The Department came into being as a separate Department in 1972. Its activities can be divided broadly into two wings pertaining to Labour and Employment. Labour wing is responsible for the implementation of 28 Labour Laws (Central & State) with a view to establishing and maintaining peace in the Industrial Establishments. Under the provisions of the Industrial Disputes Act 1947, Labour Courts-cum-Industrial Tribunals have been set up at Shimla & Dharamsala to decide industrial disputes. Under the Factories Act, 1948, registration and renewal of factories licenses is done as also ensuring safety of workers.

Employment wing is responsible for Registration, Sponsoring and giving Vocational Guidance to the interested candidates and collection of Employment Market Information, as per provisions of the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 and Persons with Disabilities Act (Equal opportunities, Protections of Rights and Full Participation) Act, 1995.