on temporary or casual contracts with ‘the objective of depriving them of their legal status and privilege of permanent workmen’ also considered to be “unfair labour practice”[14]

Overall, in the post-Independence period, both the Central government and several of the other State governments played a significant role in the development of the legislation with relation to labour rights.

India’s Recent Developments and Reforms


The Ministry of Labour and Employment, Government of India has informed with regards to the Ease of compliance in order to maintain registers under different Specified Labour Laws Rules, 2017. (Ease of Compliance Rule). These rules enable establishments to merge registers, in either electronic or physical form, as per instructed by the legislations. The underlying objective behind this was to reduce the burden of the establishments along with ease to do business in India. [15]

Code on Wage Bill, 2017 (Wage Code) aims at making business in India simpler. This bill integrates and replaces four existing labour laws, which are The Payment of Wages Act 1936, Minimum Wage Act, 1948, Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976. [16]


Child labour has been deep-rooted in the Indian labour systems since a considerable amount of time, development with regard to child labour laws have been of uttermost concern. ILO has embraced the decision of the Indian Government to ratify two significant international conventions with regards to child labour. Major steps such as redirecting the minimum age of employment to 14 along with this also help in eradicating worst forms of child labour up to the age 18 and below have also been taken. [17]

The ILO also has put in a considerable contribution in relation to the surveillance needed to outline, administer and observe intersecting approaches to promote the crucial role of labour rights operations in remote locations. [18]


There have been various legislations catering and addressing to the different labour law issues. These Acts have been enacted to bring into light the social and economic issues faced by the worker class. Labour Laws are very dynamic in nature, hence new legislation should be formulated in order to adapt to the changing environment and need to evolve continuously. There have been various future prospects and projects being formulated by India is collaborating with ILO.

The ESIS (Employee State Insurance Scheme) is considered as the major contributory scheme in India with regards to social health insurance of workers, employed in the formal sector, earning less than Rs 21,000 per month in non-seasonal factories employing 10 or more persons.[19] The object of the project initiated by ESIS is to improve access to health care services in India.

The “Work in Freedom” is a future project programme by ILO, formulated to provide support to women and girls in countries like (India, Bangladesh and Nepal) so as to help them with decent jobs, provide dignity and safety and having a fair recruitment procedure for the same.[20]

In India, we should be analysing and assess the multi-faceted approach of labour regulations. In situations where the traditional ideas of labour laws are ineffective then relevant and a newer outlook is warranted. There cannot be a mere assumption that developing countries, will necessarily industrialise in likewise patterns that were set by previous developers. Hence these legislations need to be investigated in order to understand what truly is ‘regulating labour’ in a country like India.[21]

[1] Indian Journal of Applied Research, Volume 6, S.I.A. Muhammed Yasir, “Labour Legislation in India – A Historical Study” (April 2016) Link

[2] Asia Monitor Research Centre, Babu Mathew, “A Brief Note on Labour Legislation in India” (2003) Link

[3] Mohapatra, P. (2016). Regulated Informality: Legal Constructions of Labour Relations in Colonial India 1814–1926. In Eckert A. (Ed.), Global Histories of Work (pp. 215-238). Berlin; Boston: De Gruyter.

[4] Richard MITCHELL et al., The Evolution of Labour Law in India: An Overview and Commentary on Regulatory Objectives and Development, 1 Asian Journal of Law and Society, 413-453 (2014) Link

[5] These included the Labour Commission set up by the Governor of Bombay in 1875, the Bombay Factory Commission of 1884, the Government of India Factory Commission of 1890, the Textile Factory Committee 1906, and the Factory Labour Commission of 1907.

[6] Richard MITCHELL et al., The Evolution of Labour Law in India: An Overview and Commentary on Regulatory Objectives and Development, 1 Asian Journal of Law and Society, 413-453 (2014) Link

[7] Ibid

[8] MENON, S., & MAJUMDAR, I. (2005). India: Labour law focus. International Union Rights, 12(3), 12-13. Retrieved May 7, 2020, from

[9] Richard MITCHELL et al., The Evolution of Labour Law in India: An Overview and Commentary on Regulatory Objectives and Development, 1 Asian Journal of Law and Society, 413-453 (2014) Link

[10] The Indian Constitution 1950 encapsulates specific goals relating labour, inclusive of ‘right to work’, ‘just and humane conditions of work’, a ‘living wage’ and a ‘decent standard of life’ and also the right to form trade unions: see Constitution of India 1949 Sections 14, 15, 19, 39, 41, 43 and 43A in particular.

[11] Richard MITCHELL et al., The Evolution of Labour Law in India: An Overview and Commentary on Regulatory Objectives and Development, 1 Asian Journal of Law and Society, 413-453 (2014) Link

[12] Industrial Disputes (Amendment) Act 1965, Section 2-A.

[13] The Contract Labour (Regulation and Abolition) Act 1970.

[14] The Industrial Relations Act 1947, Fifth Schedule

[15] Government of India, Ministry of Labour and Employment, “Ease of Compliance to maintain Registers under various Labour Laws Rules 2017” Link

[16] Ibid

[17] International Labour Organisation, “ILO welcomes major step to end child labour in India” (13 April 2017) Link

[18] International Labour Office, “Independent Evaluation of the ILO’s Decent Work Country Programme for India: 2007–2012” (2012) Link

[19] International Labour Organisation, “Technical support to ESIS for improving and expanding access to health care services in India – A transition to formality” Link

[20] International Labour Organisation, “Work in Freedom, Phase II – Fair recruitment and decent work for women migrant workers in South Asia and the Middle East” Link

[21] Richard MITCHELL et al., The Evolution of Labour Law in India: An Overview and Commentary on Regulatory Objectives and Development, 1 Asian Journal of Law and Society, 413-453 (2014) Link

  1. Introduction to Labour Laws: Scope and Development
  2. Slavery and Forced Labour: Sections, International Perspective & Laws