1518601161chap 1 To 7

CS EXECUTIVE CS NAINA JINDAL
Lesson 1
Factories Act 1948
Introduction  The first law in lndia relating to regulation of workers in the factories
was passed in 1881.
 The Factories Act, 1948 was enacted after independence.
 It came into force on 01.04.1949.
Objectives  To ensure adequate safety measures and promote the health and
 welfare of the workers in factories.
 To prevent haphazard growth of factories by ensuring previous approval
 of plans for setting up factories.
 To regulate the working condition, working hours, leave, holidays,
overtime, employment of children, women and young persons etc. in
factories.
Applicability
  The Act extends to the whole of India.
 It is applicable to all factories using power and employing 10 or more
 workers on any day of the preceding 12 months.
 It also applies to factories not using power but employing 20 or more
workers on any day of the preceding 12 months.
 The Act is also applicable to factories belonging to the Central or State
Governments.
Employees  The Act covers all workers employed in the factory premises or
covered under precincts, thereof,
Act 
 directly or by or through any agency including a contractor, with or
 without the knowledge of the principal employer,
 whether for remuneration or not,
 In any manufacturing process or any kind of work incidental or
connected thereto.

 There must be a nexus between the employment of the worker
concerned and the manufacturing process.
 The worker need not necessarily do manual labour or receive
remuneration for his services. Thus, pieces-rated workers are also
covered under the Act
 Employees in the canteen established under section 46 of the Act shall
be the employees of the occupier of the factory, and thus covered
 under the Act.
 But, where the workmen are employed in a canteen run by a Co-
operative Society, they do not become employees of the occupier of
factory, and are not covered by the Factories Act but by the law
1
 governing the Co-operative societies.

 Besides, persons employed only for selling the manufactured article are
not covered under this Act, since sale, distribution or transport of an
 article after its manufacturing, is nota process.
 Any member of the armed forces of the Union is not covered by the
definition of worker.
Definitions
Child [Section  Child means a person who has not completed his 15 years of age.
2(c)]
Adolescent  Adolescent means a person who has completed his 15 year of age but
[Section 2(b)] has not completed his 18 year.
Adult [Section  Adult means a person who has completed his 18 years of age.
2(a)]
Young Person  Young person means a person who is either a child or an adolescent.
[Section 2(d)]
Power Power means electrical energy, or any other form of energy which is
[Section 2(g)] mechanically transmitted and is not generated by human or animal
agency.
Factory Factory means any premises including the precincts thereof ~
[Section 2(m)]
 whereon 10 or more workers are working, or were working on any day
of the preceding 12 months, and in any part of which a manufacturing
process is being carried on with the aid of power, or is ordinarily so
carried on, or
 Whereon 20 or more workers are working, or were working on any
day of the preceding 12 months, and in any part of which a
manufacturing process is being carried on without the aid of power,
or is ordinarily so carried on.
 All the workers in different groups and relays in a day shall be taken into
account.
Manufacturing Manufacturing process includes Manufacturing process does not
Process includes
[Section 2(k)]  making, altering, repairing,  Exhibition of film process.
ornamenting, finishing,
packing, oiling, washing,
cleaning, breaking up,
demolishing, or otherwise
treating or adapting any
article or substance with a
view to its use, sale,
transport, delivery or
disposal; or
 pumping oil, water, sewage or any  Industrial schools or institute
other substance; or imparting training, producing
2
cloth not for sale.


generating, transforming or  Receiving news from various
transmitting power; or sources through tele-printer.
 composing types for printing,  Preliminary Packaging of raw
printing by letter press, materials.
lithography, photogravure or
other similar process or book
binding; or
 constructing reconstructing,  Finished goods and
repairing, refitting, finishing packaging.
or breaking up ships or
vessels; or
 preserving or storing any
article in cold storage.
Worker Worker means a person employed,
[Section 2(l)]
 directly or by any agency (including a contractor) with or without the
 knowledge of the principal employer.
 whether for remuneration or not,
 in any manufacturing process, or
 in cleaning any part of the machinery or premises used for a
manufacturing process.
 in any other kind of work incidental to, or connected with, the
manufacturing process,.
The concept employment covers three things, employer, employee and
employment.
All employees are workers but all workers may not be employees.
Hazardous Hazardous process means any process or activity in relation to an industry
Process specified in the First Schedule where, unless special care is taken, raw materials
[Section 2(n)] used therein or the intermediate or finished products, by-products, wastes or
effluents thereof would --
 Cause material impairment to the health of the persons engaged in or

connected therewith, or
 Result in the pollution of the general environment.
Occupier Occupier of a factory means the person who has ultimate control over the
[Section 2(n)] affairs of the factory.
 In the case of a firm or other association of individuals -Any meet the
 individual partners or members.
  In the case of a company -Any one of the directors.
 In the case of a factory owned or controlled by the Government or any
local authority - The person appointed to manage the affairs of the
 factory by the Government or the local authority.
3

In the case of a dry dock which is available for hire -The owner of the
dock.
 In case of ship -The owner of the ship or his agent or master or other
officer-in-charge of the ship.
General duties Every occupier shall ensure the health, safety and welfare of all workers.
of the
occupier The duty extends, shall include the following:
[Section 7A]
  Maintenance of plant and systems of work in the factory.

 Arrangements in the factory for ensuring safety and absence of risks to
 health.
 Provision for information, instruction, training and supervision to ensure
 the health and safety of workers.
 Maintenance of all places of work in the factory in proper condition.
 Maintenance or monitoring of working environment in the factory.
Provisions for health of Workers

Cleanliness  Every factory shall be kept clean and free from effluvia.
[Section 11]  The floor of every work-room shall be washed using disinfectant in
 every week.
 Inside walls, ceilings, staircases which are painted or varnished, be
 repainted or varnished once in every 5 years.
 Where these are painted with washable paints, be repainted once in
 every 3 years and washed once in every 6 months.
 White-washing or colour washing be done at least once in every 14
months.
 All doors, window frames and shutters shall be painted or varnished in
at least once in every 5 years.
Ventilation  Suitable provision shall be made for adequate ventilation.
and  Walls and roofs shall be of such material and design to keep
Temperature temperature low.
[Section 13]
Dust and  Effective measures shall be taken to prevent inhalation of dust or
Fume  fume.
[Section 14]  Exhaust appliance shall be applied.
 Internal combustion engine shall be operated that exhaust into the
open air.
Artificial  Where humidity of air is artificially increased. the standards of
Humidification  humidification shall be followed.
[Section 15]  Water used for the purpose shall be taken from a public supply or shall
be effectively purified before use.
Overcrowding  No room in any factory shall be overcrowded.
4
[Section 16]  There shall be at least 14.2 cubic meters of space for every worker in
the work room.
Lighting  Where workers are working or passing, sufficient and suitable lighting
[Section 17] shall be provided.
 All glazed windows and skylights shall be kept clean on both the inner
and outer surfaces.
Drinking  Arrangements shall be made at convenient points for sufficient supply
Water of wholesome drinking water.
[Section 18]  All such points shall be legibly marked "Drinking Water" in a language
understood by a majority of the workers.
Latrines and
  Sufficient latrine and urinal shall be provided.
Urinals  The floors, walls and the sanitary pans shall be washed and cleaned
[Section 19] once in every 7 days with detergents or disinfectants or with both.
Spittoons  In every factory there shall be sufficient number of spittoons at
[Section 20] convenient places.
 These shalt be maintained in a clean and hygienic condition.
Provision for Safety

Employment  No young person shall work at any machine unless he has been fully
of young instructed of the dangers of the machine.
persons on  He should receive sufficient training or should be under supervision of
dangerous a person having knowledge and experience of the machine.
machines
[Section 23]
Floors stairs  All floors, steps, stairs. passages and gangways shall be of sound
and means of construction.
access  These shall be properly maintained and kept free from obstructions.
[Section 32]
Protection of  Where any manufacturing process involves risk of injury to the eyes
eyes from particles or fragments thrown off in the course of the process, or
[Section 35] by reason of exposure to excessive light, effective screens or suitable
goggles shall be provided.
Precautions in  All practicable measures shall be taken to prevent outbreak of fire and
case of fire its spread.
[Section 38]  Safe means of escape for all persons in the event of a fire shall be
provided.
 Necessary equipment and facilities for extinguishing fire shall be
provided.
Safety Officers  In every factory, wherein 1000 or more workers are employed, or any
[Section 40 B] manufacturing process is carried on which involves any risk of bodily
injury, poisoning or disease, or any other hazard to health, the
occupier shall employ Safety Officers.
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Provision for Welfare

Washing  In every factory adequate and suitable facilities for washing shall be
facilities provided and maintained.
[Section 42]  Separate facilities shall be provided for male and female workers.
Facilities for  Suitable arrangements for sitting shall be provided and maintained for
sitting all workers who work in a standing position so that they may take rest
[Section 44] in the course of their work when available.
First-aid  First-aid boxes or cupboards shall be provided in the factory readily
appliances  accessible to the workers.
[Section 45]  At least one box or cupboard shall be provided for every 150 workers.
 Where more than 500 workers are employed, an ambulance room
with prescribed equipment shall be provided.
Canteens  In any factory where more than 250 workers are employed, canteen
[Section 46] shall be provided and maintained.
Shelters rest  Where more than 150 workers are employed, adequate and suitable
rooms and shelters or rest rooms and lunch room, with provision for drinking
lunch rooms water, shall be provided.
[Section 47]
Creches  Where more than 30 women workers are employed. creches shall be
[Section 48] provided for use of children under the age of 6 years.
 Such rooms shall provide adequate accommodation, adequately
lighted and ventilated, maintained in a clean and sanitary condition.
Welfare  Where 500 or more workers are ordinarily employed, the occupier
officers shall employ welfare officers.
[Section 49]
Specific  Every occupier shall maintain accurate and up-to-date health records
Responsibility or medical records of the workers who are exposed to any chemical.
of the  toxic or any other harmful substances.
Occupier  He shall appoint qualified persons having experience in handling
[Section 41C]  hazardous substances.
 He shall provide for medical examination of every worker before such
worker is assigned to a job involving hazardous substance, while
continuing in such job and after he has ceased to work in such job, at
intervals not exceeding 12 months.
Employment of Adults
Weekly  No adult worker shall be required to work for more than 48 hours in
working hours any week.
[Section 51]
Intervals for  No worker shall work for more than 5 hours before an interval for rest
rest  of at least half an hour.
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[Section 55]  The State Government or the Chief Inspector may exempt any factory
from this provision.
 The total number of hours of work without an interval shall not exceed
6 hours.
Prohibition of  Shifts shall be arranged so that not more than one relay of workers
overlapping work of the same work at the same time.
shifts  The State Government or the Chief Inspector may exempt on this
[Section 58] condition.
Restriction on  No adult workers do work on anyday on which he has already been
double working in any other factory.
employment
[Section 60]
Notice of  A notice shall be displayed and correctly maintained in every factory
periods of stating the periods of work for adults.
work for  Where all the adult workers are required to work during the same
adults periods, the manager shall 6x those periods.
[Section 61]
Register of The manager of every factory shall maintain a register of adult workers
adult workers showing the following:
[Section 62]
 Name of each adult worker in the factory.
 Nature of his work.
 Group, if any, in which he is included.
 Where his group works on shifts, the relay to which he is allotted.
Employment of Child and Adolescent

Prohibition of  No child who has not completed his 14 year to work in any factory.
employment
[Section 67]
Working hours  A child of more than 14 years (during 15 year) if employed shall not be
of children  employed for more than four and a half hours in any day.
[Section 71]  No child shall be allowed to work during the night. Night means 12
 consecutive hours including time between 10 PM. and 6 AM.
 The period of work of all children shall be limited to 2 shifts.
 The shift shall not ‘spread over more than 5 hours each.
  No child shall work more than 48 hours in a week.
 No child shall be required to work on any day on which he has already
been working in another factory.
 A female child shall work in any factory between 8 AM. and 7 PM.
Notice of  To display of notice showing clearly the periods during which children
periods of may work in the factory.
work for  The periods shown in the notice shall be fixed beforehand.
7
children
[Section 72]
Register of  The manager of every factory shall maintain a register of child
child workers workers.
[Section 73]  The register shall contain the following:
 Name of each child worker in the factory.
 Nature of his work.
 Group, if any in which he is included.
 Where his group works on shifts, the relay to which he is allotted.
 Number of his certificate of fitness.
Non-adult  A child who has completed his 14th year or an adolescent shall not
workers to work in any factory unless a certificate of fitness is given to the
carry tokens manager of the factory. Such child or adolescent shall carry a token
[Section 68] giving a reference to such certificate.
Certificate of  On the application of any young person or his parent or guardian with
fitness to a document signed by the manager of a factory that such person will
young person be employed if certified to be fit, or on the application of the manager
[Section 69] of the factory, the certifying surgeon shall examine such person and
 issue certificate of fitness.
 A certificate of fitness granted or renewed shall be valid for a period of
12 months.
 A certifying surgeon shall revoke any certificate if, in his opinion, the
holder is no longer fit to work.
Certificate of  An adolescent having a certificate of fitness as an adult carrying a
fitness to  token, shall be deemed to be an adult.
adolescent  No female adolescent or a male adolescent who has not attained the
[Section 70] age of 17 years but who has been granted a certificate of fitness as an
adult shall not work in any factory between except 6 AM. and 7 PM.
 The State Government may change the time so that any female
adolescent shall not be employed between 10 PM. and 5 AM.
Restriction of  A woman shall work in a factory between 6 AM. and 7 PM.
Employment  The State Government may vary the limits but not between 10 PM.
of Women and 5 AM.
[Section 66]  There shall be no change of shifts except after a weekly holiday or any
 other holiday.
 The State Government may exempt the restrictions for women
working in fish-canning, where the employment beyond the specified
 hours is necessary to prevent damage in any raw material.
 The rules shall remain in force for not more than 3 years at a time.
Weekly  An adult worker who works on the first day of the week, has or will
holidays have a holiday for a whole day 3 days immediately before or after the
[Section 52] said day.
 No worker shall work for more than 10 days consecutively without a
holiday for a whole day.
8
Annual Leave Number of days of leave

with Wages
[Section 79] Every worker working for 240 days during a calendar year shall be allowed
during the subsequent calendar _ year leave with wages -
 if an adult, one day for every 20 days of work performed by him during
 the previous year;
 if a child, one day for every 15 days of work performed by him during
the previous year.
 Fraction of leave of half a day or more shall be treated as one full clay.

 The leave shall be exclusive of all holidays whether occurring during or
 at either end of the period of leave.
 In calculating the number of days, the following shall be considered as
 working days:
 Any day of lay off, by agreement or contract or as permissible
 under the standing orders.
 in the case of a female worker, maternity leave upto 12 weeks.
 The leave earned in the year prior to that in which the leave is
enjoyed.
Wages in lieu of leave
 if a worker is dismissed from service or quits his employment or is

superannuated or dies while in service, he or his heir or nominee, shall
be entitled to leave wages due to him.
 Such payment shall be made

 where the worker is dismissed or quits employment, before the
expiry of the 2nd working day from the date of such discharge,
 dismissal or quitting;
 where the worker is superannuated or dies while in service, before
the expiry of 2 months from the date of such superannuation or
death.
Carry forward of leave

 If a worker does not in any one calendar year take the whole of his
due leave, the balance shall be added to his leave of the succeeding
calendar year.
 The total number of days of leave to be carried forward shall not
 exceed 30 in the case of an adult and 40 in the case of a child.
 A worker, who has applied for leave with wages but has not been
given such leave, shall be entitled to carry forward such leave refused
beyond the limit.
9
Overtime  Where a worker works more than 9 hours in any day or for more than
[Section 59] 48 hours in any week, he shall be entitled to wages twice of his
ordinary rate of wages for the extra hours called overtime.
 Ordinary rate of wages’ means the basic wages plus dearness
allowances, including the cash equivalent i0r concessional sale of food grains
and other articles. it does not include bonus and wages for overtime work.
Penalties General penalties for offences
 If there is my contravention of any of the provisions of the Act or of

any rules made thereunder, the occupier and manager of the factory shall be
punishable with imprisonment up to 2 years or with tine up to Rs. 1 lakh or
with both.
 If the contravention is continued after conviction, a further tine up to
i“ 1000 for each day on which the contravention is continued shall be
made.
Penaty for subsequent offence
 If any person who has been convicted of any 'offence is again guilty of
an offence involving the same provision he shall be punishable on a
subsequent conviction with imprisonment up to 3 years or with tine
which shalt not be less than 1‘ 10,000 but which may extend to Rs. 2
lakh or with both.
Offences by workers
 If any worker contravenes any provision of the Act imposing any duty
or liability on workers, he shall be punishable with fine up to Rs. 500.
 Where a worker is so convicted, the occupier or manager shall not be
deemed to be guilty of the offence.
Power of  An inspector may exercise any of the following powers within the local
Inspectors limits for which he is appointed.
 He can enter any place which is used or which he has reasons to
believe, is used as factory.
 He can make examination of the premises, plant and machinery etc
 He can require the production of any prescribed register or any other
document relating to the factory
 Take measurement and photographs and make such recordings as he
considers necessary for the purpose of any examination.
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Special Provisions relating to Hazardous Processes

Special provisions relating to hazardous processes have been envisaged under Chapter IVA of
the Factories Act, 1948. This chapter was inserted by the Factories (Amendment) Act, 1987 and
Consists of Section 41 A to 41 H. these sections are as follows:
Constitution A Committee under the name Site appraisal Committees shall be constituted
of Site by the State Government to advise the Government in the matter of
appraisal examination of applications for establishment of factories involving hazardous
Committees processes. The constitution of the site appraisal committee consisting of
[Section 41A] committee has been specified therein.
The Site appraisal Committee shall examine an application for the
establishment of a factory involving hazardous process and make its
recommendation to the State Government within a period of ninety days in
the prescribed form.
Compulsory It is compulsory on the part of the occupier of every factory involving a
disclosure of hazardous process to disclose all information regarding dangers, including
information health hazards to the workers employed in the factory, the Chief Inspector, the
by the local authority within whose jurisdiction the factory is situated and the general
occupier public in the vicinity.
[Section 41B]
Inquiring In the event of occurrence of an extraordinary situation, the Central
Committee Government may appoint an Inquiry Committee to inquire into standards of
[Section 41D] health and safety observed in the factory with a view to finding out the causes
of any failure or neglect in the adoption of any measures prescribed for the
health and safety of the workers or the general public.
Emergency The Director General of Factory Advice Service and Labour Institutes may be
standards directed by the Central Government to lay down emergency standards in
[Section 41E] respect of hazardous process.
Permissible The Section Schedule added to the Act, indicates maximum permissible
limits of threshold limits of exposure of chemical and toxic substances in manufacturing
exposure of processes in any factory.
chemical and
toxic
substances
[Section 41F]
Workers The occupier in every factory shall set up a safety committee consisting of
Participation equal number of representatives of workers and management to promote co-
in safety operation between the workers and the management in maintaining proper
management safety and health at work and to review periodically the measures taken in
[Section 41G] that behalf where hazardous process is involved.
Warning If there is reasonable apprehension regarding likelihood of imminent danger to
about the lives or health of the workers employed in a factory, they may bring the
imminent same to the notice of the occupier agent, manager etc.
danger
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[Section 41H]
Important Cases
Employers Seasonal factory does not cease to be a factory when no manufacturing
Association of process is carried on during the off-season.
Northern India
v. Secretary
for Labour U.P.
Govt.
Workmen of Process undertaken in zonal, sub-stations and electricity generating stations
Delhi Electric relating to transforming and transmitting electricity generated at the power
Supply station does not fall within the definition of manufacturing process and could
Undertaking v. not be said to be factories.
Management
of D.E.S.U.
Chintaman The prima facie test for determination of the relationship between the
Rao v. State of employer and employee is the existence of the right of the employer to
MP. supervise and control the work done by the employee not only in the matter
of directing what work the employee is to do but also the manner in which
he shall do his work.
Shankar Balaji Piece-rate workers are workers within the definition of ’worker’ as per
Waje v. State Factories Act, 1948, if they are regular workers and work under supervision
of and control of employer.
Maharashtra
Shinde v. Employee employed in work incidental to process connected with factory is

Bombay workman whether he stands outside the factory premises or inside it.
Telephones
J .K. Industries In case of company, only director can be occupier of the factory of the
Ltd. v. Chief Company. Company owing factory cannot nominate its employees or officers
Inspector of except director of the company as occupier of its factory.
Factories
State of Land in which manufacturing process of salt is carried on would be deemed a

Bombay v. factory.
Ardeshir
Hormusji
Bhiwandiwala
Ravi Shankar Factories Act is a social legislation and it provides for the health, safety,
Sharma v. welfare and other aspects of the workers in the factories.
State of
Rajasthan
12
Lesson 2
Minimum Wage Act 1948
Introduction  The concept of minimum wages was first evolved by
 InternationalLabourOrganisation in 1928.
 0n the recommendation of the 8‘" Standing Labour Committee, the
Minimum WagesAct, 1948 was passed.
 It came into force on 15th March, 1948.
Objectives  The main object of the Act is for fixing minimum rates of wages in
certain employments.
Scope and   The Act applies to the whole of India.
Coverage  All the provisions of the Act equally apply to both male and female
workers.
 “Scheduled employment’ refers to the employments specifically
stated in the Schedule to the Act.
Employees  The Act covers every employee engaged in any Scheduled
Entitled employment, including an 'out-worker’ to whom the materials are
given out for manufacturing or processing at his own premises. The
Act is applicable to all employees engaged to do any work, skilled,
unskilled, manual or clerical, in a scheduled employment, including
out-workers.
Definitions
Child Child means a person who has not completed his 14 year of age.
[Section 2(bb)]
Adult Adult means a person who has completed his 18th year of age.
[Section 2 (aa)]
Appropriate “Appropriate Government” means –
Government (i) In relation to any scheduled employment carried on by or under the
[Sec 2 (b)] authority of the Central or a railway administration, or in relation to a mine,
oilfield or major part or any corporation established by a Central Act, the
Central Government, and
(ii) In relation to any other scheduled employment, the State Government.
Adolescent Adolescent means a person who has completed his 14th year of age but not
[Section 2 (a)] completed his 18th year.
Wages [Section  Wages means all remuneration capable of being expressed in terms
2(h)] of money which would be payable to a person employed in respect
of his employment or of work done in such employment if the terms
of the contract of employment express or implied, were fulfilled. It
includes house rent allowance.

13
 Wages does not includes;


 The value of any house accommodation, supply of light, water,
medical attendance, or any other amenity or any service
excluded by general or special order of the appropriate
 government.
 Any contribution paid by the employer to any pension fund or
 provident fund or under any scheme of social insurance.
 Any travelling allowance or the value of any travelling
concession. I Any sum paid to the person employed to defray special
expenses entailed on him by the nature of his employment.
 Any gratuity payable on discharge.
Scheduled Scheduled employment means an employment specified in the Schedule to
Employment the Act or any process or branch of work forming part of such employment.
[Section 2(g)]
The following are some of the industries to' which the Act applies as
provided in the Schedule:
 Employment in any woolen carpet making or shawl weaving
establishment.
 Employment in any rice mill, flour mill or dal mill.
  Employment in any tobacco (including bidi making) manufactory.
 Employment in any plantation that is to say any estate which is
maintained for the purpose of growing cinchona rubber, tea or coffee.
 Employment in any oil mill.
 Employment under any local authority.
 Employment on the construction or maintenance of roads or in
building operations.
 Employment in stone breaking or stone crushing.
 Employment in public motor transport
 Employment in tanneries and leather manufactory.
 Scheduled employment also includes employment in agriculture
including cultivation and tillage of the soil, dairy farming, production,
cultivation, growing and harvesting of any agricultural or horticultural
commodity, raising of live-stock, bees or poultry and any practice
performed by a farmer or a farm incidental to or in conjunction with farm
operation including any forestry or timbering operations and the
preparation for market and delivery to storage or to market or to carriage
for transportation to market of farm produce.
Fixation of  The appropriate government to fix minimum rates of wages in an
Minimum employment specified in Part I or Part ll of the Schedule.
Wages  In respect of employment specified in Part ll of the Schedule,
[Section 3(1)] minimum rates of wages may be fixed for part of the State or for any class
or classes of such employment.
Revision of  The ‘appropriate Government’ may review at such intervals as it may
Minimum Wage thing fit, such intervals not exceeding five years, and revise the
14
[Section 3(1)(b)]  minimum rate of wages, if necessary.

 This means that minimum wages can be revised earlier than five
years also.
Manner of The ‘appropriate Government’ may fix minimum rate of wages for:
Fixation/  time work, known as a Minimum Time Rate;
  piece work, known as a Minimum Piece Rate;
Revision of
minimum wage  a “Guaranteed Time Rate” for those employed in piece work for the
[Section 3(2)] purpose of securing to such employees a minimum rate of wages on a time
work basis
 a “Over Time Rate” i.e. minimum rate whether a time rate or a piece
rate to apply in substitution for the minimum rate which would
otherwise be applicable in respect of overtime work done by
employee.
Different wages Different minimum rates of wages may be fixed for –
for different  different scheduled employments;
employees  different classes of work in the same scheduled employments;
 adults, adolescents, children and apprentices;
 different localities

Further, minimum rates of wages may be fixed by any one or more of the
following wage periods, namely:
 by the hour,
 by the day,
 by the month, or
 by such other large wage periods as may be prescribed;
Minimum rate Any minimum rate of wages fixed or revised by the appropriate
of Wages Government under Section 3 may consist of—
[Section 4]
(i) A basic rate of wages and a special allowance at a rate to be
adjusted, at such intervals and in such manner as the appropriate
Government may direct to accord as nearly as practicable with the
variation in the cost of living allowance; or
(ii) A basic rate wages or without the cost of living allowance and the
cash value of the concession in respect of supplies of essential commodities
at concessional rates where so authorized; or
(iii) An all inclusive rate allowing for the basic rate, the cost of living
allowance and the cash value of the concessions, if any;
Procedure for In fixing minimum rates of wages in respect of any scheduled employment
Fixing and for the first time or in revising minimum of wages, the appropriate
Revising Government can follow either of the two methods described below.
Minimum
Wages Committee Method
[Section 5]
15
 The appropriate Government may appoint as many committee and

sub-committees as it considers necessary to hold enquiries and
advise it in respect of such fixation or revision as the case may be.

 After considering the advise of the committee or sub-committees,
the appropriate Government shall, be notification in the Official
Gazette, fix or revise the minimum rates of wages.

 The wage rates shall come into force from such date as may be
specified in the notification.
 If no date is specified, wage rates shall come into force on the expiry
of three months from the date of the issue of the notifications.
Notification  When fixing minimum wages, the appropriate Government shall be
Methods notification, in the official gazette publish its proposals for the
information of persons likely to be affected thereby and specify a
date not less than 2 months from the date of notification, on which
the proposals will be taken into consideration.

 The representations received will be considered by the appropriate
Government. It will also consult the Advisory Board constituted under
Section 7 and thereafter fix or revise the minimum rates of wages by
notification in the Official Gazette.
 The new wage rates shall come into force from such date as may be
specified in the notification. However, if no date is specified, the notification
shall come into force on expiry of three months from the date of its issue.
Minimum wage rates can be revised with retrospective effect.
Minimum Wage-  Minimum wages payable under the Act shall be paid in cash.

Whether to be
 But where it has been the custom to pay wages in kind, the
paid in Cash or appropriate government, on being satisfied, may approve and
Kind authorize such payments.
[Section 11] 
 Such Government can also authorize for supply of essential
commodities at concessional rates.
Payment of  Payment of less than the minimum rates of wages notified by the
Minimum appropriate Government is an offence.
Wages is
Obligatory on
Employer
[Section 12]
Advisory Boards
State Advisory  The advisory board is constituted, under Section 7 of the Act, by the
Board State Government for the purpose of co-ordinating the work of
committee and subcommittees appointed under Section 5 of the act
16
and advising the appropriate Government generally in the matter of

 fixing and revising of minimum rates of wages.
 The advisory board shall consist of persons to be nominated by the
State Governmentrepresenting employers and employees in the scheduled
employment who shall be equal in number and independent persons not
rd
exceeding 1/3 of its total number of members, one of such independent
persons shall be appointed as the Chairman by the state government.
 An independent person means a person who is neither an employer
nor an employee in the employment for which the minimum wages are to
be fixed.
Central Advisory  Section 8 of the Act provides that the Central Government shall
Board appoint a Central Advisory Board for the purpose of advising the
Central Government and State Governments in the Matters of
fixation and revision of minimum rates of wages and other matter
under the Minimum Wages Act and for coordinating work of the
 advisory boards.
 The Central Advisory Board shall consist of persons to be
nominated by the CentralGovernment representing employers and
employees in the scheduled employment who shall be equal in number; and
rd
independent persons not exceeding 1/3 of its total number of members,
one of such independent persons shall be appointed as the Chairman of the
Board by Central Government.
Overtime Rate  Where an employee whose minimum rate of wages is fixed by
[Section 14] hour, day or such a longer wage-period, works on any day in
excess of normal hours, he shall be entitled to overtime rate for
the excess hour.
 Overtime rate is fixed by the appropriate government. It is
generally double the actual rate.
Time of In the case of establishments with Before the expiry of the 7 day after
Payment of less than 1000 employee. the last day of wage period.
Wages
Before the expiry of the 10 day after

In the case of other establishments. the last day of wage period.
Where the employment of any Before the expiry of the 2nd working
person is terminated by the day after the day on which the
employer. employment is terminated.
17
Working Hours  The appropriate government may fix the working hours and
and Rest Day intervals.
[Section 13]  It may provide for a day of rest in every period of 7 days.
Claim for  The following persons may apply to the authority for a direction for
Minimum payment of minimum rate of wages.
wages and 
Compensation  The employee.
 Any legal practitioner authorised in writing.
 Any official of a registered trade union authorised in writing.
 Any Inspector or any person acting with the permission of the
authority appointed.


A single application may be made on behalf of a number of
 employees.
 Every application shall be presented within six months from the date
on which the minimum wages is due.
 Any such application may be admitted after six month if sufficient
cause is given.
Relinquishing  Any contract or agreement whereby an employee relinquishes or
Right to reduces his right to minimum rate of wages shall be null and void.
Minimum
Wages
[Section 25]
Offence and 
Any employer who pays to anyemployee less than the minimum
Penalties rates of wages, shall be punishable with imprisonment up-to six
 months or with fine up to Rs. 500 or with both. [Section 22]
 Any employer who contravenes any provision of the Act or of any
rule or order made thereunder shall, if no other penalty is provided
for such contravention by the Act, be punishable with fine up to Rs
500. [Section 22A]
Maintenance of  Every employer shall maintain registers and records in prescribed
Registers and manner giving particulars of employees, work performed by them, the
Records wages paid to them, the receipts given by them etc.
[Section 18]  Every employer shall keep exhibited, in prescribed manner in the
factory, workshop or place where the employees may be employed, or in
the case of out-workers, in such factory, workshop or place as may be used
for giving out work to them, notices containing prescribed particulars.
 The appropriate government may make rules for the issue of wage
books or wage slips to employees and the manner in which entries
shall be made and authenticated in such wage books or wage slips
by the employer or his agent.
18
Lesson 3
Payment of wages Act 1936
Objectives  The Payment of Wages Act, 1936 has been enacted to regulate the
payment of wages to workers employed in certain specified industries.
The Payment of Wages Act, 1936 was enacted with the object of

 regulating payment of wages, imposition of fines and deductions
 from wages, and
 eliminating all malpractioes by laying down wage periods and times
and mode of payment of wages.
 The Act, therefore, ensures payment of wages in a particular form

at regular intervals without unauthorized deductions. The Act came into force
on 28.03.1937.
Scope and  The Act extends to the whole of India.
Coverage  It applies to any factory, any railway establishment and any industrial
or other establishment like tramway service, motor transport service, air
transport service, dock, wharf, jetty, inland vessel, mine, quarry, oilfield,
plantation, workshop or other establishment producing, adapting or
manufacturing any article, establishments engaged in construction,
development and maintenance of buildings, roads, bridges or canals,
navigation, irrigation or supply of water, generation, transmission and
distribution of electricity/power and any other establishment notified by the
Central or a State Government.
Applicability of  The Act extends to the whole of india.
the Act  The Act applies for payment of wages
  to persons employed in any factory,
 to persons employed otherwise than in a factory upon any railway
or directly or through a sub-contractor.
 The State Government may, giving three months‘ notice extend
the provisions of the Act to any class of persons.
Non- The Act shall not apply where wages payable is Rs. 18,000 or more ‘per
Applicability of month. vide notification no. SO 2260(E), dated 11-94012]
the Act
Definitions Wages Section 2 (vi)
Wages means all remuneration (whether by way of salary, allowances or

otherwise) expressed in terms of money or capable of being so expressed
which would be payable to a person employed in respect of his
employment or of work done in such employment.
19
Wages Includes Wages Does not includes

Remuneration payable under any Any bonus.
award or settlement between the
parties or order of a Court.
Remuneration in respect of The value of any house-
overtime work or holidays or for accommodation or of the supply
any leave period. of light, water, medical a or of any
service excluded from the
computation of wages by a
general or Special order of
appropriate Government.
Any additional remuneration Any contribution paid by the
payable under the terms of employer to any pension or
employment (whether bonus or by provident fund and interest
any other name). accrued thereon
Any sum payable under any law Any travelling allowance or the
on termination of employment but value of any travelling concession.
does not provide for the time
within which the payment is to
be made.
Any sum payable under any Any sum paid to defray special
scheme framed under any law for expenses entailed on him by the
the time being in force. nature of employment.
Employed  Employed person includes the legal representative of a deceased

person employed person.
[Section 2 (ia)]
Employer  Employer includes the legal representative of a deceased employer.
[Section 2 (ib)
Obligations of Employers
Responsibility   Every employer shall be responsible for the payment of wages.
for Payment of  ln factories, the person named as manager under the Factories Act,
Wages 1948;

 In industrial establishments, the person responsible for the
supervision and control of the establishments.
 ln railways (otherwise than in factories), if the employer is the
railway administration, the person nominated by the railway
administration for any local area.
 In case of a contractor, the contractor or a person designated by
 such contractor who is directly in charge of the contract.
 In any other cases, a person designated by the employer for
complying with the provisions of the Act.
20
Fixation of  Every person responsible for the payment of wages has to fix wage
Wages- period.
Periods  No wage-period shall exceed one month.
Time of Payment Sec. 5


Nature of employment Time of payment of wages
In any railway factory or industrial Before the expiry of the 7'" day
or other establishment in which after the last day of the wage-
less than 1000 persons are period.
employed.
In any other railway, factory or Before the expiry of the 10th day,
industrial or other establishment. after the last day of the wage-
period.
In a dock, wharf or jetty or in a Before the expiry of the 7th day
mine, the balance of wages found from the day of such completion.
due on completion of the final (Normal wages shall be paid
tonnage account of the ship or before expiry of the 10th day of
wagons loaded or unloaded. the wage-period)
In case of termination of Before the expiry of the 2"d
employment by the employer. working day from the day on

which employment is terminated.
Mode of  All wages shall be paid in current coin or currency notes or in both.
payment  The employer may, with written Authorization of the employee, pay
him the wages by cheque or by crediting bank account.
Appeal  An appeal against an order dismissing an application may be
[Section 17] preferred within 30 days of the date on which the order or direction
was made, in a Presidency-town before the Court of Small Causes,
and elsewhere before the District Court.
 Where an employer prefers an appeal, the concern appealed
authority shall withhold payment of any sum in deposit with it.
Offences and Offences Penalties
Penalties Delay in, or non-payment of, wages Fine up to Rs. 7500/(Minimum Fine
within the Prescribed time 1500/-)
Making any unauthorized As above
deduction or imposition of tines in
contravention of the Act
Failure to fix the wage period or Fine upto 3,750
make payment of wages on a
working day and in current coins or
notes.
Failure to maintain the registers of As above
fines and deductions or display the
21
prescribed notices.
Failure to nominate or designate a Fine upto 3,000
person under section 3 of the Act
Failure to maintain the prescribed Fine upto 7,500/(Minimum Fine
returns and records, failure to 1,500/-)
furnish the required information
or furnishing of false information.
Obstructing the Inspector or As above
refusal to produce before himthe
records/documents, for inspection.
Deductions Wages shall be paid without deduction except as authorised by the Act. The
[Section 7] Act however authorises the following deductions:
  Fines.
 For absence from duty.
 For damage to or loss of goods expressly entrusted to the employed
 person for custody.
 For loss of money which he is required to account and the loss is
 due to his neglect or default.
 For house-accommodation supplied by the employer or by
 Government or any housing board.
 For amenities and services supplied by the employer as the
 Appropriate Government may authorise.
  For recovery of advances including interest due thereon if any.
 For adjustment of over-payments of wages. For recovery of loans
 from any approved fund and interest due thereon.
 For recovery of loans granted for house building and the interest due
thereon.
 Income-tax payable by the employed person.
 Any amount as per order of a Court or other competent authority.
 For contribution and repayment of advances from provident fund.
 For payments to approved co-operative societies or insurance
scheme of Post Office.
 Amount authorized by employee for payment of LIC premium.
 Amount authorized by employee for purchase of Government
securities.

 Amount authorized by employee for deposit in Post Office Savings
 Bank.
 Amount authorized by the employee for payment to any approved
 fund constituted by the employees.
 Amount authorized by employee for payment to registered trade
 union for the welfare of the employees.
22
 Amount authorized by the employee for payment to registered trade

 union.
 Amount authorised by the employee for payment to the Prime
 Minister's National Relief Fund or any approved Fund.
 For contributions to any insurance scheme framed by the Appropriate
Government for benefit of its employees.
The following shall not be deemed to be a deduction from wages:
 Withholding of increment or promotion (including stoppage of

 increment at an efficiency bar).
 Reduction to a lower post or time scale or to a lower stage in a time
scale.
 Loss of wages due to suspension.
MAXIMUM  The total amount of deductions in any wage period shall not exceed
DEDUCTION 75% of such wages in case of payment to co-operative societies. .
 In any other case, the deduction shall not exceed 50% of such wages.
Fines  No fine shall be imposed for acts and omissions previously approved
[Section 8]  by the Appropriate Government.
 Such notice shall be exhibited on the premises in which the
employment is carried on. ’
 No fine shall be imposed until an opportunity has been given of
 showing cause.
 The total amount of fine in any one wage-period shall not exceed 3%
 of the wages payable for that wage-period.
 No fine shall be imposed on any employed person under the age of 15
 years.
 No fine shall be recovered by installments or after the expiry of 90
 days from the day on which it was imposed.
 All fines and all realisations shall be recorded in a register.
 All such realisations shall be applied only for purposes beneficial to the
employees.
Maintenance  Every employer shall maintain registers and records of persons
of registers employed by him the work performed by them the wages paid to
[Section 13A] them the deductions made from their wages, the receipts given by
them and such other particulars as may be prescribed.
 Every such register and record shall be preserved for a period of 3
years after the date of the last entry made therein.
23
Lesson 4
Equal Remuneration Act 1976
Objectives  Article 39 of the Constitution of India envisages that the State shall
direct its policy towards securing equal pay for equal work for both
men and women.
 To give effect to this constitutional provision, the Equal Remuneration
Act, 1976 was enacted.
Scope and
Coverage  The Central Industrial Relations Machinery in the Ministry of Labour is
 responsible for enforcing the Act.
 The Act aims to provide for payment of equal remuneration to men and
women workers and for the prevention of discrimination on the ground
of sex against women in the matter of employment.
 The provisions of the Act shall have overriding effect of any other law
or any award, judgment or contract of service.
Exemptions  The provisions of the Act shall not apply to employment of woman in
[Section 15] complying with the requirements of any law giving special treatment to
 women.
 It shall also not apply where special treatment is given to women in
connection with
 birth or expected birth of a child, or
 retirement, marriage or death.
Definitions
Remuneration Remuneration means the basic wage or salary, and any additional
[Section 2(g)] emoluments whatsoever payable, either in cash or in kind, to a person
employed in respect of employment or work done in such employment, if the
terms of the contract of employment, express or implied, were fulfilled.
Same work or  Same work or work of a similar nature means work in respect of which
work of a the skill, effort and responsibility required are the same, when
similar nature  performed under similar working conditions by a man or a woman.
[Section 2 (h)]  The differences, if any, between the skill, effort and responsibility
required of a man and a woman are not of practical importance in
relation to the terms and conditions of employment.
Payment of  No employer shall pay to any worker remuneration at rates less
Equal favourable than paid to the workers of the opposite sex in such
Remuneration  establishment for performing the same work or of a similar nature.
24
[Section 4]  This means men and women are to be paid same remuneration for
same or similar nature of work.
[Employer has the same meaning as in the Payment of Gratuity Act, 1972]
No  No employer shall make any discrimination against women while
Discrimination making recruitment for the same or similar work, or changing service
in Recruiting condition like promotions, training or transfer etc.
Men and
Women
[Section 5]
Advisory  For the purpose of providing increasing employment opportunities for
Committee women, the appropriate Government shall constitute one or more
[Section 6] Advisory Committees to advise it with regard to the extent to which
women may be employed in such establishments or employments as
the Central Government may, by notification, specify in this behalf.
 Every Advisory Committee shall consist of not less than ten persons, to
be nominated by the appropriate Government, of which one-half shall
be women.
Claims and The appropriate Government may, by notification, appoint such officers, not
Complaints below the rank of a Labour Officer, as it thinks fit to be the authorities for the
[Section 7] purpose of hearing and deciding
 complaints with regard to the contravention of any provision of this

Act;
 claims arising out of non-payment of wages at equal rates to men and
women workers for the same work or work of a similar nature, and
may, by the same or subsequent notification, define the local limits
within which each, such authority shall exercise its jurisdiction.
Cognizance  No court inferior to that of a Metropolitan Magistrate or a Judicial
and Trial of Magistrate of the first class shall try any offence punishable under the
offences  Act.
[Section 12]  No court shall take cognizance of an offence punishable under this Act
except upon

 its own knowledge or upon a complaint made by the appropriate
government or an officer authorized by it in this behalf, or
 a complaint made by the person aggrieved by the offence or by any
recognized welfare institution or organization.
Appeal  Any employer or worker aggrieved by any order made by any
authority, may, within 30 days from the date of the order, make an
 appeal to the appellate authority.
 The appellate authority may confirm, modify or reverse the order.
 No further appeal shall lie against the order.
Penalties  An employer shall be punishable with simple imprisonment for a term
up to one month or with fine up to Rs. 10,000 or with both under the
25
following circumstances:

 If the employer omits or fails to maintain any register or other
 document in relation to workers employed by him.
 If the employer omits or fails to produce any register, muster-roll
 or other document relating to the employment.
 If the employer omits or refuses to gives any evidence or prevents
his agent, servant, or any other person in charge of the
 establishment, or any worker, from giving evidence.
 If the employer omits or refuses to give any information.

 An employer shall be punishable with fine which shall not be less than
Rs. 10,000 but which may extend to Rs. 20,000 or with imprisonment
for a term which shall be not less than 3 months but which may extend
to one year or with both for the first offence, and with imprisonment
which may extend to two years for the second and subsequent
offences in the following cases:

 If any person omits or refuses to produce to an Inspector any register
or document or information, he shall be punishable with fine upto Rs.
500.
26
Lesson 5
Employees State Insurance Act 1948
Objectives  In order to provide benefits to employees in case of sickness,

maternity, employment injury etc. the government thought to
 regularize the process through legislation.
 The Employees’ State Insurance Act, 1948 was enacted for this
purpose.
 The Act came into force on 19.04.1948.
Scope and  The Act extends to the whole of India. ' It is applicable to non-seasonal
Coverage  factories employing 10 or more persons.
 The Scheme has been extended to shops, hotels, restaurants, cinemas
including preview theatres, road-motor transport undertakings and newspaper
establishments employing 20 or more persons.
 The Scheme has also been extended to Private Medical and Educational
institutions employing 20 or more persons in certain States and Union
Territories.
Exemption The Act does not apply to the following:
  Seasonal factories
 Factories or establishments under the control of the Government
getting better benefits
 Indian Army, Navy and Air Force Factories where less than 10 workers
are employed
 Mines
 Railway running shed
 Employees drawing wages exceeding Rs. 15,000/per month.
Employees  Every employee (Including casual and temporary employees), whether
Entitled employed directly or through a contractor, who is in receipt of wages
upto 21000/p.m. (excluding remuneration for overtime work), is
 entitled to be insured under the ESL Act
 Persons engaged as apprentices [Including those whose period of
training is extended by period of time] are also covered.
 However, apprentices engaged under the Apprentices Act are not
entitled to the ESI benefits.
 Employee as per section 2(9) of the ESI Act means any of the
following persons employed for wages in or in connection with the
work of a factory or establishment to which the Act applies:

27
 Any person who is directly employed by the principal employer

whether such work is done in the factory or establishment or
 elsewhere.
 Any person who is employed by or through an immediate
employer or under the supervision of the principal employer or
his agent which is ordinarily part of the work of the factory or
establishment or which is preliminary to the work carried on in
 or incidental to the purpose of the factory or establishment.
 whose services are temporarily lent or let on hire to the principal
employer by the person with whom the person whose services are so
lent or let on hire has entered into a contract of service ;
Employees includes Employees does not includes

Any person employed for wages on Any member of the lndian Naval,
any work connected with the Military or Air Forces;
administration of the factory or
establishment or any part, Any person so employed whose
department or branch thereof or wages (excluding remuneration
with the purchase of raw for overtime work) exceed such
materials for, or the distribution wages as may be prescribed by the
or sale of the products of, the Central Government.
factory or establishment or any
person engaged as an apprentice,
not being an apprentice engaged
under the Apprentices Act, 1961
and includes such person engaged
as apprentice whose training
period is extended to any length of
time.


An employee whose wages (excluding remuneration for overtime
work) exceed such wages as may be prescribed by the Central
Government at any time after (and not before) the beginning of the
contribution period, shall continue to be an employee until the end
 of that period.
 The Central Government has since prescribed by a Notification under
Rule 50 of the ESL Rules, 1950 wage limit for coverage of an employee under
Section 2(9) of the Act 10,000 per month.
 Further, it is provided that an employee whose wages (excluding
remuneration for overtime work) exceed 10,000 a month at any time after
and not before the beginning of the contribution period, shall continue to be
an employee until the end of the period.
Dependent  Dependent means any of the following relatives of a deceased insured
[Section person namely: 
2(6A)]  a widow, a legitimate or adopted son who has not attained the age of
 twenty-five years,, an unmarried legitimate or adopted daughter,
28
 a widowed mother,

 if wholly dependent on the earnings of the insured person at the time
of his death, a legitimate oradopted son or daughter who has attained
 the age of 25 years and is infirm;
 if wholly or in part dependent on the earnings of the insured person at
the time his death:
 a parent other than a widowed mother,

 a minor illegitimate son, an unmarried illegitimate daughter or a
daughter legitimate or adopted or illegitimate if married and minor
 or if widowed and a minor,
 a minor brother or an unmarried sister or a widowed sister if a
minor,
 a widowed daughter-in-law,
 a minor child of a pre-deceased son,
 a minor child of a pre-deceased daughter where no parent of the
child is alive or,
 a paternal grand parent if no parent of the insured person is
alive.
Meaning of Employer means the following:
Employer
  Owner of the factory;
  Head of the department in case of Government department;
 Person responsible for supervision and control in the case of any other
establishment.
In case of contracted labour, primary liability of ESI contribution is that of

principal employer.
However, he can recover the contribution paid by him from the contractor.
Immediate Employer and Principal Employer
“Immediate Employer” in relation to employees employed by or through him

means a person who has undertaken the execution on the premises of a
factory or an establishment to which this act applies or under the supervision
of principal employer or his agent, of the whole or any part of any work which
is ordinarily part of the work of the factory or establishment of the principal
employer or is preliminary to the work carried on, in or incidental to the
purpose of any such or establishment.
“Principal Employer” means the following:

 In a factory, owner or occupier of the factory and includes the
managing agent of such owner or occupier, the legal representative of
a deceased owner or occupier and where
29
Wages Wages means all remuneration paid or payable in cash to an employee, if the
[Section terms of the contract of employment, express or implied, were fulfilled.
2(22)] Wages includes Wages does not includes
 ny payment to an employee  Any contribution paid by the
in respect of any period of employer to any pension
authorised leave, lock-out, fund or provident fund, or
strike which is not illegal or under the ESl Act.
lay-off and other additional  Any travelling allowance or
remuneration, if any, paid at the value of any travelling
intervals not exceeding two concession.
months.  Any sum paid to defray
special expenses by the
nature of employment.
 Any gratuity payable on
discharge.
Wage period  Wage period means the period in respect of which wages are ordinarily
[Section payable whether in terms of the contract of employment, express or
2(23)] implied or otherwise.
Contribution Contribution means the sum of money payable to the Corporation by the
[Section principal employer in respect of an employees and includes any amount
2(4)] payable by or on behalf of the employee in accordance with the provisions
of the Act.
 Contribution is payable by the employer and also the employee.

 Contribution is paid in respect of each wage period.
RATE or CONTRIBUTION

Employer’s : 4.75% of the wages

Employee's : 1.75% of the wages.
(to be rounded off to the next higher rupee)
Employees’ State Insurance Act, 1948
Time and  The amount of contribution should be paid be paid into the ESL
Mode of Account with an

Deposit authorised branch of State Bang of lndia, through an E.S.l challan in
st
quadruplicate, on or before the 21 of the month following the
calendar month in which the wages fall due.
 The aggregate amount should be rounded off to the next higher rupee.

Levy of Interest
Interest shall be payable @ 12% pa. in respect of each day of default or delay
in payment of contributions.
30
Standard The benefits available under the ESI Scheme are linked to the standard benefit
Benefit Rate rate which is in turn linked to the 'average daily wages' of the employee.
Standard benefit rate = Total wages paid during the Contribution period
No. of days for which these wages were paid
Medical  An insured person or a member of his family whose condition requires
Benefit  medical treatment shall be entitled to receive medical benefit.
 The medical benefit may be given either in the form of out-patient
treatment in authorised hospital or dispensary, clinic or other
institution or by visits by doctor to the home of the insured person or
 treatment as in-patient in hospital or other institution.
 An insured person whoceases to be in insurable employment on
account of permanent disablement shall continue to receive medical
benefit till the date on which he would have vacated the employment
 on attaining the age of superannuation.
 An insured person, who has attained the age of superannuation, and
his spouse, shall be eligible to receive medical benefit subject to
payment of contribution.
Sickness  Sickness Benefit in the form of cash @70% of wages is payable to

Benefit insured workers during the periods of sickness for a maximum of 91
 days in a year.
 In order to qualify for sickness benefit the insured worker is required to
 contribute for 78 days in a contribution period of 6 months.
 The sickness has to be certified by ESl registered doctor.
 No employer shall dismiss, discharge, or reduce or otherwise punish an
employee during the period when he is in receipt of sickness benefit.
Extended sickness benefit

 Sickness benefit extendable upto two years in the case of 34 malignant
and long-term diseases @ 80% of wages.
Enhanced sickness benefit

 Enhanced Sickness Benefit equal to full wage is payable to insured
persons undergoing sterilization for 7 days/14 days for male and female
workers respectively.
Maternity  Maternity Beneht for conhnement/pregnancy is payable for 26 weeks.
Benefit  This is extendable by further one month on medical advice at the rate
 of full wage.
 Contribution is to be paid 70 days in the preceding year. Not more than
8 weeks shall precede the expected date of confinement.
 No employer shall dismiss, discharge, or reduce or otherwise) unish an
employee during the period the employee is in receipt of maternity benefit.
Disablement  In case of temporary disablement, benefit is payable from day one of
31
Benefits entering insurable employment & irrespective of having paid any

 contribution in case of employment injury.
 Temporary Disablement Benefit at the rate of 90% of wage is payable
 so long as disability continues.
 In case of permanent disablement, the benefit is paid (:2 90% of wage
in the form of monthly payment depending upon the extent of loss of
 earning capacity a 5 certified by a Medical Board.
 A person shall be qualified to claim temporary disablement benefit for
not less than 3 days (excluding the day of accident) for the period of
such disablement.
Dependant  Dependant benefit is paid @ 90% of wage in the form of monthly
Benefits payment to the dependant of a deceased insured person in cases
where death "occurs due to employment injury or occupational
hazards.
Other Funeral Expenses An amount of Rs. 10,000 is payable to the dependents or to
Benefits the person who performs last rites from day one of entering insurable
employment.
 Confinement Expenses an Insured Women or an I.P.in respect of his
wife in case confinement occurs at a place where necessary medical
facilities under ESI Scheme are not available.
Benefits  If a person dies during any period for which he is entitled to a cash
Payable on benefit, the amount of such benefit up to and including the day of his
Death death shall be paid to his nominee.
[Section 71]  If there is no such nomination, to the heir or legal representative of the
deceased person.
Employer not  No employer shall dismiss, discharge or punish an employee during the
to Dismiss or period he is in receipt of sickness benefit or maternity benefit.
Punish  It shall not dismiss, discharge or punish an employee during the period
employee he is in receipt of temporary disablement benefit or is under medical
treatment for sickness or is absent from work for illness arising out of
During Period
the pregnancy
of Sickness,
etc. Section
73
Employee Insurance Court

Constitution  Section 74 of the Act provides that the State Government shall by
 notification in the
Official Gazette constitute an Employees’ Insurance Court for such local
 area as may be specified in the notification.
 The Court shall consist of such number of judges as the State
 Government may think fit.
 Any person who is or has been judicial officer or is a legal practitioner
of 5 years standing shall be qualified to be a judge of E.I. Court.
 The State Government may appoint the same Court for two or more
32
local areas or two or more Courts for the same local area and may regulate the
distribution of business between them.
Adjudication  The Employees’ Insurance Court has jurisdiction to adjudicate disputes,
of disputes namely, whether any person is an employee under the Act, rate of
wages/contribution, as to who is or was the principal employer, right of
a person to any benefit under the Act.
Adjudication  The E.I Court also has jurisdiction to decide claims for recovery of
of claims contribution from principal employer or immediate employer,
action for failure or negligence to pay contribution, claim for
 recovery of any benefit admissible under the Act.
 Proceedings in both the above cases can be initiated by filing
application in the prescribed form by the employee or his dependent or
employer or the corporation depending who has cause of action.
 No Civil Court has power to decide the matters falling within the
purview/ jurisdiction of E.I. Court.
Appeal  An appeal shall lie to the High Court against an order of an Employees’
Insurance Court, if it involves a substantial question of law. The appeal
should be preferred within 60 days.
Offences and  Giving False statements Imprisonment upto 6 months, or with fine not
Penalties exceeding 2000, or with both
 Failure to pay contributions, etc Imprisonment for a term up to 3 years
and shall also fine of 5000.
 in other cases Imprisonment upto one year or with fine upto 4000 or
with both under the following circumstances:

 if employer's contribution is deducted from the wages of
employee.
 If wages or any privileges or benefits admissible to an employee is
 reduced.
 if an employee is dismissed, discharged, reduced or otherwise
punished during the period of receipt of disablement/ maternity
 benefit.
 If there is failure or refusal to submit any return or makes a false
 return.
 if there is obstruction to any Inspector or other official of the
Corporation in the discharge of his duties.
 If here is contravention of or non-compliance with any of the
requirements of the Act or the rules or the regulations in respect of which no
special penalty is provided.
Offences by If a company commits an offence, the company and every person, who at the
Companies time the offence was committed was in charge of and was responsible for the
[Section 86A] conduct of the business of the company, shall be deemed to be guilty of the
offence and shall be liable to punishment.
33
Lesson 6
Employees Provident Funds and Miscellaneous
Provisions Act 1952

Objectives  The employees’ Provident Funds and Miscellaneous Provident Act, 1952
came in to force on 1st November 1952.
 It is a social security measure meant for providing provident fund,
 famiiy pension and deposit linked irsurm benefits to employees.
 Both the employee and employer contribute to the Fund equally
 throughout the covered persons’ employment
 The amount is payable normally on retirement, superannuation or
death.
Scope and  The Act extends to the whole of India except the State of Jammu and
Coverage Kashmir.
 The Act applies to the following establishments:

 Every factory engaged in any industry specified in Schedule l and
 in which 20 or more persons are employed. .
 Any other establishment employing 20 or more persons. 0 Any
class of establishments which the Central Government by
notification Specifies.

 As per Section 1 an establishment to which the Act applies shall
continue to be governed by the Act even if the number of employee
at any time falls below 20.
 The Act is administered by the Central Government through the
Employees Provident Fund Organisation.
Non-  Any establishment registered under the Co-operative Societies Act,
applicability of 1912, or under any other State law relating to co-operative societies
the Act [Section employing less than 50 persons and working without the aid of
16]  power.
 Any other establishment belonging to or under the control of the
Central or State Government and whose employees are entitled to
the benefit of contributory provident fund or old age pension in
accordance with any Scheme framed by the Government.
 Any other establishment set up under any Central or State Act and
whose employees are entitled to the benefits of contributory
provident fund or old age pension in accordance with any scheme
framed under that Act.
  Section 16 does not restrict the scope of the Act.
34
 The Central Government having regard to the financial position of

any class of establishments or other circumstances may exempt such
establishment prospectively or retrospectively from operation of the
Act for any period.
Employee  Any person who is employed for wages in any kind of work, manual
[Section 2(f)] or otherwise.
 Any person who gets his wages'directly or indirectly from the
employer.
Employee includes Employee does not includes
 Any person employed by An employee who has withdrawn
or through a contractor in the full amount of his PF :
or in connection with the  on retirement from
work of the establishment; service after attaining the
age of 58 years or
 An apprentice, not being  Before migration from
an apprentice under the India for permanent
Apprentices Act, 1961 or settlement abroad or for
under the standing taking employment
orders of the abroad.
establishment.
  An employee whose pay at
the time he is entitled to
become a member of the
Fund exceeds Rs. 25,000
per month.

 An apprentice.
Superannuation Superannuation in relation to an employee, who is the member of the
[Section 2(ll)] Pension Scheme, means the attainment of the age of 58 years by the said
employee.
Basic Wages  Basic wages means all emoluments which are earned by an
[Section 2(b)] employee while on duty or on leave or on holidays with wages in
accordance with the contract of employment and which are paid or
payable in cash to him.
 Basic wages does not include the following: 
 The cash value of any food concession.
 Dearness allowance, house-rent allowance, overtime allowance,
bonus, commission or any other allowance payable to the
employee in respect of his employment or of work done in such
employment.
 Any presents made by the employer.
Employer  The owner or occupier of the factory, including the agent of such
[Section 2(a)]  owner or occupier.
 The legal representative of a deceased owner or occupier.
 A person named as a manager of the factory under the Factories Act,
35
 1948.
 The person or the authority which has the ultimate control over the
affairs of the establishment
 Where the affairs are entrusted to a manager, managing director,
such manager, managing director.
Different Three schemes have been framed by the Central Government under the Act:
Schemes  Employees Provident Fund Scheme, 1952
 Employees Pension Scheme, 1995
 Employees Deposit-Linked Insurance Scheme, 1976.
Provident Fund Membership of Fund
Scheme
 Every employee employed in any factory or other establishment to
which the Scheme applies shall be entitled to join the Scheme and
become a member of the Scheme.
 Exempted employees are excluded.
Voluntary contribution
 Any employee if so desires may contribute voluntarily to the Fund in

 excess of his statutory contribution.
 The amount shall not exceed 10% of his basic wages, dearness
 allowance and retaining allowance (if any).
 The employer may not make any contribution for such voluntary
contribution.
 Wages for contribution means basic wages, dearness allowance and
retaining allowance (if any). Cash value of any food concession
allowed to the employee.
Investment of Fund
 All moneys belonging to the Fund shall be deposited in the Reserve
Bank of India or State Bank of India Or any Scheduled Banks approved
by the Central Government from time to time.
 The fund shall be invested in the securities referred to in Section 20
of the Indian Trusts Act, 1882.

Advance and withdrawal
The EPF Scheme allows members to obtain advances or to withdraw the PF
balance under following circumstances:
 In case a factory or other establishment has been locked up or closed
down for more than 15 days and its employees are rendered
 unemployed without any compensation.
 In case an employee does not receive his wages for a continuous
 period of 2 months or more.
 Advance from the Fund for illness in certain cases.
36
 Advance from the Fund for marriages or post-matriculation education

of children.
 Grant of advances in abnormal conditions like floods, earthquakes or
riots, etc.
 Grant of advance to members affected by cut in the supply of
 electricity.
 A member may be allowed a non-refundable advance if there is a cut
in the supply of electricity to a factory or establishment in which he is
employee.
 A physically handicapped member may get non-refundable advance
for purchasing equipment required to minimize the hardship on account of
handicap.
Pension  Under the EPF Act, the Central Government framed Employees‘
Scheme Pension Scheme, 1995 for payment of pension to the employees of
 any establishment to which the Act applies.
 The scheme also covers payment of widow or widower's pension,
children pension or orphan pension payable to the beneficiaries of
such employees. Pension is payable on
(i) superannuation,
(ii) retirement,
(iii) permanent total disablement,
(iv) death.
 Normal superannuation pension is payable on attaining 58 years of

 age.
 0n attaining 50 years of age, pension may be paid at discounted rate.
 Minimum 10 years of pensionable service is required to get pension.
 Pension is payable only if contribution is paidotherwise the liability
rests with the employer.
Calculation of pension

 Pension amount is calculated as [Pensionable salary x (Pensionable
 service+2)]/70.
 Where the pensionable service is more than 10 years but less
than 20 years, pension shall be calculated considering pensionable
service as 20 years.
 The amount so arrived shall be reduced @3% per year by
which the pensionable service is shorter than 20 years subject to
maximum of 25%.
Insurance
  The benefit provided under the EDLlS is called Assurance Benefit.
Benefits  On the death of the member while in service, the nominee or any
other person entitled to receive the Provident Fund benefits will, in
37
addition to the Provident Fund, receive the Assurance Benefit

 under EDLIS.
 The amount of Assurance Benefit is equal to the average balance in
the amount, of deceased in the Fund during the preceding 12 months or
during the period of his membership whichever is less.
 However, where the average balance exceeds 50,000, amount
payable shall be 50,000 plus 40% of the amount in excess of 50,000 subject
to a selling of 1,00,000.
Contributions Schemes Employees Employers
Contribution Contribution
Provident Fund 12% of wages, 10 % in 3.67%
Scheme specific industries
Pension Scheme 0 8.33% of employee’s
wages
Employee Linked 0 0.5% of employee’s
Insurance Scheme wages
EPF Administrative 0 0.85%
Charge
EDLI Administrative 0 0.01%
Charge
UNDER EPF  The contributions are payable on maximum wage ceiling of it
 25000/by employee and employer.
 The employee can pay at a higher rate and in such case employer is
 not under any obligation to pay at such higher rate.
 To pay contribution on higher wages, a joint request from
Employee and employer is required [Para 26(6) of EPF Scheme]. In such
case employer has to pay administrative charges on the higher wages
(wages above 25000/-)
 For an International Worker, wage ceiling of 25000/is not
applicable.
UNDER EPS  Contribution is payable out of the employer's share of PF and no
 contribution is payable by employee.
 Pension contribution not to be paid:

 When an employee crosses 58 years of age and is in service (EPS
 members ceases on completion of 58 years).
 When an EPS pensioner is drawing Reduced Pension and re-joins
 as an employee.
 In both the cases the Pension Contribution @ 8.33% is to be
added to the Employer Share of PF. (Pension contribution is not
 to be diverted and total employer share goes to the PF).
 In case an employee, who is not existing EPFIEP member joins on
 or after 01-09-2014 with wages above 15000
 In these cases the pension contribution part will be added to
38
employee share, EPF.



In all other cases Pension Contribution is payable. A member joining
after 50 years age, if not a pensioner does not have choice of not
getting the Pension Contribution on grounds that he will not
complete 10 years of eligible service. The social security cover is
 applicable till he/she is a member.
 For lnternational Worker, higher wage ceiling of 15000 is not
applicable from 11-09-2010.
UNDER EDLI  Contribution to be paid on upto maximum wage ceiling of Rs. 15000
 even if PF is paid on higher wages.
 Each contribution is to be rounded to nearest rupee. (Example for
each employee getting wages above Rs. 15000, amount will be Rs.
 75/-)
 EDLI contribution to be paid even if member has crossed 58 years age
and pension contribution is not payable. This is to be paid as long as the
member is in service and PF is being paid.
 [Contribution is rounded to the nearest rupee for each employee, for
the employee share, pension contribution and EDLI contribution]
Procedure for  When any employee is dissatisfied with any PF money received from
determination the authorities, he may approach the PF authorities for settlement.
of money from  The Central Provident Fund Commissioner, any Additional Central
employer in Provident Fund Commissioner, any Deputy Provident Fund
Commissioner, any Regional Provident Fund Commissioner or any
case of any
Assistant Provident Fund Commissioner may determine the amount
dispute due from any employer under any provisions of the Act. The Scheme
or the Pension Scheme or the insurance Scheme, as the case may be.
 The officer conducting the inquiry shall have the same powers as
vested in a court under the Code of Civil Procedure, 1908, for trying a
 suit.
 Such inquiry shall be deemed to be judicial proceeding. Review of
order
Review of order  Any person aggrieved by an order of the Provident Fund authorities
for which no appeal has been preferred may apply for a review of
 that order to the officer who passed the order.
 Such review shall be preferred under the following circumstances:

 When new and important matter or evidence which, after the
exercise of due diligence was not within his knowledge or could
not be produced by him at the time when the order was made
 was discovered.
 When, on account of some mistake or error apparent on the
face of the record, such review is required.
 When there is any other sufficient reason for such review.
Recovery of  The amount of contribution and other charges paid by an employer in
39
money from respect of an employee employed by contractor may be recovered by such

contractors employer from the contractor, either by deduction from any amount payable
[(Section 8A)] to the contractor or as a debt payable by the contractor.
 A contractor, from whom the amount may be recovered in respect of
any employee employed by him, may recover the employee’s contribution
from such employee by deduction from his wages.
 No contractor shall be entitled to deduct the employer's contribution
or the charges from the wages payable to an employee.
Appeals to the Any person aggrieved by a notification issued by the Central Government, or
Tribunal an order passed by me Central Government, or any authority, except an
[Section 7-l] order rejecting an application for review, may prefer an appeal to a Tribunal
against such order. The Tribunal may, after giving the parties an opportunity
of being heard, pass such orders as it thinks fit, confirming, modifying or
annulling the order appealed against
Penalties For avoiding payment
Whoever avoids payment, knowingly makes false statement or false
representation, shall be punishable with imprisonment up to one year, or
with fine of 5,000, or with both.
For not paying charges

 An employer who contravenes, or makes default in payment of
inspection or administrative charges, shall be punishable with
imprisonment up to 3 years. This shall not be less than one year and
fine of 10000 in case of default in payment of employees'
contribution which has been deducted by the employer from the
employees' wages; six months and fine of 5000, in any other case.
 The court may, for any adequate and special reasons to be recorded
in the judgment, impose a sentence of imprisonment for a lesser term.
For not paying  An employer who contravenes, or makes default in complying with,
inspection the provisions in so far as it relates to payment of inspection charges,
charges shall be punishable with imprisonment for a term which may extend
to one year but which shall not be less than six months and shall also
be liable to line which may extend to 5000. The court may, for any
adequate and special reasons to be recorded in the judgment, impose
a sentence of imprisonment for a lesser term.
Separate  Subject to the EFF Act, the Schemes may provide for penalty for
penalty by contravenes of the Schemes, shall be punishable with imprisonment
schemes upto one year, or with line up to 4000 or with both.
Offences and  If a company commits any offence under the EFF Act, the Scheme,
penalties by the Pension Scheme or the Insurance Scheme, the company and
companies every person, who at the time the offence was committed was in
[(Section 14A)] charge of and responsible to the company for the conduct of the
business shall be deemed to be guilty of the offence and punished
accordingly.
EPF Appellate  The Central Government is empowered to constitute the Employees’
40
Tribunal  Provident Funds

[Section 7D] Appellate Tribunal.
 A Tribunal shall consist of one person only to be appointed by the
 Central Government.
 A person shall not be qualified for appointment as a Presiding Officer
of a Tribunal unless he is or has been or is qualified to be
(i) A Judge of a High Court; or
(ii) A District Judge.
 The Presiding Officer of a Tribunal shall hold office for a term of 5
years or until he attains the age of 62 years, whichever is earlier.
Attachment of  The amount standing to the credit of any member in the Provident
PF Fund shall not in any way be assigned or charged or attached under
[Section 10] any decree or order of any Court in respect of any debt or liability
 incurred by the member.
 Neither the official assignee nor any receiver shall be entitled to any
 claim on any such amount.
 Any amount standing to the credit of a member in the provident fund
at the time of his death and payable to his nominee vests in the nominee and
shall not be liable to attachment under any decree or order of any Court
 The above provisions shall apply to the family pension or any amount
payable under the Pension Scheme and Insurance Scheme.
Exempted  Exempted establishment means an establishment in respect of which
Establishment an exemption has been granted under section 17 from the operation
[Section 17] of all or any of the provisions of any Scheme or the Insurance
 Scheme.
 Section 17 provides that the Central Government may, on application
by the employer and the majority of employees in relation to an
establishment employing 100 or more persons, authorise the employer to
maintain separate provident fund account in relation to the establishment.
 No such authorization shall be made if the employer had committed
any default in the payment of provident fund contribution or had
committed any other offence under the Act during the 3 years
immediately preceding the date of such Authorization.
Application of  The Employees Provident Fund Scheme, 1952 and Employees Pension
the Act to Scheme, 1995 was amended enlarging the ambit of the schemes to
International include international workers.
workers 
 International Worker means the following persons:
 An lndian employee having worked or going to work in a foreign
country with which India has a Social Security Agreement and is
eligible to avail the benefits under a social security programme
of that country under the said agreement.
 An employee, other than an lndian employee, holding other than an
Indian passport and working for all establishment in lndia to which
the EPF Act applies.
41
Lesson 7
Payment of bonus Act 1965
Objectives  The Payment of Bonus Act, 1965 was enacted to pay bonus to certain
categories of employees. The broad frameworks of the Act are the
following:

 To impose statutory liability on employer to pay bonus.
 To provide for minimum and maximum bonus.
 To prescribe means for determination of bonus.
 To prescribe machinery for administration and enforcement of
liability.
Scope and  The Act applies to
Coverage
  every factory; and
 every other establishment in which 20 or more persons are
employed on any day during an accounting year_
 An establishment to which the Act applies shall continue to be
governed by the Act even if the number of persons employed therein
 falls below 20.
 In deciding the number of persons all employees even though they
are getting salary above the eligible amount is to be considered.
 The appropriate government may after giving not less than two
months' notice, apply the provisions of the Act with effect from such
accounting year specified in the notification, to any establishment or class of
establishments, including a factory employing less than 20 persons but not
less than 10 persons.
Employees  Employee means as per section 2(13) of the Act any person (other
Entitled than an apprentice) employed on a salary or wage not exceeding. Rs.
21,000 per month in any industry to do any skilled or unskilled,
manual, supervisory, managerial, administrative, technical or clerical
work for hire or reward, whether the terms of employment be
express or implied.
 As per Section 21, employee includes a person who is entitled to
bonus under the Act but who is no longer in employment.
Definitions Salary or Wages Section 2(21)
 Salary or wages means all remuneration (other than remuneration for

over-time work) capable of being expressed in terms of money, which
would be payable to an employee in respect of his employment or of
work done in such employment, if the terms of employment, express
or implied, were fulfilled.
 It includes dearness allowance.
42
Salary or wages does not include the following:
  Any allowance.
 The value of any house accommodation or of supply of light, water,
medical attendance or other amenity or of any service or of any
concessional supply of food grains or other articles.
 Any traveling concession.
  Any bonus including incentive, production and attendance bonus.
 Any contribution paid or payable by the employer to any pension fund
or provident fund or for the benefit at the employee under any law
 for the time being in force.
 Any retrenchment compensation or any gratuity or other retirement
benetit payable.
 Any ex-gratia payment made to him. (viii) Any commission payable to
the employee.
 Where the employer gives an employee in lieu of the whole or part of
the salary or wages free food allowance or free food, such food allowance or
the value of such food shall be deemed to form part of the salary or wages.
Allocable Allocable surplus is as follows:
Surplus
[Section 2(4)]  ln relation to a non-banking company which has not made the
arrangement for the declaration and payment within india of
dividends payable out of its profits 67% of the available surplus in an
accounting year;
 In any other case -60% of such available surplus.
 The allocable surplus is the amount which is eligible to be distributed
as bonus to the employees.
Eligibility of Minimum working days (Section8)
Bonus
Every employee who has worked in the establishment for not less than 30
working days in a year shall be entitled to bonus from his employer in that
accounting year.
Salary Limit Section 2 (13)

 An employee earning more than f 21,000 per month is not eligible to
bonus.
 As per Section 12, where the salary of an employee exceeds 21,000
per month, it bonus is paid to such employee, it shall be calculated as if his
salary is seven thousand rupees or the minimum wage for the scheduled
employment, as fixed by the appropriate Government, whichever is higher
Determination  Pay ability of bonus is to be determined on the basis of allocable
of Bonus  surplus of the establishment.
43
 Allocable surplus is to be arrived at from the available surplus.

 Available surplus is derived from the gross profit calculated under
section 6.
 The gross prams in respect of any accounting year shall be computed
in the case of a banking company in the manner specified in the First
Schedule and in any other case, in the manner specified in the Second
Schedule.
Disqualification An employee shall not be entitled to get bonus, if he is dismissed from service
for Bonus on the following ground:
[(Section 9)]
  Fraud.
 Riotous or violent behavior while on the premises of the
establishment.
 Theft, misappropriation or sabotage of any property of the
establishment.
Calculation of In calculating the number of working days the following shall be considered
number of as working days:
working days  When the employee has been laid off under an agreement or as
[Section 14] permitted by standing orders or under the Industrial Disputes Act,
 1947, or under any other law applicable to the establishment.
  When the employee has been on leave with salary or wages.
 When the employee has been absent due to temporary disablement
caused by accident arising out of and in the course of his employment.
 When the employee has been on maternity leave with salary or
wages.
Customary  Customary bonus generally means a bonus paid by an establishment
Bonus to its employees for a long time.
[Section 17]  Section 17 of the Act provides that where in any accounting year an
employer has paid any puja (festival) bonus or other customary bonus
to an employee then, the employer shall be entitled to deduct the
amount of bonus so paid from the amount of bonus payable to the
employee under the Act in respect of that accounting year and the
employee shall be entitled to receive only the balance.
Applicability of Establishment in public sector means an establishment owned, controlled or
the Act to managed by the following:
establishments   A Government Company.
in Public Sector  A Corporation in which not less than 40% of its capital is held whether
singly or taken together by (i) the Government; or (ii) the Reserve
Bank of India; or (iii) a Corporation owned by the Government or the
Reserve Bank of India.
 If in any accounting year an establishment in public sector sells any

goods produced or manufactured by it or renders any services, in
competition with an establishment in private sector, and the income
from such sale or services or both is not less than 20% of the gross
44
income of the establishment for that year, the provisions of the Act
shall apply to such establishment as they apply in relation to a like
establishment in private sector.
Minimum  An employer is required to pay minimum bonus irrespective of profit
Bonus or loss. Such bonus is payable as under:
irrespective of
Loss Employee above Every employer shall be bound to pay minimum bonus
15 years of age to every employee above 15 years of age @ 8.33% of
(Section 10) the salary or wages earned by the employee during the
accounting year or Rs. 100 whichever is his/her.
EmpIoyee not Where an employee has not completed 15 years of age
completed 15 at the beginning of the accounting year, he shall be
years of his entitled to minimum bonus @ 8.33% of salary or wages
age (Section 10) or Rs. 60 whichever is higher.
Maximum  Where in any accounting year, the allocable surplus exceeds the
Bonus minimum bonus payable to the employees, the employer shall pay to
[Section 11] every employee bonus for that accounting year proportion to the
salary earned by the employee subject to a maximum of 20% of such
salary.
 In computing the allocable surplus the amount of set on or set off
shall be taken into account.
Time of  Bonus shall be paid in cash within 8 months from the close of the
Payment of accounting year.

Bonus  Where there is a dispute regarding payment of bonus pending before
any authority, bonus shall be paid within one month from the date on
which the award becomes enforceable or the settlement comes into
 operation, in respect of such dispute.
 The appropriate government may, on application by the employer
and for sufficient reasons extend the period of 8 months to such
further period or periods as it thinks fit so that the total period so
extended shall not In any case exceed 2 years.
Set on of  Where for any accounting year, the allocable surplus exceeds the
allocable amount of maximum bonus payable to the employees in the
surplus establishment, the excess shall be carried forward subject to a limit of
20% of the total salary or wages of the employees employed in the
 establishment-in that accounting year.
 Such carried forward amount are to be added to the available surplus
in the succeeding accounting year and so on up to and inclusive of the
4th accounting year for the purpose of payment of bonus in the
manner illustrated in the Fourth Schedule.
Set off of Where for any accounting year, there is no available surplus or the allocable
allocable surplus falls short of the amount of minimum bonus payable and there is no
surplus amount or sufficient amount carried forward before which could be utilised
for the purpose of payment of the minimum bonus, then the deficiency shall
be carried forward and set off in the succeeding accounting year up to and
45
inclusive of the 4th accounting year in the manner illustrated in the Fourth
Schedule.
Order of set Where in any accounting year any amount has been carried forward and set
on/set off on or set off, in calculating bonus for the succeeding accounting year, the
amount carried forward from the earliest accounting year shall first be taken
into account.
Deduction The following sums shall be deducted from the gross profit.
[Section 6]  Depreciation admissible under the Income-tax Act, or agricultural
Income-tax law.
 Development rebate or investment allowance or development
 allowance under the Income-tax Act
 Direct tax which the employer is liable to pay for the accounting year
 on his income, profits and gains.
 Such further sums as specified in respect of the employer in the Third
Schedule.
Deduction Where in any accounting year an employee is found guilty of misconduct
from Bonus causing of natural loss to the employer, the employer can deduct the amount
from of such loss from the bonus payable to the employee in respect of that
Misconduct accounting year only.
[Section 18]
Bonus Linked  Where an agreement or a settlement has been entered into between
with the employees and the employer for payment of annual bonus linked
Production or with production or productivity in lieu of bonus based on profits
Productivity payable under the Payment of Bonus Act, such employees shall be
[Section 31A] entitled to receive bonus under such agreement.
 Such bonus shall be more than the minimum bonus as per the Act.
 Such bonus shall also not be more than 20% of the salary.
Newly Set up In a newly set up establishment, bonus shall be paid as under:
Establishment  In the first five accounting years -In the first five accounting years
following the accounting year in which the employer sells the goods
produced or manufactured by him or renders services, bonus shall be
payable only in respect of the accounting year in which the employer
derives profit from such establishment. No set off and set on is
 allowable.
 For the sixth accounting year -Set on or set off shall be made in the
manner illustrated in the Fourth Schedule taking into account the
excess or deficiency of the allocable surplus set on or set off in respect
 of the fifth and sixth accounting years.
 For the seventh accounting year -Set on or set off shall be made in
the manner illustrated in the Fourth Schedule taking into account the
excess or deficiency of the allocable surplus set on or set off in respect
 of the fifth, sixth and seventh accounting years.
 From the eighth accounting year -From the eighth accounting year
the provisions of set off and set on shall apply in relation to such
46
establishment as they apply in relation to any other establishment.


An establishment shall not be deemed to be newly set up merely by reason of
a change in its location, management, name or ownership.
Penalty  Offence by any person- if any person contravenes any of the
provisions of the Act or if any person to whom a direction is given or a
requisition is made under the Act fails to comply with the direction or
requisition, he shall be punishable with imprisonment up to six
 months, or with fine up to Rs. 1000, or with both.
 Offence by company- Where a company commits an offence, the
company and every person who, at the time when the offence was
committed was in charge of and was responsible for the conduct of its
business shall be deemed to be guilty of the offence and shall be
liable to be proceeded against and punished accordingly. Such person
shall not be liable to any punishment if he proves that the offence was
committed without his knowledge or that he exercised all due
diligence to prevent the commission of such offence.
47
Lesson 8
Payment of Gratuity Act 1972

Objectives  The Payment of Gratuity Act, 1972 envisages to provide a
retirement benefit to the workmen who have rendered long and
unblemished service to the employer, and have thus contributed
to the prosperity of the employer. Gratuity is a reward for long
and meritorious service.

 The significance of this Act lies in the acceptance of the principle
of gratuity as a compulsory, statutory retrial benefit.
Scope and Coverage  The Act extends to the whole of India except that it does not
extend to the State of Jammu and Kashmir so far as it relates to
plantations or ports.

 The Act applies to the following:

 Every factory, oilfield, plantation, port, railway company and
mine.

 Every shop or establishment in which 10 or more persons are
employed, or were employed on any day of the preceding 12
months.

 As per Section 3A, a shop or establishment to which the Act
becomes applicable shall continue to be governed by the Act
even if the number of employees falls below 10.

 The Central Government has specified Motor Transport
undertakings, clubs, chambers of industries, inland water
transport establishments, solicitor’s office, local bodies, trusts
and societies, circus industry in which 10 or more persons are
employed or were employed on any day during the preceding 12
months to be covered under the Act.
Exemption  The appropriate government is empowered to exempt, by
notification, any establishment, factory, mine, oilfield, plantation,
port, railway company or shop to which this Act applies from the
operation of the Act.

 If the government so opines that the employees of such
establishment, etc. are in receipt of gratuity or pensionary
benefits not less favourable than the benefits conferred under this
Act. The appropriate government may also exempt any employee
48
or class of employees, similarly.

Employees Entitled  Employee as defined in section 2(e) means any person (other than
an apprentice) who is employed on wages, whether the terms of
such employment are express or implied, in any kind of work,
manual or otherwise in or in connection with the work of a
factory, mine, oilfield, plantation, port, railway company or shop,
other establishment to which the Act applies.

 Teachers are now covered under the Act in terms of the
amendment of the Act in 2010 though teaches were not earlier
covered under the Act.

 Employee does not include any person who holds a post under
the Central or State Government and is governed by any other
Act or rules providing for payment of gratuity.
Employer [Section In relation to any establishment, factory, mine, oilfield, plantation, port,
2(f)] railway company or shop belonging to, or Under the control of the
Central or a State Government:
 Any person or authority appointed by the appropriate government

for the supervision and control of employees.

 Where no person or authority has been so appointed, the head of
the Ministry or the Department concerned.
In relation to any establishment, factory, mine, oilfield, plantation, port,

railway company or shop belonging to, or under the control of any local
authority.
 The person appointed by such authority for the supervision and

control of employees'
 Where no person has been so appointed, the chief executive
officer of the local authority.
.
In any other case :
 The person, who or the authority which has the ultimate control
over the affairs of the establishment, factory, mine, oilfield,
 plantation, port, railway company or shop.
 Where the said affairs are entrusted to any other person, whether
called a manager, managing director or any other name, such
person.
Family [Section Family in relation to an employee shall be deemed to consist of the
2(h)] following:
49
(i) In the case of a male employee :
 himself,
 his wife,
 his children, whether married or unmarried,
 his dependent parents,
  the dependent parents of his wife, and
 the widow and children of his predeceased son, if any.

(ii) In the case of a female employee :
 herself,
 her husband,
 her children, whether married or unmarried,
 her dependent parents,
 the dependent parents of her husband, and
 the widow and children of her predeceased son, if any.

(iii) Any child lawfully adopted shall be deemed to be included in his
family.
(iv) Where a child has been lawfully adopted by another person, such
child shall be excluded from the family.
Wages [Section 2(s)]  Wages means all emoluments which are earned by an employee
while on duty or on leave in accordance with the terms and
conditions of his employment which are paid or payable to him in
 cash.
  Wages includes dearness allowance.
 Wages does not include any bonus, commission, house rent
allowance, overtime wages and any other allowance
Continuous Service  Eligibility of an employee for gratuity depends upon his
[Section 2A]  continuity of service
 An employee shall be in continuous servrce for a period if he has
 been in uninterrupted service for that period.
 Any interruption in service on account of sickness, accident,
leave, absence from duty Without leave, layoff, strike or a lock-
out or cessation of work not due to any fault of the employee
 shall be ignored.
 Any absence for which an order treating it as break in service has
been passed as per the standing orders shall not be in continuous
service.
DEEMED For one year
CONTINUOUS  If he actually worked for not less than 190 days below the ground
SERVICE OTHER in a mine or In an establishment which works for less than 6 days
THAN IN  in a week;
SEASONAL  In any other case, if he actually worked for not less than 240 days
50
ESTABLISHMENT in a year.
SECTION 2A For six month
 If he actually worked under the employer for not less than 95
days 
(i) below the ground in a mine or
 in an establishment which works for less than 6 days in a
 week;
 In any other case, if he actually worked for not less than 120
days.
Consideration of The number of days on which an employee has actually worked include
days the following:
 The days on which he has been laid-off under an agreement or as

 permitted by standing orders.
  The days on which he has been on leave with full wages.
 The days on which he has been absent due to temporary
disablement caused by accident arising out of and in the course of
 his employment.
 In the case of a female, the days on which she has been on
maternity leave not exceeding twelve weeks
DEEMED  An employee employed in a seasonal establishment shall be
CONTINUOUS deemed to be in continuous service if he has actually worked for
SERVICE IN not less than 75% of the number of days on which the
SEASONAL establishment was in operation during period of one year or six
ESTABLISHMENT month as the case may be.
What is Gratuity  Gratuity is a lump sum payment made by the employer to an
employee when he retires or leaves service.
Entitlement of  After 5 years of continuous service - On superannuation or
Gratuity retirement or resignation.
[Section 4]
 Less than 5 years of continuous service - On death or
disablement due to accident or disease.
To WHOM  In case of death gratuity shall be paid to the nominee of the
GRATUITY BE employee.
PAID IN CASE OF  If no nomination has been made, gratuity shall be paid to his
DEATH  heirs.
 Where any such nominee or heir is a minor, the share of such
minor shall be deposited with the controlling authority.
Computation of  The employer shall pay gratuity to an employee at the rate of 15
Gratuity in Case of day8‟ wages based on last drawn wages for every completed year
Monthly Wage  of service or part thereof in excess of six months.
Employee  The 15 days' wages shall be calculated by dividing the last drawn
 wages by 26 and multiplying the quotient by 15
 Gratuity = Last drawn wages x (15/26) x completed year of
service
Computation of  Daily wages shall be computed on the average of the total wages
51
Gratuity in the received by him for a period of 3 months immediately preceding

Case of a Price  the termination of his employment.
Rated Employee  The wages paid for overtime work shall not be taken into
account.
 Gratuity shall be computed at the rate of 15 days wages for
completed years of service.
 Gratuity = Average daily wages x 15 x completed year of service
Computation of  The employer shall pay the gratuity at the rate of 7 days' wages
Gratuity in the case for each season.
of Seasonal
Establishment
Maximum Amount   The amount of gratuity shall not exceed Rs. 10,00,000/-.
of Gratuity  An employee may receive better terms of gratuity under any
award or agreement or contract.
Forfeiture or  If the services of an employee have been terminated for any act,
Gratuity willful omission or negligence causing any damage or loss or
[Section 4(6)] destruction of the property of the employer gratuity shall be
 forfeited to the extent of the damage or loss caused
 If the service of such employee is terminated for his riotous or
disorderly conduct or any other act of violence gratuity may be
 wholly or partially forfeited.
 If the service of any employee is terminated for any offence
involving moral turpitude gratuity may be wholly or partially
forfeited.
Intimation of  As soon as gratuity becomes payable, the employer should
Gratuity Becoming determine the amount of gratuity and give a notice in the
Payable prescribed form to the payee viz. the employee or his nominee or
legal hair and to the controlling authority of that area.
Application for  A person shall make application in Form ‟I” within 30 days from
Payment of the date the gratuity is payable for payment of gratuity.
Gratuity  A nominee shall apply ordinarily within 30 days from the date of
 gratuity became payable to him, in Form 'J'.
 An application in plain paper with relevant particulars shall also
 be accepted.
 A legal heir shall apply ordinarily within one year from the date
 of gratuity became payable to him, in Form „K„.
 An application filed after the expiry of the specified periods shall
 be entertained on sufficient ground.
 No claim shall be invalid merely because the claimant failed to
present his application within the specified period.
Duty of Employer  The employer shall whether application has been made or not
to Pay Gratuity determine the amount of gratuity and pay within 30 days from the
[Section 7]  date it becomes payable.
 If the amount is not paid within 30 days. The employer shall pay
simple interest.
 NO interest shall be payable if the delay is due to the fault of the
52
employee.
Insurance and  Every employer, other than under the control of the Central or
Registration State Government, shall have insurance for its liability for
[Section 4A] payment of gratuity with the Life Insurance Corporation of India
 or any other prescribed insurer.
 The appropriate government may exempt any employer
employing 500 or more persons who establishes an approved
gratuity fund.

 Every such employer shall get his establishment registered with
 the controlling authority.
 Where an employer fails to make any payment of premium to the
insurance company or contribution to an approved gratuity fund,
he shall be liable to pay gratuity (including interest, if any, for
 delayed payments) forthwith to the controlling authority.
 Whoever contravenes the aforesaid provisions shall be punishable
with fine up to Rs. 10,000 and for continuing offence with a
further tine up to Rs. 1,000 for each day during which the offence
continues.
Nomination  Each employee, who has completed one year of service, shall
[Section 6]  make nomination (in Form F) for receiving gratuity.
 An employee may distribute the amount of gratuity amongst
 more than one nominee.
 If an employee has a family at the time of making a nomination,
the nomination shall be made in favour of one or more members
of his family. Any nomination made in favour of a non-family
 member shall be void.
If at the time of making a nomination the employee has no
family, the nomination may be made in favour of any person. On
subsequently acquiring a family, such nomination shall forthwith
become invalid and the employee shall make a fresh nomination
(in Form G) in favour of one or more members of his family.
 A nomination may be modified by an employee at any time
 giving notice in Form H.
 If a nominee predeceases the employee, the interest of the
nominee shall revert to the employee.
Attachment and  Gratuity shall not be liable to attachment in execution of any
Assignment of decree or order of any civil, revenue or criminal court.
Gratuity
[Section 13]
Disputes and  Where there is any dispute regarding the amount of gratuity or
Settlement admissibility of any claim, or entitlement of the person to receive
[Section 7(4)] gratuity, the employer shall deposit with the controlling authority
 such amount as he admits to be payable.
 The employer or employee or any other person raising the dispute
may make an application to the controlling authority for deciding
53
 the dispute.
 The controlling authority shall, after giving the parties a
 reasonable opportunity of being heard, determine the matter.
 If any amount is payable to the employee, the controlling
 authority shall direct the employer to pay such amount.
 The controlling authority shall pay the amount deposited
including the excess amount, if any, deposited by the employer to
the person entitled it.
Penalties  Whoever knowingly makes any false statement or false
[Section 9] representation for avoiding payment of gratuity, he shall be
punishable with imprisonment for a term upto 6 months, or with
 fine upto Rs. 10,000 or with both.
 An employer who contravenes any of the provisions of the Act,
he shall be punishable with imprisonment not less than 3 months
but which may extend to one year, or with fine which shall not be
less than Rs. 10,000 but which may extend to 20,000 or with
 both.
 Where the offence relates to non-payment of any gratuity, the
employer shall be punishable with imprisonment for a term which
shall not be less than 6 months but which may extend to 2 years
unless the court allows a lesser term.
54
Lesson 9
Employee’s Compensation Act 1923
Objectives  The Employees' Compensation Act, 1923 is an Act to provide for

payment of compensation by certain classes of employers to their
 employees for injury due to accident.
 The Act was originally enacted as the Workmen's Compensation Act,
 1923.
 By the Workmen’s Compensation (Amendment) Act, 2009 which
came into force on 18.01.2010, the word Workmen' was replaced by
the word Employee'.
Scope and   The Act extends to the whole of India.
Coverage  It applies to factories, mines, docks, construction establishments,
plantations, oilfields and other establishments listed in Schedule ll and
 III to the Act.
 The Act covers workers of newspaper establishments, drivers,
cleaners, etc. working in connection with a motor vehicle, workers
employed by lndian companies abroad, persons engaged in spraying or
dusting of insecticides or pesticides in agricultural operations,
mechanised harvesting and thrashing, horticultural operations and
 doing other mechanical jobs.
 Every employee including those employed through a contractor,
except casual employees, who is engaged for the purposes of
employer's business and who suffers injury in any accident arising out
of and in the course of his employment, shall be entitled for
compensation under the Act.
Exceptions  The Act does not cover establishments covered by the Employees
State Insurance Act
 It also does not apply to the Armed Forces.
Employees As delined in SectIon 2(dd), employee means a person, who Is -
Entitled  a railway servant not permanently employed in any administrative
district or sub-divisional office of a railway and not employed In any
 such capacity as is specified In Schedule II; or
 a master seaman or other members of the crew of a ship,
  a captain or other member of the crew of an aircraft,
 a person recruited as driver, helper, mechanic, cleaner or in any other
capacity in a motor vehicle,
 a person recruited for work abroad by a company, and who is
employed outside India in any such capacity as is specilied in
Schedule II and the ship, aircraft or motor vehicle, or company, as the
55
 case may be, is registered in India; or

 employed in any such capacity as is specified in Schedule II, and
whether such contract is express or implied, oral or in writing.
 Exceptions: Employee does not include any person working in the

capacity of a member of the Armed Forces of the Union. It also does
not include 3 employees whose employment is of casual nature and his
work not connected with the employer’s trade or business.
Definitions Dependent means any of the following relatives of a deceased employee
Dependent
[Section 2(1)(d)]  A widow, a minor legitimate son, and unmarried legitimate daughter,
 or a widowed mother,
 If wholly dependent on the employee at the time of his death, a son or
 a daughter who has attained the age of 18 years and who is infirm.
 If wholly or partly dependent on the employee at the time of death,
 a widower,
  a parent other than a widowed mother,
 a minor illegitimate son, an unmarried illegitimate daughter or a
daughter legitimate or illegitimate if married and a minor or if
 widowed and a minor,
 a minor brother or a unmarried sister or a widowed sister if a
minor,
  a widowed daughter-in-law,
 a minor child of a pre-deceased son,
 a minor child of a pre-deceased daughter where no parent of the
child is alive, or
 a paternal grandparent if no parent of the employee is alive.
 Son, daughter and child include adopted son, daughter and adopted
child.
Temporary  Where the disablement is of such a nature that it reduces the earning
Partial capacity of the employee in which he was engaged at the time of the
Disablement  accident.
[Section 2  Every injury specified in Part II of Schedule I.
(1)(g)]
Permanent  Where the disablement is of such a nature that it reduces the earning
Partial capacity of the employee in every employment which he was capable
Disablement of undertaking at the time of the accident resulting in the disablement.
[Section 2
(1)(g)]
Total  Disablement, whether temporary or permanent that incapacitates an
Disablement employee for all work which he was capable of performing at the time
[Section of the accident.
2(1)(I)]
Permanent   Every injury specified in Part I of Schedule I.
Total  Any combination of injuries specified in Part II where the aggregate
56
Disablement percentage of the loss of earning capacity specified in the said Part II
[Section against those injuries is 100% or more.
2(1)(I)]
Wages Section  Wages includes any privilege or benefit which is capable of being
2(1)(m)  estimated in money.
 Wages does not include the following:
 Any travelling allowance or the value of any travelling concession.
 Contribution paid by the employer towards any pension or
 provident fund.
 Any sum paid to an employee to cover any special expenses entailed
on him by the nature of his employment.
Liability for  The employer is liable for payment of compensation it personal injury
Compensation is caused to an employee by accident arising out of and in the course
[Section 3] of his employment.
Accident Accident arising out of employment
arising out of
and in the  An accident arising out of employment means that at the time of injury
course of the employee has been engaged in the business of the employer and
employment  not doing something for his personal benefit.
 The accident occurs at the place where the employee is performing his
 duties.
 The injury has resulted from some risk incidental to his duties or
inherent in the nature of condition of employment.
Accident arising in the course of employment
 Accident in the course of employment refers to the accident suffered

when the employee is on duty at or about the place of his work.
Statutory Section 3(2) provides the following provisions
provisions for  If an employee is in employment specified in Part A of the Schedule
accident III contacts any disease, it is accident arising out of and in the course
arising out of  of employment.
and in the  If an employee is in employment specified in Part B of the Schedule
course of III contacts any disease for not less than 6 months, it is accident
employment  arising out of and in the course of employment.
 If an employee is in employment specified in Part C of the Schedule
III contacts any disease, it is accident arising out of and in the course
of employment.
Non-liability of The employer shall not be liable to pay compensation under the following
Employer circumstances:
 In respect of any injury which does not result in total or partial

 disablement exceeding 3 days.
 In respect of any injury, not resulting in death, caused by an accident
directly due to the employee under the influence of drink or drugs, or
57
wilful disobedience of an order expressly given or to a rule expressly

framed, for the purpose of securing the safety of employee, or wilful
removal or disregard by the employee of any safety guard or other
 device which he knew to have been provided for safety of employees.
 In respect of any disease if the disease is not directly attributable to the
 injury by accident arising out of and in the course of employment.
 In respect of any injury for which he has instituted in a Civil Court a
suit for damages.
Amount of  Nature of injury, his monthly wages and the „Factor‟ provided in
Compensation  Schedule IV to the Act with respect to his completed year of age.
[Section 4]  Such compensation may be for death, disablement whether total or
 partial or temporary or permanent. '
 The amount of compensation shall be as follows:
In case of death
Where death results from the injury, an amount equal to 50% of the monthly
wages of the deceased employee multiplied by the relevant factor as given in
Schedule IV; or an amount of Rs. 1,20,000 whichever is more.
In case of permanent total disablement
Where permanent total disablement results from the injury, an amount equal
to 60% of the monthly wages of injured employee multiplied by the relevant
factor; or an amount of Rs. 1,40,000, whichever is more.
In case of Permanent partial disablement

Where permanent partial disablement results from injury specified In Part II
of Schedule I, such percentage of the compensation which would have been
payable in the case of permanent total disablement as is specified in the
schedule. Where more than one injury is caused by the same accident, the
amount of compensation payable shall be aggregated. Such amount shall not
exceed the amount which would have been payable if permanent total
disablement had resulted from the injuries.
In case of temporary disablement In case of temporary disablement, whether

total or partial result from the injury, a half-monthly payment at the monthly
wages or sum equivalent to Rs. 25,000 to be paid.
Time of   Compensation to employees shall be paid as soon as it falls due.
Payment and  In cases where the employer does not accept the liability for
Distribution of compensation to the extent claimed, he shall t bound to make
Compensation  provisional payment based on the extent of liability which he accepts.
[Section 4A(1)]  Such payment shall be deposited with the Commissioner or made to
 the employee.
 Where any employer is in default in paying the compensation due
within one month from the date it fell (ill! the Commissioner shall
58
direct that, in addition to the amount of the arrears, simple interest at

the rate of 12% per annum on the amount due together with, if in the
opinion of the Commissioner there is no justification fc the delay, a
further sum not exceeding 50% of such amount. shall be recovered
from the employer.
Time of  Half-monthly payment shall be payable on the 16”1 day from the date
Payment and of disablement where such disablement lasts for a period of 28 days or
Distribution of  more.
Half-monthly  Where such disablement lasts for a period of less than 28 days, half-
Compensation monthly payment shall be payable on the „16th day alter the expiry of
[Section 4A(2)]  a waiting period of 3 days from the date of disablement.
 Thereafter, the payment shall be made half-monthly during the
disablement or during a period of 5 years whichever period is shorter.

 The amount of any allowance which the employee has received from
the employer by way of compensation during the period of
disablement prior to the receipt of lump sum or of the first half-
monthly payment, shall be deducted from the lump sum or half-
 monthly payments.
 Any payment received from the employer towards medical treatment
shall not be deemed to be a payment by way of compensation.
Payment of  The principal employer is liable to pay compensation to contract
Compensation labour in the same manner as his departmental labour. He is entitled to
to Contract be indemnified by the contractor. The principal employer shall not
Labour however be liable to pay any interest and penalty leviable under the
Act
Calculation of  Monthly wages means the amount of wages deemed to be payable for
Monthly a month„s service. whether the wages are payable by the month or by
Wages whatever other period or at piece rates.
[Section 5] 

 Such wages is to be calculated as follows :
In case of monthly wages
Where the employee is liable to compensation during a continuous period of

not less than 12 months immediately preceding the accident, monthly wages
of the employee shall be one-tweth oi the total wages in the last twelve
months of that period.
In case of less than a month’s wages
Where the whole of the continuous period of service immediately preceding

the accident is less than one month. the monthly wages shall be the average
monthly amount during the twelve months immediately preceding the
accident earned by any employee employed on the same work by the same
employer, or, if there was no employee so employed, by an employee
59
employed on similar work in the same locality.
In case of insufficient information
 ln other cases, the monthly wages shall be 30 times of the total wages
earned in respect of the last continuous period of service immediately
preceding the accident from the employer who is liable to pay
compensation, divided by the number of days comprising such period.
Review of  Any half monthly payment may be reviewed by the Commissioner on
Half-monthly  the application of the employer or the employee.
Payment  Such application shall be accompanied by certificate of a qualified
[Section 6] medical practitioner that there has been a change in the condition of
 the employee or rules.
 Any half-monthly payment may on review be continued, increased,
 decreased or ended.
 If the accident is found to have resulted in permanent disablement,
half-monthly payment may be converted to the lump sum.
Computation  Any right to receive half-monthly payments may, by agreement
of Half- between the parties or, if the parties by the parties or determined by
monthly the Commissioner.
Payment
[Section 7]
Distribution of  Compensation amount shall be deposited with the Commissioner.
Compensation   Payment made directly shall not be a payment of compensation.
in case of  An employer may make advance not exceeding (100 but the amount
Death of the shall be deducted from such compensation.

injured  The Commissioner shall deduct the actual cost of the employee's
Employee funeral expenses not exceeding 5,000 and pay the same to the person
[Section 8] who incurred the same.

 If the Commissioner is satisfied that no dependant exists, the balance
money be paid to the employer.
No Assignment  Any lump sum or half-monthly payment shall not be assigned or
and charged or be liable to attachment or pass to any person other than the
Attachment of  employee by operation of law.
Compensation  Any claim shall not be set off against the compensation.
[Section 9]
Procedure for  Notice of the accident to be given as soon as practicable after the
Claiming  happening of the accident.
Compensation  The claim is to be made within two years of the occurrence of the
[Section 10]  accident or death. "
 The Commissioner may entertain any claim even if the notice has not
been given or the claim has not been preferred in due time on
 sufficient cause.
 The Commissioner shall dispose of the matter within a period of three
months from the date of reference and intimate the decision within the
said period to the employee.
60
Penalties  Whoever fails (a) to maintain a notice-book, or (b) to send to the

[Section 18A] Commissioner a statement or (c) to send a report under Section 108, or
(d) to make a return under section 16, shall be punishable with fine up
 to 5,000.
 No prosecution shall be instituted except previous sanction of the
 Commissioner.
 No Court shall take cognizance of any offence, unless complaint is
made within six months of the date on which the alleged offence came
to the knowledge of the Commissioner.
61
Lesson 10
Contract Labour Act, 1970

Objectives  Contract Labours suffer from lack of job security, poor economic
 conditions, casual nature of employment low payment etc.
 To regulate the conditions of these labours, the Contract Labour
 (Regulation and Abolition) Act, 1970 was passed
  The Act came into force from 10.02.1971.
 The main objective of the Act is to stop the exploitatlon of the
contract labours and to abolish the practice of contract labour
 under the following circumstances:
 if the work is of perennial nature. o If the work is incidental to
 and necessary for the work of the factory.
 If the work is of the nature that it can employ considerable
number of whole time workmen.
 If the work can be done by ordinary or regular workmen.
Coverage   The Act applies to the following:
 To every establishment in which 20 or more workmen are
employed or were employed on any day of the preceding
 twelve months as contract labour.
 To every contractor who employs or who employed on any
 day of the preceding twelve months 20 or more workmen.
 The appropriate Government may, after giving not less than two
months' notice apply the provisions of the Act to any
 establishment or contractor employing less than 20 workers.
 The Act does not apply to establishments in which work of an
intermittent or casual nature is performed.
Work of  As provided in explanation to section 1. Work is intermittent nature if
intermittent it was performed for not more than 120 days in the preceding twelve
nature months. In case of a seasonal establishment. The work performed is
not more than 60 days in a year.
Workman Workman means any person employed in or in connection with the work of
Entitled any establishment to do any skilled. Semi-skilled or un-skilled, manual,
supervisory, or clerical work for hire or reward, whether the terms of
employment be express or implied. [Section 2(1)(i)]
Exceptions
A workman does not include the following person:
 A person employed mainly in a managerial or administrative

capacity.
62
 A person employed in a supervisory capacity drawing wages

exceeding 500 pm.
 A person exercises functions mainly of a managerial nature.
 Who is an out worker.
Contract  A workman shall be deemed to be employed as contract labour in or
Labour in connection with the work of an establishment when he is hired by
[Section 2(1)(b)] or through a contractor, with or without the knowledge of the
principal employer.
Registration of  An establishment to which the Act applies has to get registered
Establishments  under the Act.
[Section 7]  The Contract Labour (Regulation and Abolition) Rules, 1971
provides that every principal employer of an establishment shall
make an application to the Registering Officer of the area in
which the establishment sought to be registered is located in Form
 I for registration within time fixed by the appropriate government.
 The registering officer may entertain any such application after
 expiry of the period for sufficient cause.
 The application shall be accompanied by a demand draft showing
payment of the fees which vary from 20 to 500 which is related to
the number of workmen employed as contract Labour.
 If the application is complete in all respects, the registering officer
shall register the establishment and issue a certificate of
registration.
Revocation of  If the registering officer is satisfied that the registration has been
Registration obtained by misrepresentation or suppression of any material fact, or
[Section 8] that for any other reason the registration has become useless or
ineffective and requires to be revoked, the registering officer may,
after giving an opportunity to the principal employer of the
establishment to be heard and with the previous approval of the
appropriate Government, revoke the registration of such
establishment.
Effect of Non- No principal employer of an establishment, to which the Act applies, shall
Registration employ contract labour if the establishment is not registered or the
[Section 9] registration has been revoked.
Prohibition of  The appropriate Government to prohibit employment of contract
Employment of Labour in any process, operation or other Work in consultation
Contract with the Central or the State Board.
Labour  If a question arises whether any process or operation or other
[Section 10] work is of perennial nature, the decision of the appropriate
Government thereon shall be final.
Licencing of  No contractor shall undertake any work through contract labour
Contractor  except under a licence issued by the licensing officer.
[Section 12]  Every application for a license shall be made, in triplicate, in
Form IV, to the licensing officer of the area in Which the
 establishment is located.
 The application shall be accompanied by a demand draft showing
63
 deposit of the security and the payment of fees.

 The deposit shall be calculated @ Rs 90 for each workman to be
 employed as contract labour.
 Where the contractor is a Co-operative Society, the deposited
 shall be @ Rs. 15 for each contract labour.
 A certificate by the principal employer in Form V to the effect
that the applicant has been employed by him as a contractor and
that he undertakes to be bound by all the provisions as applicable
to him as principal employer is to be given along with the
application.
 On receipt of the application, the licensing officer shall grant an
acknowledgement to the applicant.
Revocation  If the licensing officer is satisfied that a licence has been obtained
Suspension of by misrepresentation or suppression of any material fact, the
Licence licensing officer may, after giving the holder of the licence an
[Section 14] opportunity of showing cause, revoke or suspend the licence or
forfeit the deposit for the due performance of the conditions subject
to which the licence has been granted.
Welfare and Health of Contract Labour
Canteens  Every establishment to which the Act applies and wherein 100 or
[Section 16] more contract labourers are ordinarily employed by a contractor,
one or more canteens shall be provided and maintained by the
contractor.
Rest-rooms  In every place wherein contract labour is required to halt at night in
[Section 17] connection with the work, the contractor shall maintain for the use
of the contract labour, rest-rooms or such other suitable alternative
accommodation.
Other facilities  Every contractor shall provide and maintain (a) sufficient supply of
[Section 18] wholesome drinking water at convenient places; (b) sufficient
number of latrines and urinals convenient and accessible and (c)
washing facilities.
First-aid facility  The contractor shall provide not less than one first-aid box for 150
[Section 19] contract labour. The boxes shall be readily accessible during all
working hours at every place where contract Labour is employed.
Liability of  If any amenity required to be provided for the benefit of the contract
principal labour is not provided by the contractor, such amenity shall be
employer provided by the principal employer.
[Section 20]
Payment of  A contractor shall be responsible for payment of wages to each

Wages to  worker employed by him as contract labour.
Contract  Every principal employer shall nominate a representative duly
Labours authorized by him to be present at the time of disbursement of
[Section 21]  wages by the contractor.
 lt shall be the duty of such representative to certify the amounts paid
as wages.

64
 lt shall be the duty of the contractor to ensure the disbursement of

wages in the presence of the authorized representative of the
 principal employer.
 In case the contractor fails to make payment of wages within the
prescribed period or makes short payment, then the principal
employer shall be liable to make payment of wages in full or the
unpaid balance due to the contract labour employed by the
contractor.
 The principal employer shall recover the amount so paid from the
contractor either by deduction from any amount payable to the
contractor under any contract or as a debt payable by the
contractor.
Penalties
Obstruction  Whoever obstructs an inspector in the discharge of his duties or
(Section 22) refuses or willfully neglects to afford the inspector any reasonable
faculty for making any inspection, examination, inquiry or
investigation, he shall be punishable with imprisonment up to 3
months, or with fine up to Rs. 500, or with both.
Refusal to give  Whoever willfully refuses to produce to an inspector any register or
documents other document or prevents or attempts to prevent or does anything
(Section 22) which he has reason to believe is likely to prevent any person from
appearing before or being examined by an inspector, shall be
punishable with imprisonment up to 3 months, or with fine up to Rs.
500, or with both.
Contravention  Whoever contravenes any provision of the Act or of any rules made
of provisions of thereunder, shall be punishable with imprisonment up to 3 months,
the Act or with fine up to Rs. 1000, or with both. in the case of a continuing
[Section 23] contravention, an additional fine upto Rs. 100 for every day during
which such contravention continues after conviction for the first
shall be paid.
Other offences  If any person contravenes any of the provisions of the Act or of any
[Section 24] rules made there under for which no other penalty is elsewhere
provided, he shall be punishable with imprisonment for a term up to
3 months, or with fine up to Rs. 1000, or with both.
Ofences by  If a company commits an offence, the company as well as every
Companies person in charge of and responsible to the company for the conduct
[Section 25] of its business at the time of the commission of the offence shall be
deemed to be guilty of the offence and shall be liable to be
proceeded against and punished accordingly
Registers and  Every principal employer and every contractor shall maintain
Records registers and records giving particulars of contract labour employed,
[Section 29] the nature of work performed, the rates of wages paid etc.
Display of  Every principal employer and every contractor shall exhibit within
Notice the premises of the establishment where the contract labour is
employed, notices containing particulars of hours of work, nature of
duty etc.
65
Lesson 11
Maternity Benefit Act 1961

Objectives  The object of maternity leave and benefit is to protect the dignity of
motherhood by providing for the full and healthy maintenance of
 working woman and her child when she is not working.
  With this object the Maternity Benefit Act, 1961 was enacted
  The Act came into force on 01.11.1963
 As per preamble of the Act, it is an Act to regulate the employment of
woman in certain establishments for certain period before and after
child-birth and to provide for maternity and certain other benefits.
Scope and   The Act extends to the whole of india.
Coverage  It applies to every establishment being a factory, mine or plantation
including any such establishment belonging to Government and to every
establishment wherein persons are employed for the exhibition of
 equestrian acrobatic and other performances.
 The Act also applies to every shop or establishment in which 10 or more
persons are employed or were employed on any day of the preceding 12
 months.
 Where ESI Act applies to the factory but any employee is out of its
coverage due to salary limit, the provisions of the Maternity Benefit Act
shall apply in her case.
Exception  The Act shall not apply to any factory or establishment to which the
Employees„ State insurance Act, 1948 applies except as provided in
Sections 5A and 58.
Employees  Every woman employee, whether employed directly or through a
Entitled contractor, who has actually worked in the establishment for a period of
at least 80 days during the 12 months immediately preceding the date of
 her expected delivery, is entitled to receive maternity benefit. [Sec 5(2)]
 The qualifying period of 80 days shall not apply to a woman who has
immigrated into the State of Assam and we pregnant at the time of
 immigration, [Sec- 5(2)]
 For calculating the number of days on which a woman has actually
worked during the preceding 12 months, the days on which she has been
 laid off or was on holidays with wages, shall also be counted.
 There is neither a wage ceiling for coverage under the Act nor there is
any restriction as regards the type of work a woman is engaged in.
 Female workers engaged on casual basis or on muster roll on daily
wages are also entitled to benefit under the Act since there is nothing in
the Act which confers the benefit only on regular women employees.
Maternity Benefit
Rate of  Every woman shall get maternity benefit for the period of her actual
66
Benefit absence at the rate of average daily wage.

 Average daily wage for this purpose means the average wages payable
to her for the days on which she has worked during the period of three
calendar months immediately preceding the date from which she
absents herself on account of maternity, or the minimum rate of wage
fixed or revised under the Minimum Wages Act, 1948 or „10 whichever
is the highest.
Minimum  A woman shall be entitled to maternity benefit if she has actually
Working worked in an establishment for t not less than 80 days in the 12 months
Period immediately preceding the date of her expected delivery.
 For calculating the actual working days, the days for which she has been
laid off or was on holidays shall be taken into account as working days.
Maximum The maximum period for entitlement of maternity benefit shall be 26 weeks of
Benefit which not more than 8 weeks shall precede the date delivery.
Period
Death of a If a woman entitled to maternity benefit or any other amount dies before
Woman receiving such benefit or amount, the employer shall pay such benefit or
Before amount to the person nominated by the woman in the notice and in case there is
Actually no such nominee, to her legal representative.
Receiving
Benefit
Claim for  Any woman entitled to maternity benefit may give notice in writing
Maternity  to her „employer claiming the benefit.
Benefit  She may nominate any person in the notice and state that she will
[Section 6] not work in any establishment during the period for which she
 receives maternity benefit.
 She shall state the date from which she will be absent not earlier
 than six weeks from the date of her expected delivery.
 Any woman who has not given the notice when she was pregnant
 may give such notice as soon as possible after the delivery.
 On receipt of the notice, the employer shall permit such woman to
absent herself during the period for which she receives the maternity
 benefit.
 The amount of maternity benefit for the period preceding the date of
her expected delivery shall be paid in advance on production of proof.
 The amount due for the subsequent period shall be paid within 48
 hours on production of proof of delivery of child.
 The failure to give notice shall not disentitle a woman to maternity
benefit.
Forfeiture of  If a woman after she has been permitted by her employer to absent
Maternity for any period works in any establishment during such authorized
Benefit absence, she shall forfeit the maternity benefit for such period.
Maternity  Every woman entitled to maternity benefit under this Act shall also be
bonus entitled to receive from her employer 8 medical bonus of Rs. 1000, if
no pre-natal confinement and post-natal care is provided for by the
67
[Section 8] employer free of charge.

Leave Leave for  In case of miscarriage or medical
Miscarage termination of pregnancy, a woman shall be
[Section 9] entitled to leave with wages for a period
of 6 weeks immediately following the day
of miscarriage 0" medical termination of
pregnancy.
Leave with  In case of tubectomy operation, a woman
wages for shall be entitled to leave with wages at the
tubectomy rate of maternity benefit for a period of 2
operation weeks immediately following the day of her
[Section 9A] tubectomy operation.
Leave for  A woman suffering from illness arising out of
illness pregnancy, delivery; premature birth of
[Section 10] child, miscarriage, medical termination of
pregnancy or tubectomy operation shall
be entitled to leave with wages at the rate
of maternity benefit for a maximum period
of one month in addition to the period of
absence allowed to her.
Nursing Every woman who delivered of a child if returns to
Breaks duty after such delivery shall, in addition to the
[Section 11] normal interval for rest, will get two breaks for
nursing the child until the child attains the age
of 15 months.
Dismissal  When a woman absents herself from work in accordance with the
During Act it shall be unlawful for her employer to discharge or dismiss her
Absence for  during such absence.
Pregnancy  The employer shall not vary to her disadvantage any of the conditions
of her service.
 The discharge or dismissal of a woman at any time during her
pregnancy shall not deprive her of the maternity benefit or medical
bonus.
No Deduction  No deduction from the normal and usual daily wages of a woman
of Wages entitled to maternity benefit shall be made by reason only of (a) the
nature of work assigned to her; or (b) breaks for nursing the child
allowed to her.
Penalties
Non-payment  If any employer fails to pay any amount of maternity benefit to a
of benefit or
68
discharge of woman or discharges or dismisses such woman during her absence, he

women shall be punishable with imprisonment which shall not be less than 3
months but which may extend to one year and with fine which shall
not be less than Rs. 2,000 but which may extend to Rs. 5,000. The
court may, for sufficient reasons impose a sentence of imprisonment
for a lesser term or fine only in lieu of imprisonment.
Contravention  If any employer contravenes the provisions of the Act or the rules
of the Act made thereunder, he shall, if no other penalty is elsewhere provided
under the Act, be punishable with imprisonment which may extend to
one year, or with fine which may extend to Rs. 5,000, or with both.
69
Lesson 12
Child Labour (Prohibition & Regulation) Act

1986
Objectives  In order to ban employment of children below the age of 14 years in
factories, mines and hazardous employments and to regulate the
working conditions of children in other employments, Child Labour
(Prohibition & Regulation) Act, 1986 was enacted.
The objectives of the Act are as follows:
 To ban the employment of children in Specified occupations and

 processes.
 To lay down procedures for modifications to the Schedule of banned
 occupations or processes.
 To regulate the conditions of work of children in employments where
they are not prohibited.
 To lay down enhanced penalties for employment of children where
they are prohibited.
Scope and  The Act applies to all establishments and workshops wherein any
Coverage  industrial process is carried on.
 It does not apply to any factory to which Section 67 of the Factories
 Act, 1948 (Employment of Children) applies.
 It prohibits employment of children in all occupations and processes to
facilitate their enrolment in schools in view of the Right of Children to
Free and Compulsory Education Act, 2009 and to prohibits
employment of adolescents (persons who have completed fourteenth
year of age but have not completed eighteenth year) in hazardous
occupations and processes and to regulate the conditions of service of
adolescents.
 The Schedule to the Act now provides 18 occupations and 65
processes Where employment of children is prohibited.
Who is a Child  Child means a person who has not completed his fourteenth year of
Labour age or such age as may be specified in the Right of Children to Free
and Compulsory Education Act, 2009, whichever is more. [Section
2(11)]
Establishment  Establishment includes a shop, commercial establishment, work-shop,
[Section 2(iv)] farm, residential hotel, restaurant, eating-house, theatre or other
place of public amusement or entertainment.
Prohibition of Section 3 of the Act provides that no child shall be employed or permitted to
70
employment work in any occupations or process except:-

of child labour  helps his family or family enterprise, which is other than any
[Section 3] hazardous occupations or processes set forth in the Schedule, after his
 school hours or during vacations;
 works as an artist in an audio-visual entertainment industry, including
advertisement, films, television serials or any such other
entertainment or sports activities except the circus, subject to such
conditions and safety measures, as may be prescribed.
 However no such work shall effect the school education of the child.
Prohibition of Section 3A provides that no adolescent shall be employed or permitted to
employment work in any of the hazardous occupations or processes set forth in the
of adolescents Schedule. The hazardous occupations or processes set forth in the Schedule
in certain are as under:
hazardous
occupations   Mines.
and processes  Inflammable substances or explosives.
 Hazardous process.
However, the Central Government may, by notification, specify the nature of

the non hazardous work to which an adolescent may be permitted to work
under the Act.
Hours and  No child shall work in any establishment in excess of such number of
period of work  hours as may be prescribed.
[Section 7]  The period of work on each day shall be so fixed that no period shall
exceed 3 hours.
 No child shall work for more than 3 hours before an interval for rest
 for at least one hour.
 The period of work shall not be spread over more than 6 hours,
 including waiting time on any day.
  No child shall work between 7 pm. and 8 am.
  No child shall work overtime.
 No child shall work in any establishment on any day on which he has
already been working in another establishment.
Weekly  Every child employed in an establishment shall be allowed in each
Holidays week, a holiday for one whole day.
[Section 8]  The day shall be specified by the occupier in a notice permanently
exhibited in a conspicuous place in the establishment.
 The day so specified shall not be altered by the occupier more than
once in 3 months.
 These provisions shall not apply to any establishment where any
process is carried on by the occupier with or to any schools established
by, or receiving assistance or recognition from Government
Disputes as to  If any question arises as to the age of any child and no certificate as to
age the age of such child is granted by the prescribed authority, the matter
71
[Section 10] be referred by the inspector to the prescribed medical authority.

 Every certificate as to the age of a child granted by a prescribed
medical authority shall be W evidence as to the age of the child.
Display of  Every railway administration, every port authority and every occupier
Notice shall display in a conspicuous and accessible place at every station on
[Section 12] its railway or within the limits of a port or at the place of work a notice
in the local language and in the English language containing an
abstract of Sections 3 and 14.
Penalties  Whoever employs any child or permits any child to work in
[Section 14] contravention of the provisions of the Act shat] be punishable With
imprisonment which shall not be less than 3 months but may extend
to one year or With line not be less than Rs. 10,000 but which may
 extend to Rs. 20,000 or with both.
 Whoever, having been convicted of an offence commits a like offence
afterwards; he shall be punishable With imprisonment for a term
which shall not be less than 6 months but which may extend to 2
 years.
 Any employer who fails to give notice or fails to maintain a register or
makes any false entry in any such register; or fails to display a notice or
fails to comply with or contravenes any other provisions of the Act or
the rules made there under; shall be punishable with simple
imprisonment up to one month or With fine.
Maintenance Every occupier shall maintain in respect of children a register showing
of Register  the name and date of birth of every child;
 hours and periods of work of any such child and the intervals of rest;
 the nature of work; and
 such other particulars as may be prescribed.
The register shall be available for inspection by an Inspector at all times during
working hours or when work is being carried on in any such establishment.
72
Lesson 13
Industrial Employment (Standing Order) Act 1946

Objectives  The object of the Act is to have uniform Standing Orders providing for
 the matters enumerated in the Schedule to the Act.
 As the preamble of the Act says it is an Act to require employers in
industrial establishments formally to define conditions of
employment under them and to make the said conditions known to
workmen employed by them.
Coverage  The Act applies to every industrial establishment where 100 or more
workmen are employed, or were employed on any day of the
 preceding twelve months.
 The appropriate government may, after giving not less than two months‟
notice, apply the provisions of the Act to any industrial establishment
employing less than 100 workmen.
Standing  “Standing Orders‟ means rules of conduct for workmen employed in
Orders -  industrial establishments.
Definition &  In order to maintain harmonious relationship between the employers
Meaning and the employees, regulating the conditions of recruitment,
discharge, disciplinary action, leave, holidays, etc. of the workers
employed in industrial establishments, the Industrial Employment
(Standing Orders) Act, 1946 was enacted.
Industrial Industrial establishment means the following:
Establishment
[Section 2(e)]  An industrial establishment as defined in Section 2(ii) of the Payment
 of Wages Act, 1936.
  A factory as defined in Section 2(m) of the Factories Act, 1948.
  A railway as defined in Section 2(4) of the lndian Railway Act, 1989.
 The establishment of a person who, for the purpose of fulfilling a
contract with the owner of any industrial establishment, employs
workmen.
Submission of  Within six months from the date on which the Act becomes applicable
draft Standing to an industrial establishment, the employer shall submit to the
Orders for Certifying Officer five copies of the draft standing orders for adoption
Certification in the industrial establishment.
[Section 3]  The draft standing order shall be, as far as practicable, in conformity
 with the model standing order.
 The draft standing orders shall be accompanied with a statement
giving particulars of the workmen including the name of the trade
73
 union, if any, to which they belong.

 A group of employers in similar industrial establishments may submit
a joint draft of standing orders.
Certification of  On receipt of the draft standing order, the Certifying Officer shall
Standing forward a copy thereof to the trade union of the workmen or where
Orders there is no such trade union, to the workmen together with a notice
[Section 5]  requiring objections, if any.
 The objections, if any, are to be given within 15 days from the receipt
 of the notice.
 After giving the employer and the trade union or such other
representatives of the workmen an opportunity of being heard, the
Certifying Officer shall decide whether any modification or addition to
 the draft submitted by the employer is necessary.
 The Certifying Officer shall thereupon certify the draft standing orders
 after making modifications if any.
 Within seven days thereafter he shall send copies of the certified
standing orders to the employer and to the trade union or other
representatives of the workmen.
Appeal against  Any employer, Workmen, trade union or other representatives of the
Certification workmen aggrieved by the order of the Certifying Officer may, within
[Section 6] 30 days from the date on which copies are sent, appeal to the
 appellate authority.
 The appellate authority shall by order in writing confirm the standing
orders either in the form certified by the Certifying Officer or after
amending the said standing orders by making modifications or
 additions as it thinks necessary.
 The appellate authority shall, within 7 days of its order send copies
thereof to the Certifying Officer, employer and trade union or other
representatives of the workmen, accompanied, unless it has
confirmed without amendment, by copies of the standing orders as
certified by it.
Effective Date  The standing orders shall, unless an appeal is preferred, come into
of Operation of operation on the expiry of 30 days from the date on which
Standing Order authenticated copies thereof are sent.
[Section 7]  Where an appeal is preferred, the standing orders shall come into
operation on the expiry of 7 days from the date on which copies of
the order of the appellate authority are sent.
Display of  The text of the finally certified standing orders shall be prominently
Standing Order posted by the employer in English and in the language understood by
[Section 9] the majority of his workmen on special boards at or near the entrance
through which the majority of the workmen enter the industrial
establishment and in all departments where the workmen are
employed.
Duration and  Standing orders finally certified shall not be modified until the expiry
74
Modification of of six months from the date on which the standing orders or the last
Certified  modifications came in to operation.
Standing  After six months, modification can be made if there is any agreement
Orders between the employer and the workmen or trade union or other
[Section 10]  representative of the workmen.
 Any one of them may apply to the Certifying Officer for modification
of the standing orders attaching five copies of the modifications
 proposed.
 Where such modifications are proposed to be made by agreement a
certified copy of that agreement shall be filed along with the
application.
Powers of  All the powers of a Civil Court for the purposes of receiving evidence,
Certifying administering oaths, enforcing the attendance of witnesses, and
Officer and The  compelling the discovery and production of documents.
Appellate  To correct any clerical or arithmetical mistake in any order passed by
Authority it or errors arising therein from any accidental slip or omission
[Section 11]
Penalties  An employer who fails to submit draft standing orders or who
modifies his standing orders otherwise than in accordance with
 Section 10, shall be punishable with fine up to ? 5,000.
 In the case of a continuing offence the punishment is with a further
fine up to t 200 for every day after the first during which the offence
 continues.
 An employer who does any act in contravention of the finally certified
 standing orders shall be punishable with fine up to Rs. 100.
 In the case of a continuing offence the punishment is with a further
fine up to Rs. 25 for every day after the first during which the offence
continues.
Model  Model Standing Orders refer to the one given in the Schedule to the
Standing Industrial Employment (Standing Orders) Act, 1946. This model
Orders standing order can be used and followed by establishments in
preparing their own standing order. This is like a sample standing
order for use by the employers in preparing their standing orders.
This standing order is applicable to an establishment which has no
certified standing orders.
Draft Standing  Draft standing orders means the standing order prepared by an
Order establishment and submitted to the Certifying officer for certification.
Certified  When an establishment prepares it standing orders and get it
Standing Order registered with the authority, the standing orders are known as
certified standing orders. Certified standing orders are the approved
standing order to be followed in the establishment.
Subsistence  Where any workman is suspended by the employer pending inquiry,
Allowance the employer shall pay to such workman an allowance called
(Section 10A)  subsistence allowance.
75
 Such allowance is payable for the first 90 days of suspension @ 50%

of the wages which workman was entitled to immediately preceding
 the date of such suspension.
 If there is delay in completion of disciplinary proceedings against such
workman not directly attributable to the conduct of such workman
subsistence allowance @ 75% of such wages is payable for the
 remaining period of suspension. '
 If any dispute arises regarding the subsistence allowance, the
 workman or the employer may refer the dispute to the Labour Court.
 The Labour Court shall, after giving the parties an opportunity of
being heard, decide the dispute such decision shall be final and
 binding on the parties.
 Where provisions relating to payment of subsistence allowance under
any other law for the time being in force in any State are more
beneficial, the provisions of such other law shall be applicable to the
payment of subsistence allowance in that State.
76
Lesson 14
Industrial Disputes Act 1947
INTRODUCTION  The Employers and Workmen’s (Disputes) Act, 1880 was the first law
 dealing with industrial disputes in India,
  The Trade Disputes Act, 1929, replaced this Act.
 The Industrial Disputes Act, 1947 came in place of the 1929 Act to give
 more coverage to the industries disputes in the country.
 The Act came into force on the 01.04.1947.
 The Act extends to the whole of lndia.
 It applies to all industries whether owned by private owners or by the
Government
Objectives Workman of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea

Estate, AIR (1958) SC 353 . The Supreme Court laid down the following
principal objectives of the Act:
 Promotion of measures for securing and preserving amity and good

 relations between the employer and workmen.
 Investigation and settlement of industrial disputes between employers
 and employers, employers and workmen, or workmen and workmen.
 Prevention of illegal strikes and lock-outs.
 Relief to workmen in the matter of lay-off and retrenchment.
 Promotion of collective bargaining.
 Providing machinery or authority for settlement of industrial disputes.
 Relief to workmen in case of transfer and closure of undertaking.
 Improving service conditions of labour.
Workman Any person (including an apprentice) employed in any industry to do any

Section 2(5) manual, unskilled, skilled, technical, operational, clerical or supervisory work
for hire or reward, whether the terms of employment is express or implied.
For the purposes of any proceeding under the Act. Workmen includes any such
person who has been dismissed, discharged or retrenched in connection with, or
as a consequence of that dispute or whose dismissal, discharge or retrenchment
has led to that dispute.
Workman does not include the following :

 Any person who is subject to the Air Force Act, 1950,0r the Army Act,
1950, or the Navy Act, 1957.
 Any person who is employed in the police service or as an officer or
 other employee of a prison.
77
 Any person who is employed mainly in a managerial or administrative

 capacity.
 Any person who, being employed in a supervisory capacity, draws
wages exceeding 10,000 p. m Any person who exercises functions
mainly of a managerial nature.
Wages Section Wages means all remuneration capable of being expressed in terms of money,
2 (rr) which would, if the terms of employment, expressed or implied, were fulfilled,
be payable to a workman in respect of his employment or of work done in such
employment.
Wages includes the following :
 Allowances (including dearness allowance) as the workman is for the

 time being entitled to.
 The value of any house accommodation or of supply of light, water,
medical attendance or other amenity or of any service or of any
 concessional supply of food-grains or other articles.
 Any travelling concession.
 Any commission payable on the promotion of sales or business or both.
Industry Industry means any business, trade, undertaking, manufacture or calling of

[Section 2(i)] employers and includes any calling, service, employment, handicraft, or
industrial occupation or evocation of workmen.
Case Laws; Bangalore Water Supply v. A Rajappa (1978) 2 SCC 213

[Triple Test]
A bench of the Supreme Court consisting of seven judges exclusively

considered the scope of industry and laid down that "Where there is
 systematic activity,
  organised by co-operation between employer and employee,
 for the production and/or distribution of goods and services calculated
to satisfy human wants and wishes,
 prima facie, there is an "industry" in that enterprise." This is known as

the ‘Triple Test’ for defining an enterprise as industry.
Industrial Industrial dispute means any dispute or difference between

Dispute  employers and employers or
[Section 2(k)]  employers and workmen, or
 workmen and workmen,
which is connected with the employment or non-employment or the terms of

employment or with the conditions of labour of any person.
78
The two crucial limitations are

 the dispute must be a real dispute between the parties capable of
 settlement or adjudication and
 the person against whom the dispute is raised must be one in whose
employment, non-employment, terms of employment, or conditions of
labour, the parties to the dispute have a direct or substantial interest.
Individual
Dispute or An industrial dispute may be individual dispute or collective dispute. Any
Collective dispute between an individual worker and the management is an individual
Dispute dispute.
Where any dispute relates to the overall workers like dispute relating to hours
of work, leave, wages, retrenchment, closure etc., these are collective disputes.
Case Laws : Workmen v. Cotton Greaves Co. Ltd. (1971) An industrial

dispute can be raised for non-workmen.
Industrial  Where any employer discharges, dismisses, retrenches, or otherwise

Dispute by terminates the services of an individual Workman, the dispute or
individual difference between that workman and his employer shall be deemed to
(Section 2A) be an industrial dispute even when no other workman nor any union of
workmen is a party to the dispute.
Works  In case of any industrial establishment in which 100 or more workmen

Committee are employed or have been employee; on any day in the preceding 12
[Section 3] months, the appropriate Government may order the employer to
 constitute a Works Committee.
 The Committee shall consist of representatives of the employer and
workmen engaged in the establishment.
Duties of  To promote measures for securing and preserving amity and good
Works  relations between the employer anq workmen.
Committee  To comment upon matters of their common interest.
 To endeavour to compose any material difference of opinion in respect
of any matters.
Conciliation   Appropriate government to appoint conciliation officers.

Officer [Section  The conciliation officers shall be charged with the duty of mediating
4] and promoting the settlement of industrial disputes.

 A conciliation officer may be appointed for a specified area or for
specified industries in a specified area or for one or more specified
industries either permanently or for a limited period.
Powers of  The conciliation officer may enter the premises of any establishment to
79
Conciliation which the dispute relates after giving reasonable notice for holding
Officer  conciliation proceeding.
 The conciliation officer may enforce the attendance of any person for
 the purpose of examination of such person
 The conciliation officer may call for and inspect any documents which
are relevant to the industrial dispute or for verifying the implementation
of any award or carrying out any other duty.
Duties of  Where any industrial dispute exists or is apprehended, the conciliation

Conciliation  officer may hold conciliation proceedings to settle the dispute.
Officers  Where the dispute relates to a public utility service and a notice has
been given, the conciliation officer shall hold conciliation proceedings
 to settle the dispute.
 The conciliation officer shall investigate the dispute and may do all such
things as he thinks ht for the purpose of inducing the parties to come to
a fair and amicable settlement.

 A report shall be submitted within 14 days of the commencement of the
conciliation proceedings or within such shorter period as may be fixed
by the appropriate Government. The time may be extended by such
period as may be agreed upon in writing by all the parties to the dispute.
Duties of Court  A Court shall inquire into the matters referred to it and report thereon to
the appropriate government ordinarily within a period of six months
 from the commencement of its inquiry.
 Every report of a Court together with any minute of dissent shall, within
a period of 30 days from the date of its receipt by the appropriate
government, be published in such manner as the appropriate
 government thinks tit.
The award so published shall be final and shall not be called in question
by any Court.
Power of  A member of a Labour Court may, after giving reasonable notice, enter
Labour Courts the premises occupied by any establishment to which the dispute relates
 for the purpose of inquiry.
  The Court shall have the same powers as are vested in a Civil Court,.
 A Labour Court may appoint one or more persons having special
 knowledge of the matter under consideration as assessor to advise it.
 The Labour Court shall have full power to determine by and to whom
and to what extent and subject to what conditions, if any, such costs are
 to be paid.
 Where an industrial dispute relating to the discharge or dismissal of a
workman has been referred to a Labour Court, and if it is satisfied that
the order of discharge or dismissal was not justihed, it may set aside the
order of discharge or dismissal and direct reinstatement of the workman
 on such terms and conditions as it thinks tit.
 The Labour Court shall rely only on the materials on record and shall
80
not take any fresh evidence in relation to the matter.
Reference of Where the appropriate government is of opinion that any industrial dispute
Disputes to the exists or is apprehended, it may refer the dispute to different adjudication
Board Court or authorities as under for adjudication:
Tribunals
[Section 10]
  To Board of Conciliation - For settlement of any dispute.
 To a Court for inquiry - Any matter appearing to be connected with
the dispute. (c) To a Labour Court if the dispute relates to any matter
 specified in the Second Schedule.
 To a Labour Court - Where the dispute relates to any matter specified
in the Third Schedule and is not likely to affect more than 100
 workmen.
 To a Tribunal -The dispute or any matter appearing to be connected
with the dispute, whether it relates to any matter specified in the Second
 Schedule or the Third Schedule.
 To National Tribunal -Where the Central Government is of opinion
that any industrial dispute involves any question of national importance
or is of such a nature that industrial establishments situated in more than
one State are likely to be affected, the Central Government may,
whether or not it is the appropriate Government in relation to that
dispute, at any time refer the dispute.
THE Matters within the Jurisdiction of Labour Courts

SECOND
SCHEDULE 1. The propriety or legality of an order passed by an employer under the
standing orders;
2. The application and interpretation of standing orders;
3. Discharge or dismissal of workmen including reinstatement of, or grant of

relief to, workmen wrongfully dismissed;
4. Withdrawal of any customary concession or privilege;

5. illegality or otherwise of a strike or locklout; and
6All matters other than those specified in the Third Schedule.
THE THIRD Matters within the Jurisdiction of Industrial Tribunals

SCHEDULE
1. Wages, including the period and mode of payment;
2. Compensatory and other allowances;
3. Hours of‘ work and rest intervals;
4. Leave With wages and holidays;
5. Bonus, profit sharing, provident fund and gratuity;
6. Shift working otherwise than in accordance with standing orders;
7. Classification by grades;
81
8. Rules of discipline;
9. Rationalisation;
10. Retrenchment of workmen and closure of establishment; and
11. Any other matter that may be prescribed.
Voluntarily  Where any industrial dispute exists or is apprehended and the employer
Reference of and the workmen agree to refer the dispute to arbitration, they may, at
Disputes to any time before the dispute has been referred to a Labour Court or
Arbitration Tribunal or National Tribunal, by a written agreement refer the dispute
[Section 10A] to arbitration.

 The reference shall be as per the arbitration agreement.
Award  As per Section 2(b), award means an interim or a final determination of

any industrial dispute or of any question relating thereto by any Labour
Court, industrial Tribunal or National Industrial Tribunal. It includes an
arbitration award. The report of a Board or Court shall be in writing and
 shall be signed by all the members of the Board or Court
 The award of a Labour Court or Tribunal or National Tribunal shall be
 in writing and shall be signed by its presiding officer. ‘
 Every report of a Board or Court together with any minute of dissent,
every arbitration award and every award of a Labour Court, Tribunal or
National Tribunal shall, within 30 days from the date of its receipt by
the appropriate Government, be published in such manner as the
 appropriate Government thinks fit.
The award published shall be final and shall not be called in question by
any Court.
Settlement  Settlement means a settlement arrived at in the course of conciliation
[Section 2(p)] proceeding.
 It includes a written agreement between the employer and workmen
 arrived at otherwise than in the course of conciliation proceeding.
  The agreement has to be signed by the parties.
 A Copy the agreement has to be sent to an officer authorised in this
behalf by the appropriate Government and to the conciliation officer.
Period of  Such settlement shall be binding for such period as is agreed upon by
operation of the parties.
Settlement 
[Section 19]  If no such period is agreed upon, it shall be binding for a period of six
months from the date on which the memorandum of settlement is signed
by the parties to the dispute.
Change in No change without notice section 9A

Conditions of
Service  An employer, who proposes to effect any change in the conditions of
service in respect of any matter specified in the Fourth Schedule, shall
82
not effect such change without giving to the workmen a notice of the
 nature of the change proposed.
 Such change shall not be effective within 21 days of giving such notice.
No notice shall be required under the following circumstances as provided
in section 9A
  Where the change is effected in pursuance of any settlement or award.

Where the workmen are persons to whom the Fundamental and
Supplementary Rules, Civil Services (Classification, Control and
Appeal) Rules, Civil Services (Temporary Service) Rules, Revised
Leave Rules. Civil Service Regulations, Civilians in Defence Services
(Classification, Control and Appeal) Rules or the Indian Railway
Establishment apply.
No action  No employer shall, during the pendency of any proceeding in respect of
against an industrial dispute, take any action against any protected workman
protected concerned in dispute by altering the service conditions applicable to him
workmen immediately before the commencement of such proceedings.

 No employer shall discharge or punish, whether by dismissal or
otherwise, such protected workman.
Unfair Labour  No employer or workman or a trade union shall commit any unfair
Pratice [Section labour practice.

25T] Any person who commits any unfair labour practice shall be punishable
with imprisonment up to six months or with fine up to 1000 or with
both.
Strikes [Section Strike means cessation of work by a body of persons employed in any industry
2(q)] acting in combination, or a concerted refusal, or a refusal under a common
understanding of any number of persons who are so employed to continue to
work or to accept employment.
Prohibition of Strikes Section 23
No workman shall go on strike in breach of contract under the following

situations:
 During the pendency of conciliation proceedings before a Board and

 within 7 days after the conclusion of such proceedings.
 During the pendency of proceedings before a Labour Court, Tribunal or
National Tribunal and two months after the conclusion of such
 proceedings.
 During the pendency of arbitration proceedings before an arbitrator and
 two months after the conclusion of such proceedings.
 During any period in which a settlement or award is in operation, in
respect of any of the matters covered by the settlement or award.
83
Illegal Strikes Section 24
  A strike is legal if it does not violate any provision of the statute.

 A strike shall be illegal if it is in contravention of section 22 or section
 23.
 Strike is also illegal if it is continued in contravention of an order made
 under section 10(3) or section 10A(4A).
 Where a strike is in existence at the time of reference of the dispute to a
Board, Arbitrator, Labour Court, Tribunal or National Tribunal, the
continuance of such strike shall not be deemed to be illegal if such strike
was not in contravention of the provisions of the Act or not prohibited
 under section 10(3) or section 10A(4A) at commencement.
 A strike declared in consequence of an illegal lock-out shall not be
deemed to be illegal.
Dismissal of Workman for illegal Strike
  lf workers participate in illegal strike. the employer can dismiss them.

 Before, dismissal proper inquiry should be held and the worker be given
an opportunity to represent his case.
Wages for the Strike Period
 The workmen shall be entitled to wages for the period of strike, where it
 is found that the strike is neither illegal nor unjustified.
 A strike is legal if it does not violate any provision of the law.
 And a strike cannot be said to be unjustified unless the reasons for it are
entirely perverse or unreasonable.

In this connection, it is pertinent to note that in the case of Bank of indie Vs
T.S. Kelawala and Dre. the Supreme Court had observed that the workmen are
not entitled to wages for the strike period. irrespective of whether the strike is
legal or illegal. However, a larger bench of the Supreme Court had earlier
upheld the claim for wages for the strike period, where the strike was held to be
neither illegal nor unjustified. And. where there are two pronouncements of the
Supreme Court, suggesting or indicating contrary views, the ruling of the
decision rendered by the larger Bench should be adopted.
Strikes in Public The Act prohibits strike in public utility service

Sector
Undertaking  Without giving notice of strike to the employer six weeks before
[Section 22] striking; or
 Within fourteen days of giving such notice ; or
  Before the expiry of the date of strike specified in any such notice
 During the pendency of any conciliation proceedings and 7 days after
84
 the conclusion of such proceedings.

 If an employer receives any such notice he shall within five days report
to the appropriate Government
Lock-out Lock-out means the following:

[Section 2(I)]
 Temporary closing of a place of employment or the suspension of work,
 or the refusal by an employer to continue to employ any employee.
 Termination of the service of the workman due to non-renewal of the
contract of employment on its expiry or the contract being terminated in
 terms of the contract.
 Termination of the service of a workman on the ground of continued ill
health.
 Lock out is opposite to and an antithesis of strike.
Prohibition of Lock-out Section 23
No employer shall declare a lock-out
 During the pendency of conciliation proceedings before a Board and 7

 days after the conclusion of Such proceedings;
 During the pendency of proceedings before a Labour Court. Tribunal or
National Tribunal and two months. after the conclusion of such
 proceedings;
During the pendency of arbitration proceedings before an arbitrator and two
months after the conclusion of such proceedings; or
 During any period in which a settlement or award is in operation, in
respect of any of the matters covered by the settlement or award.
Illegal Lockout [Section 24)
 Lock-out shall be illegal if it is commenced or declared in contravention

of section 22 or section 23 or it is continued in contravention of an order
 made under section 10(3) or section 10A(4A).
 A lock-out declared in consequence of an illegal strike shall not be
deemed to be illegal.
Lay-Off As defined in Section 2(kkk), lay-off with its grammatical variations and
cognate expressions means the failure, refusal or inability of an employer on
account of shortage of coal, power or raw materials or the accumulation of
stocks or the breakdown of machinery or natural calamity or for any other
reason to give employment to a workman whose name is borne on the muster
rolls of his industrial establishment.
Compensation to workmen laid-off Section 25C
85
 Whenever a workman (other than a badli workman or a casual

workman) whose name is borne on the muster rolls and has completed
one year of continuous service is laid-off, he shall be paid for all days
 during which he is so laid-off except for weekly holidays.
 The compensation shall be equal to 50% of the total of basic wages and
 dearness allowance.
 If during any period of twelve months, a workman is laid-off for more
than 45 days, no such compensation shall be payable in excess of the
first 45 days if there is an agreement between the workman and the
employer.
Non-entitlement of Compsensation for laid off Section 25E
 No compensation shall be paid to a workman if he refuses to accept any

alternative employment in the same establishment, or in any other
establishment belonging to the same employer situate in the same town
or village or situate within a radius of five miles from the establishment
 to which he belongs,
 Such alternative employment should not require any special skill or
 previous experience and can be done by the workman.
  The wages should be that normally have been paid to the workman.
 If he does not present himself for work at the appointed time during
normal working hours at least once a day no compensation shall be
 paid.
 If such laying-off is due to a strike or slowing-down of production on
the part of workmen in another part of the establishment, no
compensation shall also be paid.

Prohibition of lay-off Section 25M
 Where the workman of a mine has been laid off, the employer shall,
within a period of 30 days from the date of commencement of such lay-
off, apply to the appropriate Government for permission to continue the
lay-off.
Retrenchment  As defined in Section 2(oo), retrenchment means the termination of the

service of a workman by the employer for any reason whatsoever
otherwise than as a punishment inflicted by way of disciplinary action.
 Exception Retrenchment does not include the following :

 Voluntary retirement of the workman.
  Retirement of the workman on reaching the, age of superannuation.
 Termination of the service of the workman as a result of the non-
 renewal of the contract of employment.
 Termination of the service of a workman on the ground of continued ill
 health.
 Retrenchment may be for surplus age, redundancy due to advanced
86
machinery, slowdown in business. Reason does not matter.
 Retrenchment Compensation Section 25F
 A workman who has been in continuous service for not less than one
year under an employer shall not be retrenched by the employer under
the following circumstances :
 Until the workman has been given one month's notice in writing
indicating the reasons for retrenchment or the workman has been paid
 wages in lieu of such notice.
 Until the workman has been paid compensation equivalent to 15 days'
average pay for every completed year of continuous service or any part
 thereof in excess of six months.
 Until notice is served on the appropriate Government.
 Notice of Retrenchment Section 25N
 In case of an industrial establishment (not being a seasonal

establishment or in which work is performed only intermittently) in
which not less than 100 workmen were employed on an average per
working day for the preceding 12 months no workman employed in any
such establishment, who has been in continuous service ,for not less
than one year under an employer shall be retrenched by that employer
until the workman has been given three months' notice in writing
indicating the reasons for retrenchment and the period of notice has
expired or the workman has been paid in lieu of such notice, wages for
the period of the notice.
 Re-employment of retrenched workmen Section 25H
 Where any workman is retrenched and the employer proposes to employ

any persons, he shall give an opportunity to the retrenched workmen
who are citizens of India for re-employment.
 Such retrenched workmen who offer themselves for re-employment
shall have preference over other persons.
CLOSURE OF  As defined in Section 2(cc) ‘closure’ means the permanent closing

UNDERTAKING  down of a place of employment or part thereof.
 Section 25FFA of the Act provides that an employer who intends to
close down an undertaking shall serve a notice on the appropriate
Government stating clearly the reasons for the closure at least 60 days
before the date of the intended closure.
 Compensation in case of Closure Section 25FFF
87
 Where an undertaking is closed, every workman who has been in

continuous service for not less than one year in that undertaking
immediately before such closure shall be entitled to notice and
 compensation as if the workman had been retrenched.
 Where the undertaking is closed down on account of unavoidable
circumstances beyond the control of the employer, the compensation
shall not exceed average pay for 3 months.
Penalties An employer shall be liable to the following penalties for offences under the
Act:
 Lay-off without previous permission " [Section 25Q] Imprisonment

for a term up to one month or with fine up to 1000, or with both.

 Retrenchment without previous permission [Section 25Q]
Imprisonment for a term up to one month or with fine up to 1000, or
with both.

 Closure without permission [Section 25R] Imprisonment for a term
up to six months or with fine up to 5000 or with both.

 Closure if not permitted by authority -[Section 25R] Imprisonment
up to one year, or with fine up to 5000, or with both. In case of
continuing offence, further fine up to 2000 for every day during which
the contravention continues.

 Committing unfair labour practices [Section 25U] Imprisonment up
to six months or with fine up to IOOO or with both.

 Illegal strikes and lock-outs [Section 26] Imprisonment up to one
month, or with fine up to 50, or with both.

Furtherance of illegal lock-outs [Section 26] Imprisonment up to one month,
or with up to 1000, or with both.
 Instigating strike etc. [Section 27] Imprisonment up to six months, or
with up to 1000, or with both.

 Giving financial aid to illegal strikes and lock-outs [Section 28]
Imprisonment up to six months, or with fine up to 1000, or with both.

 Committing breach of settlement or award [Section 29]
Imprisonment up to six months, or with tine, or with both, and in case of
continuing one, further tine up to 200 for every day during which the
breach continues.

 Disclosing confidential information [Section 30] Imprisonment up to
88
six months, or with fine up to 1 000, or with both. '


 Closure without notice [Section 30A] Imprisonment up to six months,
or with fine up to 5000, or with both.

 Other offences -[Section 31] Any employer who contravenes the
provisions for changing conditions of service, etc. during pendency of
proceedings, shall be punishable with imprisonment up to six months, or
with fine up to 1000, or with both. Where no penalty is provided by the
Act for any contravention fine up to 100.

 Offence by companies, etc [Section 32] Where company commits an
offence, every director, manager, secretary, or other officer or person
concerned with the management thereof shall, unless he proves that the
offence was committed without his knowledge or consent, be deemed to
be guilty of such offence.
89
Lesson 15
Trade Union Act 1926

Objectives  Trade unions are essential for safeguarding the rights of labourers when
 there is a struggle between the labourers and the management.
 In order to regulate the trade union movement in India, the Trade
Unions Act, 1926 was enacted on the recommendation of the Royal
 Commission of Labour.
 The Act came into force on 01.06.1927.

The following are the main objects of the trade unions:
 To secure fair wages for workers and improve their opportunities for
promotion and training. To safeguard security of tenure and improve
 their conditions of service.
 To improve working and living conditions of workers.
 To provide educational, cultural and recreational facilities.
 To facilitate technological advancement by broadening the
 understanding of the workers.
 To help them in improving levels of production, productivity, discipline
and high standard of living. To promote individual and collective welfare
and thus correlate the workers‘ interests with that of their industry.
Scope &
Coverage  Its main objective is to provide for the registration of trade unions and
to define law relating to registered trade unions. In order that the union
may fight for its legitimate rights fearlessly, certain immunities from
criminal and civil actions are granted to the members of a registered
trade union to ensure a healthy trade union movement in India.
Trade Unions  Trade union means any combination, whether temporary or permanent,
formed primarily for the purpose of regulating the relations between
workmen and employers or between workmen and workmen, or
between employers and employers, or for imposing restrictive
 conditions on the conduct of any trade or business.
 It includes any federation of two or more Trade Unions.
 Employees only engaged in business are eligible to form union.

Minimum requirement about Membership of a Trade Union
A registered Trade Union of Workmen shall at all times continue to have not
less than 10% or 100 of the workmen whichever is less subject to a minimum of
90
seven engaged or employed in an establishment or industry with which it is

connected as its members. [Sec9A]
Who can be a member?
Any person who has attained the age of 15 years, is eligible to be a member of a
registered trade union, subject to the rules of the union. [Sec -21]
Registration  At least seven members of a Trade Union may, apply to the Registrar of
of Trade Trade Unions for registration of the Trade Union

Union  No Trade Union shall be registered unless at least 10% or 100 of the
[Section 4] workmen, whichever is less, engaged or employed in the establishment
or industry with which it is connected are the members of such Trade
 Union on the date of making of application.
 At least 7 persons should be workmen engaged or employed in the
establishment or industry on the date of application.
The application shall not become invalid even if after the date of the application
but before the registration, half of the total applicants have ceased to be
members of the Trade Union or have given notice in writing to the Registrar
dissociating themselves from the applications.
Cancellation of Registration Section 10
 A certificate of registration of a Trade Union may be withdrawn or

 cancelled by the Registrar on the application of the Trade Union.
 The registration may be withdrawn or cancelled if the Registrar is
satisfied that the certificate has been obtained by fraud or mistake, or
that the Trade Union has ceased to exist or has wilfully contravened any
provision of the Act or allowed any rule to continue in force which is
 inconsistent with any such provision.
 The registration may be withdrawn or cancelled if the Registrar is
satisfied that a registered Trade Union ceases to have the requisite
number of members.
 Not less than two months' previous notice in writing specifying the
ground is required.
Legal Status of  A registered trade union is a body corporate with perpetual succession
a Registered and a common seal.

Trade Union  it can acquire, hold, sell or transfer any movable or immovable property
 and can be a party to contracts.
  A registered trade union can sue and be sued, in its own name. [Sec -13]
No civil suit or legal proceeding can be initiated against a registered trade union
in respect of any act done in furtherance of a trade dispute under certain
conditions. [Sec - 18]
No agreement between the members of a registered trade union shall be void
91
or voidable merely on the ground that any of its objects is in restraint of trade.
[Sec -19]
Offences & Penalties
Offence Penalty
1. if the registered trade union/its Fine upto Rs. 5 plus additional fine upto
office- bearers or members fail to give Rs. 5 per week in case of continuing offence.
any notice or send any statement as (Maximum fine imposable Rs. 50)
required under the Act[Sec -31(1)].
2. if any person willfully makes any Fine upto Rs. 500
false entry in the annual statement of
the union or its rules. [Sec 31 (2)]
3. if any person, with intent to deceive, Fine upto Rs. 500
gives an incorrect copy of rules of the
union to any member or a prospective
member. [Sec -32]
Dissolution of When a registered Trade Union is dissolved, notice of the dissolution signed by
Trade Union 7 members and by the Secretary of the Trade Union shall, within 14 days of the
[Section 27] dissolution, be sent to the Registrar, for dissolution of the Trade Union.
92
Lesson 16
The Labour Laws (Exemption from Furnishing Returns and

Maintaining Register by Certain Establishments) Act 1988
Introduction  The Labour Laws (Exemption from Furnishing Returns and Maintaining
Registers by certain Establishments) Amendment Act, 2014 passed by the
Rajya Sabha on November 26, 2014; the Lok Sabha on November 28,
2014 and received the assent of the President on the 9th December,
2014 amended the Labour Laws (Exemption from Furnishing Returns and
Maintaining Registers by certain Establishments) Act, 1988.
 The Amendment Act now includes 7 more Labour Acts under the purview
of the Principal Act. Also, the coverage of Principal Act has been expanded from
the establishments employing upto 19 workers to 40 workers. The Amendment
Act also gives an option to maintain the registers electronically and to file the
returns electronically which leads to ease of compliance as well as better
enforcement of the labour laws.
Objectives  From time to time a number of labour laws have been enacted for
 regulating employment and conditions of service of workers.
 Whenever a new law was enacted, it prescribed certain registers to be
maintained by the employers and also for furnishing various returns by
 the employers to the authorities.
 The Labour Laws (Exemption from Furnishing Returns and Maintaining
Register by Certain Establishments) Act, 1988 was enacted exempting
 from maintaining registers and filing returns by some establishments.
 Act also provides for the simplification of procedure for furnishing
returns and maintaining registers in relation to establishments employing
 a small number of persons under certain labour laws.
The Act came into force on 27.09.1988.
Scope and
Coverage
 The Act was enacted to provide exemption to certain establishments
given in the Schedule to the Act (Scheduled Act) employing a small number of
persons from furnishing returns and maintaining registers under some labour
laws.
Definitions Scheduled Act
The following acts are specified in the Schedule:
 The Payment of Wages Act, 1936

 The Weekly Holidays Act, 1942
 The Minimum Wages Act, 1948
  The Factories Act, 1948
 The Plantations Labour Act, 1951
93

 The Working Journalists and other Newspaper Employees (Conditions of
 Service) and Miscellaneous Provisions Act, 1955
 The Motor Transport Workers Act, 1961
 The Payment of Bonus Act, 1965
 The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
  The Contract Labour (Regulation and Abolition) Act, 1970
 The Sales Promotion Employees (Conditions of Service) Act, 1976
  The Equal Remuneration Act, 1976
 The Inter-State Migrant Workmen (Regulation of Employment and
 Conditions of Service) Act, 1979
 The Dock Workers (Safety, Health and Welfare) Act, 1986
  The Child Labour (Prohibition and Regulation) Act, 1986
 The Building and Other Construction Workers (Regulation of Employment
and Conditions of Service) Act, 1996

Small Establishment Section 2 (e)
Small establishment means an establishment in which not less than 10 and not
more than 40 persons are employed or were employed on any day of the
preceding twelve months
Very Small Establishment Section 2(f)
Very small establishment means an establishment in which not more than 9

persons are employed or were employed on any day of the preceding twelve
months.
Compliances The employer has to comply with the following:
 Section 4(1) of the Act provides that it shall not be necessary for an
employer in relation to any small establishment or very small
establishment to which a Scheduled Act applies, to furnish the returns or
to maintain the registers required to be furnished or maintained under
 that Scheduled Act.
It may be noted that such employer furnishes, in lieu of such returns, annual
return in Form I; and
 maintains at the work spot, in lieu of such registers,— (i) registers in
 Form II and Form III, in the case of small establishments, and
  a register in Form III, in the case of very small establishments,
 Every such employer shall continue to issue wage slips in the Form
prescribed in the Minimum Wages (Central) Rules, 1950 made under
 sections 18 and 30 of the Minimum Wages Act, 1948 and
 slips relating to measurement of the amount of work done by piece-rated
workers required to be issued under the Payment of Wages (Mines)
94
Rules, 1956 made under sections 13A and 26 of the Payment of Wages
 Act, 1936; and
 file returns relating to accidents under sections 88 and 88A of the
Factories Act, 1948 and sections 32A and 32B of the Plantations Labour
 Act, 1951.
Furnishing or maintaining of returns and registers in electronic
Penalty Any employer who fails to comply with the provisions of the Act shall be
punishable-
  in the Case of the first conviction, with fine up to Rs. 5,000; and
 in the case of any second or subsequent conviction with imprisonment
not less than one month but which may extend to six months or with fine
not less than Rs. 10,000 and may extend to Rs. 25,000 or with both.
95
Lesson 17
Employment Exchange (Compulsory Notification of

Vacancies) Act 1959
Objectives  The Employment Exchanges (Compulsory Notification of Vacancies) Act,

1959 was enacted to provide for compulsory notification of vacancies to
the Employment Exchanges and for the rendition of returns relating to
 employment situation by the employers. '
 The act came into force on 01.05.1960.
Scope & The Act extends to whole of India.
Coverage
It applies to all establishments in the public sector and to establishments in the
private sector engaged in non-agricultural activities employing 25 or more
workers.
Establishment Unskilled office work means work done in an establishment by any of the
in Public Sector following categories of employees:
[Sector 2(f)]
 Daftri.
 Jemadar, orderly and peon.
  Dusting man or farash.
 Bundle or record lifter.
 Process server.
 Watchman.
  Sweeper.
 Any other employee which the Central Government may declare to be
unskilled office work.
Establishment Establishment in private sector means an establishment which is not an
in Private establishment in public sector and where ordinarily 25 or more persons are
Sector [Sector
2(g)]
employed to work for remuneration.
Act not apply to The Act shall no apply in8 relation to the following vacancies:
in certain  In any employment in agriculture (including horticulture) in any
vacancies
establishment in private sector other than employment as agricultural
 or farm machinery operatives. ‘
 In any employment in domestic service.
 Inany employment the total duration of which is less than 3 months.
 In any employment to do unskilled office work.
 In any employment connected with the staff of Parliament.
 In case of promotion or absorption of surplus staff.
96
 Any employee carrying remuneration of less than t 60 per month.
Unless the Central Government otherwise directs by notification in the Official

Gazette, the Act shah not also apply in relation to the following:
 Vacancies which are proposed to be filled through promotion or by

absorption of surplus staff of any branch or department of the same
establishment or on the result of any examination conducted or
interview held by, or on the recommendation of any independent
agency, such as the Union or a State Public Service Commission.
 Vacancies in an employment which carries a remuneration of less than
60 in a month.
Notification  The employer in every establishment in public sector shall, before filling
[Section4] up any vacancy in any employment, notify the vacancy to the
 employment exchanges.
 The appropriate Government may, by notification in the Official Gazette,
require that the employer it every establishment in private sector shall,
before filling up any vacancy in any employment, notify the vacancy to
the employment exchanges and the employer shall comply with such
requisition.
 There is, however, no obligation to recruit any person through the
employment exchanges.
Right of access  Any authorized officer shall have access to any relevant record or
to records and document in the possession of any employer required to furnish any
documents
 information or returns.
[Section 6]
 He may enter at any reasonable time any premises where he believes
such record or document to be kept
 He may also inspect or take copies of relevant records or documents or
ask any question necessary for obtaining any information.
Power of Make The Central Government for carrying out the purposes of the Act framed the
Rules Employment Exchanges (Compulsory Notification of Vacancies) Rules, 1960,
which came into force w. e. f. 1.5.1960.
Penalties lf any employer fails to notify to the employment exchanges, he shall be
punishable for the first offence with hne up to t 500 and for every subsequent
offence, with fine up to 111,000.
If any person required to furnish any information or return
 refuses or neglects to furnish such information or return, or

 furnishes any information or return which he knows to be false, or
  refuses to answer, or gives a false answer to any question; or
impedes the right of access to relevant records or documents, he shall be
punishable for the first offence with fine upto a 250 and for every subsequent
offence with fine up to 500.
97
Lesson 18
Apprentice Act 1961
Objectives  The Apprentices Act 1961 was enacted with the objective of regulating
the programme of training of apprentices in the industry by utilising the
 facilities available therein for imparting on-the-job training.
 The Act was amended in 1973 and 1986 to include training of graduates,
technicians and technician (vocational) apprentices respectively under its
 purview.
 It was further amended in 1997 and 2007 to amend various sections of
the Act as regards definition of “establishment”, “worker”, number of
apprentices for a designated trade and reservation for candidates
 belonging to Other Backward Classes, etc.
 Comparing the size and rate of growth of economy of India, the
performance of Apprenticeship Training Scheme is not satisfactory and a
large number of training facilities available in the industry are going
unutilised depriving unemployed youth to avail the benefits of the
 Apprenticeship Training Scheme.
 Employers are of the opinion that provisions of the Act are too rigid to
encourage them to engage apprentices and provision relating to penalty
creates fear amongst them of prosecution and they have suggested to
 modify the Apprentices Act suitably.
 In order to make the apprenticeship more responsive to youth and
industry, the Apprentices Act, 1961 has been amended and brought into
 effect from 22nd December, 2014.
 These amendments have been made with the objective of expanding the
 apprenticeship opportunities for youth.
 Non engineering graduates and diploma holders have been made eligible
 for apprenticeship.
 A portal is being setup to make all approvals transparent and time
bound.
 Apprenticeship can be taken up in new occupations also.
Scope &
Coverage
 Its provisions apply to areas or industries specified by the Central
Government by notification in the Official Gazette.
 The Act shall not apply to an area or an industry until it is specified by
notification.
Power to The Central Government has the powers to make rules, after consultations with
Make Rules the Central Apprenticeship Council, for enforcement of the provisions of the Act.
98
Apprentice Apprentice means a person who is undergoing apprenticeship training in

[Section 2(aa)] pursuance of a contract of apprenticeship
Apprentice Apprenticeship training means a course of training in any industry or
Training establishment undergone in pursuance of a contract of apprenticeship and
[Section
2(aaa)]
under prescribed terms and conditions which may be different for different
categories of apprentices.
Trade Trade Apprentice means an apprentice who undergoes apprenticeship training
Apprentice in any designated trade
[Section 2(q)]
Designated Designated trade means any trade or occupation or any subject field in
Trade [Section engineering or non-engineering or technology or any vocational course which
2(e)]
the Central Government, after consultation with the Central Apprenticeship
Council, may, by notification in the Official Gazette, specify as a designated trade
for the purposes of this Act.
Graduate or Graduate or technician apprentice means an apprentice who holds, or is
Technician undergoing training in order that he may hold a degree or diploma in
Apprentice
[Section 2(i)]
engineering or non-engineering or technology or equivalent qualification
granted by any institution recognized by the Government and undergoes
apprenticeship training in any designated trade.
Technician Technician (vocational) apprentice means an apprentice who holds or is
(Vocational) undergoing training in order that he may hold a certificate in vocational course
Apprentice
[Section 2(pp)]
involving two years of study after the completion of the secondary stage of
school education recognized by the All-India Council and undergoes
apprenticeship training in designated trade.
Optional Trade Optional trade means any trade or occupation or any subject field in engineering
[Section 2(ii)] or non-engineering or technology or any vocational course as may be
determined by the employer for the purposes of this Act.
Qualification A person shall not be qualified for being engaged as an apprentice to undergo
of Apprentice apprenticeship training -
[Section 3]
 in any designated trade, unless he is not less than 14 years of age, and
 for designated trades related to hazardous industries, not less than 18 of
age; and
 satisfies such standards of education and physical fitness as may be
prescribed:
 Provided that different standards may be prescribed in relation to
apprenticeship training in different designated trades and for different
categories of apprentices.
Contract of  No person shall be engaged as an apprentice to undergo apprenticeship
Apprentices training in a designated trade unless such person or, if he is minor, his
[Section 4]
guardian has entered into a contract of apprenticeship with the
 employer.
 The apprenticeship training shall be deemed to have commenced on the
 date on which the contract of apprenticeship has been entered into.
 Every contract of apprenticeship may contain such terms and conditions
99
 as may be agreed to by the parties to the contract

 Provided that no such term or condition shall be inconsistent with any
 provision of this Act or any rule made thereunder.
 Every contract of apprenticeship shall be sent by the employer within 30
days to the Apprenticeship Adviser until a portal-site is developed by the
Central Government, and
 thereafter the details of contract of apprenticeship shall be entered on
the portal-site within 7 days, for verification and registration.
Objection in In the case of objection in the contract of apprenticeship, the
contract of Apprenticeship Adviser shall convey the objection to the employer within
Apprentice
fifteen days from the date of its receipt.
[Section 4A]
Registeration The Apprenticeship Adviser shall register the contract of apprenticeship
of Contract within 30 days from the date of its receipt.
(4B)
Period of As per section 6 the period of apprenticeship training, which shall be specified in
Training the contract of apprenticeship, shall be as follows-
[Section 6]
In the case of trade apprentices who, having undergone institutional training in

a school or other institution recognized by the National Council, have passed the
trade tests or examinations conducted by that Council or by an institution
recognized by that Council , the period of apprenticeship training shall be such
as may be prescribed.

 In the case of trade apprentices who, having undergone institutional
training in a school or other institution affiliated to or recognised by a
Board or State Council of Technical Education or any other authority or
courses approved under any scheme which the Central Government
may, by notification in the Official Gazette specify in this behalf, have
passed the trade tests or examinations conducted by that Board or State
Council or authority or by any other agency authorised by the Central
Government, the period of apprenticeship training shall be such as may
 be prescribed;
 In the case of other trade apprentices , the period of apprenticeship
 training shall be such as may be prescribed;
 In the case of graduate or technician apprentices, technician (vocational)
apprentices and the period of apprenticeship training shall be such as
may be prescribed.
Termination of  The contract of apprenticeship shall terminate on the‘expiry of the

Apprenticeship period of apprenticeship training.
Contract 
[Section 7]  Either party to a contract of apprenticeship may make an application to
the Apprenticeship Adviser for the termination of the contract earlier

 After considering the application and the objections, if any, the
100
Apprenticeship Adviser may terminate the contract

Number of  Central Government to prescribe the number of apprentices to be
apprentice for engaged by the employer for designated trade and optional trade.
a designated
trade [Section
 Several employers may join together either themselves or through an
8] agency, approved by the Apprenticeship Adviser, according to the
guidelines issued from time to time by the Central Government in this
behalf, for the purpose of providing apprenticeship training to the
apprentices under them.
Practical  Every employer shall make suitable arrangements in his workplace for
Training of imparting a course of practical training to every apprentice engaged by him.
Apprentices
[Section 9]
 Any of the trade apprentices who have not undergone institutional
training in a school or other institution recognised by the National
Council or any other institution affiliated to or recognised by a Board or
State Council of Technical Education or any other authority which the
Central Government may, by notification in the Official Gazette, specify
in this behalf, shall, before admission in the workplace for practical
training, undergo a course of basic training and the course of basic
training shall be given to the trade apprentices in any institute having
adequate facilities.
Cost of  Recurring costs (including the cost of stipends) incurred by an employer
Training in connection with basic training, imparted to trade apprentices shall be
 borne-
 If such employer employs two hundred and fifty workers or more, by the
 employer;
 If such employer employs less than two hundred and fifty workers, by
the employer and the Government in equal shares up to such limit as
may be laid down by the Central Government and beyond that limit, by
 the employer alone;
Recurring costs (excluding the cost of stipends) incurred by an employer in
connection with the practical training imparted to graduate or technician
apprentices technician (vocational) apprentices shall be borne by the employer
and the cost of stipends shall be borne by the Central Government and the
employer in equal shares up to such limit as may be laid down by the Central
Government and beyond that limit, by the employer alone except apprentices
who holds degree or diploma in non-engineering.
Objection of Every employer shall have the following obligations in relation to an apprentice:
Employers
 To provide the apprentice with the training in his trade in accordance

 with the provisions of the Act and the rules made thereunder.
 if the employer is not himself qualified in the trade, he shall ensure that a
person who possesses the prescribed qualifications is placed in charge of
 the training of the apprentice.
 To provide adequate instructional staff, possessing prescribed
qualifications for imparting practical and theoretical training and facilities
 for trade test of apprentices.
101
To carry out his obligations under the contract of apprenticeship.

Obligation of Every trade apprentice shall have the following obligations:
Trade  To learn his trade conscientiously and diligently and endeavour to qualify
Apprentice
 himself as a skilled craftsman before the expiry of the period of training.
 To attend practical and instructional classes regularly.
 To carry out all lawful orders of his employer and superiors in the
 establishments.
 To carry out his obligations under the contract of apprenticeship.
Hours of Work,  The weekly and daily hours of work of an apprentice while undergoing
Overtime, practical training in a workplace shall be as determined by the employer
Leave and
Holidays  subject to the compliance with the training duration, if prescribed.
[Section 15]  No apprentice shall be required or allowed to work overtime except with
the approval of the Apprenticeship Adviser who shall not grant such
approval unless he is satisfied that such overtime is in the interest of the
training of the apprentice or in the public interest.
 An apprentice shall be entitled to such leave and holidays as are
observed in the establishment in which he is undergoing training.
Records and  Every employer shall maintain records of the progress of training of each
Returns apprentice undergoing apprenticeship training in his establishment in
[Section 19]
 such form as may be prescribed.
 Until a portal-site is developed by the Central Government, every
employer shall furnish such information and return in such form as may
 be prescribed, to such authorities at such intervals as may be prescribed.
Every employer shall also give trade-wise requirement and engagement of
apprentices in respect of apprenticeship training on portal-site developed by the
Central Government in this regard.
Offence and  If any employer contravenes the provisions of the Act relating to the
Penalties number of apprentices which he is required to engage under those
[Section 30]
provisions, he shall be given a month’s notice in writing, by an officer
duly authorised in this behalf by the appropriate Government, for
explaining the reasons for such contravention.
 In case the employer fails to reply the notice within the period specified
under subsection or the authorised officer, after giving him an
opportunity of being heard, is not satisfied with the reasons given by the
employer, he shall be punishable with fine of five hundred rupees per
shortfall of apprenticeship month for first three months and thereafter
one thousand rupees per month till such number of seats are filled up.
If any employer or any other person-
(a) required to furnish any information or return-
(i) refuses or neglects to furnish such information or return, or
(ii) furnishes or causes to be furnished any information or return which is false
and which is either knows or believes to be false or does not believe to be true,
or
(iii) refuses to answer, or give a false answer to any question necessary for
102
obtaining any information required to be furnished by him, or

(b) refuses or wilfully neglects to afford the Central or the State Apprenticeship
Adviser or such other person, not below the rank of an Assistant Apprenticeship
Adviser, as may be authorised by the central or the State Apprenticeship Adviser
in writing in this behalf any reasonable facility for making any entry, inspection,
examination or inquiry authorised by or under this Act, or
(c) requires an apprentice to work overtime without the approval of the
Apprenticeship Adviser, or
(d) employs an apprentice on any work which is not connected with his training,
or
(e) makes payment to an apprentice on the basis of piece-work, or
(f) requires an apprentice to take part in any output bonus or incentive scheme.
(g) engages as an apprentice a person who is not qualified for being so engaged,
or
(h) fails to carry out the terms and conditions of a contract of apprenticeship he
shall be punishable with fine of one thousand rupees for every occurrence.
(2A) The provisions of this section shall not apply to any establishment or
industry which is under the Board for Industrial and Financial Reconstruction
established under the Sick Industrial Companies (Special Provisions) Act, 1985.
103
Lesson 19
Audit Under Labour Legislations

Objectives  The legislatures have, from time to time enacted numerous laws and
 legislations to protect the interest of labourers
 Lack of legal awareness amongst the working population as well as the
employers Is the major impediment In proper compliance with the laws
and regulations
 Business corporations have recognized the importance of legal compliance

of the provisions of the labour laws.
 For this purpose labour law audit is essential.
Scope &  The scope of labour law audit includes in depth examination of various
Coverage applicable laws, company records, facilities, policies practices and
procedures to ensure proper and complete compliance with applicable
labour laws
 Labour law audit also suggests a remedial action if something Is in violation
or not In line with the provisions of the applicable labour laws
Areas of  Registration and licenses (eg Factory, Shops and Establishment, Contract
Labour Labour, P F, E.S.l., etc)
Audit

 Preparation and submission of various returns.) ' ‘
  Updatation/maintenance of records and registers.
 Display of notices and extracts of Acts.
 Process of disciplinary action.
  Handling audits and inspections.
 Apprising of the corporations of any amendments and important
 judgments on various labour laws for compliance
 Engaging law practitioners to appear in any matter or disputes before the
 industrial and labour court and . other authorities
Any other measures required under the special circumstances of your business.
Company  The institute of Company Secretaries of indie has mooted the concept of
Secretary as audit of compliance of labour laws‘.
Labour Law
Auditor
 The course content of the institute is such that qualified company
secretaries are well versed with the legal aspect in a broader way.
 It would be easy for the practicing company secretaries to have the labour
law audit as independent professionals.
 Similar to compliance certificate under the Companies Act, compliance
certificate can be given the PCS to the government within specified time.
Provisions in  The Companies Act, 2013 provides provisions for compliance of various
the laws and empowers the Company Secretary to ensure that the company
Companies
Act, 2013
has made compliances with the provisions of the Act, the rules made
104
 thereunder and other laws applicable to the company.

 To ensure this, complete check list is to be maintained by a Company
 Secretary.
 This will serve some aspects. But for strict compliance, labour law audit is
essential and will support the Company Secretary to ensure strict compliances by
various departments of the company dealing with such compliances.
105

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CS EXECUTIVE CS NAINA JINDAL

 governing the Co-operative societies.

cloth not for sale.

 Cause material impairment to the health of the persons engaged in or

  Maintenance of plant and systems of work in the factory.

Provisions for health of Workers

Provision for Safety

Provision for Welfare

Employment of Child and Adolescent

Annual Leave Number of days of leave

Wages in lieu of leave

 if a worker is dismissed from service or quits his employment or is

Carry forward of leave

 If there is my contravention of any of the provisions of the Act or of

Penaty for subsequent offence

Special Provisions relating to Hazardous Processes

Shinde v. Employee employed in work incidental to process connected with factory is

State of Land in which manufacturing process of salt is carried on would be deemed a

 Wages does not includes;

[Section 3(1)(b)]  minimum rate of wages, if necessary.

 The appropriate Government may appoint as many committee and

and advising the appropriate Government generally in the matter of

Before the expiry of the 10 day after

 The Act, therefore, ensures payment of wages in a particular form

Definitions Wages Section 2 (vi)

Wages means all remuneration (whether by way of salary, allowances or

Wages Includes Wages Does not includes

Employed  Employed person includes the legal representative of a deceased

Time of Payment Sec. 5

 Amount authorized by the employee for payment to registered trade

The following shall not be deemed to be a deduction from wages:

 Withholding of increment or promotion (including stoppage of

 complaints with regard to the contravention of any provision of this

Objectives  In order to provide benefits to employees in case of sickness,

 Any person who is directly employed by the principal employer

Employees includes Employees does not includes

In case of contracted labour, primary liability of ESI contribution is that of

Immediate Employer and Principal Employer

“Immediate Employer” in relation to employees employed by or through him

“Principal Employer” means the following:

 Contribution is payable by the employer and also the employee.

Sickness  Sickness Benefit in the form of cash @70% of wages is payable to

Extended sickness benefit

Enhanced sickness benefit

Benefits entering insurable employment & irrespective of having paid any

Employee Insurance Court

Provisions Act 1952

 The Central Government having regard to the financial position of

 Any employee if so desires may contribute voluntarily to the Fund in

 Advance from the Fund for marriages or post-matriculation education

 Normal superannuation pension is payable on attaining 58 years of

addition to the Provident Fund, receive the Assurance Benefit

employee share, EPF.

money from respect of an employee employed by contractor may be recovered by such

For not paying charges

Tribunal  Provident Funds

 Salary or wages means all remuneration (other than remuneration for

Salary or wages does not include the following:

Salary Limit Section 2 (13)

 Allocable surplus is to be arrived at from the available surplus.

 If in any accounting year an establishment in public sector sells any

establishment as they apply in relation to any other establishment.

Payment of Gratuity Act 1972