Indian Labour and Industrial Laws
The industrial revolution in the world during the 19th century brought about radical changes in the western world. The significant changes in the method of production, shipping and transportation resulted in corresponding changes in the social set-up. These scientific and technological developments in the industrial sector culminated in the emergence of two classes namely, the working class (wage earning class) and the managerial class (entrepreneur class). These two classes strive always for conflicting interest. The working class demand higher wages and better working conditions, while the managerial class demand higher productivity and minimum wages.
Slowly but steadily, the working class formed unions and conducted movements to put forward their case, and this resulted in the passage of various laws in the protection of the working class. These various laws put together are collectively known as the Labour and Industrial Laws. Of these various laws, the following are some of the essential laws.
- Trade Union Act, 1929
- The Industrial Disputes Act, 1947
- The Factories Act, 1948
- The Minimum Wages Act, 1948
- The Payment of Wages Act, 1936
- The Industrial Employment (Standing Orders) Act. 1946
- The Workmen’s Compensation Act, 1923
- The Employees State Insurance Act, 1948
- Payment of Bonus Act, 1965
- The Maternity Benefit Act, 1961
These above acts are discussed below.
TRADE UNION ACT, 1926
Trade Union: Meaning and Definition
The word Trade Union is commonly understood as “an association of wage earners or workers”. It is essentially an organisation or association of workers for the purposes of forwarding and defending their professional interest.
However, the Trade Union Act defines it as follows.
“any combination whether temporary or permanent, formed primarily:
- for the purpose of regulating relations between:
- workmen and employers; or
- workmen and workmen; or
- employers and employers
- imposing respective conditions on the conduct of any trade or business and includes any federation of two or more trade unions, is called Trade Union
The Act shall not apply to:
Essential Elements of a Trade Union
- Any agreement between partners as to their own business
- Any agreement between an employer and those employed by him as to such employment; or
- Any agreement in consideration of the sales of the goodwill of a business or of instruction in any profession, trade or handicraft.
To constitute a trade union:
Recognition of Trade Unions:
- There must be combination of workmen or employers
- There must be trade or business; and
- The main object of the Union must be to regulate relations of employers and employees or to impose restrictive conditions on the conduct of any trade or business.
A trade union can be recognised by the employer and the central government. A Union which is statutorily recognised must be entitled to the following additional priviledges and rights compared to an unregistered union.
- the right to sole representation of the workers in any collective bargaining
- to raise issues and enter into agreements with employers on general questions concerning the terms and conditions of employment
- to collect membership fees and subscription payable by members to the union within the premises of the undertakings or demand check off facility.
- to put notice board in the premises of the undertaking and affix notices relating to meetings, statements of accounts and other announcements
- to discuss with employer the grievances of the workers
- to nominate its representatives to the grievance committee or statutory and non-statutory bipartitate committees.
The recognition of a trade union is different from its registration. A trade union registered under the Act is entitled to all the protections and rights contemplated by the Act even if it is not recognised by the employer.
Registration of a Trade Union
A registered trade union is entitled to get some benefits and protection under the act. The members of a registered trade union are entitled to get protection, immunity, exemption from certain civil and criminal liabilities. It must be noted that individual disputes become industrial dispute only when it is represented by a registered or unregistered trade union.
The registration of a trade union is not compulsory under the act, but is desirable. A trade union, if decides to register itself, should be registered under the Trade Union Act only. It must not be registered under any other acts or provisions. However, a Civil Servants’ Union cannot
be registered under the Trade Unions Act, as government servants cannot form trade unions.
Every State has a Registrar of Trade Unions who is in charge of registering the trade unions. The minimum number of members of a trade union for registration purposes should be 10, if the aggregate members of workmen who are memebrs of such trade union is 100. In all other cases, the minimum number of members for registration purposes is 7.
Application for registration of a Trade Union should be made in Form A, together with the following details.
- names, occupations and address of the members making the application
- the place of work of the members making the application
- the name of the Trade Union, its address and its head office
- titles, names, age, address and occupations of the office bearers of the trade unions.
The rules or bye-laws of the trade union should provide for the following.
- Name of the trade union
- Objects of its establishment
- The purposes for which the general funds would be spent
- Maintenance of records such as Member List, Office Bearers, etc.
- The procedure for admission of ordinary members, honorary and temporary members
- The minimum subscription amount (which shall not be less than Rs. 1 per year for rural workers and Rs. 3 per year for other unorganised sectors and Rs. 12 per year for workers in any other cases.
- The condition under which any member would be entitled to any benefit under the rules
- The rules for conduct and imposition of fine
- The procedure for amendment of rules
- The rules and procedure regarding safe custody of funds, annual audit of accounts and facilities for office-bearers and inspection of books
- The rules and regulations regarding dissolution of trade union (Under the rules at least 1/2 of the office bearers must be persons actually engaged or employed in the plant or industry that the Union represents)
The registrar after being satisfied with the application may grant a certificate of registration to the union.
A certificate of registration is a conclusive evidence that the trade union is duly registered under the act. The trade union once registered becomes a separate legal entity, which shall have perpetual succession and its own common seal. It can sue and be sued by others. It can also acquire movable and immovable property on its own.
Cancellation or withdrawl of Registration
The certificate of registration of a trade union can be cancelled in the following cases.
If the certificate has been obtained by the trade union
Recognition of Central Trade Unions
- by means of fraud, or
- by mistake, or
- if the trade union is not in existence, or
- if the trade has contravened any provisions of the act willfully, or
- if the trade union has incorporated any rule in its Rules, which is inconsistent with the provisions of the act or any rules made thereunder, to continue in force.
- if any person is aggrieved by the order of the Registrar then he may file an appeal before the High Court within 60 days of hte order of cancellation.
The central government recognises some trade unions as Central Trade Unions for the purposes of representation in the world organisations and international conferences, if they fulfull the following conditions.
- The union has a minimum of 5 lakh members
- The union must have members from at least 4 states
- The union must have membership from at least 4 industries
The Central Chief Labour Commissioner will make verification relating to the fulfillment of the above mentioned conditions.
Privileges and Immunities of a registered trade union
The Trade Unions Act provides certain privileges and immunities to the members/leaders of the registered trade unions so as to enable them to carry out their legitimate trade union activities without any fear or threat of civil or criminal actions or liabilities. The immunity from civil or criminal liability constitutes the most important basic right without which the office bearers of the registered trade unions may not be able to discharge their duties properly, efficiently and successfully.
The following are some of the immunities or privileges of the registered trade unions.
1. Civil Liability:
- Civil Liability
- Immunity from civil liability
- Immunity from tortious liability
- Immunity from agreements in restraint of trade
- Criminal Liability
The trade union act provides immunity from civil suits in certain cases to the leaders and office bearers of the registered trade unions.
(a) Immunity from civil liability
If the leaders or office bearers, while conducting thier duties, induce some other persons to break a contract of employment, or is in interference with the trade, business or employment of some other then the leaders or office bearers cannot be held responsible through a civil suit.
If the Union or its members have performed some tortuous acts for furtherance of a trade dispute, then no suit can be brought about on them in any civil courts in respect of such tortuous acts.
If the act done is not for furtherance of the trade dispute then the immunity is not applicable. Similarly, if the inducement or acts done by the trade unions or its members are by illegal means such as violence, intimidation, etc., then the immunity is not applicable.
(b) Immunity from tortious liability:
A registered trade union is not liable for torts committed by its agents in furtherance of trade disputes, if such agents acted:
(c) Immunity from agreements in restraint of trade
- without the knowledge of the executive committee of the Trade Union; or
- contrary to the express instructions of the executive committee.
As per the Indian Contract Act, any agreement which restraints the pursuance of a lawful profession, trade or business is against public policy and hence is void. However, reasonable restrictions may be imposed upon the freedom of trade in some cases such as to avoid monopoly, or to control prices, etc. In such cases, any agreement between the members of the registered trade union is valid and binding on the members, though it is in restraint of trade.
2. Criminal Liability:
The Union and its members are immune from criminal liability of criminal conspiracy.
Criminal Conspiracy refers to “agreements between two or more persons to do an illegal act or a legal act but by illegal means”.
Under the existing criminal laws an agreement to do an illegal act is itself a criminal offense. For example, two men who agree to persuade workmen to break their contracts with their employers are guilty of criminal conspiracy. The Trade Union Act protects trade unionists from ciminal conspiracy, as long as the agreement is in furtherance of their profession.
Minor as a member of Trade Union
A registered trade union can admit a minor, who has attained the age of 15 years, as a member. The minor so appointed shall enjoy the same benefits as that of a member who is a major. However, he is not allowed to become an office bearer of the union until he attains the age of 18.
Collective bargaining or negotiations is one of the methods for settlement of an industrial dispute. Through this method, the workers and management can bilaterally discuss and settle an industrial dispute without the involvement of a third party. This method is preferable as it provides an amicable solutions to the dispute.
In India, collective bargaining agreements are enforceable under the Industrial Dispute Act, 1947 by filing a petition in Labour Court or Industrial Tribunal.
The advantages of collective bargaining is that it imposes obligation on both the parties to the dispute and creates a code of conduct. It also prevents strikes and unrest in the industry. The only major disadvantage in this type of settlement is that hike in wages and other amenities to workmen results in higher cost of production.
General Fund and Political Fund
A trade union is entitled to maintain two kinds of funds, namely
- General Fund
- Political Fund
The trade unions should spend the funds for the purposes specified in the act.
1. General Fund:
Every trade union can create a general fund. The members of the trade union can contribute to it. The fund should be utilised for the following purposes.
2. Political Fund:
- The payment of salaries, allowances and expenses to office bearers of the trade union
- Expenses related to administration of the trade union including audit of accounts
- Legal expenses related to prosecution or defence for protecting any rights of the trade union
- For conducting trade disputes on behalf of the union or any member
Every registered trade union can create a separate fund for promotic civic and political interest of its members. A trade union is not allowed to use its general fund for political uses. The contribution for the political fund must be collected separately. The contribution to the political fund cannot be mandatory or put as a pre-condition for membership into the trade union. The fund may be managed or controlled only by those who have contributed to the fund.
The following are some of the uses of the political fund.
Right, Duties and Liabilities of a registered Trade Union
- The meeting of any expenses incurred by a candidate or prospective candidate for election as a member of any legislative body or any local body.
- Holding of any meeting or distribution of any literature or documents in support of prospective candidature
- Maintenance of any person who is a member of any legislative body or local authority
- Registration of electors or the selection of a candidature for any legislative body or local authority
- Holding political meetings or distribution of political literature
Amalgamation of Trade Union
- Right of Admission: The right to admission as a member in a trade union is not an absolute right. A trade union may impose certain restrictions that it deems fit for its purpose.
- Right of Representation: A trade union can make a representation on behalf of the employee or individual dispute, if such employee gives written authorization. With that authorisation, a trade union can make representation before any conciliation officer, industrial tribunal,
labour courts, etc.
- Right to Contract: A trade union being a legal person can enter into a contract on its own.
- Right to own property: Being a legal person, it can own property
- Right to inspect books: The office bearers of the union can inspect the books of accounts. The members do not have such rights.
- Duty to manage: The union should manage its affairs properly and legally. It must communicate with various bodies including the registrar in case of change of address, etc. It also has a duty to manage its finances and accounts transparently. If funds are collected for both general and political purposes then the funds should be maintained separately.
- Duty to monitor registration of members: It has a duty to ensure that more than 1/2 of its members are from the industry that it represents, a laid down in the act.
- Duty to file returns: Every registered union must send anually to the Registrar the following statements.
- A general statement, audited receipt and expenditure statement statement.
- A audited statement of its assets and liabilities
- A statement showing the current list of office bearers and the changes made during the year
- A copy of the rules of the trade union amended till date
- A minister or a person holding an office of profit in the Union or State shall not be selected as the member of the executive or other office bearer of a registered trade union.
It refers to merger of two or more trade unions into one trade union. The provisions for amalgamation are as follows.
- Amalgamation with dissolution of such trade unions
- Amalgamation without dissolution of such trade unions
- Amalgamation with division of funds of such trade unions
- Amalgamation without division of funds for such trade unions
The amalgamation can take place if:
At least half of the members of the concerned trade union vote for amalgamation
At least 60% of the votes recorded are in favour of amalgamation
After the vote for amalgamation decides in favour of amalgamation, the notice of amalgamation should be sent to the Registrar of Trade Unions. The registrar after being satisfied with the amalgamation may issue a certificate confirming the amalgamation.
Amalgamation does not change the rights, duties and liabilities of a trade union.
Dissolution of Trade Union
A registered trade union can be dissolved anytime by giving a notice of dissolution, signed by all the office bearers, to the Registrar within 14 days of dissolution. If the Registrar is satisifed then he may process the request for dissolution as per the rules. Upon dissolution, the funds of the union shall be distributed among its members as per the bye-laws of the union. If the bye-laws of the union is silent about the distribution of funds then the Registrar may distribute the funds among its members in such manner as he thinks fit. Distribution of funds can also be made as per the order of Court.
THE INDUSTRIAL DISPUTE ACT, 1947
The Industrial Dispute Act, 1947 is a comprehensive piece of legislation envisaging elaborate machinery for prevention and settlement of industrial disputes. Its main purpose is to harmonize the relationship between employer and employees so as to maintain industrial peace and harmony. The following are the main purposes of the legislation.
- Promotion of good/cordial relationships between the employer and workmen
- Investigation and settlement of industrial disputes between:
- Employers and Employees
- Employer and Workmen
- Workmen and Workmen
- Prevention of illegal strikes and lock-outs
- Relief to workmen in the matter of lay-offs and retrenchment
- Collective bargaining
The act is applicable to the whole of India except Jammu & Kashmir. It applies to workmen employed in both private and public sector industries.
The following are the main features of the act
- It is applicable to industries and certain category of industrial workers
- It lays down comprehensive machinery for the prevention and settlement of industrial disputes
- The emphasis of resolution is through conciliation and settlement
- It empowers the Government to make reference of the dispute to the Labour Court, Industrial Tribunal and National Tribunal depending upon the nature of the dispute.
- The award given by these above authorities is final and binds all the parties. The award is for a period not exceeding one year. The award is enforced by the government concerned.
- The right to strike by the workers and lock-out by the employers has been subjected to certain restrictions. The rights given are not absolute rights but limited rights.
- In the interest of the public at large, the Government has been empowered to declare certain industries as public utility services for the purpose of this act.
This refers to either the Central Government or the State Government. If any industry is controlled by the Central Government then the appropriate government is the Central Government. If it is controlled by the State Government then the appropriate government
is the State Government.
It means either the final or interim determination of the industrial dispute by the respective courts of law - Labour Court, Industrial Tribunal, National Tribunal or Arbitrators.
It means settlement arrived between the parties without going through the judicial conciliation proceedings. The settlement should be in writing.
|It is the decision given by the Arbitrator, Labour Court, Industrial Tribunal or National Tribunal
||It is arrived at as a result of conciliation process.
|It resembles the judgement of a court
||It resembles a gentleman agreement
|It is to be signed by the Presiding Officer
||It is to be signed by the parties to the dispute
The Awards and Settlements are binding on the following persons:
Period of Operation of the Award
- A settlement arrived at between the employer and workman shall be binding on the parties to the agreement
- An arbitration award shall be binding on the parties who referred the dispute to the arbitration
- A settlement arrived at in the course of conciliation proceedings and an award of a Labour Court, Tribunal and National Tribunal shall be binding on:
- all parties to the industrial dispute
- all parties summoned to appear as parties to the dispute
- the heirs, successors, assignees of the employer
- all persons who were employed in the establishment on the date of dispute, and subsequent to the dispute
Period of Operation of Settlement:
- The award shall remain in operation for a period of 1 year from the date on which it becomes enforceable.
- The award does not cease to be effective after the expiration of the period of its operation. It continues to be binding thereafter on the parties until notice has been given by one of the parties of the intention to terminate it.
- If there is any material change in the circumstances since the award is made, the appropriate government may refer the award or part of the award to the Labour Court or Tribunal to decide where any changes are necessary or should the award continue in its original form. The decision of such courts is final.
Penalty for breach of settlement or award:
- The settlement shall come into operation from the date agreed in the settlement.
- If no date is agreed in the settlement, the date of settlement shall be the date of signing the settlement deed.
- The settlement is binding for such period as is agreed upon by the parties. If no such period is mentioned, it remains biding for 6 months from the date it was signed.
Any person who commits breach of any terms of settlement or award is liable for punishment. The punishment can be either fine or imprisonment or both.
According to the Act, Employer means:
- in relation to an industry carried on by or under the authority of the Central or State Government, the head of the department.
- in relation to an industry carried on by the local authority, the chief executive of that authority.
Workman means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or award, whether the terms of employment be expressed or implied, and for the purpose of any proceedings under
the Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged, or retrenched in connection with, or as a consequence of that dispute, or whose dismissal, discharge or retrenchment has led to the dispute
but does not include the following persons.
- who is subject to the Air Force Act, the Army Act, the Navy Act; or
- who is employed in the police service or as an officer or employee of a prison; or
- who is employed mainly in a managerial or administrative capacity; or
- who, being employed in a supervisory capacity, draws wages exceeding Rs. 1,600 per month.
The essential condition for a person being a ‘workman’ within the Act is that there should exist an “Master-Servant relationship”. Hence, persons such as consultants, independent contractors, etc., are excluded from the definition.
It refers to all remuneration capable of being expressed in terms of money payable on fulfillment of the terms of employment to a workman in respect of his employment. It includes the following.
- all allowances including dearness allowance
- the value of any house accommodation, or of supply of light, water, medical attendance, or other amenity or of any service of any concessional supply of food grains or other articles
- any traveling concessions, commissions paid to agents
but excludes the following
Note: Any free food and tiffin supply to hotel workers by their employers form part of wages.
Public Utility Services
- any bonus, night shift allowances
- any contribution paid or payable by the employer to any pension fund, provident fund or any other fund
- any gratuity payable on the termination of his service
It refers to services that are essential and useful to public at large. The government can declare any industry as a public service industry if it thinks that such industry is essential to the public at large.
The following are some of them.
- any railway service or any transport service for the carriage of passengers or goods by air
- any service in, or in connection with the working of, any major port or dock
- any services related to postal, telegraph or telephone services
- any industry which supplies power, light or water to the public
- any system of public conservancy or sanitation
- any other industry which is notified as public utility industry
Some of the industries that are declared as public utility industries are:
- Transportation other than railways for carriage of passengers or goods, by land or water
- Cotton Textiles
- Food Stuffs
- Iron and Steel
- Defense Establishments
- Service in hospitals and dispensaries
- Fire Brigade
- Indian Government Mints
- India Security Press
- Copper mining
- Lead mining
- Zinc mining
- Iron Ore mining
- Service in any Oil Fields
- Service in the uranium industry
- Pyrites mining
- Security Paper Mill
The relevance of public utility service is that in case of any strike or lock-out the dispute is dealt with rigorously in case of a public utility service compared to a non-public utility service.
It means any business, trade, undertaking, manufacturing or calling of employers in that name.
Whether hospital, educational institutions, statutory bodies (cooperations, boards, departments, etc.), Solicitor’s office can be termed as industry?
To determine whether a particular business unit or service is an industry or not under the Act, the said industry should pass the “TRIPLE TEST” . As per the test, the following three criteria should be fulfilled by an unit to be called an industry.
- Systematic activity.
- Cooperation between employer and employee.
- Production and distribution of goods and services for satisfaction of human wants.
Industry does not include spiritual or religious services and activities of charitable nature (non-profit activities).
Hence, the answer to the question above is that hospital, educational institutions, statutory bodies and solicitor’s office are all defined as ‘industry’ under the act, as they are involve systematic activity, cooperation between employer and employee and production and distribution of goods and services for satisfaction of human wants.
Industrial Dispute and Individual Dispute
As per the act, industrial dispute refers to any dispute or differences between (i) employers and employees, or (ii) employers and workmen, or (iii) workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of
labour of any person.
An industrial dispute is one where a particular dispute is supported or taken-up by a registered or recognized trade union or body of workers.
An individual dispute is one where the dispute is between an individual employee or workmen and the employer or between two workmen in an industry, but without the support of such dispute by any trade unions or a majority group of workers.
Even if a trade union supports an individual dispute, at least half of the members of the industry should be members of that trade unions, without which the union will not be legally competent to represent the dispute. Such disputes can be settled through ordinary civil courts but not through Industrial Tribunals.
Strikes and Lockouts:
They are the most effective weapons of the workmen and the employer respectively to meet their demands and to safeguard their interests.
It is an act by which employees stop working until their demands are met by the employer. The stoppage of work is meant to bring pressure on the employer to concede to their demands. It is a weapon in the armoury of the working class to fight collectively against the employer.
Essentials of Strike:
Classification of Strikes:
- Cessation of work
- Cessation of work by a body of persons employed in any industry
- Acting in combination
- The industry should be within the meaning of Industry as per the Act
- Alternate day strike
- Slowdown strike
- Slowgear strike
- Lazy strike
- Token strike
- Pendown strike
- Tool-down strike
- Folded-arms strike
- Gherao, etc.
Strikes can also be classified into (i) Strikes in Public Utility Services; and (ii) Strikes in Non-Public Utility Services.
When any industrial dispute arises in a public utility service, a notice need to be served as per applicable rules.
It literally means “to shut or to close”. It refers to closure of an industrial establishment for a particular period to suppress the prevailing situation in the industry. Lock-Out is an antithesis of Strike. It is an act of the employer, by which his industrial establishment is temporarily closed to suppress the demands of his employees and to make them resume duties at his own terms and conditions.
Essentials of Lock-Out:
The following are the essential conditions of a lock-out.
Lock-Out and Closure
- Temporary closing of a place of employment by the employer
- Suspension of work by the employer
- Refusal by an employer to continue to employ any number of persons employed by him.
- The act of the employer is motivated by coercion
Lock-Out is an voluntary act of the employer to force his employees to accept his terms and conditions of employment. The lock-out is usually done against a strike by the employees. It is mainly done to suppress the demands of the employees. A closure, on the other hand, is not voluntary.
It is done primarily due to financial or other difficulties faced by the business establishment or industry.
Lock-Out and Lay-Off
Lock-Out is done to suppress the demands of the employees. Lay-off is for trade reasons, which are beyond the control of the employer. Lock-Out is due to an industrial dispute. Lay-Off is not concerned with industrial dispute. It happens due to unfavorable financial or operational circumstances.
Prohibition of strikes in public utility services:
No person employed in a public utility service shall go on strike:-
- without giving to the employer a notice of strike within six (6) weeks before striking
- within fourteen (14) days of giving such notice
- before the expiry of the date of strike specified in any such notice
- during the pendency of any conciliation proceedings before a conciliation officer and seven (7) days after the conclusion of such proceedings.
If the strike has to be legal then the above provisions have to be complied with.
If a lock-out is already in existence then the 6 weeks notice is not required.
Prohibition of lock-out in public utility services:
- No employer carrying out utility services shall lock-out its establishment:-
- without giving a notice of lock-out within six (6) weeks before such lock-out
- within fourteen (14) days of the date of giving such notice
- before the expiry of the date of lock-out specified in the notice
- during the pendency of any conciliation proceedings before a conciliation officer and seven (7) days after the conclusion of such proceedings
If the lock-out has to be legal then the above provisions have to be complied with.
If a strike is already in existence then the 6 weeks notice is not required.
General prohibition of strikes and lock-outs
The following are the general prohibitions for strikes and lockouts.
Punishment and Penalty for Illegal Strikes and Lockouts:
- During the pendency of conciliation proceedings before a Board and seven days after the conclusion of such proceedings.
- During the pendency of proceedings before a Labour Court, Tribunal or National Tribunal and two months after the conclusion of such proceedings
- During the pendency of arbitration proceedings before an arbitrator and two months after the conclusion of such proceedings, where a notification has been issued.
- During any period in which a settlement or award is in operation in respect of the matters covered by such settlement or award.
Penalty for Instigation, etc:
- Any workman who commences, continues or acts in furtherance of a strike which is illegal under the Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extent to Rs. 50 or both.
- Any employee who commences, continues or acts in furtherance of a strike which is illegal under the Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extent to Rs. 1,000 or both.
Any person who instigates or incites others to take part in, or otherwise acts in furtherance, of a strike or lockout which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to six (6) months or with fine which may extent to Rs. 1,000 or both.
Penalty for giving financial aid to illegal strikes and lock-outs:
Any person who knowingly expends or applies any money directly or indirectly to aid illegal strikes or lock-outs shall be punishable with imprisonment for a term which may extend to six (6) months, or with fine of Rs. 1,000 or both.
Penalty for breach of settlement or award:
If any person commits breach of any term of any settlement or award, which is binding on him under this Act, he/she shall be punishable with imprisonment for a term which may extent to six (6) months, or with fine, which may extend to Rs. 200 for everyday during which the breach continues
after the conviction.
Penalty for disclosing confidential information:
Any person who willfully discloses any such information as is referred to in Section 21, in contravention of the provisions of that section, shall on a complaint made by or on behalf of a Trade Union shall be punishable with imprisonment for a term which may extent to six (6) months or
with fine, which may extent to Rs. 1,000, or both.
Penalty for closure without notice:
Any employer who closes down any undertaking without complying with the provisions of this Act shall be punishable with imprisonment for a term which may extent to six (6) months, or with fine which may extent to Rs. 5,000, or both.
Lay-Off and Retrenchment:
Lay-Off refers to the failure or inability on the part of the employer to provide employment to a workman on muster rolls.
Retrenchment refers to the discharge of surplus labour or staff by the employer.
Layoff refers to rendering a workman work-less under certain circumstances which are beyond the control of the employer. It also means putting aside a workmen temporarily. The duration of the layoff should not be for a period longer than the period of emergency. The employer-employee
relationship does not come to an end during the lay-off.
As per the Act. If a workman, whose name is in the muster role, presents himself for work at the scheduled work time but is not given employment by the employer within two (2) hours shall be deemed to have been laid-off for that day.
If there are two (2) shifts and the worker who presents himself in the first shift is not given employment, and is asked to be present for the second shift, and is given employment in the second shift, is deemed to have been laid for the first shift only. However, if worker is not provided employment in the second shift also, after being present for duties as instructed, he/she is entitled to full basic wages and dearness allowance for that part of the day.
In other words, layoff is a temporary deprivation of work to a workman on muster rolls. During the period of lay-off, the employer and employee relationship does not come to an end.
The provisions related to Lay-Off as per this Act does not apply to the following industrial establishments:
Rights of a workmen laid off for compensation:
- Industrial establishments in which less than 50 workmen on an average per working day have been employed in the preceding calender month; or
- Industrial establishments which are of a seasonal character or in which work is performed only intermittently.
The Act lays down the conditions and extent of compensation to workers who are laid-off. The following are those.
Workers not entitled to lay-off compensation:
- The establishment must have employed 50 or more workmen on an average during the calender month preceding the lay-off.
- The industrial establishment in question must not be a seasonal character or in which work is performed intermittently.
- The claimant should come within the definition of workman
- He should not be a badli workman or casual workman
- His name must be in the muster rolls and he should not have been retrenched.
- He must have completed not less than one (1) year of continuous service.
- Each one year continuous service must be under the same employer
- Lay-off compensation must be half of basic wages and dearness allowance
- Maximum period for entitlement of lay-off compensation is forty-five (45) days during any period of twelve months.
- No right to lay-off compensation for more than forty-five (45) days during 12 months, if there is an agreement to that effect.
- In the absence of a contrary agreement, lay-off compensation is payable for subsequent period beyond 45 days during the same 12 months, if such subsequent period is not less than one week or more at a time.
- Beyond 45 days the employer can escape liability of resorting to retrenchment after payment of retrenchment compensation.
- The lay-off in question should not be by way of victimization or some other ulterior motives.
The workmen is not entitled to compensation in the following cases.
Prohibition of Lay-Off:
- If he refuses alternative employment
- in the same establishment or elsewhere within a radius of 5 miles.
- if the alternative employment does not require any special skills or previous experience.
- no diminution in wages (same or equal wages)
- If he does not present himself for work at the establishment at the scheduled time
- If the lay-off is due to strike or slowing down of production on the part of workmen in another part of the same establishment
The following are the various prohibitions for lay-offs.
- No workman (other than Badli workman or a casual workman) whose name is in the muster rolls of an industrial establishments, as per this Act, shall be laid off by the employer except with the prior permission of the appropriate government or such authority as may be specified by the government through notification in the Official Gazette. The permission needs to be obtained by making an application for such layoff. If the layoff is due to shortage of power, natural calamity, fire, flood, excess of inflammable gas, explosion, etc. The application for lay-off should be made to the appropriate authority in the prescribed manner clearly stating the reason for layoff.
- If case of extension of lay-off beyond 30 days, an application for such extension should be made to the appropriate authority.
- The authority, after having received the application for layoff and hearing the concerns of both the employer and workmen, may grant or refuse permission for layoff. Such decision shall be informed to both the employer and workman.
- If the authority does not take any decision within 60 days from the receipt of application then the decision in favour of layoff is deemed to have been given by the authority on the expiry of the 60 days period.
- The order given by the appropriate authority shall be final and binding on all parties and shall remain in force for a period of one year from the date of such order.
- The authority may either on its own or on receipt of an application from the employer orworkman may review its decision or refer it to a tribunal for adjudication.
- If a reference has been made to a Tribunal then the Tribunal shall give an award within 30 days from the date of such reference.
8. If no application has been made to the authority seeking permission for layoff but the employees have been laid off without a permission then such a lay-off is illegal from the date of lay off.
- Notwithstanding anything above, if government or an appropriate government decides that the layoff is valid due to the circumstances of the case then the said lay off is not illegal, even if a notice seeking permission for such lay off has not been made.
If the workman has been offered alternative employment by the employer within a radius of 5 kms from the actual place of work and if the work does not require any special skills and the alternative work provides the same wages then the action of the employer does not amount to lay off.
It refers to termination of service of a workman by the employer for any reason other than disciplinary action or punishment. It is usually done due to surplus labour conditions. It does, however, include the following.
Conditions precedent for retrenchment:
- voluntary retirement of the workman
- retirement of the workman on reaching the age of super annuation
- termination of service as a result of non-renewal of the contract of employment
- termination of the service on the ground of continued ill-health.
Usually, a workman having more than one continuous year of service cannot be retrenched. He may be retrenched only if the following conditions are satisfied.
- By serving one month’s notice stating the reasons in writing or paying one month wages in lieu of the notice
- By paying 15 days wages for each year of service, not exceeding 6 months wages as compensation for total service.
- The notice of retrenchment must be served to the appropriate government.
The Supreme Court held that one month notice or one month wages in lieu of notice is mandatory.
Rights of Retrenched Workman:
Procedure for Retrenchment:
- Retrenchment compensation:
- Right to re-employment
The well establishment principle for retrenchment is “the last come first go and the first come last go”. To invoke protection under retrenchment the following conditions need to be satisfied.
Methods of settlement of Industrial Disputes
- the workman must be workman within the meaning of the Act
- such a workman should be citizen of India
- the industrial establishment employing such workman should be industry within the meaning of this act
- there should be no agreement between the employer and workman contrary to the procedure of “last come first go”.
- Collective Bargaining
- Voluntary Arbitration
Collective Bargaining or negotiation is one of the methods for settlement of industrial dispute. It plays a significant role in promoting labour management relations and in ensuring industrial harmony. Under this method, the labour and management settle their disputes amicably. It is the
best method to settle any industrial disputes.
It is a process, by which a third party persuades the parties to the industrial dispute to come to an amicable settlement. Such a third party is called as “Conciliation Officer” or Board of Conciliation.
It refers to settlement or determination of a dispute outside the courts. The parties to the contract may appoint an arbitrator, in which they have mutual trust, and assign him the task of finding a solution to their dispute. The decision or award given by the arbitrator is binding on both the
When an industrial dispute could not be settled either through bipartite negotiations or through the conciliation machinery or through voluntary arbitration, the final stage resorted is through adjudication. It involves the government referring the dispute to a statutory bodies such as Labour
Court, Industrial Tribunal or National Tribunal.
Settlement Machinery or Authorities under the Act
The following are the agencies or authorities for settlement of industrial disputes.
1. Works Committee:
- Works Committees
- Conciliation Officer
- Board of Conciliation
- Court of Inquiry
- Labour Court
- Industrial Tribunal
- National Tribunal
It refers to a committee comprising of representatives from both the parties (employer and employees) to the dispute. The main purpose is to create a sense of partnership between the parties to reduce the friction between them. Any industrial establishment where more than 100 workman are employed on any day in the preceding 12 months is required to constitute a works committee consisting of representatives of employers and workmen engaged in the establishment. The number of representatives of the workman in such a committee should not be less than the number of representatives of the employer. The representatives of the workman should be in the prescribed manner from among the workman engaged in the establishment and in consultation with the trade union. The decisions of the works committee are not binding but recommendatory.
It is a process by which a third party persuades the parties to an industrial dispute to come to an equitable solution. Under the Act, conciliation is mandatory in all disputes related to public utility services, and occasionally in some non-public utility services. There are two types
of authorities available under this method - (a) Conciliation Officer; and (b) Board of Conciliation.
As per the Act, the appropriate government may appoint one or more conciliation officers. The officer acts as a bridge between the employer and the employee. A conciliation officer is deemed to be a public servant under Section 21 of IPC. He has, however, no authority to decide a dispute
or pass an award or binding orders on the parties.
The appropriate government may also appoint a Board of Conciliation, which shall comprise of a chairman and a few members. The Chairman is independent and th members representing both the parties must be in equal number. The members of the board of conciliation act in judicial capacity
and hence enjoy more powers than the conciliation officers. However, the decisions of the Board are not conclusive or binding but only recommendatory.
3. Court of Inquiry:
The appropriate government by notification in the official gazette may appoint Court of Inquiry. It consists of one or more independent presided by a Chairman. The court of inquiry shall submit a reports to the government within six months from the date of enquiry. Its
decision is not conclusive and binding, but recommendatory.
4. Compulsory Adjudication:
It refers to the settlement of disputes through the various courts of laws. The Act provides three courts of law for settlement of industrial disputes namely, (1) Labour Court, (2) Industrial Tribunal, and (3) National Tribunal
The appropriate government, by notification, may constitute one or more labour courts for adjudication of industrial disputes. It consists of a person appointed by the government called as the Presiding Officer. The jurisdiction of the court continues until it makes an award, which is enforceable on the parties.
The Labour Court has the same powers of a Civil Court. The proceedings of the Labour Court shall not be questioned on the ground that it is not properly constituted.
Qualification for appointment as the Judge of a Labour Court:
A person to be appointed as the Presiding Officer of the labour court shall possess any one of the following qualifications.
Tribunals or Industrial Tribunals
- Judge of a High Court
- District Judge or Additional District Judge for a period of not less than 3 years
- A person who held judicial office in India for not less than seven years.
- Presiding Officer of a labour court under provincial or state act for not less than 5 years.
The appropriate government, by way of notification in the Official Gazette, may constitute one or more Industrial Tribunals for adjudication of industrial disputes. Such tribunals may be constituted for a limited time or for any particular case. It is headed by a presiding officer. Two accessors are also appointed by the government to assist the tribunal.
Qualifications of Presiding Officer
A person to be a presiding officer should possess any one of the following qualifications.
- He has been a judge of a High Court; or
- He has, for a period not less than 3 years, been a District Judge or an Additional District Judge
- He must not have attained the age of 65 years.
The decisions or award given by the tribunal is final and applicable to all parties concerned.
The Act empowers the Central Government to constitute one or more National Tribunals for adjudication of industrial disputes of national importance, or in respect of industrial establishments situated in two or more states. It is headed by a Presiding Officer. Two or more accessors are also appointed to assist the presiding officer.
Qualifications of Presiding Officer:
The person appointed as a presiding officer of a national tribunal must be a judge of a High Court.
THE FACTORIES ACT, 1948
The act is a piece of social welfare legislation. Its main object is to protect and safeguard the interest of the workmen employed in the factories or industrial establishments. It is applicable to the whole of India including Jammu & Kashmir.
Salient features of the act:
Some definitions under the Act
- The state governments have the power to extend the application of the Act to any establishments irrespective of whether power was used or the number of workers employed.
- There is no distinction between seasonal and non-seasonal industries
- The minimum age for admission of children to employment is 14 years and the maximum permissible daily hours of work by children is 4.5 hours.
- Children and Women cannot be employed between 7pm and 6am.
- For overtime, workers are entitled to twice their normal wage rates.
- Certain basic minimum facilities regarding health, safety and welfare of workers are mandated by the act.
- The Act lays down provisions for licensing and registration of a factory. The factories shall be scrutinized at regular intervals by a factory inspector.
It means anyone who has completed eighteen (18) years of age
It means a person who has completed his fifteenth (15th) year of age but not completed his eighteenth (18th) year.
It means a person who has not completed his fifteenth (15th) year of age.
It refers to any process or activity, in relation to an industry, where if proper care is not taken then it would:-
- cause material impairment to the health of the persons engaged in or connected therewith; or
- result in the pollution of the general environment
It refers to any engine, motor or other appliance which generates or provides power.
It means any shaft, drum, pulley, system of pulleys. coupling clutch, driving belt or other appliance or device by which the motion of the prime mover is transmitted to or received by any machinery or appliance.
It includes prime mover, transmission machinery and all other appliances whereby power is generated, transformed, transmitted or applied.
It means any process for:
- making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to use, sale, transport delivery or disposal, etc., or
- pumping oil, water, sewage, or any other substance; or
- generating, transforming power, or transmitting power, or
- composing types for printing, printing by letter press, lithography, photographer or other similar process or book binding, or
- constructing, reconstructing, repairing, refitting, finishing, or breaking up ships or vessels, or
- preserving or storing any article in cold storage.
It means a person employed directly or by through any agency (including contractor) with or without the knowledge of the principal employer, for remuneration or not, in any manufacturing process.
As per the act, the term does not include members of the armed forces.
As per the act, it refers to any premises:
- where ten or more workers are working, or were working on any day during the last 12 months, and in any part of which a manufacturing process is being carried on with the aid of power.
- where 20 or more workers are working, or were working on any day during the last 12 months, and in any part of which a manufacturing process is being carried out without the aid of power.
It does not include a mine, a mobile unit belonging to the armed forces, a railways running shed, hotel, restaurant, or any other eating place.
For calculating the total number of workers, muster roll or employment records is considered. If a particular work is done in relay then the total workers employed in such relay will be considered as the total number of workers.
The place of work can be either a building or land.
Computer rooms and other Electronic Data Processing Units are not considered as factory, even through some power is employed to conduct the work.
The occupier of a factory means a person who has the ultimate control over the affairs of the factory, provided that:
- in case of a firm or other association of individuals, any one of the individual partners or members thereof shall be deemed to be the occupier;
- in the case of a company, any one of the directors shall be deemed to be the occupier;
- in case of a factory owned by the Central or State Government or any local authority, the person or persons appointed to manage the factory shall be deemed to be the occupier.
The expression ‘Occupier’ is different from that of the ‘Owner’.
Owner(s) have the final control over a factory. However, the day to day management of the factory may rest with a factory manager or some other appointed person. The term occupier refers to such appointed person who has the control over the affairs of the factory.
Periodic inspection of the factories is required to be carried out to ensure that the factories are operating as per the provisions of the act.
The State Government has the power to appoint inspectors to carry out such inspection.
The state government shall appoint
- Chief Inspectors
- Additional Chief Inspectors
- Joint Chief Inspectors
- Deputy Chief Inspectors
- Qualified Medical Surgeons and certifying surgeons
Every district magistrate shall act as an Inspector of his district. He is competent to take cognizance of any offence on receiving a complaint of facts which constitutes an offence under this act. The District Magistrate has also the powers to exercise Criminal Procedure Code for dealing with
an offence under the Factories Act.
Powers of Inspector:
The following powers are vested with the inspector.
Duties of Certifying Surgeons:
- he may enter any premises which is used or which he has reason to believe is used, as a factory. He may be accompanied by such assistants, who are in the service of the government or any local or public authority or within an expert as he thinks fit.
- he may make examination of the premises, plant, machinery, article of substance
- inquire into an accident or dangerous occurrence, whether resulting in bodily injury, disability or not, and take on that spot or otherwise statements of any person which he may consider necessary for such inquiry.
- require the production of any prescribed register or any other document relating to the factory.
- seize, or take copies of any register, record or other document or any portion thereof as he may consider necessary in respect of any offence under this act, which he has reason to believe, has been committed.
- direct the occupier that any premises or any part thereof or anything lying therein shall be left undisturbed for so long as is necessary for the purpose of any examination.
- take measurements and photographs and make such recordings as he considers necessary for the purpose of any examination.
The following duties may be carried out.
Provisions relating to health
- examination and certification of young persons under the act
- examination of persons engaged in factories in such dangerous occupations or processes as may be prescribed.
- exercising of medical supervision for any factory or class or description of factories where:
- cases of illness have occurred which is believed to the due to some manufacturing process or the prevailing working conditions.
- due to any change in manufacturing process involving change in hazardous substances used in such processes
- young persons are about to be employed in any work which is likely to cause injury to their health.
The Factories Act requires the employer to provide the following facilities in every factory.
Cleanliness of the factory:
- Cleanliness of the factory
- Disposal of waste and effluents
- Ventilation and temperatures
- Dust and fumes
- Artificial humidification
- Over crowding
- Drinking water
- Latrines and Urinals
Every factory must be kept clean and free from unpleasant or harmful odour or discharge.
The following precautions should be taken for the cleanliness in the factory.
Disposal of waste and effluents:
- every factory must be kept clean and free from unpleasant or harmful odour or discharge.
- floors, benches, staircases and passages should be sweep-ed daily.
- the floor of the workroom should be cleaned at least once in a week with disinfectant.
- where the floor becomes wet during the course of a manufacturing process it must be effectively drained.
- white-washing of factory walls must be done at least once in every 14 months.
- doors, window panes, frame work and shutters should be painted at least once in every 5 years; and
- the date of which the above mentioned processes are carried out should be entered in the prescribed register.
The waste and other effluents should be disposed as per the rules prescribed by the state government.
Ventilation and Temperatures:
There should be free and adequate circulation of air in the factory to help reduce the temperatures.
Dust and Fume:
Necessary arrangements should be made to prevent dust and fumes.
It is used in textiles and cigarette industries. The water used in the process should be purified before use.
Overcrowding is injurious to health and hence it should be reduced. The area of the factory must be a minimum of 500 cubic feet.
Necessary arrangements of both natural and artificial lighting should be made.
Supply of pure and fresh drinking water should be made at different points.
Latrines and Urinals:
Separate toilets for ladies and gents should be maintained. Sweepers should be employed for maintaining them in hygenic conditions.
Spittoons should be arranged to avoid spitting indecently. Suitable notices must be errected not to spit outside. A fine of Rs. 5 may be imposed for contravening this rule.
Provisions relating to Safety
Safety is a basic and primary requirement to ensure effective and proper working conditions in the factory. The following safety measures should be implemented as per the act.
Provisions relating to Hazardous Processes:
- Fencing of machinery
- Work on or near machinery in motion
- Employment of young persons on dangerous machines
- Striking gear and devices for cutting off power
- Self acting machines
- Casing of new machinery
- Prohibition of employment of women and children near cotton openers
- Hoists and lifts
- Lifting machines, chains, ropes and lifting tackles
- Revolving machinery
- Pressure plant
- Floors, stairs and means of access
- Pits, sumps and opening of floors, etc.
- Excessive weights
- Protection to eyes
- Precautions against dangerous fumes, gases,
- Use of portable electric light
- Explosive or inflammable dust, gas, etc.
- Precautions in case of fire
- Power to require specifications of defective parts
- Safety of building and machinery
- Maintenance of buildings
- Safety Officers
- Power to make rules to supplement the above points
- Provisions relating to hazardous processes
The following are the provisions relating to hazardous processes as per this act.
Self Appraisal Committees:
- The state government is empowered to appoint self appraisal committees.
- It insists on compulsory disclosure of hazardous processes undertaken by the occupier
- Imposes scientific responsibility of the occupier
- Empowers the central government to appoint/constitute inquiry committee.
- Confers power on the central government to prescribe emergency standards through expert bodies
- Prescribes permission limits of exposure of chemical and toxic substances
- Makes provision for workers participation in safety management
- Confers on workers right to warn against imminent danger
The state government should appoint a committee to render advice on applications for permission to start factory involving hazardous processes. The committee should consist of the following persons.
- Chief Inspector of the state as the Chairman
- Two representatives of the Central Water and Air Pollution Control Boards
- Two representatives of the State Water and Air Pollution Control Boards
- One representative, each from State Environment Department and the Central Meteorological Department and the Central Meteorological department
- One expert from occupational hazard
- One from State Town Planning Department
- Not more than 5 representatives co-opted by the State Government who shall include a scientist specialized in hazardous processes; and
- A representative of the local authority of the areas of the proposed site.
The committee is to consider applications and forward recommendations to the state government within 90 days.
Specific responsibility of the occupier:
Provisions relating to welfare of workers:
- To maintain accurate up to date medical records of the workers who are exposed to any chemicals, toxic or any other harmful substances which are manufactured, stored or transported.
- Appoint qualified persons to handle and supervise the handling of such hazardous substances with necessary facilities for protecting the workers
- Provide for medical examination of every worker before assigning a job involving hazardous substances and during its continuance and after ceasing to work in such job at intervals not exceeding 12 months.
Provisions relating to employment of young persons:
- Washing facilities
- Storing and drying clothing
- Sitting facilities
- First aid appliances / facilities
- Shelters, Rest rooms and lunch rooms
- Welfare officers
- Power to make rules to supplement the above items
No child below the age of 14 years is allowed to work in any factories.
However, young persons above 15 years of age but less than 18 years of age may be employed in factories subject to production of a fitness certificate from an authorized surgeon.
No child is allowed to work in a factory for more than 4.5 hours per day.
No child should be allowed to work during night between 10 pm and 7am.
A child is entitled to weekly holiday like an adult worker
A register of child workers must be maintained at the factory
A child worker is not allowed to work on or near:-
Provisions relating to employment of women:
- A machinery in motion
- cotton openers
- beedi making
- carpet making
- cement factories
- cloth printing
- A women shall not be allowed to clean or lubricate or adjust any part of a dangerous machinery
- A women worker shall not be allowed to work near cotton opener
- There shall be no change of shifts in case of women workers
- A women worker shall not be made to work for more than 48 hours in a week or more than 9 hours a day.
- A women worker shall not be made to work in the night between 10pm and 6am.
- A women worker in an industrial establishment is entitled to maternity leave of 12 weeks.
THE MINIMUM WAGES ACT, 1948
One of the main factors of production is labour, which a workmen or employee offers in consideration for wages. It refers to all remuneration including house rent paid to the workers for work done as per the terms of the contract of service. In the absence of proper legislation, capitalists exploit the labour, by lowering down the wage level. In such situation, the intervention of State is necessary to regulate such exploitation, by passing necessary legislation. The Minimum Wages Act is such legislation, which is aimed to set a minimum wages for workers to ensure social security and to promote economic standards of working class in industrial establishments.
The Act is applicable to the whole of India including Jammu & Kashmir.
The Act empowers the central government to fix minimum wages for employees working in some specified industrial establishments, which are under the control of Central and State Government. While fixing the rates, the government need not take into consideration the economic capacity of
The Act empowers both the government to fix minimum wages for different type of employments listed in the Schedule of the Act. It also makes provision for revision of rates at intervals, not exceeding 5 years.
Schedules in the Act
The Act is not applicable to all industries. It is only applicable to industries which are specified in the schedule of the act. There are two schedules in the act namely, Part-1 and Part-2. The below are those schedules.
Part - 1
- Employment in any woolen carpet making or shawl weaving establishment
- Employment in any rice mill, four mill, or Dal mill
- Employment in any tobacco manufacturing, including bidi making.
- Employment in any plantation such as cinchona, rubber, tea, coffee, etc.
- Employment in any oil mill
- Employment under any local authority
- Employment in the construction industry (construction or maintenance of roads and building operations)
- Employment in stone breaking or stone crushing. It covers the breaking or the crushing of stones incidental to the mining operations, but the stone breaking or stone crushing operations which are carried on in mines are not included. It also does not apply to stone breaking and crushing in quarries.
- Employment in any lac manufacturing
- Employment in any mica works
- Employment in Public Motor Transport
- Employment in tanneries and leather manufacturing.
Part - 2
Employment in agriculture
This includes any form of farming including the cultivation and tilling of soil, dairy farming, the production, cultivation, growing and harvesting of any agriculture or any practice performed by a farmer or on a farm as incidental to or in conjunction with farm operation (including any forestry or timbering operations and the preparation for market and delivery to storage or to market or to carriage for transportation
to market of form produce).
Salient Features of the Act
The following are the salient features of the act.
Definitions under the Act
- It provides for fixation of:
- minimum time rate of wages
- minimum piece rate of wages
- a guaranteed time rate
- overtime rate, for different occupations, localities or classes of work for adults, adolescents, children and apprentices.
- The minimum rate of wages under the Act may consist of:
- a basic rate of wages
- a cost of living allowance
- allowance and the cash value of the concession in respect of essential commodities supplied at concessional rates
- an all inclusive rate
- The act requires that wages shall be paid in cash, although it empowers the appropriate government to authorize the payment of minimum wages partly in cash and partly in kind.
- The cost of living allowance and the cash value of concessions should be calculated by a competent authority at regular intervals. The Labour Bureau is one of the competent authority.
- The Act empowers the appropriate government to fix the number of hours of work per day, weekly holiday and payment of overtime wages.
- The establishments covered under the act are required to maintain registers and records in a prescribed manner.
- Inspectors should be appointed to inspect the wage conditions.
- The appropriate authority has the power to impose penalties in case of any violation.
It refers to any person who has completed 14 years of age but has not completed 18 years.
It refers to either the central government, state government, local authority, railways, ports, or any other corporation established by the government.
It refers to the authority appointed by the appropriate government by notification in the offiical gazette.
Cost of Living Index Number:
It refers to the index numbers ascertained and declared by the competent authority by notification in the official gazette.
It refers to any person who employs, whether directly or indirectly or through another person, or whether on behalf of himself or any other person one or more employees in any scheduled employment in respect of which minimum rates of wages have been fixed under the act.
It means prescribed by rules under this act.
It means employment specified in the schedule.
It means all remuneration, capable of being expressed in terms of money, which would if the terms of the contract of employment, expressed or implied, were fulfilled, to be payable to person employed in respect of his employment.
It does not include:
- value of any house accommodation, supply of light, water, medical attendance
- any other amenity or service excluded from time to time through notification
- any contribution paid by employer to any Pension Fund or Provident Fund or any other scheme of social insurance
- any travelling allowance or the value of any travel concession
- any gratuity payable on discharge
It means any skilled or unskilled person who is employed for hire or reward to any work, in respect of whom minimum rates of wages have been fixed.
It does not include any member of the Armed Forces of the Union.
Living Wage, Fair Wage & Minimum Wage
Living wage is a sum which is adequate to satisfy the normal needs of the average employee regarded as human being in a civilized society.
Fair wage is a mean between the living wage and the minimum wage. Fair wage is fixed taking into consideration the present economic position and further prospects of the industry.
The term ‘Minimum Wage’ has not been defined in the Minimum Wages Act.
However, it means the lowest wage below which the efficiency of a worker is likely to be impaired. It includes the sum required for bare physical necessities and to afford some basic comforts to lead a decent life. In other words, it means a sum which is required to meet the bare physical requirements of a worker and also provide him some additional money for availing some basic comforts in order to preserve the efficiency of the worker on the long run.
An employer is required by law to pay the minimum wage as prescribed for his industry. This amount has to be paid irrespective of the economic position of the employer.
Components of Minimum Wage:
The following are the components of the minimum wage according to the act.
Authorities under the Act
- a basic rate of wages and a special allowance, as per variation in the cost of living index.
- a basic rate of wages with or without the cost of living allowance and cash value of the concession in respect of supply of essential commodities at concessional rates
- an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concession.
The following authorities have been appointed under the act.
- Advisory Board
- Central Advisory Board
THE PAYMENT OF WAGES ACT, 1936
It is an act which aims at preventing exploitation of laborers. The act applies to the whole of India including Jammu & Kashmir. The act does not apply if the wage is more than Rs. 1,000 per month. One of the main object of the act is to remove the irregularities in payment of wages and unauthorized deductions by the employer. It ensures payment of wages in a particular form and at regular intervals without any unauthorised deductions. The regulation under is act is two fold:
Definitions under the Act:
- Date of payment of wages
- Deduction from wages whether as fine or otherwise
It means the Central Government, State Government and Local Authority.
It refers to the person employed in employment including legal representatives of the deceased person.
It means the person who has provided employment including the legal representative of a deceased person.
It refers to a Factory as defined under Factories Act, 1948.
Industrial and Other Establishments:
It refers to the following:
- Tramway service
- Air transport service
- Dock, Wharf or Jetty
- Inland vessel, mechanically propelled
- Mine, Quarry or Oil Field
- Workshop or other establishment
- Establishment in which work relates to construction, development and maintenance of buildings is being carried out.
- Any other establishment that is declared or notified by the appropriate government.
It refers to a mine as defined in the Mines Act, 1952.
It refers to the plantation as defined under the Plantation Labour Act, 1951.
It refers to the rules prescribed under the act.
It refers to the railways and railways administration as defined in the Railways Act, 1989.
Main Provisions of the Act:
The following are the main provisions of the act.
- Meaning and definition of wages
- Time and payment of wages
- Unlawful deduction
- Authorised deduction
- Mode of payment
- Responsibility for payment of wages
- Authority to hear claims; and
It refers to all forms of remuneration, salaries, allowances and also includes the following.
- any remuneration payable under any award or settlement between the parties or order of a court.
- any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period.
- any additional remuneration payable under the terms of employment, including bonus or any other forms of payment.
- any amount received on termination of employment
- remuneration received with or without a formal contract or agreement
It does not include:
- any bonus which does not form a part of remuneration payable under employment
- the value of house accommodation or supply of light, medical attendance, and other amenities.
- any contribution paid by the employer to any pension or provident fund, and the interest which may have been accrued thereon.
- any traveling allowance or the value of any traveling concession.
- any gratuity payable on termination of employment
Bonus payable under the Payment of Bonus Act, 1965 amounts to wages within the definition of wages under this act.
Time of payment of wages:
Wages of a person employed in any railway, factory or industrial or other establishment in which less than 1,000 persons
are employed, shall be paid before the expiry of the 7th day, after the last day of the wage-period.
Wages of person employed in any railway, factory or industrial or other establishment in which more than 1,000 persons
are employed, shall be paid before the expiry of the 10th day after the last day of the wage-period.
Any deductions other than those authorised under Section 7 of the act are unlawful and would be declared null and void.
Authorised Deductions (Section 7):
The following are the authorised deductions under the act.
- Deduction for absence from duty
- Deduction for damages of loss of goods
- Deduction for house accommodation
- Deduction for amenities and services
- Deduction for recovery of advances
- Loans made for specific purpose
- Deduction for income tax
- Deduction by the order of the court
- Deduction for provident fund
- Deduction for payment to co-operative societies
- Deduction with the consent of employed person
- Deduction for welfare fund
- Trade union membership fees
- Deduction for fidelity guarantee bonds
- Recovery of losses sustained by a railway administration
- Prime Minister’s national relief fund.
No fine shall be imposed on any employed person except for such acts and omissions which are specified by the employer through a notice.
Deduction for absence from duty:
Rejection of leave under certain circumstances is legal and proper. Absence from duty, especially for the purpose of participation in an agitation against the management is unauthorised. An unauthorised absentee has no right to compel payment of wages for the period of unauthorised absence.
Deduction for damages of loss of goods:
If any money or good entrusted to the employee is lost by his negligence or default, the employer is entitled to deduct such loss.
Deduction for house accommodation:
The employer is entitled to deduct expenses related to providing house accommodation.
Deduction for amenities and services:
The employer can make deduction from the wages of his employees for providing any amenities to the employees.
Deduction for recovery of advances:
Advances make to employees can be deducted from wages
Loans made from the Welfare Fund:
If the employee takes a loan from welfare fund, it may be deducted with interest from his salary in easy installments.
Trade union membership fees:
It permits deduction of membership fees of trade union from wages.
Deduction for fidelity guarantee bonds:
Deduction can be made from wages
Prime Minister’s National Relief Fund:
The employees by written undertaking may authorize the employer to deduct some amount from his wages as contribution to prime minister’s national relief fund.
Authority to hear claims:
The following authorities can hear claims or disputes.
Who can file an application:
- A presiding officer of a labour court or Industrial Tribunal
- Any commissioner for workmen’s compensation
- Any other officer with experience as a Judge of a civil court or a stipendiary magistrate.
- the employee himself; or
- any legal practioner; or
- any official of a registered trade union authorised in writing to act on his behalf; or
- any inspector under the act; or
- any other person with the permission of the authority
Any employer who is found guilty of delaying payment of wages or making unauthorised deductions from the wages of the employee is subject to penal liability. The liability is through fine which can extent to Rs. 3,750.
The employer is also liable to penalty if there is a:
- failure to maintain registers or records; or
- willful refusal or neglect without lawful cause to furnish such information or return
- willfully furnishing or causing to be furnished any information or return which he knows to be false
- refusal to answer or willfully giving a false answer to any question necessary for obtaining any information required to be furnished under the act.
THE INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946
The expression “Standing Orders” means “Conditions of service or employment”. In other words, it refers to the rules and regulations relating to conditions of recruitment, discharge, disciplinary action, leaves, holidays, etc. The absence of proper legislation regulating the service conditions of the employees or workman employed in industrial establishment may lead to frequent disputes or conflicts between the employer and workman. In order to avoid such disputes, the Industrial Employment (Standing Orders) Act was enacted by the Central Government.
Application of the act:
Objects of the act:
- It applies to the whole of India except Jammu & Kashmir.
- It applies to all industries which employ 100 or more workman on any day of the preceding 12 months. However, the government through a notification can make the act applicable to any industry which employs less than 100 employees also.
- The act does not apply to industries to which the Bombay Industrial Relations Act, 1946 and M.P Industrial Employment (Standing Orders) Act, 1961 applies.
The object of the act is to make it clear to both the parties (employer and employee) as to the terms and conditions on which the workmen are offering to work and the employer is offering to engage them.
The act requires the employer to define the conditions of service in their establishment and to reduce them in writing and to get them compulsorily certified by an appropriate authority to avoid unnecessary industrial disputes.
Features of the Act:
The following are the main features of the act.
- The employer of every industrial establishment to which the act applies is required to frame Draft Standing Orders and to submit them to the Certifying Officer, who is generally the Labour Commissioner, for certification.
- The definition of workmen under the Act includes a “Supervisory Technical Person” under certain conditions.
- The certifying officer is empowered to modify or add to the Draft Standing Orders so as to render them certificate under the act.
- A group of employers of similar industrial establishments may submit Joint Standing Orders for certification.
- The certifying officers and appellate authorities shall have all the powers of a Civil Court with respect to certain matters pertaining to this act.
- The employer can be penalized for failure to submit Draft Standing Order for certification or for contravention of any provision of the standing order finally certified.
- The appropriate government may by a gazette notification exempt any establishment or class of industrial establishment from any of the provisions of the act.
It refers to Labour Commissioner or a Regional Labour Commissioner and includes any other officer appointed by the appropriate government to perform the functions of a certifying officer.
It refers to a factor as defined under the Factories Act, railways as defined under the Indian Railways Act, 1890.
The following matters are provided in the standing orders.
Posting of Standing Orders:
- Classification of workmen, e.g. whether permanent, temporary, apprentice, probationers, or badli.
- Manner of intimating to workmen period and hours of work, holidays, pay days and wage rates.
- Shift working
- Attendance and late coming
- Leave and holidays
- Liability to search
- Closing and reopening of an industrial establishment and temporary stoppage of work.
- Termination of employment and notice thereof.
- Suspension or dismissal for misconduct and acts or omissions.
The act requires that the standing orders shall be posted permanently in English or any other language known to workmen at the main gate through which majority of the workers pass through.
THE WORKMEN'S COMPENSATION ACT, 1923
Of all the legislations aimed at protecting the interest of the workmen employed in industrial establishments, the Workmen’s Compensation Act, 1923 is an important act. The act is applicable to the whole of India including Jammu and Kashmir. The act applies to only to those workmen who are working in the specified industries.
Objective of the act:
The objective of the act is to provide compensation to workmen injured in an accident. It also aims at preventing industrial accidents so as to provide a safe working environment for the workmen. However, if an workman is covered under Employees’ State Insurance Act, then such a person is
not entitled to compensation under Workmen’s Compensation Act.
Conditions for payment of compensation under the act:
In order to claim compensation under the act, the following conditions have to be satisfied.
- personal injury must have been caused to the workman
- the injury must have resulted in the workman’s death or permanent or temporary, total or partial disablement
- the injury must have been caused by accident
- the accident must have been arisen out of the workman’s employment
- the accident must have occurred in the course of the workmen’s employment
- the formalities prescribed in the act must have been observed for claim of compensation
- there must be some claimant who is entitled to compensation
- the accident must have happened in India except in the case of Mastership and Seamen.
- the person from whom the compensation is claimed must be one of the persons liable to pay compensation under the act.
- the compensation must be calculated as per provisions of the act
- the workman must not have filed a suit for damages against any person in Civil Court in respect of the same injury.
It refers to the Commissioner of Workmen’s Compensation.
The following are the dependents as per the act.
It includes a widow, a minor (legitimate or adopted), daughter (legitimate or adopted but unmarried), and widowed mother.
It includes dependents, including sons and daughters. They have to fulfill the following conditions, namely.
- They must be wholly dependent on the earnings of the workman at the time of his death.
- They must be infirm; and
- They must have attained the age of 18 years.
It includes the following dependents, provided they are wholly or partly dependent on the earnings of the workman at the time of his death.
- a parent other than a widowed mother
- a minor illegitimate son
- an unmarried illegitimate daughter
- a daughter whether legitimate or illegitimate or adopted
- a minor brother or an unmarried sister or a widowed sister, if a minor
- a widowed daughter in law
- a minor child of a predeceased don
- a minor child of a predeceased daughter where no parent of the child is alive, or
- a paternal grandparent if no parent of workman is alive.
It refers to the following persons.
- any body of persons whether incorporated or not
- any managing agent of the employer
- legal representatives of the deceased employer
- If the services of an employer are let out by the employer to someone else then such other person.
A widow who is entitled to claim compensation on the time of her husband is not dis-entitled by her subsequent remarriage. The act takes into consideration only those situations that are in existence at the time of death but not subsequent events.
It means legitimate, illegitimate, and adopted son of the workman.
It means legitimate, illegitimate, adopted and unmarried widowed daughter, who is being maintained by her father during his lifetime. A daughter acquires a new relationship on marriage but she does not lose the old relationships. Once a daughter, always a daughter.
It refers to disablement which reduces the earning capacity of a workman permanently.
It refers to disablement which reduces the earning capacity of a workman temporarily.
Permanent Total Disablement:
It refers to total disablement caused due to an accident specified in Schedule 1 of this act, which reduces the earning capacity of the workman permanently.
Permanent Partial Disablement:
It refers to partial disablement caused due to accident specified in Schedule 2 of this act, which reduces the earning capacity of the workman permanently.
Liability of the employer to pay compensation:
The right of one person becomes the duty or liability of another. As per the act, the employer is liable to pay compensation to a workman if he meets with an accident during the course of employment.
It means infliction of pain in a human body. It refers to both physical and mental (psychological) injuries.
Mere proof of personal injury is not enough to claim compensation. The claimant must prove that the workman sustained personal injury as a consequence of an accident. Under section 3 of the act, accident includes not only such occurrences as collisions, tripping over floor, obstacles, falls of roof but also less obvious accidents such as strain, causing rupture, exposure to drought, causing chill, or due to attack of others, etc.
Death or Disablement:
To claim compensation under the act, it must be proved that the accident has resulted in death or disablement of the workman. The disablement may be total, partial, temporary or permanent.
In certain industries, workers employed in certain occupations are exposed to certain diseases. Such diseases are called ‘occupational diseases’. Compensation can be claim in such occupational diseases are contracted. The act specifies 3 categories of occupational diseases, as follows.
- Compressed air illness
- Nitrous fumes
Poisoning due to:
- Lead poisoning
- Phosphorous mercury
Theory of Notional Extension:
Generally, the work of a workman commences when he reaches the place of work, and comes to an end when he leaves the place of work, after completing his work. The period of going to place of work and returning home from place, is generally excluded for the purpose of computing
course of employment. However, there are certain circumstances in which this period is included in computing the course of employment. In such cases, if the accident occurs during the period the workman reaches the place of work or after he leaves the place of work, it is treated as course
of employment period and the employer is liable to pay compensation for such accidents.
One example of such inclusive period or extension is when the employer provides transport facilities to the workman.
There are no proper rules and regulations for this extension. The courts takes into account the situation and give award based on the unique circumstances of a case.
THE EMPLOYEES STATE INSURANCE ACT, 1948
The ESI act is an important social security legislation in India. It envisages an integrated system of health, maternity and accident insurance. It aims to protect the industrial workers and their families, who are exposed to risk of sickness, employment, injury, occupational diseases and maternity in case of female employees.
The act is applicable to the whole of India including Jammu & Kashmir.
The act applies to all factories including factories belonging to the Government other than seasonal factories. However, the act does not apply to factories belonging to the Government whose employees are in receipt of benefits substantially similar or superior to the benefits provided under
The central government can through notification apply this act to any other establishments such as industrial, commercial, agricultural or otherwise.
The main object of the act is to cover various risks and injuries sustained by workers, while serving in a factory or establishment. Roughly, it ams to provide the following.
- Cash benefits in case of sickness and employment injury; and
- Pension payments to the dependants of the deceased workman
The scheme of the act is contributory. The contributions are made by both the employer and employee.
Some definitions under the act:
It refers to Central or State government
It means labour resulting in the issue of a living child, or labour after twenty six (26) weeks of pregnancy resulting in the issue of a child whether alive or dead.
It means the sum of money payable to the corporation (ESI Corporation) by the principal employer in respect of an employee and includes any amount payable by or on behalf of the employee in accordance with the provisions of this act.
It means the Employees’ State Insurance Corporation setup under this act.
It means any of the following relatives of a deceased insured person.
- a widow, minor legitimate or adopted son, an unmarried legitimate or adopted daughter
- if wholly dependent on the earnings of the insured person at the time of his death a legitimate or adopted son or daughter who has attained the age of 18 years and is infirm (not physically or mentally strong, especially through age or illness).
- if wholly or in part dependent on the earnings of the insured person at the time of his death -
- a parent other than a widowed mother
- a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or adopted or illegitimate if married and a minor or if widowed and a minor.
- a minor brother or an unmarried sister or a widowed sister if a minor
- a widowed daughter in law
- a minor child of a predeceased son
- a minor child of a predeceased daughter where no parent of the child is alive, or
- a paternal grand-parent if no parent of the insured person is alive.
It means a personal injury to an employee caused by accident or an occupational disease arising out of and in the course of his employment, being an insurable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India.
It means any person employed for wages in or in connection with a work of a factory or establishment to which this act applies, and -.
- who is directly employed by the principal employer, in or in connection to the work of the factory to which this act applies.
- who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer
- whose services are temporarily lent or let on hire to the principal employer by the person with whom there is a contract of service or employment.
The employment may be in any department of the factory or establishment. It need not be in the production or operations.
The act does not applies to members of the armed forces.
It means an employment in a factory or establishment to which this act applies.
Powers of the corporation:
The corporation (ESI) has the following powers:
- to promote measures for the improvement of health and welfare of insured personnel
- to promote measures for the rehabilitation and re-employment of insured persons who are disabled or injured.
- to incur expenses in respect of such measures from its fund up to a limit prescribed by the Central Government.
The ESI Fund is created by the act. The fund is mainly created from the contribution from employees and employers. The fund shall be held and administered by the corporation for the purpose of the act. The corporation may also accept grants, donations, and gifts from the Central, State and Local authorities, and any individuals.
The following are some features and provisions regarding this fund.
Contributions to the Fund:
- All contributions shall be paid only into the fund (ESI Fund), which shall be administered by the corporation.
- The corporation may accept grants, donations and gifts from anybody.
- The money received by the fund shall be kept with the Reserve Bank of India or any other bank as is prescribed by the central government
- The fund accounts (bank accounts) shall be operated by only such persons who are authorised by the Standing Committee of the corporation.
- The fund may be used for the following purposes only.
- payment of benefits and provisions of medical treatment and attendance to insured persons and their families.
- to meet the charges and costs in connection with medical treatment and attendance to insured persons and their families
- payment of fees and allowance to members of the corporation, standing committee, medical benefit council, regional board, local committee and regional and local benefit councils.
- payment of salaries and allowances, gratuities, compensatory allowances, bonus, contribution to provident fund and other benefit funds to officers and servants of the corporation.
- establishment and maintenance of hospitals, dispensaries and other institutions and the provisions of medical and other ancillary services for the benefit of insured persons and their families.
- to meet the cost including all expenses of auditing accounts of the corporation.
- to meet any legal liabilities
- any other expenditure as is required to meet the objects of the organization as per the act.
Benefits under the Fund:
- The contribution to the fund shall be made both by the employer and the employee.
- All employees in factories or establishments to which the act applies shall contribute to the fund.
- However, workman who earn less than Rs. 100 a day are exempt from contributing to the fund.
- All employers are also required to contribute the fund.
- The rate of contribution is prescribed from time to time by the central government.
- The rate of contribution depends on the wage level.
- The liability of paying the contributions lies with the employer.
The following are the broad benefits under the fund
||Primary, Secondary and Tertiary medical care with no cap on individual expenditure
||84 days + 1 month (due to complications arising out of pregnancy, confinement, premature birth of child, etc.)
||Permanent Disablement Benefit/Temporary Disablement Benefit
||Based on loss of earning capacity/as long as diability lasts
||On the death of IP to the wife till she is alive/remarried and to family members as per conditions w.r.t. age/marriage
||6 Rajiv Gandhi Shramik Kalyan Yojna (Unemployment Allowance)
||50% of daily average wages upto 12 months unemployment on account of closure of factories, retrenchment or permanent invalidity of not less than 40% arising out of non employment injury.
||Incentive Scheme to employers for employing persons with disabilities
||The employers’ share of contribution is paid by government for 3 years for providing employment to persons with disabilities drawing monthly wages upto Rs. 25,000.
||Medical care to retired IPs
||Medical facility available within ESIC on payment of Rs. 120 per annum
PAYMENT OF BONUS ACT, 1965
The term Bonus is not defined under the Payment of Bonus Act, 1965. In normal sense, it refers to something extra being given in addition to wages.
Kinds of Bonus:
Bonus can be categorized into the following types.
Extent, Application, Object and Scheme of the Act
- Production Bonus: That which is linked to production
- Profit Bonus: This is linked to profits made by the organization.
- Customary Bonus: It is usually made during special occasions or festivals.
- Bonus as an Implied Term of Contract: It is as per the implied agreement between the employer and employee.
The act applies to every factory and every establishment in which ten (10) or more persons are employed on any day during the accounting year.
The act is applicable to the whole of India including Jammu & Kashmir.
The object of the act is to enable payment of bonus to persons employed in certain establishments. That means, certain persons working in certain establishments can only claim bonus under the act. If a person belongs to a establishment to which the act does not apply then such persons
cannot claim bonus under this act.
- in relation to corporation, the year ending on the day on which the books and accounts of the corporation are to be closed and balanced;
- in relation to a company, the period in respect of which any profit and loss account of the company laid before it in annual general meeting is made up, whether that period is a year or not.
- in any other case:-
- the year commencing on the 1st day of April; or
- if the accounts of an establishment maintained by the employer thereof are closed and balanced on any day other than the 31st day of March, then, at the option of the employer, the year ending on the day on which its accounts are so closed and balanced.
- in relation to an employer, being a company other than a banking company which has not made the arrangements prescribed under the Income Tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of Section 194 of that Act, sixty seven percent (67%) of available surplus in an accounting year;
- in any other case, sixty percent (60%) of such available surplus.
- in relation to an establishment in respect of which the appropriate government under the Industrial Disputes Act, 1947 is the Central Government, the Central Government.
- in relation to any other establishment, the Government of the State in which that other establishment is situated.
It means the available surplus as computed under Section 5.
It means an interim or a final determination of an industrial dispute or of any question in relating thereto by any Labour Court, Industrial Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947. It also includes any other authority authorised by the Central or State Government. It also includes Arbitration Award.
It means any person other than an apprentice employed on a salary or wage not exceeding three thousand and five hundred rupees per month (Rs. 3,500/- per month) in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work,
whether the terms of employment is express or implied.
In includes the following.
Salary and Wages:
- in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier.
- in relation to any other establishment, the person who, or the authority, which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent.
They refer to all remuneration (other than remuneration in respect of overtime work) capable of being expressed in terms of money. It includes Basic and Dearness Allowance but excludes the following.
- overtime wages
- any other allowance which the employee is for the time being entitled to.
- value of any house accommodation or of supply of light, water, medical attendance or other amenities or of any service or concessional supply of food grains.
- any traveling concessions.
- any bonus (including incentive, production and attendance bonus).
- any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
- any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex-gratia payment made to him;
- any commission payable to the employee.
The act is not applicable to all establishments and persons. The following persons are excluded from the act.
- Employees of Life Insurance Corporation of India
- Seamen as defined under the Merchant Shipping Act
- Employees employed by the Indian Red Cross Society, Hospitals, Educational Institutions and Chamber of Commerce
- Employees of Reserve Bank of India
- Employees employed through contractors on building operations.
- Employees employed by Industrial Finance Corporation, Unit Trust of India, Industrial Development Bank, National Housing Finance and State Finance Corporations.
The appropriate government can include other industries or establishments to the exclusion list through Official Gazette notification.
Computation of Gross Profit:
As per the act, the gross profit derived by an employer from an establishment in respect of an accounting year shall be:-
- in the case of a banking company, be calculated in the manner specified in the First Schedule
- in any other case, be calculated in the manner specified in the Second Schedule.
The calculation of gross profit is the first step towards computation of bonus. It depends on the net profits of the establishment as per balance sheet and profit and loss account. Normally, the net profit shown in the profit and loss account would form the basis of calculation of gross profit.
Sums deductible from Gross Profit:
According to Section 6 of the Act, the following sums are deductible from the gross profit.
Computation of Available Surplus:
- Depreciation as per Income Tax Act.
- Any amount paid by way of development rebate or investment allowance or development allowance which the employer is entitled to deduct from his income under the Income Tax Act.
- Such further sums as are specified in respect of the employer in the Third Schedule.
The available surplus in respect of any accounting year shall be the gross profit for that year after deducting therefrom the sums referred to in Section 6.
Eligibility for Bonus
Every employee shall be entitled to Bonus as per this act, provided he has worked in the establishment for not less than thirty working days (30 days) in that year.
The words ‘worked’ above refer to actual work being done or being present in employment. If an employee is suspended then it is not counted as worked.
Disqualification to receive Bonus:
If an employee has been dismissed from service due to fraud, violent behavior, theft, misappropriation or sabotage of property then is disqualified from receiving bonus under this act.
If in an accounting year, the allocable surplus exceeds the amount of minimum bonus payable to all the employees at the rate specified in Section 10, then the employer shall be bound to pay to every employee bonus which shall be an amount in proportion to the salary or wages earned by the employee during the accounting year subject to a maximum of 20% of such salary or wage.
The claim for bonus can only be made after the close of the accounting year. Bonus cannot be computed or claimed in the middle of an accounting year or at any time before the close of the accounting year.
Payment of Minimum Bonus:
As per Section 10 of the act, every employer is bound to pay his employees in an accounting year a minimum bonus of 8.33% of the salary earned by the employee during the accounting year or Rs. 100, whichever is higher, whether there is profits or not in the accounting year.
Employees below 15 years of age are entitled to 8.33% of the salary or Rs. 60, whichever is higher.
The minimum bonus has to be paid irrespective of whether the employer has profits or not. However, the government has the power under Section 36 of the act to exempt the operation of Section 10 by having regard to the financial position and other relevant circumstances of any establishment
which is unable to pay minimum bonus.
Time Limit for Payment of Bonus:
The bonus shall be paid in cash as per the following time line.
- where there is a dispute regarding payment of bonus pending before any authority under Section 22, within a month from the date of which the award becomes enforceable or the settlement comes into operation, in respect of such dispute.
- in any other case, within a period of 8 months from the close of the accounting year.
If any person:
- contravenes any of the provisions of this Act or any rule made there under; or
- to whom a direction is given or a requisition is made under this Act fails to comply with the direction of requisition.
He shall be punishable with imprisonment for a term which may extent to six months, or with fine which may extend to Rs. 1,000, or with both.
Offenses by Companies:
If the person committing the offence is a company, every person who is responsible or in charge of the company shall be liable for prosecution.
THE MATERNITY BENEFIT ACT, 1961
This act applies to the whole of India, excluding Jammu & Kashmir.
The object of this act is to provide social justice by prohibiting employment or work by women during certain periods and enabling payment of maternity benefit to them during maternity period.
Application of the Act:
The act applies to the following:
Definitions under the act:
- to every establishment being a factory, mine or plantation including any such establishment belonging to Government and to every establishment wherein persons are employed for the exhibition of equestrian, acrobatic and other performances;
- to every shop and establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten (10) or more persons are employed, or were employed, on any day of the preceding twelve (12) months.
It includes a still-born child.
It means birth of a child
- in relation to an establishment which is under the control of the Government a person or authority appointed by the Government for the supervision and control of employees or where no person or authority is so appointed, the head of the department;
- in relation to an establishment under any local authority, the person appointed by such authority for the supervision and control of employees or where no person is appointed, the chief executive officer of the local authority;
- in any other case, the person who, or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to any other person whether called a manager, managing director, managing agent, or by any other name, such person.
- a factory
- a mine
- an establishment wherein persons are employed for the exhibition of equestrian, acrobatic and other performances;
- a shop or establishment; or
- an establishment to which the provisions of this Act have been declared applicable.
It refers to a Factory as defined in the Factories Act, 1948.
It means an Inspector appointed under the rules of the act.
It means the payment referred to under the act.
It means expulsion of the contents of a pregnant uterus at any period prior to or during the twenty six weeks (26 weeks) of pregnancy but does not include any miscarriage, the causing of which is punishable under the Indian Penal code.
It means all remuneration paid or payable in cash to a woman, if the terms of the contract of employment, express or implied, were fulfilled and includes:
Prohibition of Work by women during certain periods:
- such cash allowances (including dearness allowances and house rent allowances) as a woman is for the time being entitled to;
- incentive bonus; and
- the money value of the concessional supply of food grains and other articles, but does not include:
- any bonus other than incentive bonus
- overtime earnings and any deduction or payment made on account of fine
- any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the woman under any law for the time being in force; and
- any gratuity payable on the termination of service.
Under the act, an employer is prohibited from employing any woman in an establishment during the 6 weeks immediately after the day of her delivery or her miscarriage or medical termination of pregnancy.
During the pregnancy and employment, the pregnant woman may request the employer to not give her any work which is of arduous nature, or which involves long hours of standing. The employer is bound under this act to accept such request and provide suitable work, which will not
cause any harm to the women’s pregnancy.
It refers to sanction of special leave with wages for a particular period and subsequent to delivery. The leave is an additional leave apart from the normal leaves such as casual leave, sick leave, earned leave, etc.
The maternity benefit is a payment to a woman at the rate of average daily wages for the period of her actual leave of absence - i.e. 6 weeks immediately preceding the day of her delivery and for the 6 weeks immediately following the day of delivery.
Every woman who is working in an establishment for which the Maternity Benefit Act applies is entitled for maternity benefit and the employer is liable to pay the benefit.
The rate of average daily wages means the average of the woman’s wages payable to her for the days she worked during the period of 3 calender months immediately preceding the date of her actual leave on account of maternity.
Payment of Maternity Benefit:
A woman is entitled to claim maternity benefit only if she has actually worked in an establishment, for a period of not less than 160 days in the 12 months immediately before the date of her expected delivery. The 160 days are also counted even during period of lay-off.
Every working women who wants to claim the maternity benefit, shall give notice in writing in a prescribed form to her employer.
Payment of maternity benefit in case of death of a woman:
Even in the case of death of a working women, the maternity benefit claimed shall be payable by the employer to the nominee of the women. If there is no nominee, the payment shall be made to the legal representative.
Other payments or benefits:
The employer is also liable to pay the following:
Forfeiture of Maternity Benefit:
- Payment of Medical Bonus
- Leave with wages for miscarriage as prescribed by an doctor for rest
- Leave with wages for tubectomy operation
- Leave for illness arising out of pregnancy, delivery, premature birth of child, etc.
If a woman works in an establishment even after she has been granted leave under Maternity Benefit, then she shall forfeit her claim to maternity benefit.
Penalty for contravention of act by employer:
If any employer fails to pay any amount of maternity benefit to a woman entitled to maternity benefit under the act, or if he discharges or dismisses such women during the period, such employer shall be punishable with imprisonment which shall not be less than 3 months and may extend upto 1 year with fine.
Penalty for obstructing Inspector:
If the employer does not provide the required documents to the Inspector when demanded or conceals any information or prevents the inspector from entering or talking to the affected, such employer shall be punishable with imprisonment upto 1 year or with fine or both.
END OF NOTES