Compensation, Industrial Relations & Labour Laws

7.1 Compensation Management

Components of total compensation:

• Basic Salary: Core pay, basis for all other components
• HRA (House Rent Allowance): Typically 40–50% of basic for non-metro / 50% for metro employees
• DA (Dearness Allowance): Linked to CPI; compensates for inflation
• Provident Fund (EPF): 12% employee + 12% employer contribution on basic+DA; governed by EPF & Miscellaneous Provisions Act 1952; EPFO manages 60 million+ active accounts
• ESIC (Employee State Insurance): Health and maternity benefits; applicable to establishments with 10+ workers earning ≤ ₹21,000/month
• Gratuity: Payment for 5+ years of continuous service; governed by Payment of Gratuity Act 1972; max ₹20 lakh

Wage Boards vs. Pay Commissions:

• Wage Boards — set by government for specific industries (journalism, textiles); National Floor Level Minimum Wage currently ₹178/day (2023)
• Pay Commissions — set salaries for central government employees; 8th Pay Commission announced in January 2025 (to be implemented from January 2026)

7.2 Four Labour Codes (2019-2020)

India consolidated 44 central labour laws into 4 codes — a landmark reform:

Code	Consolidates	Key Provisions
Code on Wages, 2019	Minimum Wages Act 1948, Payment of Wages Act 1936, Equal Remuneration Act 1976, Payment of Bonus Act 1965	Universal minimum wage; equal pay for equal work
Code on Industrial Relations, 2020	Industrial Disputes Act 1947, Trade Unions Act 1926, Industrial Employment (Standing Orders) Act 1946	Retrenchment threshold raised to 300 workers (from 100); easier standing orders
Code on Social Security, 2020	EPF Act 1952, ESI Act 1948, Gratuity Act, Maternity Benefit Act, Building Workers' Act	Extends gig/platform worker coverage; maternity benefit 26 weeks
Code on Occupational Safety, 2020	Factories Act 1948, Mines Act 1952, Construction Workers Act, 10 others	8-hour work day; single licence for multi-state contractors

Status as of 2024: All four codes passed by Parliament; pending notification of rules in most states (labour is on Concurrent List — both central and state govts must notify rules for implementation).

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