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Industrial Dispute Act 1947 This act aims at preventing and settling of industrial disputes. It is in the interest of employees and employer and also the government. It enables peaceful settlement of disputes. Rights 1. 2. 3. 4. of Laborers according to this Act are: To go on strike, If dismissed, justice can be seeked in labor and other courts, Retrenchment – compensation rights if employee is surplus, If there is no work, lay off compensation can be seeked.
This act is applicable to workmen as per classification in Sec 2(S) and who are employed in an industry. Industry Act – Section 2 (J) Industry means any business, trade, occupation, manufacturing, vocation and calling of employees. In case of Bombay Hospital Majdoor Sabha - Supreme Court said that activities of a hospital constitutes that of an industry. To prevent strike, cases etc. from hospital; the SC had to change decision in 1970. In 1970, Safdarjung hospital vs Kuldeep Singh Sethi – SC held that activities of a hospital doesn’t constitute an industry. Case: Bangalore Water Supply & Sewage Board (BWSSB) vs IA Rajappa & others, 1978, SC CJI constituted a bench to define the definition of an Industry. 3 different judgments were given by the Chief Justice and the other individual judges (Justice Krishna Iyer, Justice Chandrachur, Justice Desai & Justice Bhagwati). These judges laid down the Triple Test. What is the Triple Test? It was stated that if any activity falls under the 3 tests it is an industry. An activity: • Should be systematic. • Should lead to prosecution, distribution or rendering of services to fulfil human wants and wishes and not spiritual wants. • Should be carried with the help of labour and capital, i.e. employee and employer relationship should exist. Further the judgment states: 1. It is immaterial if the activity is carried out with a profit motive or not.
2. It is also immaterial, if the activity is carried out by public, private or joint sector. E.g. the Prasad making ceremony at the Balaji temple is also considered as an activity. In 1982, an attempt was made to remove hospitals, charitable institutions, and educational institutions from the definition of an industry. A bill was prepared called Hospitals, Charitable Institutions, and Educational Institutions (Conditions of Services) Bill, 1982 and was brought in to handle the grievances of the employees in this area. This bill has lost its importance as the then government collapsed and even the amended definition has not come into force. So, till date the Triple Test applicable. Case: Balaji Temple – The laddu preparing workers organised themselves as union, to put heavy demand for hike as they had no legal rights. SC applied Triple test and they won the case. Case: Asian Games, 1980 – Construction workers did not have any legal rights as they were temporary workers. An NGO appealed in SC, which declared that it was an industry and labour laws were applicable. LECTURE – II: ( 01-Dec-2006) Section 2(S): Defintion of Workman Workman means any person (including an apprentice) who does skilled, unskilled, manual, technical, clerical, supervisory or operational work for hire or reward if the terms and conditions of employment implied or expressed were fulfilled. But, does not include: (a) persons who are employed in army, navy and air-force (b) persons employed in the police or in the prison (c) persons employed in a supervisory capacity and drawing wages exceeding Rs. 1,600 per month. In Maharashtra, there is an amendment, which has raised this limit to Rs. 6,500. (d) persons employed mainly in an administrative or managerial capacity Case: Burmah Shell Oil Storage and distribution company v/s Burmah Shell Oil Storage and Distribution Company’s Employees and Staff Association There are many people with different designations. Employer said that they are not workmen as they are working in a supervisory capacity. The issue was presented before SC. The SC laid down that mere designation is not sufficient to determine whether a person s a workman or not. What has to be seen is the nature of duties of the person. The SC laid down the supervisory functions: (a) The person should supervise the work of others reporting to him (b) This person should distribute work to people under him.
(c) The supervisor would have the right to accept or reject the jobs produced by people working under him. (d) He should have a right to recommend leave in respect of the people working under him (e) He should have a right to recommend increments (f) He should have the right to initiate disciplinary action against workmen who indulge in misconducts. If a person is assigned at least some of the above functions then they can be regarded as supervisors. Air India and Indian Airlines pilots are regarded as a workman. They are doing the work of a highly sophisticated driver although they are not supervising the work of some others. The pilots capitalized on this – formed unions and are putting their demands before the govt.
What is the difference between a workman and non-workman? A person who is a workman under the act has all the rights under the act. If he is terminated, he can seek justice at the court but a non-workman cannot approach the court. The latter can however go to the civil court for justice. Civil court has the powers only to grant damages or compensation. The person also has to pay the stamp the duty for the case whereas the labor court has no stamp duty. Labor court has the powers to grant re-instatement (take the person back into same position) with full back-wages and continuity of service. This can backfire on the company because the employee has to be paid lakhs of rupees. A person under the Industrial Dispute Act can go on a strike. If a person is a surplus, the company has to pay retrenchment compensation if that person is laid off. If there is a union leader who gives troubles to the company, then the company can get rid of him by excluding him under the Act. The moment he is exempted, he has to behave as a normal person as his powers are removed. Secttion 2(K): Definition of Industrial Dispute: Defined under Sec 2(K), it means “a dispute or difference between an employer and a workman or between a workman and a workman or between an employer and employer regarding employment, non-employment and other terms and conditions of employment”. E.g. Disputes regarding wages (underpayment, not paid bonus, transfer, no promotion), rude language. In non-employment – dismissal, retrenchment, termination, lay-off, discharge. Other terms – bad working conditions, poor ventilation, excessive temperatures, poor lighting, high level of noise, lot of pollution, etc The interpretation given by the SC to the definition of Industrial Dispute is that if an Industrial Dispute is to be raised, there has to be a community of interest and an individual workman cannot raise a dispute. At least 15% of the workmen have to raise
the dispute for it to become an Industrial Dispute. This interpretation has been misused by unions and there are many unions behaved in away to get rid of employees who were against the views of the union. This was the situation until 1965. Until that time, SC said that it did not intend to exclude such people and unions are misusing such clauses. The SC gave directives to the govt to bring in suitable legislations to make better the state of the employees. In 1965, a new section was inserted into the Industrial Dispute Act and that section is Sec 2(A). The section says, “the individual dispute is deemed to be an industrial dispute, where the services of a workman are dismissed, discharged, retrenched, or terminated, such a workman can raise a dispute and even though the dispute is of an individual nature, yet it shall be deemed to be an industrial dispute.” With this section, a workman need not get the support of the union to raise a dispute. Dismissal is a form of extreme punishment – equal to death punishment. Sometimes, the terminal benefits can be forfeited. If the services of a workman are dismissed for indulgence in a misconduct of violent or riotous behavior, the whole of the gratuity can be forfeited or some terminal benefits can be forfeited. The Employers’ Provident Fund share can also be forfeited. Discharge: It is also a form of termination but it may not be for misconduct. It can be for a loss of confidence. In discharge, 1-month wage has to be paid to the employee. If the crime is proved, it results in dismissal and not discharge.
Retrenchment is termination of surplus labor. It is a wider term when compared to the above two. E.g. VRS Layoff is a temporary form of retrenchment. The employee is asked to stay at home. The employee-employer relation still exists and the employee is still paid compensation. Case: Atlas Copco v/s Mrs Kher This is a case decided by Bombay High Court. In the company, Mrs Kher was working for a long time in a clerical post. Since she was outspoken, the management did not like her and for years, she stayed in the same post. Usually, every 3 years a settlement is signed for improved working conditions, etc between management and employees. When this was executed, Kher informed the management that she has been ill-treated. The negotiations concluded and a settlement was signed. However, nothing was done for her betterment. When she asked the unions, they said that the management refused to appraise her. She started abusing her and later she resigned from the membership of the union. The supervisors were a part of the union. One person defying the union is not a good sign and hence the union decided to bring her back. They started harassing her because they thought that she would react when spoken to. Not all the harassment yielded any result. On a particular day, the employees harassed her so much that she was not able to hold it any more. She asked the manager to give her a ‘gatepass’. She went to the police station and filed a complaint against the employees. The police registered a non-cognizable offense – they cannot arrest a person without a warrant. They called the union leaders and told them to take appropriate actions such
The works committee is elected for a period of 2 years and the max members cannot be more than 20 (10 each from employer and employees). you are discharged”. deputy commissioner of labor (for a district). (ii) Section 4 . The personnel manager agreed to it. Therefore. He is supposed to hold conciliation process and bring about a reapproachment between the two parties. In govt institutions. The whole establishment is divided into constituencies and regular election is carried out to elect the works committee members. there is breach of peace and the production is suffering. Even then. When the case came up for hearing. 8 lacs was a huge amount at that time. the court said that the company has to pay 8 lacs as compensation to her and that she need not be taken back into service. (ii) wants reinstatement and (iii) continuity of service. Management challenged the decision of the labor court before the high court. The union took it seriously. the works committee is given insignificant work. many authorities have been reinstated. This is because the unions play little role – for eg the pay is fixed by the pay commission. He can be assistant commissioner of labor (for an area or areas within a district). The union leaders met the factory workers. The election is held if there is more than one candidate in a particular constituency. additional commissioner of labor (for a division). these committees are working well. Authorities under the act: For prevention and settlement of Industrial Disputes.that such incidents do not happen in the future. The working of the committee is not intelligent because the unions do not like this committee because they may lose their power. (i) Section 3 – Works committee: It has to be constituted in establishments where the number of employees is 100 or more. 5 . A simple termination letter was given to Kher. In private sector. there was only 6 months of service remaining for Kher. One of the management team is appointed the chairman and the workers representative as the vice-chairman. The factory workers said that they could not increase the productivity because the atmosphere in the factory is tense – because of Mrs Kher’s complaint. It consists of equal number of representatives representing employer and workers. The lady then went to court and the court said that she has to be taken back into the post with full back-wages.Conciliation officer: He is appointed by the appropriate govt (state or central as applicable) by notification in the official gazette. commissioner of labor (for a state) or labor officer. The personnel manager did not know about Sec 2(A). The job the officer is that of a mediator between the dispute workman and the employer and bring them to a settlement. The personnel manager resigned from the company. The management may reject this. which said. The employee representatives are to be elected and management representatives are nominative. If a workman has been dismissal. “Because of you. the workman (i) has to raise a demand to the employer saying that he opposes the layoff. Then the union said to remove Kher and told that they would not take the case of her. The committee has to meet quite often and whatever frictions arise in the day to day working of the establishment has to be removed.
then the Board of conciliation closes the proceeding and sends a failure report to the govt. He asks the workman to give a justification statement as to his claims. etc. he will make a try. This settlement is signed under Section 12(3) of the Industrial Dispute Act. And the govt then will refer the dispute to the adjudication of labor court or industrial tribunal. A copy of the justification is given to employer and asked to reply to the justification statement. He speaks to the employee about factors like his justification. then a settlement is signed under Section 12(3) of the Act and the dispute is resolved.5 lacs and management agrees to pay 60. Then. (iii) Section 5 – Board of conciliation: Board of conciliation is constituted by the appropriate govt when it is of the opinion that a particular dispute should be referred to board of conciliation. He conducts a pre-conciliation process. He labor officer has to ascertain that the person is a workman who is employed in a factory. the officer can prepare a failure report under Sec 12(5) and submits this report to the appropriate govt. That govt now based on the report. The Board consists of an independent person who is appointed as the Chairman of the Board and equal number of members representing the employers and the employees. The Court consists of one person but the govt may appoint one or two persons possessing technical and legal knowledge to assist the enquiry officer as assessors. Even after the efforts of the conciliation officer. whether he wants to go to the court. The job of the Board is to mediate into the dispute and bring about a settlement of the dispute. he acts a conciliation officer. The govt will then decide the next course of action. But. if both the parties are not in a mood to compromise. (v) Section 7 – Labor Court: The Labor court is constituted by the appropriate govt by notification in the official gazette. The enquiry officer will investigate into the dispute and submit the report to the appropriate govt. The conciliation officer has to bargain with the employer and employee and finally the deal may be settled at say 1 lac. If the Board succeeds in persuading the parties to arrive at a settlement. then he would admit the matter in conciliation. After receiving both the letters. he will come to know the stand of the respective parties. sustain the payment. The latter will not admit the matter immediately because some preliminaries have to be held. sustain the charges. then a copy of the findings is to be submitted. The officer then writes a letter to the employer to send some info like (i) what work. (iv) Section 6 – Court of Enquiry: The Court of Enquiry is constituted by the appropriate govt when it is of the opinion that a particular dispute needs to be enquired by a court of enquiry. A stamp paper is prepared and signed by all three parties and the money is paid to the employee. The person who presides the Labor 6 . The employee’s requests or negotiations are put forth to the employer’s personnel manager. if both parties do not strike a deal.000.The workman has to approach the conciliation officer. Now. refers the case to the labor court for adjudication. (ii) what salary (iii) reasons for termination (iv) designation (v) whether an enquiry was conducted (vi) if yes. After it is made sure that the person is a workman. Say the employee wants 1.
He should have been a judge of the high court or should have been eligible for being appointed as the judge of the high court b. a person should possess one of the following qualifications: a. He should have been a district judge or an additional district judge for a period of not less than 5 years c. He should have been in judicial service for at least 7 years. He should be a judge of the Labor Court for a period of not less than 5 years One member of the Industrial Tribunal may not possess any of the above qualifications if the appropriate govt is of the opinion that such person is possessing expert knowledge on labor and industrial matters. Withdrawal of any customary concession (vi) Section 7(A) – Industrial Tribunal: The Industrial Tribunal is constituted by the appropriate govt by notification in the official gazette. Wages including the date and mode of payment b. 7 . discharge or termination b. Jurisdiction of the Labor Court: The Labor Court can decide matters which are specified in Schedule-II of the Act. Cases of dismissal. Leave with wages e. The presiding officer has to possess one of the following qualifications: a. Therefore. these disputes are called Interest Disputes. In order to be eligible to be appointed as a member of the Industrial Tribunal. Bonus c.Court is called the Presiding Officer of the court. Some of the matters are: a. Rationalization f. Note: A govt can refer matters from Schedule(2) to the Industrial Tribunal if it wants to. The proprietary or legality of an order passed by the employer under the standing orders d. then matters from Schedule(3) can be referred to the Labor Court. If the number of workmen in an establishment is less than 100. Some matter are: a. He should have worked as a District Judge or an Additional District Judge for a period of 3 years. He should have been a judge of the High Court or should have been eligible for being appointed as the judge of the High Court (if he has practiced for at least 10 years). Retrenchment These are matters where are large number of people are affected. b. c. The interpretation or application of standing orders c. Paid holidays d. Jurisdiction of Industrial Tribunal: It is to decide matters specified in Schedule(3) of the Act.
This section says that when the services of a workman are terminated. the following case came-up. The above are made clear in the decision of the SC. Case: Air Lanka v/s workmen Air Lanka has newly started services in India and appointed a lot of cabin boys. the Supreme Court was called upon to decide as to what are the powers of the Labor Court. When the principles of natural justice are not followed d. it was not there in the year 1947. such a workman can raise a dispute and if the Labor Court comes to the conclusion that the punishment is disproportionate. Therefore. The SC in this case has laid down that the powers of the Labor Court to interfere with the punishment awarded by the employer is restricted. then the Labor Court can reduce the quantum of punishment and award reinstatement to the workman with or without back-wages or award compensation in lieu of reinstatement. When the findings of the enquiry officer are perverse. The airline issued him a charge-sheet. After this decision. When the dismissal is by way of victimization b. discharge or termination of service: This section was inserted in the year 1971. He was caught by the security when he was going home. Immediately after this section. The punishment of the employer came under the judicial scanner with this section. Who can preside over the National Tribunal? A judge of the Supreme Court or a person who can be appointed as a judge of the Supreme Court can preside over the Industrial Tribunal Jurisdiction: Matters from both Schedule (2) and Schedule(3) can be referred to the National Tribunal. One of the cabin boys found one bag when he entered the plane. (viii) Section 11(A) – Powers of Labor Court and Industrial Tribunal to grant appropriate relief in case of dismissal. Case: Firestone Tyre and Rubber Company v/s workmen In this case. they decided to add the Section 11(A) to the Act. At that time. When the dismissal is by way of unfair labor practices c. In 1971. But Labor Court could interfere in only certain specific matters: a. to promote the business Air Lanka gave the passengers a complementary air bag. then such a report is called ‘perverse’. If he has submitted a report that is not based on such evidence. The boy raised a dispute under the Industrial 8 .(vii) Section 7(B) – National Tribunal: National Tribunal is constituted by the Central Govt when two or more states are interested in a particular dispute or two or more states are likely to be affected by a particular dispute. conducted an enquiry and ultimately dismissed him. the Parliament felt that the labor must be given more powers. The enquiry officer is supposed to base his report on the basis of evidence of record. the Supreme Court has decided a very important case. This Section has tried to take away the absolute powers that were available to the employer with regard to punishment.
This was a case from 1983. With that. The dept head asked the person to do the work. This bench felt that the punishment was too harsh and the person had also come to the verge of retirement. Case: Mahindra & Mahindra v/s Narwade Narwade was a person who had the abusing the superiors. The employer said that the value was 100/-. One of the judge was Justice Santhosh Hegde. The court said that the punishment was shockingly disproportionate and the employer was asked to take back the employee with 50% back wages. The superior. He said that it is wrong on the part of the employees to sleep during the working hours. He told the management and complained about the 9 . The dept head felt humiliated and insulted. The employee went to a Divisional Bench (2 judges). Then. another case came before SC. They also felt that Section 11(A) should be used only in rarest of rarest cases. the workman was found sleeping at 11:40 a. it felt that there is no need to fire him and pay him the compensation – 2. The employers had to think twice before firing an employee. So. The employer was questioned as to why the boy was dismissed due to such a reason. Earlier he was let off with minor punishments of 4 days. His judgments are in favor of the employers.5 lacs. there was a change in the behavior of court in the year 2005. The single judge of the High Court also felt that the dismissal was justified. In Bharat Forge. this person refused to do a work given to him by his superior. The head was also abused by this employee. This person was caught three times earlier for the same reason. The management gave him minor punishments on those occasions. The employee was issued a charge-sheet and a disciplinary action was initiated against him. The employer said that the integrity of the boy was doubtful and hence could not employ him further. The company went to SC. The employee raised a dispute and the matter was sent to Labor Court. afraid of the language of the person.Dispute Act. complained to the dept. This was the trend of the court from 1971. The matter was submitted to the court and the court started asked the employer what the value of the bag was. The people knew that even they are at fault. The employee went to the High Court. The witness of the management was examined and ultimately he was dismissed. The court started easing the section with each case.m. The employer was asked to pay 1 lac rupees to the boy as compensation (the employer refused to take the boy into service again). The company went to the Industrial Court. One day. The supervisor tried to locate him and did not find him and after a long search. The enquiry officer conducted the enquiry ex-parte (in the absence of the employee). This court found that the employee was given 3 chances but still he did not change and found that the dismissal was justified and the court aside the orders of the Labor Court. One such case changed the scenario. Case: Bharat Forge v/s Nalawade This case was decide in 2005 and was cited in CLR (Current Law R…). the court was there to help them to get back into the job. They said that the dismissal was fully justified as the employee was given enough chance to change. the workman was found missing from his place at around 11:00 in the morning. He used to insult the superiors with a bad and filthy language. A lighter punishment was given with the hope that the person would change. After 1-2 months. the employees started taking liberties and indiscipline started in the organizations.
wages can be payed on or before 7th). 6. Notice of change was given and objection was raised. What are the matters for which notice of change has to be given? 7. ( as per payment of wages act. What are the prerequisites for referring a dispute to voluntary arbitration? 5. The court said that the person is from a poor background. However. Now DA is introduced and computation of DA comes only on 1st of the month. retrenchment (Sec 2(OO)). The employee raised a dispute. What are the powers of the Labor Court under Section 11(A)? 4. the employer needs to give 21 days notice to the workmen of the intended change.others companies were paying by 7th. 2. When does an individual dispute become an industrial dispute? 3. So calculation of total wages by 4th was difficult. (Chapter 5(A) of Industrial Dispute Act). The employer went to SC.] Section 9(A): Notice of Change This section says that whenever an employer wants to bring any change which is enumerated in Schedule IV. only when the punishment is shockingly disproportionate. 10 . no notice is required where the change is brought about through a settlement (an agreement between the management and the workmen) Matters in Schedule 4: 1. The management took action by conducting an enquiry and ultimately dismissed him. 2. Wages including mode and time of payment of wage Say the company as paying on 4th of each month. his behavior stems that background and asked the employer was asked to take him back with 50% back wages. Go through the definitions of lay-off (in Sec 2(AAA)). So the company which was working 45 hrs ( half day) wanted to change it as the productivity was down coz of this. [Questions: 1.so they want to change mode – payment was made by cash so far and now want to be paid by cheque. New factories which came up worked full day on Saturdays. Hours of work and paid holidays : When companies were initially started. Explain the concept of triple-test. if there are less than 1000 workers. Again the court said that the section 11(A) has to be used very sparingly. When is a notice of change not to be given? 8. therefore watns to change date of payment. SC felt that using filthy language against the superiors in front of the other employees is wrong and upheld the decision of dismissing the employee. The employer went to High Court. What are the matters for which notice of change need not be given? Read: Lay of retrenchment and closure. it was customary to give half day on Saturdays. Explain the provisions of notice of change. They said to take him back with 40% back-wages. So wanted to make Saturday full day.employee. which was submitted to the Labor Court.
all the three shift workers were called together for a celebration. 11 . Withdrawal of customary concession. There was also a clause in the same settlement. Exception to this section:If the change is brought about through a settlement. maximum work hours is 9 hrs a day or 48 hrs a week. 5. The parties will have to agree on a common arbitrator and provide the dispute details. Now the company wants to work for 3 shifts. overlapping of shifts is prohibited. a notice of change must be given Introduction of automation which is likely to lead to retrenchment of workmen 4. the parties have to make an agreement on stamp paper. Intervals of rest lunch break was 1 hour and the company was working for 2 shifts.3. In 1993. There can be a clause in the settlement . Settlement – workers and employers discuss their demands. They used this clause in 1998-99 when there was recession. they had a setltemtn clause syaign. They have to mention the dispute on the stamp paper. Bajaj auto had done this. The labour went to the high court. Coz of that lunch break has to be reduced now to half an hour as factory hour says. the union and the labour fully agree with the management. 6. As per companies act. if the management wants to introduce new machine in future. in case of dispute. the umpire will decide the case. machine tools and methods of production in order to compete in the market and maintain its position in the competitive market. the management can opt for reduced working hours in a week for which the workers will be paid 50% of basic and DA. If the parties cannot agree on the arbitrators. if there is recession and work load is less. then there is no need to give a notice of change. Section 10(A): Voluntary Arbitration If the parties wish to arbitrate.Eg) the management shall have a right to introduce new machines. Eg: to celebrate Dusshera. a notice need not been given. LC said the management has a right to do that. Therefore nay time in future. rest interval can be for half an hour. Always. HC decision will eb final and labour cannot go to any othe court. In this endaevour. they started working only 4-5 days a week and gave the workers off for rest of the days with 50% of the wages. If the company wants to change this schedule. There is an umpire decided. Union protested. both arbitrators are appointed. In case both arbitrators do not agree. As per factory act syas. Leave with wage 30 days leave was given and wants to be reduced to 15 days. in a new settlement. conditions which are nto discussed would continue to be the same.
but to no avail. they had employed a local man. he had become a popular person. he became a trouble-maker. the slow down was intensified and the productivity almost came to a stand-still. given his actions. He was a renounced socialist. The decision of the arbitrator is called an award. Mr. S. but on humanitarian grounds. The government has to notify this agreement in the Gazette. He became a union committee member and started troubling the management. The company reserved the right to produce evidence when asked for. It has the same force as a decision passed by the Industrial Tribunal or Court. He was known to the union leader. When he was caught in a case of misconduct. The moment he was dismissed. Mr Manik Gagar was appointed as the arbitrator. etc…When the management decided to opt for arbitration. They started a slow-down. Mr Hadke removed all workers who he did not like. By this time. The management has taken disciplinary action against him. Hadke. To the extend that. The moment he came back to work. Over time he created more trouble for his opponents and the women workers. the management removed both of the VPs. The award is notified in the Gazette. Case: Indian Card Clothing Two of the VPs man-handled a workman. Mr Hadke. the management charge-sheeted him. Once he was confirmed. he started torturing their children who were at crèche. ladies got upset on this. look at evidence. The union was in favour of Mr. started harassing the women’s at workplace. the award becomes enforceable. they were told that is was their union leaders decision. the management should pay both the VPs one lakh of rupees each (which in 1984 was a 12 . His award was that Mr Hadke should be re-instated with full wages and back-pay. They were told to hold the lock-out by the principal. the union started creating problems for the management. on hearing this. They got upset and resigned from the union. N. The matter went to the Labor Court. When their activities did not have any effect on the management. The arbitrator has to hear both parties. they had to contact their principal company in Holland. The management could not perform any action without taking his consent. On complaining with the authorities. he became the uncrowned king of the company. He awarded that the dismissal was justified. The only way to solve the problem was the through arbitration. Only after the agreement has been notified in the Gazette can the arbitrator begin with his proceedings. The women workers took up the matter with the personnel department. The decision is not given to the parties but to the Government. There was a drop in productivity. Moral of the case: When appointing an arbitrator. A post of a lady supervisor was filled up by a person from another dept. conducted an enquiry and dismissed him. Case: Philips India Ltd Arbitration case In Philips. Joshi being the arbitrator.This agreement has to be signed and forwarded to the appropriate government. Management wanted to declare a lock-out. make sure that the arbitrator is a neutral person. Hadke was dismissed again without enquiry. The dept. etc and then give decision. and after 30 days. they started demonstrating. The court held that the dismissal of Hadke was justified. But this being a Dutch company.
There was a strike by the workmen. Case: Rotas Industries vs. When the matter went to the supreme court. Rotas Industries Staff Association This case went from the Patna high court to the Supreme Court. During the strike. The union. According to the union. The arbitrator said that the Union had said that the Union had to pay a sum of money to the management due to loss caused by the strike. The strike was because. The arbitrator did not concentrator on the job at hand. the decision of the HC was upheld. They had implemented the recommendations is part only. during which they referred the dispute to arbitration. the management had not implemented the Jijabhai award. according to the union. there were some negotiations.huge amount). furious at this went to the Patna HC and it set aside the decision of the arbitrator saying that he disregarded the provision of law and that he has crossed his jurisdiction. 13 . The arbitrator was balanced and even the management and the union were satisfied with the award. the management had not implemented the wage board in to-to.
oil power. which is 240 days approx. there was no provision for the above. If the employer wants to retrench his workmen: 1. the employer-employee relation comes to an end where as on layoff. The provisions of layout and retrenchment are applicable to workmen who have been in service for not less than one year. Give notice about the retrenchment to the appropriate govt. tells us about conditions precedent for valid retrenchment. Whatever compensation paid for layoff can be set off against the compensation payable 14 . breakdown of machinery. 3. Retrenchment is defined in Section 2 (OO). refusal oar inability on the part of the employer to provide employment to his workers on account of shortage of coal. Layoff means failure. In 1951-52. In 1953. but it does not include: 1. due to recession in Bombay textile Industry.Provisions of lay-off. The employer – employee relationship is not terminated. Compensation for layoff: 50% of basic wage and dearness allowance. retrenchment and closure of undertaking In the Industrial Act of 1947. accumulation of stock. 2. It means termination of by the employer of the service of the worker for any reason whatsoever. employers had started laying off people arbitrarily. Voluntary retirement 2. a new chapter was introduced in the Act – CHAPTER V A -> Provision for retrenchment & Layoff. Clause C: Termination on grounds of continuity In retrenchment. other than by way of punishment inflicted by way of disciplinary action. the relation still exists.2006 Section 25 F. He shall have to give 1 month notice to the workmen to pay wages in lieu of notice. Layoff is defined in Section 2(KKK). In the case of retrenchment. Clause BB: non-renewal of contract of employment 4. natural calamities or any other reason beyond the control of the employer. 08-Dec . If there is a layoff for more than 45 days. then the employer can retrench the workman. At the time of retrenchment the employer shall pay compensation which is equivalent to. 15 days average pay for every completed years of service or part thereof in excess of 6 months. Retirement on reaching the age of super-annuation 3. 15 days average pay for every completed years of service or part thereof in excess of 6 months.
Case: Indian Iron & Still vs Workmen – 1958 – Supreme Court A highly skilled workman was asked to do a job of a coolie. it can be a step or two higher or lower than the present job. The employer laid him off without compensation. They are: a) If the workman does not report for duty at the appointed hour. & the new owner did not want them. if he reports to work. in one part of the establishment as a result of which there is no work. But asking a highly skilled workman to do a job of a coolie can’t be alternate employment. But there were no buyers. The quarries are governed under the Mines Act (1952). and sign the muster roll for the day. making them two diff establishments. Alternately. which resulted in no raw material in the cement plant. on condition that he would not take any employees as part of the deal. He refused to do it. The employer can wait for hours beyond which he can be laid off. c) In case of a strike. then the workman of the other part of the establishment can be laid of without compensation. The workers. The employer said. If the worker refuses to take up the work. If there is an agreement after first 45 days of the layoff no compensation will be payable. this is not a question of surplus. belonging to the employer. The employer now terminated the service of all the workers. b) If the employer has offered alternate work (similar work) to the worker in the same or another establishment. Therefore the employer gave layoff to the workers of the cement plant without compensation. the workman will be laid off without compensation. Case: ACC vs Workman – Supreme Court – 1963 ACC (Tata Sons). the Cement factories are governed under the Factories act. Therefore. The SC 15 . in certain circumstances. The workers of the quarry went on a strike. The SC held that alternate employment means more of less similar employment. They pleaded for a retrenchment compensation. and wanted to sell off. Under Section 25 E. layoff compensation is not payable. then the employer can retrench the workman without any compensation. RETRENCHMENT Case: Barsi Light Railway Vs K N Joglekar – 1955 . He would buy only land. claimed compensation as they were not part of the same establishment. adjacent to the factory was the limestone quarries. in the other part of the establishment. plant & machinery.for retrenchment.Supreme Court ( 5 Judge Bench) Barsi Light Railway was suffering heavy losses. which is situated within 5 mile from the establishment in which he works. the workers need to be paid compensation. One individual showed interest. telling that they were selling off the plant. he cannot detain him for more than 2 hours. The SC held that they can’t be taken to be part of the same establishment. but of transfer of ownership.
decided. that when the co. and were asked to seek the asst. the SC gave a decision by which the employers were shocked. the surplus labors were terminated. If as a result of closure of an undertaking. she 16 . there was an automatic termination clause. then in 1984 bought a amendment. but why did the bank not renew his contract b’coz there is no work. that he is replaced at the end of the contract period. Therefore. The govt. In 1976. In 1956. resulting in surplus labor. were intact. he was appt for a particular no. ( at the end of the period of contract. implying he was a surplus -> the bank should have applied Sec 25F -> his termination was invalid retrenchment . that retrenchment meant termination of surplus labor and does not attract transfer or closure of establishment. he was notified. the workman now cannot challenge the termination. as if they are retrenched. of year’s. The industry took it up with the govt. 2. The SC held that retrenchment. the worker challenged the retrenchment on the ground. a. but it should not happen. This decision was critised by people. Such clauses can be placed in the appt letter. Case: JK Iron & Steel vs Workmen – 1960 The company introduced automation. The parliament stepped in and introduced two new sections in the Industrial Act. The SC once again said. Section 25 FFF – Regarding closure of undertaking. Where as a result of transfer of ownership of undertakings the services of workmen are terminated such workmen are to be paid compensation under Section 25F as if they are retrenched. Case: Sudramoni vs State Bank of India – 1976 Sudramoni was appt. His contention was. In the probation letter it was clearly mentioned that at the end of the probation period. He now decided to challenge his termination. by inclusion of clause BB – Non renewable of contract of employment. The profits of the co. And it is not necessary that there should be losses to effect retrenchment. is making huge profit. by someone else. Case: Santosh Gupta vs State Bank of Patiala – Supreme Court – 1980 S Gupta (Female) was appt on probation by the bank for a period of 1 year. on a contract with the bank for a specific period. compensation under section 25F.) When his period came to an end. He should be reinstated if the work is still there and his period of employment extended. And In the contract of employment there was a clause. with automatic termination clause. the services of a workman are terminated. 1. they should be allowed to retrench the worker.The SC in this case gave a very broad interpretation to the clause ( any other reason) and directed the bank to reinstate him with full back wages. of the govt. can be effected at any level of profits. Section 25 FF – Regarding transfer of ownership of undertaking. that retrenchment meant pure and simple – termination of surplus labor and will not attract any other cases. such workmen are to be paid. another case was decided – Hari Prasad Shiv Shankar Shukla Vs A D Divekar : The SC was to decide as to what is retrenchment. a. Now a person appt.
The person. the employer will have to justify before the court as to why he has retained a junior person. on people were against policies of Mrs. that she was working for the poor. The banks thereafter. that she was removed coz the bank doesn’t have work. She appeared for the test and she failed. Indira Gandhi. D’Souza was of invalid retrenchment and therefore he should be reinstated with full back wages and continuity of service. and asked the bank to reinstate her. in preference to a senior person. else her services would be terminated. who were retrenched last. has to be retrenched first. to take care of layoff. In 1976. he has to prepare a list category wise and seniority wise of the employees. If the employer wants to retrench the workmen. hence Sec 5B was introduced. Railways – 1984. Case: Robert D’ Souza vs General Manager. So all clauses were applicable. it was applicable to mines. • Sec 25 N – retrenchment. In this chapter they introduced : • Sec 25 M. taken rights of employer to run factory at his will. and had been working for a no. Lecture – 15 – Dec – 2006 17 . to a senior person.would have to appear for a test of confirmation. Emergency was on. The railways decided to scrap the casual labor force. He then contacted a lawyer. But.E. Her contention was. The railways contented that retrenchment was applicable only to permanent labor and not to casual labor. Hence. & • Sec 25 O – closure of undertaking. She would be confirmed. The SC ordered that the case of Mr. He had worked for more that 240days. and he filed a case. If a senior person raises a dispute. the lawyer suggested and asked him to find our exactly how many days he had worked in the preceding 12 months how many days had he worked. In 1976. as to why he is retaining a junior person in favor of senior person. of years. that he should not come for work anymore. She worked for more that 240 days. it came under Sec 25. Section 5 B – 1976. The railway admin informed Mr. who was recruited last. and raised a dispute. Supreme Court Mr D’Souza was a casual employee to the railways. plantations and factories. The SC interpreted the clause any reason whatsoever. THE PRINCIPLE OF LAST COME FIRST GO (SECTION 25 G & 25 H) Section 25 G is applicable to Indian nationals only. if the employer wants to retain a junior person in preference. She wanted to show. if the employers situation improves. in the category then the employer will have to record the reasons. and the employer want to recruit new persons. Section 25 H – After retrenchment. if she passes the test. the employer will have to give preference in employment to the person. She was dismissed. The SC held that the provisions of retrenchment are applicable to all categories of employees. S. employing 300 or more workers. changed the probation period to 6 months from 1 year. D’Souza.
It becomes a futile exercise for the employer if he loses the appln. The govt can either go thru the appln. he is not a workman. The govt can go then to the Industrial tribunal. 1976 to protect the Sales Rep’s. He can go to educational tribunal for redressal. This appln is to seek permission to give layoff to the workman. Parliament passed a new law – Sales Representative (Conditions for Service) Act. then it can be presumed that the permission is granted and the employer can proceed to give layoff to the workers. If within the 60days period the employer doesn’t receive the permission. consumption of material. It can’t be compared to clerical class. refuses to give the permission in the public interest. to the govt. asking the govt to reconsider its decision. Sec 25 O – Regarding closure. for laying off the workers. In such a case the working class may go against the govt. Sec 25 N – regarding retrenchment. This law was applicable to Plantations Mines & Factory only ( employing 300+ workers). Case: May & Baker vs Workman Sales Exec – job – sales promotion – Cant be skilled unskilled work. the employer has to wait for 60 days for reply from the govt. he has to take permission from the satate govt. etc. Sunadaram bal bs Govt of Goa . It take months in reality to decide on the appln. & if it finds that the reasons given by the employer are genuine it may grant the appln. The employer then can make review petition\ appn to the govt. He will have to make a appln to the state govt in the prescribed form. In 1976 many labour laws bought in against the interest of the employer. order position.Job of teacher noble profession.Teacher : Case: Ms. After appln. Introduced to protect the working class. as Indira Gandhi was passing many employer unfriendly laws. Medical Rep : He is not a workman. Sec 25 M – Regarding Layoff. Sec 25 M : Layoff If the employer wants to give layoff. Chapter VB This section introduced to give relief to workman laid off. Provide all the details as to how the establishment has been working for the last 3 years – profit figure. The reply may in form of permission granted or not granted. The elite class abolished the govt. Hence.hence not a workman. 18 . It was duration of Emergency. Daman & Diu SC passed . In case the govt.
The workers can also go to the hight court against any decision. JK White cement had the latest technology. decided to close the establishment.additional expenditure for the govt. it is presumed permission is granted. then he can make a review appln. They made an application. ACC Cement was slightly grayish.. Even in review he might not get the permission. After the notice.) If no reply within 60 days. Sec 25 N : Retrenchment The employer has to give 90days notice to the workman about retrenchement. It started trying for various promotion schemes. In the meantime the pollution board asked ACC to put up a Effluent Treatment Plant . To the govt of Gujrat. he can file a writ petition in the high court. the limestone used was of a very high qlty. Give all the necessary details about the establishement. The govt reconsidered. and directed to reconsider the appln. Challenging govt’s order. If permission not granted – review petition can be filed. This is the reason. 2. For permission to close down the factory. Of Gujrat ACC Porbandar one of the first co. setup during same time. declined to give permission on grounds that the establishment profitably till 1985. In 1984. why VRS schemes were introduced. he will have to make an appln to the govt in the prescribed form. Therefore the co. ACC started losing market share. 19 . JK White cement. to manf white cement. In the line of all the facts and reasons. went to Gujrat High Court and filed a petition. Rest of the procedure is same as layoff. It started having problem in 1985. He would have to wait for a period of 60 days for intimation from the govt. ACC started making losses. ( Details to be provided abt the establishment. the employer can presume that the permission is granted and the employer can go ahead. A time came when the manufacturing cost was more than sales realization. hence continue to use the same means and achieve profitably. There is no power. Porbandar vs Govt. The govt. There is natural calamity. If he receives intimation that permission is not granted. Case: ACC. The high court came heavily on the govt. Sec 25 O: Closure 90days notice to the workman – Appln to the govt for permission to close down the appn.No permission reqd when from govt. white cement from korea was easily available in the market. The co. whereas JK Cement was pure white. by an amendment chapter 5B has been made applicable to establishment employing 100 or more workers. 1. Alternately. Another co. If within 60days there is no intimation. and accepted that the reasons given were genuine and granted ACC permission to close down. In 1985.
for a min period of two years. the co. except the paid directors of the co. Layoff at Bajaj Auto in its settlement with the union in 1993. as per section 10 (10C) of the income tax act 1961. – 2nd commission Chap 5B should be applicable to establishment above size of 300 or more. In which case they will be paid 50% if the wages. technology. but should give higher compensation. Money was made available from this fund. 45days wages. they should give 30days notice. The worker started pressurizing the union. The industrial court held that the provision in the settlement is valid. National Commission of Labour – review laws. due to VRS can’t be filled up. for ever completed year of service or wages for the balanced months of service left till super annuation. ant to go for retrenchment. But. the amount will be taxable. the manpower can be rearranged. including VP’s & president. the VRS scheme should aim at overall reduction of the existing man power. The govt has created a national renewal fund. Because no political party wants to take responsibility of the same. gives certain concessions to the employers and the employees. The scheme can be made applicable to all employees of the organization. methods of production. Compensation: The compensation payable is 3 months basic wage and dearness allowance. for VRS shall be at the discretion of the management. the amt of VRS to a certain extend is exempted under the Income tax act. After the advent of globalization & liberalization – the private limited cos. since then. Started facing competition. In further recession. And in order to survive in the emerging market they started trimming the workforce. they switched to 4 days a week. and the management has the right to effectively make use of the provision. 20 . had inserted a clause in the settlement stating that. Eligibility: An employee who has worked for at least 10 years or should have completed the sage of 40yrs. As per the section. It was submitted in 2001. Whichever is less will be paid. in case there is less workload. The max’m amount payable is 5 lacs (exempted amount). The acceptance or rejection of the application. The co. VRS Compensation is treated as a revenue expenditure & the employee who opts for VRS. can switchover to 5 days or 4 days working in a week. The vacancies that arise. Non profit making co. It was so rampant that they had to change the strategies. The union then challenged the provision. in case they frame schemes. by first resorting to 5 days working. The concession under the VRS is available to an employee only once during his lifetime. In recession. they made use of this clause. to the PSU’s whenever they wanted to reduce their excess manpower.Voluntary Retirement Schemes: It was first introduced in the public sector undertaking s by the govt. but is lying in the govt. rest 60 days. for no profit no loss establishment. IT Act 1961. can pay more.
Joshi. Gave 1 months notice period. They met Hotel Mgmt and asked them to relieve all the jr staff also. but this would cost additional 1cr. but the workmen didn’t have such resources. Mrs. This section was inserted in 1974 and bought into force in 1984. Article 14 – Equality before law and equal protection of law. The union started hunger strike. This section was effectively used in the Hotel Blue Diamond Case. Case : Hotel Blue Diamond. vs. This section says if a workmen. Taj group found that the jr. and the employer wants to prefer an appeal. and request them to take back. During the transition. This provision. But court stated. The state will endeavor to ensure that all people in India are treated equally. Those who pass will be employed. Section 17 B. They met taj management. that they would get rid of all the bargainable employees. the employer is free to do so. in favor of workmen from court to court. in the case of Elpro Intl. This hotel was to be taken over by Taj Group. But. Employer had the money and resources to go from court to court. the he shall have to pay the last drawn wage to the workman. stating that. The employees went to the court challenging the termination. and 15days avg pay for every year of service. he is not gainfully employed (not employed for wages). This resulted in the workmen suffering. was challenged in the Bombay High Court. Stating that permission was required to do so. till the decision of the superior court. if union exists. is reinstated. Kirloskar’s oweners of Blue Diamond hotel and consulted legal authorities. that under transfer of ownership. that it violates Article 14 of the constitution & Article 19 (1)(G). who has been dismissed. Date: 24 Dec 2006.Transfer of Undertaking Sec 25 FF This is only under Chapter 5A. It was inserted because. Sec 17 B was challenged on the ground. to take cases where the courts had given favorable decisions. be a superior court. Hence is would be very difficult for them to provide effective service. the workman will have to file an affidavit. by the order of a labor court. 21 . The union asked the worker not to encash the cheque and wait. They asked them to reapply and appear for entrance test. Taj went to Industrial Court and got a injunction order. there is no need of permission from the govt. They terminated the services of all the bargainable staff under Sec 25FF. He came up with the proposal. They agreed for a particular price and only the managerial staff of Hotel Blue diamond were to be send home. Coz Sec 25FF is only under 5B but 5A. However. Kirloskar’s benefited as they had to pay the workers only 40lacs. Out of 400 odd ppl only 40 were selected in the process. employers were abusing the legal machinery. staff were highly unionized. 60 Lacs was their profit.
stating that it is violation of Article 14 and Article 19 (1)(G) of the constitution. After 6 months her role got over and the manager asked her to leave. to carry on any business trade or occupation. She signed visitors register to enter the premise. challenged the constitutional validity of Sec 17B. The total was coming to 225 days. i. letter there was a clause. officially she was not on rolls. it is declared as ultravires of the constitution. that there was no working member in her family. Mrs Joshi Mrs. The manager took pity on her and offered her some job work. Joshi was employed initially as a temp workman for a period of 6 months. The labor court awarded a decision after 5-6 years of re instating her and giving full back wages. and passed it to the labor court. if Surplus employer should have taken record to Chapter 5 B. She was able to work for most of the next 6 months. It had given opportunity to produce the register. She could not be terminated now. She returned and informed that she is getting a permanent job in Morris Electronics – but the co. But. In case it is not produced. To Date: …. she had to cut rubber as per size. now challenged the decision. only then would they admit the matter. So the labor officer asked the co. and she be given some allowance to sustain her life. Joshi was employed in that organization from Date: …. The co. He issued the certificate. In her temp’ appt. But one months register was missing. (ultravires .null & void). The labor officer called and said that just giving her the certificate on sympathetic ground. But. Case : Elpro Intl vs. And she had to do the job work inside the premise of the factory premise. intermittently. At the end of 6 months. She now went of to Labor Court and made a complaint that she had been employed in the co. wants an experience certificate of at least 1 year.e. her services would be automatically come to an end. Now if the higher court awards the judgment in favor of them. she be paid the last drawn wage. and filed a petition in the High court. they did not give a stay on Sec 17B.judges gave a stay on the same. the labor office would take an adverse inference that she has worked for all the days in that month.Article 19 (1)(G) – Every person in India shall have a right. The company advocate Mr. She pleaded wioth the Personal Manager. 2 member bench – Justice Dharmadikari. and hence the labor officer admitted the matter and called the employer for discussions. while the case is pending in the Higher court. The conciliation officer gave a failure to the govt. but they failed. The award of the labor court was challenged. which stated that it was to certify that Mrs. could not locate the register. to produce the months register. Work – Heap of worker from manf’ process. All the registers were bought and attendance was tabulated. The co. she was informed that she need not come to work from the next day. for a period of 12 months (> 240 Days) and is deemed to be permanent. High court appt. And it does not state that she has worked for 240 days. and if it would add up to more than 15 days. Shree Krishna. The violation was that the employer was asked to pay the wages. Any law which takes away the fundamental rights of citizen. stating that at the end of the 6 months. In the mean while the personal manager resigned and took up a job in Bangalore. 22 .
23 . he has to be paid subsistence allowance. it was challenged on similar grounds as Sec 17B. he should be paid 50% of the wage and thereafter 75% of the wage. Shree Krishna wanted to appeal to the Supreme Court. A person can be suspended pending enquiry. becomes detrimental to the very discipline of the organization. when he has committed a grave misconduct. For the first 90 days of suspension. The Supreme court held that it does not violate either Article 14 or Article 19 (1)(G). When section 10(A) was introduced. Their money is blocked due to it. Mr.how would they recover this amount. because the purpose of both is that a person out of employment should be given some sustenance. his presence. but the co. as a result of which. decided to take Mrs. Joshi back on work. Justice D said that he does not find any distinction between Sec 10 (A) of the Industrial Employment (standing orders) Act 1946 and Sec 17 B of Industrial Disputes ACT. Justice Dharmadikari drew attention of Shree Krishna to Sec 10 (A) of the Industrial Employment (standing orders) Act 1946. This section states that when a workmen is suspended pending enquiry.
This was in 1952. When the employee retires. No.Employees Provident Fund and Miscellaneous Provisions Act. In the SC. This provision for providing PF from day 1 was challenged in courts. 1.500/. Union of India (1995). • Establishments which have voluntarily applied the act to their establishments. of Employees: > 20 and < 50 5 years. The matter went to SC. Infancy Period: No. Later it was reduced to 120 days and thereafter 60 days. • Those establishments which are engaged in the manufacture of bricks.per month. 1985 and had been referred to BIFR (Board of Industrial Financial Reconstruction) • Those establishments whose accumulated losses are more than their net assets. From 1 May 1995. of Employees > 50 3 years. From 1990. it was made applicable from day 1. Contribution: The present contribution is 12% of basic wage & DA from the employee’s and the employer’s end. If the number of employees are less than 20. When the Act was enacted. There are certain establishments which can contribute 10% to PF. Employee: Employee is a person who is drawing wages less than Rs. he needs to get some substantial amount with which he can plan his life The Act is applicable to establishments employing 20 or more employees on any one day of the preceding 12 months. Now there is no infancy period. The Act is applicable throughout India. It became difficult for companies because some people just worked for one day. 6. gum. the employee had to work for 240 days. bidis 24 . In 1988. 1952 Object of the Act The object is two-fold. jute. then the employer and the employees can make a joint application to the provident fund commissioner for voluntary application of this Act. This wage is basic wage and dearness allowance only. • Thos establishments which have been declared as Sick Undertaking Act. There is a provision for voluntary application of this Act. employees have to be covered from day 1. To provide relief to the family members in case of premature death of the employee 2. in the case of J P Products vs. the SC has held that the amended para 26 is valid. there was only one infancy period of 3 years.
But this 1 1/6th amount would not be adequate to pay pension to all. It is 1 1/6th of the 8% PF contribution (8% at that time). an idea was conceived based on a survey that pension should be given to all (not restricted to the family) i. Short Service pension – payable where the employee is a member of the pension scheme for a period of minimum 10 years. • Those who have been in the pension scheme for 20 yrs or more have an added weightage of 2 yrs ( i.In 1971. but for pension scheme the age should be 58 years. out of the employer’s contribution of 10%.66% to PF. & 1. However. with no contribution from the Govt. and the spouse would receive the benefit till death or remarriage. this was not additional.33% out of employer’s contribution to PF and direct it to pension fund.) • Retirement pension – an employee has been a member of the pension scheme for 20 years or more and has retired from the services of the organization before completion of 58 years. Under this scheme. But employers did not agree.33% would go to Pension Scheme (maximum of Rs.) This pension is given only when the PF member dies only when he is in service. Once in 6 months she has to give a declaration that she is alive and not remarried. then only the elder 2 are given pension. It is not given if he retires. Earlier for family pension.e. But this aroused a lot of controversy for directing funds from PF to pension. Once the elder child completes 21. In 1989. Family pension was meant only for the immediate family (spouse and 2 minor children upto the age of 21 yrs. a new scheme was introduced in the PF act called Employees Family Pension Scheme. The minor child would get PF benefit only till the age of 21 yrs. for computation of pension. the contribution was 1 1/6th from employee and 1 1/6th from employer and the government was also contributing 1 1/6th. The New Pension Scheme provides for 3 types of pensions • Superannuation pension – payable to an employee who has been a member of the pension scheme for a period of 20 or more years and has superannuated on completion of 58 years of age. then the next child starts getting pension.6500). The spouse gets 3/5th of the total amount earmarked for the pension every year and 1/5th each to the child . Therefore it was decided to take a major amount from the PF and put in pension. payable also to the employee on his retirement. The government wanted to take 8. If the employee has more than 2 children.e. A new pension scheme was brought into force from 16th November 1995 – ‘New Pension Scheme’. It was suggested that let pension be given in addition to PF and gratuity by making the employer pay separately. if they have been in service for 20 yrs. 8. it will be taken as 22 years) 25 . (For PF there is no age limit.
pension will be reduced by 9%) The member employee should have contributed under the pension scheme for atleast 1 month and thereafter if he dies.000 and thereafter every month he commutes Rs. and thus under this scheme gets Rs.e. the 3rd child would get pension benefit. he is eligible to commute a part of the pension. For every year short of 58 yrs (but more than 50) the pension will be reduced by 3% (if he is 55yrs. An employee can also receive pension if he contributes for 1 month under the scheme and thereafter meets with an accident and is permanently disabled. If the person is alive for more than 15years.e. Immediately he will get Rs. The maximum amount that can be commuted is 1/3rd of the amount. 900 until he is alive. A person was drawing Rs. further reduced pension to the spouse (thus spouse will get only 80% • 26 . 40. the children will get ‘Orphans pension’ which is 25% extra of the earlier amount received. i. If the spouse also dies. If he dies while in service. then he gets 90% of pension.Amount of pension = (Pensionable salary * pensionable service)/ 70 Pensionable salary = average salary of last 12 months Pensionable service = from the day the employer has joined service (only full years are counted) and 2 years weightage for service more than 20 yrs However. only after his elder siblings cross the age of 25 years. nominee gets a one time payment of Rs. his nominee will get 100 times the original pension. After he dies. The commutation is to the Govt. If the person dies after retirement.000. original pension (100%) is restored. he has 3 options available • He will opt for reduced pension during his lifetime. i. spouse gets 50% of what actual member would get and each child gets 25% of what spouse gets. Spouse will get 100% and each child will get 50% (max of 2 children) – if person dies while in service. Under the new pension scheme.500/Pension can be received by a person only if he completes 50 yrs. children will get pension till the age of 25. spouse and children will get full pension. 6. He commutes Rs. he will have to forego 10% of his pension. He would gets 100 times the commuted amount and thereafter receives the reduced amount every month. 100. 1. maximum salary for pensionable salary is Rs. Commutation: Once he is entitled to pension. 1200. he has no beneficiary. Return on Capital : In case an employee’s spouse has died & children have come to the age of 25years & he is due to get pension.000. 400. In case of more then 2 children. Reduced pension to the member during this life time (will get 10% less) and after his death. spouse will get full pension. Suppose a person gets a pension of Rs. 800. If he dies.
e. if the person dies within the 20 yrs. So under pension scheme. then the PF authorities will ask the company to pay both employer and employee’s contribution along with interest at 12% and damages of 25 % per annum. Employee Deposit Linked Insurance (EDLI) Introduced in 1976. Like. if the employee continues service after 58. But in this case. The employee has to contribute for atleast one month and the Govt. the contribution stops after the age of 58. under this scheme. the nominee will get 90% of reduced pension for employee.• of the pension). does not contribute anything in this scheme. EDLI scheme introduced by LIC which is more beneficial than Govt.000 is paid to the PF nominees of the member. then he can sell the immovable property. For pension scheme.500) and Government will contribute 0. 100% contribution from the employer. And he will get a reduced pension of 87. Note: If an employee has contributed for 1 month to the pension fund & dies natural/accident or suffers permanent disability then. After 20 years. if the average balance of the member for the past 3 years is Rs. For PF. but only from employer and govt. there is not contribution from the employee. If the employer hadn’t cut PF contribution from employee and hadn’t paid to the PF account inspite of employing more than 20 employees. But the damages cannot exceed 100% of the original sum.000 irrespective of the balance amount in the fund. He can also seize the current account of the co. the recovery officer can seize the current account of the company. there is not age limit. If the employer doesn’t pay. he will get pension and his wages. Pension for a fixed period of 20 years after retirement. 60.25%. 6. under Sec 7(A). the pension stops and he will get a lump sum of 100 times the original pension. The benefit available under LIC is Rs. If the company has stopped conducting business. The whole PF amount is insured and in case of premature death of an employee.5% on basic + DA + Retaining allowance (Max Rs.62. where the premium is a little higher. 27 . But there is an exemption from EDLI. Bank of India. he can sell the movable property of the company without even a court order. The subscribed can get exemption if the scheme provided by the employer is more beneficial. the nominee will still get the lump sum only after the 20th year and not immediately while the spouse may continue to get the pension until the 20th year. and after the spouse dies or remarries. Pension is paid through : Panjab National Bank.5% for those 20 years. i. EDLI. a maximum amount of Rs. 60. Employer has to contribute 0. his family is entitled for pension. There is a PF Recovery Officer who inspects establishments for enforcement & contribution to PF & checks for any elusion. If the movable property is not adequate.000. .
Out of the total amount. has to be processed within 30 days & amt. is not settled then an interest has to be paid from the salary of the commissioner & not the government at the rate of 12% p. 28 .1% on the salary and 0. is paid via cheque. Under the PF scheme once a person makes an appln. the amt. (case: S P Joshi v/s Regional Providend Fund Commissioner (1989 – 90) by SC). The PF subscriber has been considered a consumer under Consumer Protection Act. If the amt. For withdrawl of amt.09% on the wages.a. employer has to pay 1.How PF is run? Certain administrative charges are to be paid.
Factory means premises including precincts (surrounding area) where a manufacturing process is carried on.Employee State Insurance Act. of that 7/8th amount is reimbursed by the ESI Corporation to the government and thus the state government spends only 1/8th of the amount. it notifies under the official gazette and brings the area under the Implemented zone Medical benefits consist of • Domiciliary treatment (OPT) • Diaganostic tests • Hospitalization(includes all types of operation) Therefore. The coverage under the act is all • establishments which fall under the adjudication of a factory. Under ESI the medical benefit is administered by the stage governemtn while other benefits are administered by ESI corporation (disablement benefits. As per the act. For providing the facilities. whatever expenses are incurred by the state governemtn. When the state government is equipped to provide medical benefits under ESI. in reality it is not done so. Under the ESI there are 2 zones called • Implemented zone • Non-implemented zone In pune hinjewade is under the coverage of act while nagur road is not under the coverage. it is given in the official gazette and brought under implemented zone. sickness benefits.7500 per month. he is not covered by the act. 1948 It is a social security legislation providing for integrated social security to the employees and their family members. 20 or more persons are employed. Rs. The moment he draws more than Rs7500. an employee is a person who is drawing wages upto Rs. only when all types of facilities are available. The central government doesn’t spend anything for ESI. etc) The medical benefits are entrusted to the state government as per the constitution of India where responsibility of health and medical services vests with the state government. if with the aid of power. Although the act is applicable to India. and if without the aid of power. 10 or more persons are employed.7500 salary includes all allowances except washing allowance (given for washing uniforms) and overtime wages. 29 . • And all other establishments engaged in 20 or more employees.
At the beginning of the contribution period the employer has to review the salary fo the employee and if it is less than 7500. Local office will scrutinize the form and will allot insurance number to each employee covered by the act. but also has to be paid on the Overtime wage (need not be paid on washing allowance). This benefit period is there coz certain benefits can be availed only during a specific period Employee has to get a declaration form. The first contribution period starts on the April 1st and ends on 30th of September. the employee will continue to eb covered by the ESI act until the end of the respective contribution period. The standard benefit rate is 50% of the average wage. These doctors can have both private practice and practice under ESI. Under the ESI. Note:. the salary of the employee exceeds due to an increment given. The 2nd contribution period starts from 1st of October and ends on 31st of March. employee contribution is 1. the patient has to go to the ESI approved chemist to buy medicines after meeting the doctor.75% of the wage. For computation of average 30 .5%. Under ESI there are 2 kinds of for availing domiciliary treatment:• The ESI itself has got its service dispensaries. Disablement benefits are of 3 types • Temporary disablement benefit: .On this. The medicines will be with the service dispensary. Therefore total contribution is 6. has to pay ESI. Disablement benefit:. and checked by the employer and employer has to certify it.75% of the wage and the employer’s contribution is 4. The employee will then have to register himself with the medical counter. This contribution has to be deposited in the account of ESI with SBI within 21 days of the end of the wage period (which ends on 31st of the month). If it is paid late. The local office will give temporary identification certificate to each employee and a ‘Medical Health Card’ will be given. • The state government will invite medical practitioners to be on the panel called ‘ESI panel doctors’. contribution only on the coverage amount. Daily wage employees are also covered by the act. Suppose within a contribution period. it will attract penal interest.disabled temporarily. Each establishment is attached to a local ESI office.there might be sums from this 1st benefit period starts from January 1st and ends on June 30th. Therefore has to be paid on or before 21st of the subsequent month.benefit which the insured person is entitled to receive when he meets with an accident and is unable to attend duties for more than 3 days. The employer will have to give this identification card and the certificate to the employees. The disablement benefit is disbursed by the ESI. there are 2 contribution periods. This benefit is paid at a rate which is 40% of standard benefit in addition to the standard benefit given. In this case. 2nd benfit period starts on july1st and ends on 31st December. This declaration form ahs to be sent by employer to the local office.
his average daily wage is taken and standard benefit is calculated.partially disabled permanently.g. Permanent Partial disablement:. will be paid only after 1st child completes 18 yrs. Permanent total disablement:. and once the Board decides that he is partially disabled permanently.100 as wage o Temporary benefit Benefit = 70 Total wage until recovered = 170 o Partial disablement (10%) Benefit = Rs. The spouse has to produce a certificate that she is alive and not remarried. The employee will get the benefit for lifetime E. This benefit will be paid on a monthly basis over and above his basic wages and the employee will get this benefit throughout his lifetime. a specific percentage to be paid will be decided as per the Medical board. This is available when the IP is sick and unable to attend duties. he will initially receive temporary disablement benefit.e. 3/5th will go to the spouse and 1/5th to each child. 78 days of every 6 months). The compensation is in the form of a pension which si worked on a daily basis but paid on monthly basis. In case of a 3rd. This benefit is available fro Day 1 the employee joins the organization. employee withdraws Rs. after that he will receive this benefit. Sickness Benefit: . Out of the compensation to be paid.Trinity Engineers. Once the employee meets with accident.applicable where loss of earning capacity is 100%. The rate at which the benefit is paid is the standard benefit rate (50% of average wage).not a medical benefit. The Medical Board will determine the loss of earning capacity due to disablement. This benefit is available only during the benefit period Therefore. the last 6 months is taken.• • • wage. This benefit is available for 91 days in 2 consecutive benefit periods. child. Case:. This benefit is paid after the employee has died. to qualify for this. The first 2 days is called waiting period and the benefit is paid from the 3rd days onwards. he should fall sick for minimum 3 days. To claim this benefit. the employee has to give a certificate once in 6 months from a competent authority to certify his existence. 31 . there should be no loss of earning capacity. This benefit is paid to compensate for his leave of absence. However. To this an additional 40% disablement benefit is added and out of the amount arrived. The period of disablement can even be for 6 months to 1 year. the IP should have contributed for atleast for 78 days during the contribution period (i. However.7 Total wage = 107 o Permanent total Benefit = 70 Total wage for lifetime (even after retirement) = 170 Dependent’s Benefit: . For this the employee will get 100% of the amount of (50% standard benefit + 40% additional benefit).payable to the spouse and for 2 minor children upto the age of 18 years.
The amount available is Rs. It is given to cover the funeral expenses. This benefit is paid double the standard benefit rate (full wages in addition to the normal wages) • Extended sickness benefit: . then this amount is paid to the person who has spent money for performing the funeral rights of the diseased member. After the initial 309 days. In addition.is available to benefit family planning operations. whatever has been demanded as contributions. The moment he completes the age of 60. she has to get certificate from the ESI gynecologist that she is entitled fro ESI benefit and also give a copy of the certificate to the employer. Additional 1 month benefit is available for sickness arising out of pregnancy or miscarriage. There are 2 diff types of family planning operation o For one type the benefit is available for 6 days o For the other it is available for 12 days. 50% has to be deposited in the court before the appeal is heard and the court will pass a stay order on the ESI. If the employer does not do so. or medical termination of pregnancy. the employer ahs to take steps to cover the establishemnet under the eSi act. While making the appeal.is paid when the IP dies.2500 and the same is payable to the eldest surviving member of the family or if the person was not staying with the family at the time of his death. The benefit is for 12 weeks – 6 weeks before confinement and 6 weeks after confinement. the ESI will investigate and suppose if the company has not complied for the aleast 10 years. To claim the benefit. Then the IP gets additional benefit for 309 days and that amount is paid at a rate of 40% above the standard benefit. The death could be by any manner. 32 . 1965.This benefit is available to insured female employee.Enhanced Sickness benefit: . This benefit is paid at double the standard rate (full wage in addition to normal wage). • All contract and casual labourers have to be covered. Wherever a female employee is covered under the ESI act. the benefit is stopped. • The employer can go for appeal to the ESI court. the ESI will now prosecute the employer and inquiry will eb held and thereafter a show cause notice will be sent. The IP should have contributed for atleast 70 days prior to her pregnancy. if the person further requires additional benefit. Funeral Benefit: . • Maternity Benefit: . he can approach the Specialist Team and get a certification and this period of 309 days can be further extended to even another 309 days or till the time the age of superannuation. Then the company will be asked to pay the employer and the employee contribution from the time the company has to be covered.available to the IP who has been a member of the ESI for a minimum period of 2 years and he should contract any of the 22 specified diseases which has been specified as malignant (list is given by ESI). the employer shall have to pay penal interest at the rate of 15% per annum and damages at the rate of 25% (but damages cannot exceed 100% of contribution). she will not be eligible to claim benefit under the Maternity benefit Act. abortion. Things to be noted:• Once the establishment is in the implemented zone and 20 or more employees in case of factory and 10 in case of other.
75% of basic including overtime. When the state govt is in a position to provide these med benefits. The first starts from 1 April and ends on 30 sept.ESI Act: Employee State Insurance Act. health & med services come under the state govt. ESI has made arrangements with large hospitals for more sophisticated services where patients are referred. the local office will also issue a temporary identification certificate and a medical health card. the patient will be sent to those hospitals with which the ESI has a tie-up. The entire contribution has to be deposited in the account of the ESI with the SBI before 21 of the subsequent month. diagnostic test and OPD. It is applied to factories covered under the factories act and to any other estb. of dependent family members. The benefits available are from cradle to grave. hospitalization: certain no of beds are reserved only for ESI patients. There are two contribution periods. second starts from 1 oct and ends on 31 march.75% on basic including overtime. there are additional benefits under this scheme. 7500 does not include washing allowance and overtime. 4. med benefit . The employee has to go and register himself with the ESI doctor. like sickness benefit. 7/8th of the amount spent by state govt in ESI is reimbursed to the State Govt by the ESI. : It has an integrated scheme of social security. it starts the moment the person is allotted the insurance no. The medicines prescribed would be more sophisticated and are available with the diagnostic centre. a declaration form has to be filled up which has various details. Second benefit period starts from 1 july and ends on 31 dec. The certificate has the no. 6 Benefits under ESI Funeral Benefit 33 . Employer has to ensure that this form is submitted in the local office. Under the constitution of India. Coverage: those emp who are drawing wages upto Rs 7500 have to be covered under this scheme. This scheme provides for medical benefits like hospitalization. The local office will allot the insurance no. you have to find the wage of the emp. Diagnostic Test: the doctor will refer the patient to the diagnostic centre. Corresponding benefit period starts from 1 jan and ends on 30 june. They are important because at the beginning of the contribution period. med benefits starts. The OPD treatment is available by way of private medical practitioners authorized by govt or by service dispensary. But some areas are not covered under it. Benefit: 1. Then. From the day of registration. Only if blood is needed the patient has to make arrangement. 2. Sometimes the OT at ESI hospital is booked. Employing 20 or more workers. The emp has to contribute 4. The employer has to give it to the employee. Rate of contribution: the emp has to contribute 1. it will bring the particular area in the implemented zone of ESI. 3.
you also have to pay 25% as damages. or the person who has actually spent the money for performing the last rites can claim an amount of Rs. 25% of the contract value will be considered as labour charges. There are inspectors who assess whether the provisions of the Act are complied with. He will inspect the ledger books. the inspector will note this and report to the Regional Officer. you will have to go to a specific labour court which has been designated as the one which will handle the ESI case.If an IP dies. to find the names from those who have been deducted TDS. permanent. The condition is that the damages cannot be more than the total amount of the contribution. He will inspect the list of contractors and ask the organization to show compliance with this rule. you will have to pay to the court 50% of the amount demanded by the ESI. In case of absence of records If you do not have the records for the ESI. you pay the balance 50% of the amount. after the appeal is in favour of the Government and you have not paid the amount. you get the amount paid to the court. He will inspect the Wage Roll to find out if the persons who are drawing less than Rs 10. If there is any discrepancy. 2. 2. the inspector can attach your property. Appeal If you want to appeal against the penalty. Employer has to ensure that every employee (casual. He will inspect the following documents: 1. However. the eldest surviving member of the family. If the payment is delayed.500 from the ESI These are the 6 benefits under the ESI.000 per month are covered. contractual…) has to be covered under the Act. temporary. interest is payable @ 15% per annum. Out of that. to launch the case. provided the establishment is in the implementation zone. 3. Penalty on Non-Payment after Appeal If. 6. In addition. The consequences of neglect are severe.5% of this amount will have to be paid as ESI. If you win the case. Filing of Return of Contribution 34 . If you lose the case.
Return of Contribution. and uses the amount for himself.This has to be filed by the employer within 42 days of the end of the Contribution Period. it amounts to criminal breach of trust for which the employer can be punished with imprisonment. Failure to deposit contribution If contribution has been deducted but not paid to the ESI. your current account and 35 . This is Form # 6. They might also attach your property.
so don’t pay him gratuity for the 21st yr. mines and shops employing 10 or more employees. no matter what post. and only now at the fag end of his career this has happened. The SC ruled that the clause is perfectly valid. plantations. Only exception is death or disablement due to accident (at workplace). Or. The max gratuity cannot exceed 3. but at the fag end of the career he had indulged in an act of disorderly behavior. In this scheme. It can be forfeited in part or whole. but pay for the rest of the years. hence the clause in the scheme was wrong.5 Lac. 36 . If the services of the workmen are terminated on account theft. The forfeiture would be to the extent of damage done to the property. if the services of the workmen are terminated for indulgence in act of violence disorderly or riotous behavior. Case: L B Singh v/s DCM Mills. This act is applicable to all factories. then whole of the gratuity can be forfeited. but for long and meritorious service. part thereof in excess of 6 months. But some cos. One such firm was DCM Mills. was a old employee. declined to pay him any gratuity. if an employee has willfully damaged the property of the company. if the services of the employee is terminated for his indulgence in acts of violence. The employer is free to pay any amount exceeding 3. Ludh Bugh Singh at DCM Mills. And. This act was enacted in 1972 and clause was inserted in the Payment of Gratuity Act (1972). Rate: The rate is 15 days of last drawn basic & DA for every completed year of service. there was no act covering the payment of gratuity. Employee is a person In 1995. and the co. Forfeiture: The complete amount can be forfeited. there was an amendment and anyone working under these industries are covered. Eligibility: He should have put in 5 years of continuous service. He now approached the court. disorderly or riotous behavior. were paying gratuity to its employees for settlement ( & not for long association). but the employee will be taxed on the additional amount.5 Lac. because gratuity is to be paid not only for long service. His contention was that he has worked for the last 20 years unblemished. It can be forfeited in part or whole. misappropriation or fraud.16-01-07 Gratuity Payment of Gratuity Act 1972 Prior to 1972. which should be till the very end. and ultimately the matter landed in the SC. He will get gratuity if he leaves after 5 year.
absence due to leave with wages. There ware lot of protest from unions against this judgment. LIC will give refund. goes Bankrupt. 1983 SC Lingappa. and the SC held that the employee should have worked to 5 years and 240 days in each year. this will get adjusted against new employees. And hence daily wages should be calc by dividing the monthly wages by 26 days. 37 . which tells us about insurance. for employee who have not completed for 5 years of service. Laxmi Vishnu Textile Mills. Case: Maharana Pratap Mills & Digvijay Cotton & Woolen mills. If a co. he will not be in a position to pay. but not continuously. The money will come in from the proceeds of the liquidity of the company’s property. Sec 2A defined Continuous Service as service. in the courts. there is an authority under Payment of Gratuity Act. The act contains this formula for calculation of gratuity. The workers said that they worked only for 26 days. absence due to accidents. LIC will workout the liability. lay-off. Calculation of Gratuity: For daily waged workmen. Sholapur. all employees. In 1983. age & no.It can be forfeited in full or in part. for an offence involving moral turpitude (offence against the society). of years. where you can appeal. it is not a problem. of years of service. But problem is in case of a monthly waged workmen. LIC in turn came out with scheme – Group Gratuity Insurance Scheme – Give details of scheme. In order to ensure that the workers are not deprived of gratuity. which includes paid holidays. if the establishment is working for less than 6 days a week. used to calculate the monthly salary by 30 days. illegal lockout. Definition of continuous service: Case: Lingappa Ladappa vs. gratuity allowed is 3. But if the employer is bankrupt. & inform the employer the premium to be paid. legal strike. if the employee has been convicted by a court in India. which can be redeemed against the asset of the company. This sentence redefined continuous service. in 1995 Sec 4a was inserted. then 190 days would constitute a continuous service for 1 year. So this authority will release a Recovery Certificate. salary. The employer is supposed to cover his liability by insurance with LIC. This was upheld by the SC. India. He appealed. 15 days wages for every completed year of service or part thereof in excess of 6 months. new section was introduced Section 2a in the Act.5 lac. had worked for a no. This income is tax exempted. Also. Wage = Basic + DA Max. This is done under direction of the collector.
Set-off & Set-on 38 . Research & Development 4. Bonus to be paid after the infancy period of 5 years. 60% of the available surplus has to be kept aside as allowable surplus. the remaining is called available surplus. From this allocable surplus.e. or after the firm makes profits. In case of an Indian company. the amount has to be paid as bonus. whichever is earlier. as it also covers the future gratuity. Applicable to all establishments which have at least 10 people employed. 67% of the available surplus has to be kept aside as allowable surplus. The Government did a payment of bonus bill in 1967. Chairman: Mehr Terms of reference of the commission: Whether terms of bonus could be prescribed by law. Investment Allowance: for investments for further expansion/ diversification After these deductions.LIC scheme is advantageous. Commission submitted recommendation after 3 ½ years. i. deduct certain prior charges. Payment to be made on Rs 750. A high powered commission was appointed in 1961 to look into this issue. In case of a foreign company. Return on capital 2. The Act should be applicable to those who are drawing a salary of Rs 1000. The rest would be minimum bonus. [missed 2 classes] Date: 13 Feb 2007 Payment of Bonus Act. max bonus: 20%. Bonus was first made applicable for the accounting year 1963-64. 1965 Initially. The commission said that a law could be made by which bonus is compulsory. The Government brought an ordinance. Depreciation. From the Gross Profit. these are: 1. They laid down a formula for bonus. not all companies paid bonus. in case an employee dies prematurely. as specified by the Income Tax Act 3. Min Bonus: 4%. Some employees of companies which did not pay bonus used to strike.
for payment of future bonus. RBI. It An employee is entitled to receive bonus if he has worked for more than 30 days in the acct year.m. terminated for misconduct. they have to borrow money from the Return on Capital to pay the bonus. after which it has to pay bonus even if the establishment is under loss. which talks about productivity linked bonus. then it is allowed. Min bonus 8.33% Max bonus: 20% Section 31A – Productivity linked bonus If the employer and the employee enter into an agreement that bonus will be paid based on productivity. this agreement was to be based within the provisions of the act. 2500 p. This money is kept in an account called set-off. there was an amendment. List of employees to whim the bonus has been paid. However. The bonus cab be forfeited when the employee has indulged in theft. when the Janata Party came to power. if there was no allocable surplus. there was no need to pay bonus. The moment the establishment starts earning profit it has to pay bonus. There was a new section 31A. It is to be paid within 8 months after the acct year. PSU ( which are not competing with the private sector). they restored the minimum bonus. 39 . Infancy period 5 years. 2. where it said. However. the money borrowed from the capital will be paid back. Set-on and Set-off can be kept only for a period of 3 years Present Position In 1976.33% Max 20% of Rs. The employer has to maintain 3 registers : 1. the excess has to go to an account called set-on.m. Min bonus: 8. IDBI. dishonesty or for willful damage of the property of the employee. If there is excess money available after the payment of bonus. It is paid for allowable surplus. Establishments not covered under the Payment of Bonus Act : LIC. Calculate other bonuses.If there is no allocable surplus. Establishment should have greater than 10 people. In a year of profits. Employee for the purspose of this act is a person whose basic and dearness allowance is upto 3500 p.
How discipline must be given in industry Discipline is given based on the principles of natural justice.They felt that the establishement had surplus cash. The management decided to pay Rs 800 additional. Every employee must be given a fair hearing 2. for the time being in force (eg: If a union is recognized at the Maharashtra Recognition of Trade Unions. Case: Empro International The union felt that the workers might join some other place. The management approached the labour court. and approached the management to bail out. They went on strike withint 14 days of the notice period. Engaging in trade or business within the premises of the business 12. without permission of manager. Mat What are the considered to be misconducts? 1. The workers did not do what to do. They were given 48hours to return to work. Carrying of lethal weapons 16. Collection of union subscription within the premises without the permission of the manager. Absence without leave for more than 10 days 7. Theft of property of another workman within the work premises 10. Willful insubordination: Not adhering to the lawful and reasonable instructions of the superior 2. The union celebrated this as a victory.3. and hence they should receive more that 20% bonus. Going on a illegal strike 4. Holding union meetings within the premises except in accordance with any law (eg: Under MRTU. Collection of money within premises without the permission of the employer 13. Overstaying the sanctioned leave without proper or satisfactory explanation 8. except in accordance with any law. They immediately called for a strike. a union which is recognized by this act can hold meetings for the prevention or settlement of disputes. a recognized union can collect subscription at the time of disbursement of wages) 15. it is habitual if a person remains away from work for more than 3 times in a year 6. Willful slowing down in performance of work 3. but without disturbing the work) 40 . These are: 1. but inturn they lost 3 months slalary. Theft or dishonesty in connection with the employer’s property / business 9. Habitual negligence in work 11. Habitual absence without leave. Canvassing for union membership within the working premises 14. Instigating or assistance the commencement or continuation of an illegal strike 5. who declared the strike illegal.
The management has to employ the enquiry officer. Demotion d. 41 . Conduct a preliminary enquiry: To find out whether the misconduct actually happened. the meeting will be held ex-parte. 4. or give a suspension for a certain period. id number. an independent person. 2. is the one who conducts the enquiry. or an office bearer of the union of which he is a member. follow this process: 1. describe the misconduct. A copy of the documents has to be given to the employee. If he does not attend the examination on the stated date. It will also state that if no explanation is tendered within the given period. Give workman a show-cause notice: The notice will mention the workman’s name. All documents have to be produced by the management representative to the enquiry officer. an officer of the company who will represent the management. date. Suspension for a period of 4 days c. the management can initiate disciplinary action against them. the employee has to first explain to the workman the procedure of the working. Drunkenness or indulging in violent or riotous behaviour in the premises The law expects the employee to know which acts constitute misconduct. the enquiry officer. You can do this if the misconduct is the first time around. He can defend himself with a co-worker. At the enquiry. Commission of an Act subversive of discipline or good behaviour on the premises 19. So whatever decision is taken on that day will stand. b. If the worker admits misconduct: Give a written warning letter. He has the opportunity to defend himself. ??? 6. The fines to be charged are to be ok-d by the Government. 5.17. The employee is asked by the employee officer if the employee has received the charge sheet and understood the provisions of the charge sheet. Name the person who will conduct the enquiry. Punishments: Punishments can be either: a. Not following safety instructions / using safety gear 18. or issue a charge-sheet and conduct a domestic enquiry. If action has to be taken against the employee. On the first day of the enquiry. and a defense representative of the employee. It asks the workman to submit written explanation as to why disciplinary action should not be taken against him. for which he will not get wages for the days of suspension. Fines. If worker does not admit misconduct: Punishment by way of suspension. 3. This enquiry will be based on the reports of other employees and managers. time and place of the enquiry. He can cross examine the management witnesses and also with his witnesses. Fine cannot exceed 3% of the wage. Conduct domestic enquiry: The enquiry officer.
42 . after the employee is dismissed.Arbitration and the Industrial Disputes Act will come into force only at a later stage.
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