The law relating to labour in India deals mainly with the regulation of the contract of employment under which the servant, or the employee, undertakes to work for his master, or the employer, for hire or reward. Under the concepts of law, which, under British rule, were imported into India from the common law of England, this relationship was treated mainly as a contractual relationship. The Indian Contract Act, 1872 is based mainly on the law of contract as interpreted by courts of law in England. In interpreting the provisions of this Act, the courts in India borrowed heavily from the case law of English courts.
The central doctrine, which runs through the law of contract, is that the parties are free to make their own contracts. The relationship between master and servant is a voluntary relationship into which the parties may enter on terms laid down by themselves within the limitations imposed only by the general law of contract.1 The law of contract, however, assumes that there is equal freedom in the parties to enter into a contract, but shuts its eyes to the inequality inherent in the employment relationship. It ignores the superior economic strength and the bargaining power of the employer vis-a vis the person who has to make a living getting employment, or perhaps starves. Workers have sought to redress the balance in this sphere through their organizational strength, by forming themselves into trade union and adopting the device of collective bargaining. They have also sought legislative protection and privilages by exercise of their political power, and thus persuaded the state to intervene effectively on their behalf by providing for matters like safety, health and welfare, regulation of hours of work, leave and holidays and social security. And, depending upon their organizational strength, have also sought regulatory legislation for protection and enhancement of their material well-being and security of their employment. In India, legislation relating to labour has grown mainly in the twentieth century. Till the First World War, such legislation was scanty. In the inter-war years, that is, between 1919 and 1939, some essential legislation for the protection of labour was introduced. But the law relating to labour, as we know it today, is mostly the product of the legislation passed after, or soon before India achieved political independence in 1947.
It may, broadly, be stated that labour law of India has given the go-bye to the doctrine of freedom of contract, or laissez-faire, and has recognized the need for giving adequate legal protection to labour. Labour legislation in India has now become an important part of that social and economic legislation in India, which derived its inspiration for the recognition of the wider responsibilities, which the state has undertaken to protect the economically weaker sections of the community. These are often summed up under the convenient heading of the 'welfare state', whose responsibility it is to assure to its citizens not only physical liberty to pursue their avocations according to their liking, and political liberty to choose their own government at reasonable intervals, but also assure social well-being and economic and material opportunities to make the foregoing liberties meaningful and effective.
The ideals of the welfare state are embedded in the directive principles of state policy enunciated in the Constitution of the Republic of India. These directives principles emphasise the responsibility of the state to secure just and humane conditions of work and maternity relief; public assistance in cases of unemployment, old age, sickness and disablement and in other cases of undeserved want; protection of the health and strength of workers, and avoiding circumstances which force citizens to enter avocations unsuited to their age or strength. These directive principles also place the responsibility on the state to strive to secure work, a living wage, a decent standard of living; leisure and social and cultural opportunities for people, which, it is axiomatic, must be available for all sections of people, including the working class. The Constitution of India also protects the right of labour to form associations and unions by enshrining it as a fundamental right. These directive principles and fundamental rights already formed the ethos and commitment of the national movement for political independence, and had found expression in several resolutions of the Indian National Congress and the reports of the National Planning Committee under the Chairmanship of Jawaharlal Nehru. Soon after, and even before, power was formally transferred to Indian hands in 1947; these principles were implemented with vigor in the field of labour legislations in India, adding greatly to the scanty legislation that existed on the subject previous to 1947.
The main source of labour law in India is legislation, but it is supplemented by judgments of courts, delivered particularly in the sphere of adjudication of industrial disputes. It will be convenient to divide the subject into certain broad categories. It will be wrong, however, to think of these categories as watertight compartments. As a matter of fact, they overlap, and the division of the subject into various heads may at best be considered helpful for the understanding of the main feature of labour law in the country.
The earliest attempt of the government, or the state, to intervene in the field of labour, was through certain protective measures to provide for the health and the safety of the Indian worker, and to regulate hours of work in factories and other places of employment. Improvements have been made in this respect from time to time and are a continuing process. Such legislation may be conveniently dealt with under the heading of legislation relating to health, welfare, working conditions and hours of work including leave and holidays of the Indian worker. The next important heading under which labour legislation can be dealt with is 'social security' under which we shall consider Acts like the Workmen's Compensation Act, the Employees' State Insurance Act, Maternity Benefit Act, and legislation dealing with retrial benefits. Legislation and judicial decisions relating to wages, bonus allowances, fringe benefits, regulation of contract labour and other such matters would be another branch of the labour code of India. Lastly, we shall examine legislation and case law relating to trade unions and trade or industrial disputes, which have assumed greater and greater importance, as the state has sought to encourage trade unions and regulate industrial conflict by providing machinery for settlement, arbitration and adjudication of industrial disputes, and imposed restrictions on strikes and lock out, and the ordinary common law right of the employer to hire and fire employees, taking disciplinary action against them or change their conditions of service at his sweet will.