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India has a comprehensive set of labor laws that regulate various aspects of employment such as working hours, wage and salary, leave and holidays, health and safety, social security, and other benefits. The key labor laws in India include
These laws aim to provide a fair and just treatment to workers, protect their rights, and ensure safe and healthy working conditions. Employers are required to comply with these laws and any violation may result in legal penalties.
Notice periods vary between 30 to 90 days depending on how long an employee has been employed with a company. An employer can only terminate a contract immediately is if an employee is still on an active probationary period or the employee has breached their employment contract under an exceptional reason.
There is no requirement in India for employees to give a minimum notice period when resigning, unless such a stipulation exists in the employment contract. Still, one month’s notice is standard when an employee resigns.
Severance payments are based on several factors including the terms and length of the employment contract, the role of the employee, and the reason for termination.
The standard rules around severance mandate an employer to pay a severance package of at least one month’s salary for any employee who has worked for one year or more, given they are not working on a probationary period.
For employees in the manufacturing industry, if an employer needs to make mass layoffs, they will require permission from the relevant state authority and pay out a minimum of 3 months’ salary to the employees. For workmen that have been involuntarily dismissed, the Industrial Disputes Act of 1972 states that an employer must pay 15 days severance per year of service to any affected employee.
Under The Payment Gratuity Act, any employee who has served more than 5 years within a company is entitled to a gratuity payment once they leave or if their employment contract is terminated for non-exceptional reasons.
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Indian labor laws a spread out through several relevant legal documents including The Factories Act, The Minimum Wages Act, The Industrial Disputes Act, The Payment of Gratuity Act, The Employees’ Provident Fund, Miscellaneous Provisions Act, Contract Labor (Regulation and Abolition) Act and the various Shops and Establishment Acts (2016).
An employer can terminate an employee without notice, reason or pay if they are still serving on a probationary period. In India, probationary periods can last anywhere from 3 months to 2 years but must be agreed upon between employer and employee at the start of employment.
An employee can resign without notice or reason from their employment contracts if they are still working within the probationary period.
Once a probationary is over, the employer can only terminate an employee’s contract with a valid reason and must give sufficient notice. An employer may also owe severance payments to the employee depending on their role and length of service.
