Introduction
During a market expansion, a business conducts assessments of its current market to identify the unreached markets. As argued by Cascio (2013), the primary aim of the market development strategy is to attain revenue growth through utilizing opportunities that are readily available in the markets (both local and foreign). Adhering to market expansion procedures attracts the delivery of new competencies in the current market as well as the prospective foreign for the existing products and services. As earlier stated in the video chat, employment laws play an important role in determining the success of an expansion in a foreign market. This memo aims to highlight the four primary employment laws that your company should adhere to as it expands into India. In addition, this memo will also address the consequences of noncompliance with those laws.
Current Employment Law in India
The mentioned 20 percent increase of workforce requires adherence to local employment laws. Failure to adhere to these laws, your organization may face a greater challenge of attaining the desired objectives in the foreign market. On the other hand, adhering to these laws, your organization will achieve a competitive advantage in the marketplace. In India, laws that relate to employment are mainly classified under the industrial law. Here, laws that protect employees have been developed as a result of the increased civic education on human rights (Cascio, 2013). For this reason, the industrial relations have embraced a complex relationship between employees, employers, and the central government. Most of these laws focus on the employment terms as well as the situation of labor of the employees. In India, the increasing employee expectations have resulted in the weakening of authority, more attention to work ethics and an increased number of activists in the employment sector. Therefore, to retain employees in India, it is important to adhere to the set employment laws.
India’s Employment Laws
In India, the employment laws are primarily divided into five sections. These sections include social security, Industrial relation, working condition and the minimum wedge (Cascio, 2013). All these employment laws are base on India’s constitution and recommendations made at the International Labor Organization conventions (ILO). In India, the labor laws are used to regulate employment practices by ensuring there is a high degree of employee’s protection. Concerning its significance, foreign investors are required to conform to respective contract laws by adhering to the employment laws at all times. The Indian employment regulations belong to two categories: the Factories Act and the Shops and Establishment Act.
Factories Act (1948)
In India, all factories are controlled by the requirements of the 1948 Factories Act. Under this Act, all industries that have employed more than ten people and conduct industrial business practices using electricity fall under factories. The Factories Act requires all employees to provide safety, a healthy working place, welfare and leaves for employees who work in their factories. The factory Act emphasizes not only the safety but also the welfare and the general health of employees. Since your company has a level of production activities, it is necessary to adhere to the said legal requirement (Cascio, 2013). Adhering to legal requirements is important because it is essential for consolidating the regulations that relate to health and safety provisions. Also, the Factories Act safeguards employees against using or handling substances that are a health hazard through putting in place emergency measures.
Shops and Establishment Act
This Act is a regulation of the state. In India, each state has specific regulations for this act. The primary objective of the Shops and Establishment Act is to offer rights to not only office workers but also the unofficial workers. This regulation applies to all individuals who are in establishments that do not have wages. With the existence of many legislations, which are aimed to protect workers, it is worth noting that India highly regards its workforce (Cascio, 2013). For this reason, for a company to operate in India, it should work in line with the established legal provisions.
Industrial Disputes Act (1947)
The primary role of the Industrial Disputes Act (1947) is to investigate and settle industrial disputes. The various industrial disputes to be solved through this act relate to retrenchments and layoff of employees. The Industrial Disputes Act provides a mechanism for reconciling and the adjudication of conflicts between workers and their employers (Cascio, 2013). Under this Act, the industrial responsibilities include business trade and production among others. In addition, the Industrial Disputes Act (1947) puts across situations under which businesses work under before the termination of employment or layoffs for employees who have worked for less than a year. Under this Act, employees are given a certain amount of time to write a notice that indicates the reasons for layoffs. Also, this act emphasizes the employee should be compensated in15 days after termination of employment.
Maternity Benefit Act (1961)
In India, this Act controls women’s employment in particular establishments for a given period prior to and after birth. Under this provision, women are given certain benefits. However, the Maternity Benefit Act (1961) does not apply to factories and other establishments. Under this Act, female employees working in the stated establishments for 80 days that follow the delivery date are given maternity leaves under the Maternity Benefit Act (1961). For this reason, it is important for pregnant women should benefit from medical bonuses and nursing leaves (Cascio, 2013). Because of the possibility of having pregnant workers in the new company, it is important to adhere to the Maternity Benefit Act (1961). Failure to adhere to this act, the new venture may face challenges such as legal suits.
The Employee’s Compensation Act (1923)
The Employee’s Compensation Act (1923) requires employers to compensate their employees in case of accidents. However, under this act, the accidents must have occurred in the course working periods and should be in line with the provisions available in the act. In India, employees are required to hand over the statement to the commissioner. Handing over this statement takes place within 30 days after receiving the notice. In case of the death of an employee, employers have the responsibility to investigate the accident. In determining that the accident took place under The Employee’s Compensation Act (1923), employers are required to compensate their employees.
Consequences of Noncompliance with the Employment Laws in India
In recent years, American corporations have invested up to approximately 19 billion USD in India. Even though the Indian markets have a wide range of opportunities, there is a need to adhere to all the employment rules of operation. In India, the compliance with the employment laws is always overlooked. As a result of this factor, these investors are always faced with organizational challenges (Cascio, 2013). Consequences associated with noncompliance with the employment laws come mainly because of three main reasons: availability of more jobs than employees; availability of many foreign firms; and the poaching of employees.
The first consequence of noncompliance is the adverse effects of employee retention. While considering to venture your business in India it is important to underpin the value of the skilled employees in India. Failure to comply with the employment laws, employee retention will not be achieved. To be able to maintain employees in Indian workplaces, there is a need to adhere to the employment laws to the latter. Secondly, based on the fact that there are many other foreign investors, both skilled and unskilled employees have many options at their disposal (Cascio, 2013). The availability of many foreign companies attracts junior employees using your company as a resume booster in getting new jobs. In line with such discrepancies, adhering to employment laws to maintain these employees is necessary. Lastly, the availability of many jobs is risky in the sense that there is increased poaching. Other companies are increasingly poaching employees from foreign firms. Adhering to the employment laws will ensure that your firm retain its workers.
When foreign companies do not adhere to the employment laws, they are faced with the challenge of not only attracting but also retaining the top employees in India. Therefore, before moving into the Indian market, it is necessary to carefully draft employment contracts such as the nondisclosure, privacy, and non-compete provisions (Cascio, 2013). The typical enforceable legal provisions comprise of the extent and scope of employment, the geographical boundaries, and term of employment (in most cases it is 3 years).
Reference
Cascio, W. F. (2013). Managing human resources: Productivity, quality of work life, profits (9th Ed.). Boston: McGraw-Hill/Irwin