Doing Business in India - RSM Austria

1.0 BACKGROUND
CHAPTER 4
HUMAN RESOURCES
The working population of India consists of three categories: organized work force,
unorganized work force and self-employed individuals. The organized sector
accounts for only one-tenth of India’s labour force but earns one-fourth of the
nation’s total wages and income.
India’s pool of trained workers, one of the largest in the world includes scientists,
computer software and electronics professionals, finance professionals,
accountants, advertising and marketing experts. The government encourages new
investment in regions with high unemployment and setting up of small-scale units.
The state or central governments are empowered to fix minimum wages based on
the cost-of living index for employees working in scheduled employment. The
government may appoint inspectors to ensure that the provisions of the act are
observed. However, India continues to be very cheap source of labour.
2.0 LEGISLATIVE PROVISIONS
The laws governing labour in India are very complex in nature and favour the
employees. Employers are required to provide most employees with a written
statement of the terms and conditions of their employment. The statement must
have details about salary, hours of work, disciplinary rules and complaint
procedures, the notice period for termination, holidays, the provident fund,
pensions, gratuities and other employee related details. Violation of labour law is
viewed with strictness and severe punishment is imposed on errant employers if
violations are observed.
By law, employees are entitled to a minimum period of notice of termination, which
varies according to the terms of employment. Legislation protects employees from
unfair dismissal.
The labour law reforms including closure of a factory employing less than 300
workmen without any legal hassles are on the anvil.
2.1 Mandatory Employee Benefits
Certain mandatory employee benefits required to be made by an employer in India
(including social security schemes) are as follows, please note that the regulations
are applicable to all employees employed in India:
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