THE ROLE OF LABOR MARKE T REGULATIONS, INSTITUTIONS, AND PROGRAMS
269
TABLE 6A.1 Selected aspects of employment protection in India Type of employment protection
Legal provisions
Procedures for individual notification and dismissal
• Written notice to employee • Employee given sufficient warning and opportunity to respond • Employers with at least 100 workers must give government 60 days’ notice before dismissing worker and await its approval before doing so
Notice period for individual dismissals
• Workers small firms with 4 or more years of tenure: 1 month • Workers at large firms with at least 20 years of tenure: 3 months
Severance pay for individual dismissals
• Workers with 4 or more years of tenure: 2 months • Workers with at least 20 years of tenure: 10 months
Economic reason as valid reason for dismissal
• Permitted, but in absence of agreement between worker and employer, last person to be employed in category should be one dismissed
Maximum time to make complaint of unfair dismissal
• No time limit
Compensation for unfair dismissal
• • • •
Definition and notification requirements or additional procedures for collective dismissals
• No special regulations or additional costs
Valid cases for fixed-term contracts
• Limited for work of temporary nature likely to be finished within a limited time • Some industries (information technology, business process outsourcing); export processing zones, and special economic zones in some states are exempted
Court orders reinstatement in most cases (with or without back pay) In extreme cases, court may order compensation instead of reinstatement Typical compensation for employee with 20 years of tenure is 42 months’ wages Typical three to four years for labor courts to settle disputes and make award
Maximum number of fixed-term contracts
• No limits on number of renewals or maximum duration
Temporary agency work
• Allowed in noncore activities; prohibited in some industries or firms • No limits on durations or renewals • Contractors and firms with more than 20 employees required to obtain license (renewable every 12 months) and pay fees before engaging contract workers • Contractors required to report changes in number of workers or conditions of work to licensing authority • Wages and conditions of work of contract worker must be same as direct employees performing same type of work
Source: Authors’ compilation, based on information in OECD 2009.