INDIA Law and Practice Contributed by: Anshul Prakash, Kruthi N Murthy and Deeksha Malik, Khaitan & Co
1948, which determine minimum wage rates for three major categories of workers: • unskilled; • semi-skilled; and • skilled. Statutory Bonus The Payment of Bonus Act 1965 regulates the amount of statutory bonus payable to employees (earning wages not more than INR21,000 per month) employed in certain establishments based on their profits. The law applies to every establishment employing 20 or more persons and sets out provisions relating to the payment of the minimum bonus (8.33% of the sal - ary, capped at INR7,000 or statutory minimum wages, whichever is higher), and the maximum bonus (20% of the salary, capped at INR7,000 or statutory minimum wages, whichever is higher). Government Intervention in Compensation Other than the above-mentioned requirements and certain other stipulations around the time and mode of the payment of wages, as well as permissible deduc - tions from wages, there is typically minimal interven - tion by the government in terms of the determina - tion of compensation and increments. These aspects are contractually driven but may be impacted by the presence of a unionised workforce and any collective bargaining agreements entered into by them or their representatives. The working conditions of employees, including their leave entitlements, are mostly regulated according to the nature of the entity by which they are employed. If the entity is a factory (engaged in manufacturing activity) covered under the Factories Act, employees who have worked in the factory for 240 days or more in a calendar year must be allowed, in the subsequent calendar year, privilege leave with wages at the rate of one day for every 20 days of work performed (for adults). This leave is additional to public holidays to which workers are entitled. 1.5 Other Employment Terms Leave and Holiday Entitlements
If the entity is a shop or a commercial establishment, the number of days of privilege leave to which employ - ees are entitled would depend on the state-specific S&E Acts (depending on the location of the establish - ment). The minimum threshold usually ranges from 12 to 20 days. This leave is pro-rated for the first year of employment. In several states, employees are also entitled to casual leave (that is, leave to attend to per - sonal needs) and sick leave. At the time of separation, an employee is also enti - tled to a fixed salary for accrued but unused privi - lege leave, up to the maximum accrual limits set out under the Factories Act or the state-specific S&E Acts (unless the employer contractually provides more ben - eficial terms). Note that there may be special laws in addition to the above that deal with leave entitlements for spe - cial kinds of workforces. For instance, the Sales Pro - motion Employees (Conditions of Service) Act 1976 deals with leave entitlements for employees engaged in sales activities in notified sectors, such as the phar - maceutical industry. Maternity Benefit As per the Maternity Benefit Act 1961 (the “MB Act”), every woman who has completed 80 days’ service with the employer is entitled to paid maternity leave of 26 weeks. However, women with two or more surviv - ing children are entitled to 12 weeks of paid maternity leave. Commissioning mothers and adoptive mothers are also entitled to paid maternity leave. Other kinds of paid leave envisaged under the law are in respect of special situations such as miscarriage, medical termination of pregnancy, tubectomy operations, etc. Confidentiality and Non-Disparagement There are no standard laws regarding confidentiality and non-disparagement, but it is standard practice to include these provisions in the appointment letter/ employment agreement. Note that these obligations are typically continued even after the cessation of employment. The employee can be held liable under the law of contract if there is a violation of such stipu - lations.
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