SC Irll

INDUSTRIAL RELATIONS
AND
LABOUR LAW
(FOR PRIVATE CIRCULATION ONLY)

2018
PROGRAMME COORDINATOR
Dr. Padmpriya Irabatti
COURSE DESIGN AND REVIEW COMMITTEE

Prof. Dr. Prasanna Deshmukh Prof. Sudhir Sant
Prof. Dr. Asha Nagendra Prof. VijayMasarkar
Prof. Dr. Ashish Tavkar
COURSE WRITERS
Prof. P. A. Noronha Prof. Anjali Mandke
EDITOR
Ms. Neha Mule
Published by Symbiosis Centre for Distance Learning (SCDL), Pune

July, 2011 (Revision 04, 2017)
Copyright © 2018 Symbiosis Open Education Society

All rights reserved. No part of this book may be reproduced, transmitted or utilised in any form or by any
means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval
system without written permission from the publisher.
Acknowledgement
Every attempt has been made to trace the copyright holders of materials reproduced in this book. Should any
infringement have occurred, SCDL apologises for the same and will be pleased to make necessary corrections
in future editions of this book.
PREFACE
Industrial Relations and Labour Laws is a very important subject, which deals with the various
intricacies involved in developing good and harmonious industrial relations. Good industrial relations
are essential for the growth of industry, as it ensures peaceful relations without work stoppages,
thereby ensuring that good quality products at reasonable productivity levels are produced, taking
care of the producers, consumers and the society at large. This book contains topics regarding the
evolution of industrial relations, its concepts, collective bargaining, adjudication, arbitration etc. It
also covers topics on labour laws such as laws relating to wages, social security, conditions of work
and laws dealing with industrial relations.
We have revised and updated the contents. This will help the students to understand the developments
in existing labour laws. This book contains the unit objectives, check your progress questions,
activities for self-learning and questions for self-assessment.
Special efforts are required while going through the units of labour laws, as you would be required to
refer various sources of legal information.
We sincerely hope that this book will be interesting and useful and will help the readers to understand
and learn this subject in a more meaningful and useful manner.
iii
ABOUT THE AUTHOR
Mr. P. A. Noronha is a visiting professor in most of the reputed Management Institutes in Pune. He
is actively associated with institutes like SIBM, SIMS, IIMM, SCM (HRD) and Symbiosis and ILS
Law Colleges. He is actively connected with the academic activities of the University of Pune. He has
rich experience of about 38 years in industry, mostly in the areas of Human Resource Management,
Industrial Relations, Personnel Management and Labour Laws. He has been awarded the National
Runner-up Award for his presentation on Industrial Relations at the National Convention conducted
by the National Productivity Council and Commissioner of Labour, Andhra Pradesh, which was held
at Aurangabad in 1996. Based on his practical and academic experiences and the current industrial
scenario, the author has made every effort to update the information, which can be useful to students
of management.
Ms. Anjali Mandke has co-authored the book. She has done M.B.A. and L.L.B. from University of
Pune. She practiced law for 5 years in Civil Court, Labour Court, Family Court and Consumer Tri-
bunal and has more than 21 years of industrial experience. She has teaching experience in Business
Laws & Labour Laws.
iv
CONTENTS
Unit No. TITLE Page No.

1 Industrial Relations − Evolution, Concept and Approach 1-18
1.1 Introduction
1.2 Evolution of Industrial Relations
1.3 Features of Modern Industrial System
1.4 Impact of Industrial System
1.5 Evolution of Industrial Relations in India
1.6 Industrial Relations in India
1.7 Industrial Relations and Human Relations
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
2 Evolution of Industrial Relations Policies 19-38
2.1 Introduction
2.2 Pre- and Post-Independence Industrial Relations in India
2.3 Industrial Relations Policy during the Plan Period
2.4 National Commission on Labour and Industrial Relations Policy
(1969)
2.5 Management Vs. Unions
2.6 Conditions of Good Industrial Relations
2.7 Unions and their Role
Summary
Key Words
Suggested Reading
v
3 Industrial Disputes 39-56
3.1 Introduction
3.2 Definitions
3.3 Causes of Industrial Disputes
3.4 Types of Industrial Disputes
3.4.1 Strikes
3.4.2 Lockouts
3.5 Prevention of Industrial Disputes
3.6 Machinery for Settlement of Industrial Disputes
Summary
Key Words
Answers to Check your Progress Suggested Reading
4 Mediation and Conciliation, Arbitration and Adjudication 57-74
4.1 Introduction
4.2 Functions and Process of Mediation
4.3 Kind of Mediators
4.4 Conciliation
4.5 Arbitration
4.5.1 Conciliation, Arbitration and Mediation: A Comparison
4.5.2 Advantages of Arbitration
4.5.3 Disadvantages of Arbitration
4.5.4 Procedure for Investigation
4.6 Qualities of a Conciliator and an Arbitrator
4.6.1 Qualities of a Conciliator
4.6.2 Qualities of an Arbitrator
4.7 Role of the Conciliator
4.8 Adjudication in India
4.8.1 Types of Adjudication
4.8.2 Three-tier System of Adjudication
Summary
Key Words
Suggested Reading
vi
5 Grievance Procedure 75-88
5.1 Introduction
5.2 Meaning of Grievance
5.3 Causes of Grievance
5.4 Procedure for Settlement
5.5 Public Grievance Redressal
5.6 The Principles for Model Grievance Procedure
Summary
Key Words
Suggested Reading
6 Industrial Relations in Public Sector Units 89-102
6.1 Introduction
6.2 Reasons for Creation of Public Sector
6.3 Legal Standing of Trade Unions
6.4 Issues of Conflict in Public Sector
6.5 Social Objectives of Public Sector
Case Study on Industrial Relations in Public Sector
Summary
Key Words
Suggested Reading
vii
7 Trade Unions and Collective Bargaining 103-136
7.1 Introduction to Trade Union
7.2 Definitions
7.3 Features of Trade Union
7.4 Functions of Trade Union
7.5 Role of Trade Unions
7.6 Trade Unions in India
7.7 The Trade Unions Act, 1926
7.8 Application for Trade Union Registration
7.9 Provisions in the Rules of Trade Union
7.10 Registration and Cancellation of Trade Unions
7.11 Introduction to Collective Bargaining
7.12 Pre-Requisites of Collective Bargaining
7.13 Findings of Study Groups on Industrial Relations
7.14 International Labour Organisation (ILO)
7.15 Issues Pertaining to Collective Bargaining in India
7.16 Industrial Harmony
7.17 Pre-Negotiation Preparation
Summary
Key Words
Suggested Reading
8 Workers’ Participation in Management 137-152
8.1 Introduction
8.2 Definitions
8.3 Features of Workers’ Participation in Management
8.4 Objectives of WPM
8.5 Importance of WPM
8.6 Essential Conditions for WPM
8.7 Scope and Ways of Participation
8.8 Evolution of Participative Management in India
8.8.1 Reasons for Failure of Workers Participation Movement in India
Summary
Key Words
Suggested Reading
viii
9 Domestic Enquiry 153-170
9.1 Introduction
9.2 Definition of Domestic Enquiry
9.3 Principles of Domestic Enquiry
9.4 Role of Participants in Domestic Enquiry
9.4.1 Who should be the Enquiry Officer?
9.5 Charge Sheet
9.6 Suspension
9.7 Procedure Prior to Enquiry
9.8 Show-Cause Notice
9.9 Proper Domestic Enquiry
9.10 Notes of Enquiry
9.11 Procedure Subsequent to Enquiry
Summary
Key Words
Suggested Reading
10 The Regulative Labour Legislations 171-192
10.1 Introduction to Industrial Disputes Act, 1947
10.2 Important Definitions
10.3 Closure of an Industry
10.4 Settlement of Disputes
10.5 Authorities under the Industrial Dispute Act
10.6 National Tribunals
10.7 Introduction to Industrial Employment [Standing Orders] Act, 1946.
10.8 The Model Standing Order
10.9 Temporary Employees
10.10 Matters to be provided in the Standing Order under this Act
10.11 Subsistence Allowance
10.12 Habitual Breach of any Standing Order
Summary
Key Words
Suggested Reading
ix
11 The Protective Labour Legislations 193-222
11.1 Introduction to Factories Act. 1948
11.2 Meaning of Manufacturing Process
11.3 The Inspecting Staff ( Inspectors and Certifying Surgeons)
11.4 Health and Hygiene Measures
11.5 Safety Measures
11.6 Welfare Measures
11.7 Working Hours and Leave with Wages
11.8 Introduction to Contract Labour (Regulation and Abolition) Act, 1970
11.9 Definitions of the Contract Labour (R&A) Act, 1970
11.10 The Advisory Boards (Section 3−5)
11.11
Registration of Establishments Employing Contract Labour
(Section 6−10)
11.12 Licensing of Contractors (Section 11−15)
11.13 Welfare and Health of Contract Labour (Section 16−21)
11.14 Penalties and Procedure (Section 22−35)
Summary
Key Words
Suggested Reading
x
12 Wage-Related Labour Legislations 223-256
12.1 Introduction to Payment of Wages Act, 1936
12.2 Application and Definition of the Payment of Wages Act
12.3 Responsibility for Payment of Wages
12.4 Deductions which may be made from Wages
12.5 Maintenance of Registers and Records
12.6 Appeal
12.7 Penalty for Offence under the Act
12.8 Introduction to Minimum Wages Act, 1948
12.10 Applicability of the Act
12.11 Fixing of Minimum Rates of Wages
12.12 Fixation of Revising Minimum Rates
12.13 Minimum Rate of Wages
12.14 Advisory/Central Board for Wages
12.15 Introduction to Payment of Bonus Act, 1965
12.16 Definitions of the Payment of Bonus Act, 1965
12.17 Eligibility for Bonus
12.18 Payment of Maximum Bonus
12.19 Adjustment of Customary or Interim Bonus
12.20 Gazetted Bonus Inspector
12.21 Productivity Linked Bonus
Summary
Key Words
Suggested Reading
xi
13 Social Security Labour Legislations 257-308
13.1 Introduction to Employees’ Compensation Act, 1923
13.3 Employees’ Compensation
13.4 Notice and Claim for Compensation
13.5 Penalties
13.6 Appointment of Commissioner
13.7 Power to Submit Cases
13.8 Introduction to Employees’ State Insurance Act, 1948
13.9 Definitions of the State Insurance Act
13.10 Establishment of Employee’s State Insurance Corporation
13.11 Constitution of Standing Committee
13.12 Medical Benefit Council
13.13 Powers of the Standing Committee
13.14 Constitution of Employees’ Insurance Court
13.15 Introduction to Employees’Provident Funds and Miscellaneous
Provisions Act, 1952
13.16 Coverage of the Provident Fund Act
13.17 Contributions of Provident Fund Act
13.18 Family Pension Scheme
13.19 New Pension Scheme
13.20 Option for Return of Capital
13.21 Introduction to Maternity Benefit Act, 1961
13.22 Application and Definition of the Maternity Benefit Act
13.23 Responsibility of the Employer
13.24 Payment of the Maternity Benefits
13.25 Appointment/Functions and Powers of the Inspector (Section
14−17)
13.26 Others
13.27 Introduction to Payment of Gratuity Act, 1972
13.28 Definitions of Gratuity
13.29 Payments of Gratuity
13.30 Amount of Gratuity Payable
13.31 Power to Exempt
13.32 Appointment of the Inspector
13.33 Powers of Inspectors
Summary
Key Words
Suggested Reading
xii
Industrial Relations − Evolution, Concept and Approach
UNIT
1
Structure:
1.1 Introduction
1.2 Evolution of Industrial Relations
1.3 Features of Modern Industrial System
1.4 Impact of Industrial System
1.5 Evolution of Industrial Relations in India
1.6 Industrial Relations in India
1.7 Industrial Relations and Human Relations
Summary
Key Words
Suggested Reading
Industrial Relations – Evolution, Concept and Approach 1

Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Evaluate the nature of industrial relations
----------------------
• Analyse the concept of industrial relations
---------------------- • Explain the main ideas to the approach of industrial relations
---------------------- • Identify the applications of industrial relations
---------------------- 1.1 INTRODUCTION

---------------------- Industrial Relations basically means the relations between the employer
and the employees. Here the employer also means the management associations
---------------------- and by employees we also mean the trade unions. The problem of industrial or
---------------------- labour management did not arise when the forms of business organisation were
of the small type, but they developed when elaborate organisational structures
---------------------- came on the scene during the late 19th century, when gigantic industrial empires
of the financial tycoons came into existence followed by the technology of
---------------------- mass production in the early 20th century. The labour management became an
---------------------- important subject of study only when large aggregations of people came to
work together under one roof in an organisation.
---------------------- In order to understand the issues and problems involved in such a study,
---------------------- it is necessary to know the essential features of the modern industry. The world
has progressed gradually from one system to another such that Western Europe,
---------------------- USA, Germany and Japan are highly industrialised today, while the countries
of Latin America, Africa and most of South-East Asia are still in the developing
---------------------- stage and, therefore, the system of production is different there.
---------------------- The development of modern industries in India is because of the British
Empire who started some industries in India for their benefit like the textile,
----------------------
iron and steel and the sugar industries. In this unit, we will try to understand
---------------------- how industries developed and how the modern industries affected the relations
between the employers and the employees.
----------------------
----------------------
1.2 EVOLUTION OF INDUSTRIAL RELATIONS
---------------------- Economists have traditionally identified three factors of production:

land, capital and labour. In the pre-industrial society, agriculture was the major
---------------------- source of wealth. Production was based on rudimentary skills passed on from
father to son, crude farming tools and incremental improvements made by each
---------------------- generation on the soil. Capital and labour were wedded to land and economic
---------------------- power belonged to those who could control its use.
We will study the stage-wise evolution of Industrial Relations. The
----------------------
evolution of Industrial Relations can be classified as follows:
----------------------
2 Industrial Relation and Labour Law

(1) Primitive stage: As we know, during this stage the necessities of life Notes
were simple and few, mostly fulfilled by hunting, fishing, collecting and
pastoral activities, with the help of crude implements. Members of the ----------------------
families/groups worked side by side, with very little specialisation of work
except that was required by the physical differences between sexes, or ----------------------
that which was dependent on tradition. The production was just sufficient ----------------------
for consumption and, therefore, there were no savings and, hence, no
accumulation of wealth and no exchange of products. ----------------------
uthority was exercised by the elderly people − the family head (the
A ----------------------
patriarch or the matriarch) or the chieftain; and the authority structure varied
with a generally high regard for age and experience, and was acceptable ----------------------
to the members of the group. Communications between the members was
----------------------
face to face as the group was a small unit. Members worked throughout
their active lives. ----------------------
(2) Agrarian economy stage: It developed during the Middle Ages and
----------------------
brought about a change in the views about property. As the tribes grew, so
did their needs and requirement and the greed to acquire more and more ----------------------
land and stake ownerships. In a tribal society, property was a common
and collective asset of the group, but now it was identified as the personal ----------------------
asset of the landlord. Thus, there arose a class of propertied individuals
----------------------
who employed people to work on their land which gave rise to a class of
propertyless workers. Under this system, the employees were treated as ----------------------
slaves and as the property of their master who purchased them for a few
chips or conquered them in some war against his opponents. The employee- ----------------------
employer relationship was that of the master-servant/slave type. The slaves
----------------------
were required to do all types of manual and other skilled work for their
master and in return were paid no wages except for food of the coarsest ----------------------
type, old clothes and a small place to live. They had to live under the
absolute authority of their master till death. Levels or strata of supervision ----------------------
were few. The Government did not wield any power over the employment
----------------------
relationships. Political organisations that developed from alliances and
conquests supported the authority of the owners. Some masters achieved ----------------------
dominant positions, while others became subordinates.
----------------------
(3) Serfdom stage: Serfdom developed under the feudal society (comprising
princes, lords and the landowning class) which too had been created during ----------------------
the Middle Ages. The position of serfs was not any better than the slaves.
They had to work hard for their lord on the land, getting only a pittance ----------------------
and a small hut to live. Their duties and obligations were defined largely
----------------------
in terms of quantities of produce they had to give to their master and of
possible military service. Serfs were regarded as unfortunates who were ----------------------
born to their jobs and held these jobs throughout their lives and thus lived
a life of servitude. The authority centred on the master and his family ----------------------
because he was assumed to have inborn superiority and was the owner of
----------------------
vast property.
----------------------

Notes (4) Handicrafts stage: Handicrafts system developed because of the growth
of town and cities, increase in trade and commerce and a decline in the
---------------------- power of the feudal lords. This system introduced an important innovation
because of which the workers could actually move from the rank of workers/
---------------------- employees to those of employers. The workers/craftsmen owned factors
---------------------- of production, worked with their own tools, were helped by the family
members and often worked in their own homes/workshops, and performed
---------------------- tasks by hand. They sold their products directly to the customers, without
any middleman. Separate craftsmen existed for separate works. Some basic
---------------------- skills such as shoemaking, blacksmith, carpentry, pottery, cloth weaving,
---------------------- etc. developed during this stage.
Sometimes the master craftsman also undertook to teach his craft to some
----------------------
young men. These artisans began their careers as apprentices and were
---------------------- bound to work for the master craftsman for a specified time during which
they would learn the craft. They got no wages except for lodging and
---------------------- boarding facilities from the master craftsman. When apprenticeships were
over, these artisans could settle as independent craftsmen/journeymen.
----------------------
In this system, basically the master craftsman and the apprentice worked
---------------------- side by side; and only one or two levels of supervisions were involved.
Master craftsmen held a high status because they had both the skill and the
---------------------- ownership. Then came the journeymen/craftsmen because of their skill and
relative mobility and freedom. And lastly, the apprentices occupied a low
----------------------
status, though it was superior to that of the slave or serf.
---------------------- The cottage workers of the master craftsman developed a new institution,
viz., the crafts guilds which were similar to the modern craft unions. They
----------------------
regulated economic and employment conditions of the members, the
---------------------- quality of materials and workmanship, set prices and determined wages.
Many of these guilds also provided various fraternal benefits like death
---------------------- disability and unemployment benefits to their members.
---------------------- Cottage or putting-out stage: The technological changes and the
(5)
expansion of markets and trade led to the development of the economic
---------------------- system, and that of steam and power because of which some individuals
became employees in the new industrial units. Other master craftsmen or
----------------------
travelling traders (or trading capitalists) undertook to buy raw materials
---------------------- and supply these as well as finances to the craftsmen who worked in
their homes/workshops. They also hired the craftsmen to process the raw
---------------------- materials and collect and sell the finished goods. This system was known
as the “Cottage or Putting-out System”. Under this arrangement, the
----------------------
craftsmen worked with the members of their family, in their own home,
---------------------- and were paid on a piece-work basis for the work. They delivered their
products to the financiers who supplied them with the necessary finance.
----------------------
(6) Factory or the industrial capitalism stage: With the passage of time and
---------------------- the gaining of experience, the trader capitalist realised that economies in
production can be achieved from newly perfected machines, so instead of
---------------------- “farming out” production to numerous small cottage workers, he himself

set up factories with the new machines and gave employment to the people Notes
who were willing to work for him in return of the pre-decided wages. The
cottage workers became factory hands. In these factories, a large number ----------------------
of people worked under the same roof. This made it possible to supervise
them more closely. ----------------------
With the invention and manufacturing of power-driven machinery in the ----------------------

late 18th and early 19th century, the process further developed. In the course of
----------------------
time, the factory system came to stand on a sound footing and human labour
was replaced by machines. This gave rise to a system which is known the ----------------------
world over as the Industrial Revolution. Under this system, women and children
were employed as labour for long hours because machine production simplified ----------------------
operations and reduced skill requirements. Living and working conditions
----------------------
became deplorable and housing accommodation inadequate. With the increased
production and the developed technology and science, decision-making became ----------------------
a more specialised task and the relation between the workers and the employers
became more and more impersonal. ----------------------
Industrial Revolution started in Great Britain in the latter half of the ----------------------
18th century and then around 1830 in France, Belgium and the USA, in Germany
around 1850, in Japan and Sweden around 1870, in Canada and the USSR ----------------------
around 1890 and in the other countries of the world including India by the end
----------------------
of that century. Capital was the critical factor which brought about Industrial
Revolution. ----------------------
----------------------
Check your Progress 1
----------------------
Fill in the blanks.
----------------------
1. ________________ occupied a low status, though it was superior to
that of the slave or serf. ----------------------
2. The development of Modern Industries in India is because of the ----------------------
who _____________ started some industries in India for their benefit.
3.
_________ basically means the relations between the employer and ----------------------
the employees. ----------------------
4.
_________ have traditionally identified three factors of production:
----------------------
land, capital and labour.
5.
_________ system developed because of the growth of town and ----------------------
cities, increase in trade and commerce and a decline in the power of
----------------------
the feudal lords.
----------------------
----------------------
----------------------
----------------------

Notes
Activity 1
----------------------
---------------------- What is the condition of the handicraft industry in your state? Search on the
Internet to find out the facilities provided by the state government to uplift
---------------------- this industry?
----------------------
---------------------- 1.3 FEATURES OF MODERN INDUSTRIAL SYSTEM

---------------------- We have seen the stages of Industrial Revolution. Now let’s see some
peculiar features, which have emerged as a result of industrial development.
----------------------
(1) Elimination of heavy physical labour: With the introduction of modern
---------------------- machinery, work was now less hard and safer. But it also reduced the
---------------------- opportunities of employment for unskilled labour.
(2) Increasing importance of scientist and engineers: Due to the complexity
---------------------- of the processes of production and advanced technology, a new class of
---------------------- professional employers developed in the industry who wielded a lot of
power in affairs of the industry. They handled the problems of automation,
---------------------- technology, control of nuclear energy. Many new occupations have been
created and so the need for better education, training and skill also arose
---------------------- for the labour force.
---------------------- (3) Elaborate control mechanism: To coordinate the efforts of a vast number
of people, managerial and organisational arrangements have to be made.
---------------------- Different departments with a number of jobs requiring production, planning
---------------------- and control, system and procedures, inventory control, scheduling,
accounting, financial control have been developed. Conferences, staff
---------------------- meetings and briefing sessions are held to keep all responsible personnel
abreast of important developments. Now more jobs are of the nature suited
---------------------- to the white-collar and managerial group to guide, regulate and coordinate
---------------------- the production system; formerly it was mainly the work for blue-collar
production workers.
----------------------
(4) Specialisation of functions: With division of labour, each worker/
---------------------- employee becomes very proficient at a specific job, and gains dexterity
and sustained experience due to specialisation. For example, technological
---------------------- or occupational specialisation as that of mechanical/electrical engineers,
product design engineers, or personnel specialists, such as labour
----------------------
relations managers, wage analysts, training directors, safety engineers and
---------------------- employment managers.
(5) Mass production: It involves continuous production and flow of raw
----------------------
materials at definite intervals throughout the factory. The worker remains
---------------------- at his place of work and all materials are moved to him. However, the work
done by the operator is highly repetitive and of short cycles, demanding
---------------------- close attention and a rapid speed of movement.

(6) Automation: Machines have completely eliminated human operators from Notes
the production process. Mechanical, electronic systems and computers
substitute man in the controlling and production process. ----------------------
----------------------
1.4 IMPACT OF INDUSTRIAL SYSTEM
----------------------
In the previous section, we saw the features which have emerged because
of the industrial development, now we will find out the impact of the industrial ----------------------
system on the working population. Rise in the standard of living, better education
and health services, more leisure time are the direct impact of industrialisation. ----------------------
In fact, the modern workers are much better off and lead a better life than their ----------------------
ancestors.
The main impacts of the industrial system are as follows: ----------------------
(1) Hard work: Industrialisation resulted in hard work. People started saving ----------------------
their earnings leading to more capital formation. People started striving for
----------------------
material progress. Glorification of hard labour and a high worker output
became a national “political religion” or cult. Capital formation was ----------------------
accomplished in the USA, England and Germany through private enterprise
and the capitalistic system. Max Weber opines that “The Protestant ethics, ----------------------
with its emphasis upon hard work, frugality and self-denial has been a
----------------------
major driving force among the people” to achieve savings. The prevailing
economic, social and religious attitudes also caused a strong feeling for ----------------------
material programmes.
----------------------
(2) Strict discipline: In any industry, there is a “web of rules” which binds
the individual worker. The worker lives by the clock. He has to follow the ----------------------
rules and regulations laid down by the employers or he will be fired, fined
or punished. ----------------------
(3) Monotony and boredom: These are the results of division of labour. ----------------------
Repetitive tasks cannot create any interest or sentiments towards work. A
worker feels no pride in it because the completed product is not his own ----------------------
creation. In fact, workers do their jobs mechanically and automatically.
----------------------
They don’t have to think about what they are doing. Their thoughts are
miles away from their work. ----------------------
(4) Interdependence: Closing of one sector throws the entire system out of ----------------------
gear and the entire factory may go out of work, bringing about economic
collapse. ----------------------
(5) Change in the attitude of the labour: Workers have now started to have ----------------------
a greater voice in their welfare and work through union membership. The
workers put forth their demands in front of the management for material ----------------------
things such as higher wages, more fringe benefits, fair and just treatment, job
security, freedom from discrimination, etc. through collective bargaining, ----------------------
consultative supervision, democratic leadership, labour management co- ----------------------
operation and the suggestion system
----------------------

Notes (6) Job displacement: Increased use of machinery has often resulted in
changes in employment situations. Since the operation of machines needs
---------------------- specialised knowledge and skills, the simple and unskilled workers find
it difficult to adjust with the work equipment and, thus, a large number
---------------------- of workers may become obsolete and even superfluous.
---------------------- (7) Increase in mobility: Occupational and industrial mobility also increased
greatly, facilitating geographical mobility as people started moving with
----------------------
their families from one industrial centre to another in search of employment
---------------------- opportunities. Jobs were also simplified so manpower was readily adapted
to a variety of positions instead of a single craft or trade.
----------------------
(8) Concentration of capital and instruments of production: Concentration
---------------------- of capital and instruments of production in the hands of a small group
of persons led to diverse thoughts between the working and the owning
---------------------- classes, and split the society into two hostile camps at war with each other
− the camp of the haves and the have-nots.
----------------------
(9) Hard working and living conditions: The workers had to work under
---------------------- deleterious and insecure conditions which impaired the happiness of the
family. Karl Marx points out in his Das Kapital, “The most agonising
----------------------
spectacle in the English factory (as also in the Indian cotton mills) was the
---------------------- remorseless exploitation of children under 10 or often only 6, and even 4
years old. Forced sometimes to work 18 hours a day, these ‘creatures’ were
---------------------- scarcely allowed the time to bite a meal. They worked till over-powered
by fatigue; they slept at their work upright, near the dangerous machines,
----------------------
which frequently slashed off their tender limbs. During the night, they were
---------------------- kept under lock and key by an internal band of overseers to whom lifting
tired children up by their ears and dashing them to the ground, or pouring
---------------------- water on them were all part of the day’s work.”
---------------------- Thus, “the insecure and precarious life of the labourer living under an
ever- present threat of unemployment, the frequent strikes and lock-outs, which
---------------------- threw society out of gear, and the dislocation of the economic equilibrium due to
---------------------- recurrent crises, came to be the features of the new Industrial order, and society
was faced with new complex, political and economic problems with a widened
---------------------- gulf between the masters of the factories and the operators.”
---------------------- So in this section we have seen the different stages of the industrial evolution
and the development of the Industrial Relations in the Western countries, starting
---------------------- from the primitive economy system through slavery, serfdom, handicrafts system,
cottage system to the modern factory system and the Industrial Revolution
---------------------- provides a clear evidence of persistent change. The pattern of these changes has
---------------------- not been identical/uniform in all countries and societies, because industrialisation
has moved somewhat fast in certain countries of the West, whereas in others it
---------------------- has progressed slowly, and as such the changes have been limited. It may be
noted that the shift from the earlier agricultural and handicrafts system to the
---------------------- age of factories has been drastic; and the same thing is now happening in many
---------------------- developing countries. Accelerated change is expected because of the second
Industrial Revolution brought about by automation and computerisation.
Notes
----------------------
Multiple Choice Multiple Response. ----------------------
1. The industrial system had the following impact on the working ----------------------
population:
----------------------
i. Hard conditions of work and living
ii. Decrease in mobility ----------------------
iii. Job displacement ----------------------
iv. Monotony and boredom ----------------------
2.
Some of the features which emerged as a result of industrial
development are: ----------------------
i. Elaborate control mechanism ----------------------

ii. Mass production ----------------------
iii. Specialisation of functions
----------------------
iv. Increase in heavy physical labour
----------------------
1.5 EVOLUTION OF INDUSTRIAL RELATIONS IN INDIA ----------------------
----------------------
In India, however, the evolution of Industrial Relations has been seen in
the following manner, the stages of which are given below. ----------------------
(1) Occupations in ancient India: In ancient times, the “prime” occupation
----------------------
was agriculture. Trading was next in importance. Manual services formed
the third area of occupation. A majority of the states were ruled by kings. ----------------------
India was greatly advanced in the field of industry in ancient times as is
evident in ancient literature. Kautilya’s Arthshastra gives a comprehensive ----------------------
picture of the organisations and functions of the social and political
----------------------
institutions in ancient India.
he caste system had a profound influence on the development and
T ----------------------
progress of the various industries and occupations. The concept of the caste
----------------------
system was originally based on the transfer of skills and specialisations,
which ultimately led to the standardisation of professions. The Atharva ----------------------
Veda divides the community into four classes, viz., Kshatriya (the warrior
class), Vaishya (the trading class), Shudra (the serving class) and Arya. ----------------------
The following professions were hereditary: those of goldsmiths, weavers,
----------------------
potters, blacksmiths, carpenters, hunters, charioteers, architects, sculptors,
armourers. Depending on their skill sets and occupations separate ----------------------
communities were formed, e.g., people making and repairing shoes became
a separate community of cobblers. ----------------------
----------------------

Notes The institution of slavery was also in existence in ancient India but it was
not restricted to any particular caste.
----------------------
2. Labour in medieval India: The numerous castes that developed in India
---------------------- were in the form of guilds of self-employed persons. The caste system
unified a number of persons belonging to particular occupations and formed
---------------------- the basis of occupational guilds. Indian works of art and crafts were badly
ruined with the foreign invasions, which lasted for about 700 years. These
----------------------
artisans gradually lost their traditional skills. Their condition deteriorated
---------------------- to such an extent that there was hardly any difference between an artisan
and a slave.
----------------------
The situation improved only after the restoration of law and order under
---------------------- the Mughals. Different kinds of work such as embroidery, goldsmith’s
work, varnishing, tailoring, leather work, making of pots, polishing of
---------------------- metals with gold or silver, weaving of silken clothes and superfine muslins
were carried on in big apartments known as the karkhanas. Under Akbar,
----------------------
government factories operated in Agra, Lahore, Fatehpur and Ahmedabad,
---------------------- where employees could develop their respective arts.
A large number of occupations were also carried on by small manufactures
----------------------
and traders in their cottages, mostly on a hereditary basis. A vast majority
---------------------- of artisans lived on the fringe of starvation.
---------------------- 3. Guilds and Unions: From very early days, craftsmen and workers felt
the need for being united. Their unions gradually gained strength and
---------------------- were helpful not only in the evolution of arts but they were powerful
centres of arts in themselves. Only responsible persons could become their
---------------------- members. The union followed democratic principles. In the event of a
---------------------- dispute between the president and the members, the king intervened and
brought about conciliations.
---------------------- Kautilya has given a good description of the unions of employees, craftsmen
---------------------- or artisans. According to him, the work of unions should be controlled by a
board of three directors, members of which should pay the entrance fee to the
---------------------- president and the profits earned by the unions should be equally distributed
among their members.
----------------------
The Vaishyas and Shudras, formed unions so that they could stand against
---------------------- the ill-treatment meted out at the hands of the higher castes and also to improve
their economic conditions.
----------------------
During the Epic Period, labourers working in the same industry had their
---------------------- own unions. These were affiliated to bigger unions of different industries called
“Nigam” or industrial corporations.
----------------------
Almost every craft, profession or occupation had its own union which
---------------------- was called “Shreni”. Every “Shreni” included about a thousand members. The
“shreni” elected its chief who was called “pramukha” or “jyeshta”. These guilds
----------------------
and corporations wielded considerable political power and influence.
----------------------

Notes
Activity 2
----------------------
What corrective actions would you take as an Industrial Relations Manager ----------------------
or HR Manager for maintaining a good industrial climate? Mention any three
activities with explanation. ----------------------
----------------------
1.6 INDUSTRIAL RELATIONS IN INDIA
----------------------
The Vedas mention that one of the important factors necessary for happiness ----------------------
in a group or community is good interrelations. During the Vedic times, the
industrial relations machinery consisted of a “madhyamasi” (mediator) who ----------------------
was a man of position and influence in the society. The village officials resolved
the local problems. They had the judicial as well as the executive powers. ----------------------
This system prevailed under the Hindu government. The unions were not ----------------------
only assemblies of employees but they were also institutions for maintaining
harmonious relations between employers and employees. ----------------------
Kautilya’s Arthashastra and the edicts of Emperor Asoka say that the ----------------------
workers enjoyed privileges and were paid high wages, were given sick leave as
well as old-age pensions The state recognised the organisation of workers and the ----------------------
rulers decided the matters related to wage disputes. The King had also appointed
a Board and the matters which were not resolved by the local Panchayat were ----------------------
dealt by the Board. Disputes were disposed as per the written documents and ----------------------
injunctions were also passed to restrain the employers as well as the workers.
In medieval times, during the Muslim rule, there was nominal difference ----------------------
between an artisan, a servant, an employee and a slave. Labourers could be ----------------------
forced to leave their home to work on wages as per the “farman” of the Emperor
or the Governor, as the case may be. There were no organisations of workers ----------------------
during the Mughal rule which could deal with the difficulties and problems of
the members. The workers were paid very low wages because of which their ----------------------
condition became deplorable. Wages were deducted if the work was not done ----------------------
properly. The disputes of the workers were resolved by the Emperor himself.
As the Emperor and his officials dealt harshly with the workers, the relations ----------------------
between the workers and the rulers were not cordial.
----------------------
The commercial character of the East India Company did not change the
conditions of the workers. The underdevelopment of the economy continued ----------------------
even under the British rule for more than a century. But collective relations in
----------------------
industry were modelled on the British pattern. In fact, the growth of industries
in different parts of the country was based on the need for good industrial ----------------------
relations.
----------------------
Early British Rule
India was expected to be a colonial market for British goods till the second ----------------------
half of the 19th century. The modern type of industries was first set up in the
----------------------

Notes middle of the 19th century for the benefit of the East India Company. In 1831,
indigo plantations were started followed by the setting up of a cotton mill
---------------------- in Bombay in 1853, a jute mill in Calcutta in 1855 and the coal fields were
connected by rail to the port city of Calcutta. This was the beginning of a rapid
---------------------- expansion of rail lines throughout India. The workers worked under adverse
---------------------- conditions and were sometimes required to work for more than 20 hours per
day. The wages paid were very low. Wages were also deducted by the employer
---------------------- for late attendance, insubordination or negligence.
---------------------- In 1877 the weavers of the Empress Mills in Nagpur stopped work
giving an indication of the rising industrial unrest. This gave rise to frequent
---------------------- short- lived strikes in Bombay and Surat as well, but these strikes did not make
much of an impact because the workers were not united. These powerless
----------------------
workers were intimidated, dismissed and victimised by the employers. In 1881,
---------------------- the Factories Act was passed, but the provisions of the Act were more in favour
of the employers than the employees. The Act prevented the workers from going
---------------------- on a strike. In 1884, a memorandum was presented by about 5000 workers to
the Bombay Factory Labour Commission. In 1890, the first labour association,
----------------------
the Bombay Mill Hands Association was established. This was the beginning of
---------------------- the formation of the workers unions or the trade unions.
World War I (1914−18)
----------------------
Word War I was a period of boom for employers. With the rising prices,
---------------------- their profits went up enormously. The wages of workers, however, remained
the same. Their economic distress brought workers together and an organised
----------------------
working class movement began in the country. The unrest among workers led to
---------------------- increased strikes, among which the one at Ahmedabad, and the other at Madras
in 1921, are outstanding. During this period, as a result of ILO influence,
---------------------- various laws were enacted, i.e., the Trade Disputes Act, 1917, the Workmen’s
Compensation Act, 1923 and the Trade Unions Act, 1926.
----------------------
World War II
----------------------
During the Second World War, employers made enormous profits.
---------------------- The workers demanded a share in them. Bonus and dearness allowance were
granted to them but as money wages did not increase in proportion to the rise
---------------------- in prices, the government tried to check the dissatisfaction of the workers and
---------------------- the consequent strike activity by prohibiting strikes under the Emergency Rules
(Rule 81-A of the Defence of India Rules), which provided for the adjudication
---------------------- of disputes between employers and workers. In 1942, tripartite consultative
machinery was formed, which has subsequently shaped the pattern of Industrial
---------------------- Relations in India.
---------------------- The years immediately following the War (1946 and 1947) were the most
disturbed years from the point of view of the pattern of industrial relations
---------------------- in India. During this period there were many strikes, many trade unions were
---------------------- formed and the Industrial Employment (Standing Orders) Act, 1946 and the
Industrial Disputes Act, 1947, for the settlement of disputes were passed.
----------------------

Post-Independence Era Notes
Immediately after Independence, it was considered necessary to put
----------------------
a stop to strikes/ lockouts that interrupted production, in the interests of the
national economy. Hence, the Industrial Truce Resolution was adopted through ----------------------
a tripartite conference convened in 1947, giving paramount importance to the
maintenance of industrial peace. The Minimum Wages Act, the Factories Act ----------------------
and the Employees State Insurance Act were all enacted in 1948.
----------------------
Post-independence industrial relations have been very much influenced
by the pre- independence industrial environments and labour management ----------------------
relations. When India became independent in 1947, the industrial scene was
----------------------
subjected to a considerable amount of chaos and confusion. Industrial unrest
and the shattered worker-management relation was been prevalent everywhere. ----------------------
The government emerged as an arbitrator between the management and the
workers. It is in this context that the Industrial Disputes Act of 1947 deserves ----------------------
importance.
----------------------
During the second five-year plan period, certain norms, mechanisms
and practices were evolved which formulated the need-based minimum wage, ----------------------
wage boards, guidelines on rationalisation, code of discipline, code of conduct
----------------------
and the scheme for workers’ participation in management.
----------------------
Check your Progress 3 ----------------------
State True or False. ----------------------

1. India was expected to be a colonial market for British goods till the ----------------------
second half of the 19th century.
----------------------
2. he caste system did not have any influence on the development and
T
progress of the various industries and occupations. ----------------------
3. During the Second World War, the employers suffered heavy losses. ----------------------
4. From very early days, craftsman and workers felt the need for being
----------------------
united.
5. Labourers could be forced to leave their home to work on wages, as ----------------------
per the “farman” of the Emperor or the Governor, as the case may be,
----------------------
during the Mughal era.
----------------------
Activity 3 ----------------------
----------------------
According to you did the initiatives taken by the Government immediately
after independence help to improve the industrial relations? Justify your ----------------------
answer.
----------------------
----------------------

Notes 1.7 INDUSTRIAL RELATIONS AND HUMAN RELATIONS
---------------------- The concept of Industrial Relations has become a part and parcel of
the Science of Management, particularly that which deals with the manpower
---------------------- of the enterprise and, hence, is closely linked with Personnel Management. Till
recently, the use of the term “Personnel Management” and “Industrial Relations”
----------------------
were not sharply distinguished and were very often used interchangeably as
---------------------- would be clear from a few definitions reproduced below.
---------------------- DaleYoder has defined Personnel Management as “that phase of management

which deals with the effective control and use of manpower as distinguished
---------------------- from other sources of power. Industrial relations are the relations that exist in
and grow out of employment. It refers to a wide field of relationship among
---------------------- people, human relationships that exist because of necessary collaboration of
---------------------- men and women in the process of modern industry.”
E.F. Breach observes, “Personnel management mainly deals with
---------------------- executive policies and activities regarding the personnel aspects of the
---------------------- enterprise; while industrial relations is mainly concerned with the employee-
employer relationship.”
----------------------
The British Institute of Personnel Management also does not make any
---------------------- distinction between Personnel Management and Industrial Relations. It defines
Personnel Management as that part of management function, which is primarily
---------------------- concerned with the human relationship within an organisation. Its objective is
the maintenance of those relationships on a basis, which by consideration of
----------------------
the well-being of the individual, enable all those engaged in the undertaking
---------------------- to maximise their personal contribution to the effective working of that
undertaking. The Institute, thus prefers to include under this term, “methods
---------------------- of recruitment selection, training, education, proper employment of personnel,
terms of employment, methods, and standards of remuneration, working
----------------------
conditions, amenities, employee services, joint consultations and procedures
---------------------- for the settlement of disputes, etc.”
However, of late, some distinction has been made between the two
----------------------
terms. Personnel Management in its more restricted usage refers to “that part
---------------------- of employment relations which is concerned with employees as individuals.
Group relationships are excluded from its scope and form a part of Industrial
---------------------- Relations. Accordingly, “the collective relationship of individual workers with
their management constitutes the subject matter of industrial relations”.
----------------------
Besides, the term “Human Relations in Industry” has also come into
---------------------- vogue. Some authors mean by Human Relations “the direct relationship existing
between the employer and his work people considered as individuals, as distinct
----------------------
from the term ‘Industrial Relations’which is used to denote collective relations”.
---------------------- Others include under “human relations” those subjects on which employers and
employees have common interests and, therefore, interests likely to make for
---------------------- understanding, while holding the field of industrial relations to be essentially
that of divergent interests. In the view of some others, “Human Relations are
----------------------
concerned with relations as a whole at the level of the undertaking, whether they
are relations with the union or personal relations with the staff; while Industrial Notes
Relations would apply to the relations between the organisations of employers
and workers at a higher level of economy.” Yet others consider human relations ----------------------
as the scientific investigation of the psychological and social interrelations
produced in the collective performance of work. ----------------------
These different interpretations show that while it is difficult to draw a ----------------------

definite line of demarcation between the concepts of “industrial relations” and
----------------------
“human relations” a broad distinction can, however, be made.
----------------------
Activity 4
----------------------
With the help of one example, illustrate the relationship between industrial ----------------------
relations and human relations
----------------------
Summary ----------------------
----------------------
• It has been increasingly realised that the industrial revolution has brought
about a number of complexities which have rendered the management of ----------------------
people in an organisation more difficult and complicated than it was in
earlier and simpler societies. This is because the easy mobility of men and ----------------------
women in modern societies pose complex and ever-changing problems for
----------------------
their managers and employers.
• Some features of the early system persist even now, while other features ----------------------
are the result of the Industrial Revolution and, therefore, represent sharp
----------------------
breaks with traditions, creating challenging problems for the management.
• Employment relationships are not static but dynamic. The most important ----------------------
characteristics are the persistence for change. The relations between the
----------------------
employers and employees have changed, are changing and will keep on
changing. ----------------------
• Indian management may try to experiment with the “quality of work life” ----------------------
approach of the American management and the concern for the workers of
the Swedish management. ----------------------
• Simultaneously, a certain amount of institutional framework, as practiced ----------------------
in Britain, would also become necessary to regulate industrial relations
practices under the Indian conditions. This can make for an integrated ----------------------
industrial relations policy. This integrated approach would succeed in
India to establish a cordial industrial relation scene in the years to come. ----------------------
----------------------
Keywords
----------------------
• Automation: To make a process in a factory or office operate by machines
----------------------
or computers,in order to reduce the amount of work done by humans and
the time taken to do the work. ----------------------

Notes • Complexities: Difficult to understand or find an answer to because of
having many different parts.
----------------------
• Divergent: A gap or opposite direction.
---------------------- • Dispute: An argument or disagreement.
---------------------- • Handicrafts: A skilled activity in which something is made in a traditional
way with hands.
----------------------
• Mass: A large amount of something that has no particular shape or
---------------------- arrangement.
---------------------- • Regulate: To control something, especially by making it work in a

particular way.
----------------------
---------------------- Self-Assessment Questions

---------------------- 1. Discuss the evolution of Industrial Relations.
---------------------- 2. Explain the evolution of Industrial Relations in India.

3. Explain the results of the impact of industrialisation on modern workers.
----------------------
4. How did industrial revolution brought about complexities in Industrial
---------------------- Relations?
----------------------
----------------------
---------------------- Fill in the blanks.
---------------------- 1.
Apprentices occupied a low status, though it was superior to that of the
slave or serf.
----------------------
2. The development of Modern Industries in India is because of the British
---------------------- Empire who started some industries in India for their benefit.
---------------------- 3.
Industrial Relations basically means the relations between the employer
and the employees.
----------------------
4.
Economists have traditionally identified three factors of production: land,
---------------------- capital and labour.
---------------------- 5.
Handicrafts system developed because of the growth of town and cities,
increase in trade and commerce and a decline in the power of the feudal
---------------------- lords.
----------------------
----------------------
----------------------
----------------------

Check your Progress 2 Notes
Multiple Choice Multiple Response.
----------------------
1. The Industrial system had the following impact on the working population:
----------------------
i. Hard conditions of work and living iii. Job displacement
iv. Monotony and boredom ----------------------
2. Some of the features which emerged as a result of industrial development ----------------------

are:
----------------------
i. Elaborate control mechanism
----------------------
\ ii. Mass production
iii. Specialisation of functions ----------------------
1. True
----------------------
2. False
----------------------
3. False
4. True ----------------------
5. True ----------------------
----------------------
Suggested Reading
----------------------
1. Mammoria, C.B., S.Mammoria and S.V. Gankar. 2011. Dynamics of
Industrial Relations. Mumbai: Himalaya Publishing House. ----------------------
2. Punekar, S. D., S. B. Deodhar and Saraswathi Sankaran. 2004. Labour ----------------------
Welfare, Trade Unionism and Industrial Relations. Mumbai: Himalaya
Publishing House. ----------------------
3. Rao, Dr. P. Subba. 2011. Essentials of Human Resource Management and ----------------------
Industrial Relations. Mumbai: Himalaya Publishing House.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Evolution of Industrial Relations Policies
UNIT
2
Structure:
2.1 Introduction
2.2 Pre- and Post-Independence Industrial Relations in India
2.3 Industrial Relations Policy during the Plan Period
2.4 National Commission on Labour and Industrial Relations Policy (1969)
2.5 Management Vs. Unions
2.6 Conditions of Good Industrial Relations
2.7 Unions and their Role
Summary
Key Words
Suggested Reading
Evolution of Industrial Relations Policies 19

Notes
Objectives
----------------------
----------------------
• Evaluate the nature of industrial relations
----------------------
• Analyse the role of the five-year plans in the development of the
---------------------- industrial relations policy
• Identify the conditions for good industrial relations
----------------------
---------------------- 2.1 INTRODUCTION

---------------------- We have seen some aspects of industrial relations − evolution, concept
---------------------- and approach in the first unit and now we will try to understand and evaluate
the nature of industrial relations. Deterioration in working conditions due to the
---------------------- development of industrial units at a faster pace, unduly low wages and the
consequent dissatisfaction of the working class; growing indiscipline among the
---------------------- workers; strained relations between labour and management and the formation
---------------------- of ILO; the emergence of All India Trade Union Congress (AITUC) in 1920 and
the demand for higher wages and improved conditions of work and living − all
---------------------- of these issues led to serious industrial troubles and created labour problems of
large dimensions. The situation became unmanageable in Bombay and Bengal
---------------------- hence, committees were appointed to look into the matter. The beginning of the
---------------------- industrial relations dynamics can be traced back to the inception of the Indian
Labour Conference as far back as 1942 by Dr. B.R. Ambedkar, when the policy
---------------------- of bringing together the three parties, namely, the government, management and
labour on a common platform as a consultative tripartite forum for all matters of
---------------------- labour policy and industrial relations was accepted.
---------------------- When the Second World War broke out, the Government of India passed
the Defence of India Rules to overcome the defects in the Trade Disputes Act,
----------------------
1929 which banned the strikes and lock outs in public utility services but it
---------------------- did not provide any machinery for the settlement of disputes like the Board of
Conciliation or court of enquiry. The Defence Rules incorporated the provision
----------------------
for settling the disputes by compulsory adjudication in Section 81 A, and later
---------------------- on with a few minor changes it became the Industrial Disputes Act of 1947
In this unit, we will see how Industrial Relations evolved in India.
----------------------
---------------------- 2.2 PRE- AND POST-INDEPENDENCE INDUSTRIAL

----------------------
RELATIONS IN INDIA
---------------------- Pre-Independence India

State intervention in labour/industrial relations had its beginning when
---------------------- the British Government was constrained to protect its commercial interests in
---------------------- India.

An ILO publication observes: “Far from protecting the interests of labour, the Notes
earlier attempts to regulate labour consisted of enactments such as the Assam
Labour Act, the Workmen’s Breach of Contract Act, 1859, and the Employers’ ----------------------
and Workmen’s (Disputes) Act of 1860. These Acts aimed at protecting the
social system against labour rather than protecting labour against the social ----------------------
system.” Factories Act was also enacted in 1881. Basically, the Britishers ----------------------
enacted all these laws to safeguard their interests and to prevent the labour from
uniting and going on strikes. The laws also prevented the labour from leaving ----------------------
their jobs and hence they were treated like bonded labour.
----------------------
Post-Independence India
----------------------
After Independence, the government took many initiatives to streamline
the relations between the management and the workers by enacting certain ----------------------
laws and also formed regulatory bodies to help improve the relations between
the working class and the employers. The government also planned a phase ----------------------
wise development of the industries in all the regions in the country.
----------------------
Some of the steps taken by the government are:
----------------------
The Industrial Disputes Act (1947) provided for:
(i) The establishment of a permanent machinery for the settlement of disputes ----------------------
in the shape of certain authorities like the Works Committee, Conciliation ----------------------
Officers, Industrial Tribunals, Labour Courts.
(ii) Making an award of a tribunal or any settlement brought about by the ----------------------
conciliator, binding on the parties and legally enforceable. ----------------------
The Act seeks:
----------------------
(i) The prevention and settlement of industrial disputes in all industries
through conciliation, arbitration and adjudication. ----------------------
(ii) To prohibit strikes and lockouts during the pendency of conciliation and ----------------------
adjudication proceedings.
----------------------
Besides the enactment, the two other major efforts made were to amend the
Trade Unions Act, 1926 − once in 1947 and then again in 1950. In 1947, a law ----------------------
was enacted which defined unfair employer practices and unfair union practices.
These amendments were a break with the colonial British tradition and were ----------------------
influenced by the American National Labour Relations Act (popularly known ----------------------
as the Wagner Act) of 1935. Unfortunately, these amendments to the Trade
Unions Act never came into force. The newly formed Indian National Trade ----------------------
Union Congress (INTUC) did not favour some of the changes. Employers were
not enthusiastic. Some of the unions did not like the exclusion of civil services ----------------------
and other categories of government employees and of supervisory personnel ----------------------
from the scope of the Act.
In 1950, two bills were brought by the government − a Labour Relations ----------------------
Bill and a Trade Unions Bill. They retained the provisions of the 1947 ----------------------
amendment. They also introduced the principle that collective bargaining would
be compulsory for both, employers and unions, under stipulated conditions. ----------------------

Notes Labour Courts were empowered to certify unions as sole bargaining agents.
All corrective collective agreements were to provide for a peaceful settlement
---------------------- without work stoppage on all questions arising out of such agreements by
arbitration or otherwise. However, the draft bill lapsed with the dissolution of
---------------------- Parliament.
---------------------- As a reaction to the legislative approach which was advocated by Jagjivan
Ram, the then Labour Minister, 1947−52, V.V.Giri, (1952−57) advocated his
----------------------
“Giri Approach” in terms of voluntary negotiations and collective bargaining in
---------------------- a tripartite relationship. The movement towards a non-legal industrial relations
system was a new trend. He proclaimed that “industrial adjudication was
---------------------- labour’s enemy No. 1. This was how Industrial Relations evolved in the pre-
independence era as well as immediately after Independence.
----------------------
---------------------- Check your Progress 1

----------------------
Fill in the blanks.
----------------------
1. The _________ enacted all the laws to safeguard their interests and to
---------------------- prevent the labour from uniting and going on strikes.
---------------------- 2. V. V. Giri proclaimed that industrial ___________ was labour’s enemy
No. 1.
---------------------- ___________ were empowered to certify unions as sole bargaining
3.
---------------------- agents.
----------------------
Activity 1
----------------------
---------------------- Furnish details of two bills which were brought by the government in
relation to Labour Relations Bill and the Trade Unions Bill.
----------------------
---------------------- 2.3 INDUSTRIAL RELATIONS POLICY DURING THE

---------------------- PLAN PERIOD
---------------------- In this section, we will see the phase-wise development of the Industrial
---------------------- Relations Policy initiated by various governments through the Five Year Plans.
First Plan Period
----------------------
The first Five Year Plan emphasised on the need for industrial peace in
---------------------- industry, the ultimate oneness of interests and the virtue of harmonious relations
between capital and labour. It was felt that it is incumbent on the state to
---------------------- arm itself with legal powers to refer disputes for settlement by arbitration of
---------------------- adjudication, upon the failure of efforts to reach an agreement by other means.
The plan emphasised on two other principles:
----------------------

i. The workers’ right of association, organisation and collective bargaining Notes
should be accepted without reservation as the fundamental basis of a
mutual relationship; and ----------------------
ii. Employer-employee relationship should be accepted as a partnership in a ----------------------
constructive endeavour to promote the satisfaction of the economic needs
of the community in the best possible manner. ----------------------
The plan said that the best way of settling disputes was to allow employer ----------------------
and employees to settle these without the interference of a third party.
----------------------
The plan stressed that the machinery to settle disputes should be managed
in accordance with the following principles: ----------------------
a) Legal technicalities and formalities of procedure should be used to the ----------------------
minimum possible extent.
b) ach dispute should be finally and directly settled at a level suited to the
E ----------------------
nature and importance of the case. ----------------------
c)
Tribunals and courts should be manned by specially trained expert
personnel. ----------------------
d) Appeals to these courts should be reduced. ----------------------

e) Provision should be made for a prompt compliance with the terms and ----------------------
conditions of awards.
----------------------
The plan also recommended the setting up of norms and standards to govern
the relations between the employers and employees and for the settlement of the ----------------------
industrial disputes through tripartite bodies i.e. the Indian Labour Conference,
the Standing Labour Committee and the Industrial Committee for particular ----------------------
industries. ----------------------
Astrike or lockout without due notice during the pending of any proceedings
and in violation of the terms of a settlement, agreement, award or order was to ----------------------
be banned and attended by suitable penalties and loss of privileges. ----------------------
The First Plan also prescribed that the Board of Directors of these
undertakings should include a few persons on the board who understand labour ----------------------
problems, the labour point of view and who can also be sympathetic to the ----------------------
aspirations of the labour. The following points were also made in the plan:
----------------------
i. The need for a systematic “Grievance Procedure” to be helped by having
elected shop-stewards was stressed. ----------------------
ii. The importance of the Works Committee was emphasised and these were
----------------------
described as “the key to the system of industrial relations”.
iii. The plan stressed that for the success of collective bargaining, it is essential ----------------------
that there should be a single bargaining agent over as large an area of
----------------------
industry as possible. Separate unions for industrial establishments in the
same industry in a local area would be a hindrance to the growth of strong ----------------------
and healthy trade unions and their existence may be justified only in very
exceptional circumstances. ----------------------

Notes iv. The plan recognised the vital and constructive role of trade unions and
recommended a closer association between trade unions and employers’
---------------------- representatives at various levels - at the level of the undertaking, at level of
industry and the regional and national level.
----------------------
The Principles of the Industrial Relations Policy, the Code of Conduct, the
---------------------- Code of Discipline and the Draft Code of Efficiency and Welfare were the three
important contributions to the industrial relations policy in the first five year
----------------------
plan. From the “Courts to Codes” was the new movement during the period, and
---------------------- many progressive policies were also evolved by the Indian Labour Conference
regarding the recognition, joint management councils, workers education, and
---------------------- apprentice training. During this period, the strategy was to move away from
legalism to voluntarism.
----------------------
Second Five Year Plan
----------------------
The second five year plan dealt with the following aspects with a
---------------------- special focus on the strengthening of the Trade Unions.
---------------------- 1. Avoidance of disputes at all levels, including the last stage of mutual
negotiations, namely conciliation.
---------------------- 2. The plan also recommended an increased association between labour
---------------------- and management, which might be achieved by councils of management
consisting of representatives of management, technicians and workers.
---------------------- 3. The second plan suggested that statutory provision should be made for the
---------------------- recognition of unions, keeping in mind the need for having one union in an
industry.
----------------------
4. It suggested that there should be restrictions on the number of outsiders
---------------------- who served as office bearers of unions, as the workers who become office
bearers should have additional protection against victimisation, and that
---------------------- the finances of trade unions should be strengthened.
---------------------- Third Five Year Plan
---------------------- The third Five Year Plan laid stress on moral rather than on legal sanctions
for the settlement of disputes. It laid stress on the preventions of unrest by timely
---------------------- action at the appropriate stage and on giving adequate attentions to root causes.
This involves a basic change in the attitude and the outlook of the parties and
---------------------- the new set of readjustments in their mutual relations. Ways should be found
---------------------- for increasing the application of the principle of voluntary arbitration, the same
protection should be extended to proceedings in this case as is now applicable
---------------------- to compulsory adjudication. Employers should show much greater readiness to
submit disputes to arbitration than they have done hitherto. This has to be the
---------------------- normal practice as an important application accepted by parties under the Code
---------------------- of Discipline.
Worker’s participation in management should be accepted as a fundamental
---------------------- principle and as an urgent need. A major programme during this period was
---------------------- the progressive extension of the scheme of Joint Management Councils to

new industries and units so that, in the course of a few years, it may become a Notes
normal feature of the industrial system. It can serve to bridge the gulf between
labour and management, create better mutual understanding and facilitate the ----------------------
adoption, on both sides, of an objective approach to the problems of industry
and the workers. In the course of time, management cadres should arise out of ----------------------
the working class itself. ----------------------
A large-scale expansion of the Workers Education scheme was visualised
----------------------
for the period of the Third Plan. It was intended to diversify the programme
and secure fuller association of workers’ representatives and their organisations. ----------------------
Trade union leadership would grow progressively out of the ranks of the
----------------------
workers and this process would be greatly accelerated as the programme of
workers’ education gathered momentum. ----------------------
One more resolution was initiated during this period.
----------------------
Industrial Truce Resolution, 1962
----------------------
It stated that no effort shall be spared to achieve the maximum production,
and the management and workers will strive to collaborate in all possible ways ----------------------
to promote the defence efforts of the country.
----------------------
The Resolution also emphasised on:
----------------------
a) The paramount need to maximise production and laid stress on the duty of
the employers and of the workers to exercise restraint and forbearance. ----------------------
b) That no interruption of work should be allowed.
----------------------
c) That all disputes should be settled by voluntary arbitration, especially those
relating to dismissal, discharges and retrenchment of workers. ----------------------
d) That unions should discourage absenteeism and negligence on the part of ----------------------
workers.
----------------------
e) That joint emergency production committees should be set up.
----------------------
Fourth Five Year Plan
This plan’s main aim was to enhance the role of the working class in the ----------------------
development of the nation. Following were some of the main aspects of the
----------------------
fourth plan:
i. I n the field of industrial relations, priority will be accorded to the growth ----------------------
of a healthy trade union movement so that it could secure better labour
----------------------
management relations.
ii. More emphasis should be laid on collective bargaining, and productivity ----------------------
should be increased through labour management co-operation. ----------------------
iii. Industrial disputes should be settled by voluntary arbitration.
----------------------
The plan hoped that trade unions would serve not only as agencies seeking
fair wages and proper conditions of work and living for their members, but also ----------------------
play an increasingly important role in the nation’s development.
----------------------

Notes Fifth Five Year Plan
In the fifth plan stress was laid on strengthening industrial relations
----------------------
and conciliation machinery, better enforcement of labour legislation, research
---------------------- in labour relations and labour laws, imparting training to labour officers,
improvement of labour statistics and undertaking studies in the field of wages
---------------------- and productivity. Special attention was devoted to bring about an improvement
in productivity in all spheres of the economy.
----------------------
Sixth Five Year Plan
----------------------
The sixth plan initiated the following measures to develop the Industrial
---------------------- Relations Policy:
---------------------- (i) Industrial harmony is indispensable for a country if it is to make economic

progress.
---------------------- Healthy industrial relations, on which industrial harmony is founded,
---------------------- cannot be regarded as a matter of interest only to employers and workers,
but are of a vital concern to the community as a whole. In the ultimate
---------------------- analysis, the problem of industrial relations is essentially one of attitudes
and approaches of the parties concerned.
----------------------
(ii) If adequate consultative machinery and grievance procedures are evolved
---------------------- and made effective, strikes and lockouts would become redundant.
Effective arrangements should be made for the settlement of inter-union
---------------------- disputes and to discourage unfair practices and irresponsible conduct.
---------------------- (iii) At the enterprise level, it should become an integral part of the industrial
relations system to serve as an effective instrument of modern management.
----------------------
It should be made a vehicle of transforming the attitudes of both employers
---------------------- and workers with a view to establishing a co-operative culture which helps
in building a strong self-confident and self-reliant country with a stable
---------------------- industrial base.
---------------------- (iv) Collective bargaining should be encouraged as this would enhance the
strength and facilitate the enlargement of the trade unions’ role.
----------------------
Seventh Five Year Plan
---------------------- The seventh plan suggested that there is a considerable scope for
---------------------- improvement in industrial relations which would obviate the need for strikes
and the justification for lockouts. In the proper management of industrial
---------------------- relations, the responsibility of unions and employees has to be identified and
inter-union rivalry and inter-union division should be avoided.
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
1. The Fourth Plan’s main aim was to enhance the role of the working ----------------------
class in the development of the nation.
2. The Third Five-Year Plan laid stress on moral rather than on legal ----------------------
sanctions for the settlement of disputes. ----------------------
3. In the Fifth Plan no attention was given to bring about an improvement
----------------------
in productivity in all spheres of the economy.
4. The Principles of the Industrial Relations Policy, the Code of Conduct, ----------------------
the Code of Discipline and the Draft Code of Efficiencyand Welfare were
----------------------
the three important contributions to the industrial relations policy in the
Second Five Year Plan. ----------------------
5. Industrial Truce Resolution, 1962 also emphasised that interruption of ----------------------
work should be allowed.
----------------------
Activity 2 ----------------------
----------------------
Analyse all the plans and looking at the current scenario, do you feel the
government has managed to achieve the level of industrial harmony which ----------------------
it had hoped to achieve. Justify your answer.
----------------------
2.4 NATIONAL COMMISSION ON LABOUR AND ----------------------

INDUSTRIAL RELATIONS POLICY (1969) ----------------------
In this section, we will see the role of the National Commission on Labour ----------------------
in the development of the Industrial Relations Policy.
----------------------
While realising that reaching of agreements has not made much headway
in India, the National Commission on Labour (NCL) has recommended ----------------------
compulsory recognition of a union as the sole representative for the purpose of
bargaining. ----------------------
It has observed that: ----------------------
i. In the absence of an arrangement of statutory recognition of unions, ----------------------
except in some states and provisions which require employers and workers
to bargain in “good faith”, it is no surprise that reaching of collective ----------------------
bargaining agreements has not made much headway in India. Nonetheless,
the record of reaching collective agreements as a wider area is certainly ----------------------
desirable. ----------------------
----------------------

Notes ii. There is a case for a shift in emphasis and increasingly greater scope
for a reliance on collective bargaining. Any sudden change replacing
---------------------- adjudication by a system of collective bargaining has to be gradual. A
move should be made towards collective bargaining in such a way that it
---------------------- may acquire primacy in the procedure for settling industrial disputes.
---------------------- The Commission also observed that:
---------------------- i. An essential step to facilitate a collective bargaining process is the
compulsory recognition of a union as the sole representative for the purpose
---------------------- of bargaining with the management.
---------------------- ii. In order to enable employees to effectively participate in the process of
collective bargaining, they should be well organised and trade unions must
---------------------- become strong and stable.
---------------------- iii. The place of strike/lockout should be in the overall scheme or industrial
relations defined. Collective bargaining cannot exist without the right of
---------------------- strike or lockout.
---------------------- iv. Recognition of Unions. A trade union seeking recognition as a bargaining
agent from an individual employer should have a membership of at least
---------------------- 30 per cent of workers in the establishment.
---------------------- The Committee recommends that:
---------------------- Recognition
• should be made compulsory under a central law in all
undertakings employing 100 or more workers or where the capital invested
---------------------- is above a stipulated size. A trade union seeking recognition as a bargaining
agent from an individual employer should have a membership of at least
----------------------
30 per cent of the workers in the establishment. The minimum membership
---------------------- should be 25 per cent if the recognition is sought for an industry in a local
area.
----------------------
The Industrial
• Relations Committee (IRC) is to certify the union as a
---------------------- representative union on the basis of either verification of membership
---------------------- of the contending unions or by a secret ballot open to all workers in the
establishment. The Commission will deal with various aspects of union
---------------------- recognition such as:
---------------------- (i) Determining the level of recognition whether plant, industry, centre-
cum industry to determine which is the majority union
---------------------- (ii) Certifying the majority union as a recognised union for collective
---------------------- bargaining
(iii) Generally dealing with other related matters
----------------------
The recognised
• union should be statutorily given certain exclusive rights
---------------------- and facilities, such as the right of sole representation, the right to enter into
collective agreements on terms of employment and conditions of service,
---------------------- the right to collect membership subscriptions within the premises of the
undertaking, the right of check-off, holding discussions with departmental
----------------------
representatives within factory premises, inspecting, by prior agreement,
the place of work of any of its members, and nominating its representatives Notes
on works/grievance committees and other bipartite committees.
----------------------
The minority unions should be
• allowed only the right to represent cases of
dismissal and discharge of their members before the Labour Court. ----------------------
• The unions should be made strong, organisationally and financially, and a
----------------------
multiplicity of unions and intra-union rivalries should be discouraged by:
a. Providing compulsory registration for unions ----------------------
b. Raising the minimum number required for forming a union ----------------------
c. Reduction in the number of outsiders ----------------------
d. Taking steps to build internal leadership
----------------------
Strikes/Lockouts and Gheraos
----------------------
The National Commission on Labour has made the following
recommendations related to strikes/ lockouts and gheraos: ----------------------
i. In essential industrial services, where a cessation of work may cause harm ----------------------
to the community, the economy or the security of the nation itself, the
right to strike may be banned, but with the simultaneous provision of an ----------------------
effective alternative like arbitration or adjudication to settle disputes.
----------------------
i . I n non-essential industries, a maximum period of one month has to be fixed
for the continuance of a strike or lockout. After the lapse of this period, the ----------------------
dispute has automatically to go before the IRC for arbitration. In essential
industries, the right to strike/ lockout should be made redundant by ----------------------
requiring the IRC to adjudicate when mutual negotiations fail and parties ----------------------
do not agree to arbitration.
iii. Every strike/lockout should be preceded by notice. A strike notice given ----------------------
by a recognised union should be preceded by a strike ballot open to all the ----------------------
members of the union, and the strike decision must be supported by two-
thirds of the members present and voting. ----------------------
iv. ‘Gherao’ cannot be treated as a form of labour unrest since it involves ----------------------
physical coercion rather than economic pressure. It is harmful to the
working class and in the long run may affect national interest. ----------------------
v. he penalties, which have been provided for unjustified strikes/lockouts
T ----------------------
would ultimately discharge these and would in due course persuade the
parties to sit round the table earnestly and settle their disputes by negotiation. ----------------------
vi. To restrain the outbreak of unnecessary strikes/lockouts, compensation and ----------------------
forfeiture of wages for strikes/lockout should be provided for.
----------------------
Works Committees and Joint Management Councils
As per the National Commission on Labour, works committees should ----------------------
be set up in units which have a recognised union. The recommendations of the ----------------------
committee were:
----------------------

Notes They
• should be set up only in units which have a recognised union. The
union should be given the right to nominate the worker members of the
---------------------- works committee.
---------------------- A clear
• demarcation of the functions of the works committee and the
recognised union, on the basis of mutual agreement between the employer
---------------------- and the recognised union, will make for a better working of the committees.
---------------------- When
• management and unions are willing to extend co-operation in
matters they consider to be of a mutual advantage, they may set up a joint
---------------------- management council. In the meanwhile, wherever the management and
the recognised trade union unit so desire, they can agree to enhance the
----------------------
powers and scope of the works committees to ensure a greater degree of
---------------------- consultation/co-operation. The functions of the two in this latter situation
can be amalgamated.
----------------------
Settlement of Industrial Disputes
---------------------- The National Commission on Labour made the following recommendations
---------------------- for resolving the Industrial Disputes:
1. The parties to the disputes should talk over their differences across the
---------------------- table and settle them by negotiation and bargaining.
---------------------- 2. After negotiations have failed and the notice of a strike/lockout is served,
the parties may agree to voluntary arbitration.
----------------------
3. In essential services/industries, when collective bargaining fails and parties
---------------------- do not agree to arbitration, either party may notify the IRC of the failure of
the negotiations, whereupon the IRC shall adjudicate on the dispute.
----------------------
4. In the case of non-essential services/industries, the failure of negotiations
---------------------- and the refusal to avail of voluntary arbitration, the IRC, after the receipt of
notice of direct action may offer the parties its good offices for settlement.
----------------------
5. After the expiry of the notice period, if no settlement is reached, the parties
---------------------- will be free to resort to direct action.
---------------------- In this section, we have seen the recommendations given by the National
Commission on Labour to improve the relations between the workers and
---------------------- the employers by way of giving more importance to conciliation, by giving
---------------------- recognition to the trade unions, by preventing strikes and lock outs, by giving
importance to the works committees and joint management councils and also
---------------------- by suggesting ways to settle the industrial disputes.
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
Multiple Choice Single Response. ----------------------
1. The unions should be made strong organisationally and financially, and ----------------------
a multiplicity of unions and intra-union rivalries should be discouraged
by: ----------------------
i. Providing compulsory registration for unions ----------------------
ii. Reducing the minimum number required for forming a union
----------------------
iii. Increase in the number of outsiders
----------------------
iv. Taking steps to build external leadership
----------------------
Activity 3 ----------------------
----------------------
According to you, do the Works Committees and Joint Management Councils
help in improving Industrial Relations? Justify. ----------------------
----------------------
2.5 MANAGEMENT VS. UNIONS
----------------------
In spite of the efforts taken by the government the relations between the
----------------------
workers and the management did not improve so much because the concept of
Industrial Relations has generally developed as a consequence of the Industrial ----------------------
Revolution as, prior to this, the master and servant relationship which existed
was simple and of a personal nature. With the acceleration in industralisation, ----------------------
the relation aspect became complex and impersonal. Under the early factory
----------------------
system, the worker was looked upon as a commodity which could not only
be easily secured but also replaced. The attitude was that of considering the ----------------------
supply and demand position as in case of a commodity. As the employer was in
a dominating situation, he dictated both the wages as well as the conditions of ----------------------
service of the workers resulting in many industrial and social ills such as low
----------------------
wages, unduly long hours of work, poor working conditions and persecution of
trade union activity. Trade union leaders were persecuted and victimised and ----------------------
the Government adopted a laissez faire policy.
----------------------
White-collar Unions on the Warpath
The strike fever had now extended even beyond the workers’ level. For ----------------------
example, on 28 December, 1978, 5 lakh employees of the 14 public sector banks ----------------------
went on a strike. This brought the financial transaction within the economy
to a virtual halt, indicating white- collar organisational solidarity and power. ----------------------
On the next day, 1 lakh bank officer employees in the 30,000 branches of the
nationalised and private sector banks across India joined the striking workmen ----------------------
and cheques worth Rs.1,000 crore lay uncleared in the vaults of the banks. The ----------------------

Notes year 1978 showed constant and recurring ‘go-slow,’ ‘work-to-rule,’ strikes and
other forms of agitation in nationalised banks, Life Insurance Corporation and
---------------------- the nationalised General Insurance Corporation companies.
---------------------- There was a bitter 53-day strike of eight lakh for state government employees
in Maharashtra in 1978. For the first time in the history of the state, primary
---------------------- and secondary school teachers participated. There was also a strike by power
engineers in Uttar Pradesh, a stir by port trust officers and merchant navy
----------------------
officers. This period also saw strikes by doctors in the state-managed hospitals
---------------------- and in the Labour Court in Bombay, a strike by the Labour Law Practitioners
Association in protest against the appointment of a judge to the Labour Tribunal.
----------------------
Militancy in Industrial Relations Situation
---------------------- On 8th January 1979, N. P. Godrej (63), Vice-Chairman of Godrej &
Boyce Pvt. Ltd. was stabbed by an unidentified knife-wielding assailant. This
----------------------
resulted in widespread feelings of indignation tinged with despair over the
---------------------- issue of violence in the labour movement. Public condemnation of the Janata
Government’s Industrial Relations Bill by employers, workers and even the
---------------------- Janata Party politicians made the labour question the burning issue of the day.
The labour situation became characterised with a defiant military mood within
----------------------
the organised working class, the like of which had rarely been witnessed before.
---------------------- Thus, the labour situation had deteriorated and the industrial relations situation
had declined, not only in low-wage segment, with over 30 per cent of all strikes
---------------------- in 1978 having taken place in relatively large and modern factories including
Tata Electric and Locomotive Company Ltd., Phillips India Ltd., Larsen &
----------------------
Toubro Ltd, and Guest, Keen, Williams Ltd.
---------------------- The strikes and lockouts in 1978 resulted in a production loss worth
---------------------- approximately Rs. 291.56 crore with 21.51 million man-days lost due to strikes
and lockouts during the year against 25.32 million man-days lost in 1977.
---------------------- Even after the fall of the Janata Government and the political debacle with
---------------------- the mid-term polls in sight a few months away, the position, far from improving,
deteriorated still further. There were headlines such as “Public Sector Stir Despite
---------------------- Cabinet Plea” and “ Indian Airlines May Scrap Most Flights,” in newspapers.
On 14th September, the entire Public Sector was crippled by a one-day token
---------------------- strike. The workers of the Indian Oil Corporation were already on strike.
----------------------
Activity 4
----------------------
---------------------- Give a recent example of militancy in an industrial relations situation.

According to you, why did the matter escalate so much?
----------------------
---------------------- 2.6 CONDITIONS OF GOOD INDUSTRIAL RELATIONS

---------------------- Every organisation should strive to induce good industrial relations, thus
---------------------- ensuring industrial peace and avoiding labour unrest such as strikes, work

stoppages, demonstrations, gheraos and slogan shouting. Importance of good Notes
industrial relations and concern for the welfare of the labour is best expressed in
the words of Dorabji Tata as follows: “The welfare of the labouring classes must ----------------------
be one of the first cares of every employer. Any betterment of their conditions
must proceed more from the employers downward rather than be forced up ----------------------
by demands from below, since labour, contented, well housed, well fed and ----------------------
generally well looked after, is not only an asset and advantage to the employer,
but serves to raise the standard of industry and labour in the country.” ----------------------
The following can briefly be stated as the conditions necessary for ----------------------
establishing and maintaining good industrial relations;
----------------------
1. Recognition by the employer that the workers are a part of a team working
towards a common objective; ----------------------
2. An attitude on the part of the employees of delivering the goods, that is,
----------------------
giving their money’s worth;
3. Fair redressal of the employees’ grievances such as working conditions, ----------------------
facilities, attitude of superiors and other rights; ----------------------
4. voidance by workers of being unduly influenced by political leaders
A
staging strikes as a protest or a publicity for their own political gains; ----------------------
5. Payment of fair wages and an adequate wage structure as well as the ----------------------
establishment of satisfactory working conditions;
----------------------
6. Adoption of a policy which ensures to the workers an equitable share of the
gains of an increased productivity; ----------------------
7. Introduction of a suitable system of employees’ education at all levels as ----------------------
well as providing them with appropriate equipment, where necessary;
----------------------
8. Training in industrial relations and human relations to workers, technical
staff and at all managerial levels; ----------------------
9.
Sufficient communication to keep the employees informed about decisions ----------------------
which affect their interest; and
10. Establishment of an atmosphere of participation through joint committees ----------------------
or other methods. ----------------------
Activity 5 ----------------------
----------------------
Visit any company and give two examples of conditions of good industrial
relations. ----------------------
----------------------
2.7 UNIONS AND THEIR ROLE ----------------------
In the above discussion on conditions necessary for good industrial ----------------------
relations, it must be remembered that trade unions play a vital role.
----------------------

Notes Employee Associations
With a view to self-protection and self-help, labour has organised itself
----------------------
under employee associations and unions. The conflicts between capital and
---------------------- labour in Europe and America resulted in the origin of the trade union movement.
The Trade Union Movement in India
----------------------
The trade union movement’s origin in a sense can be traced back to a very
---------------------- early date to the time when villages had panchayats and guilds for settling
disputes between the masters and their members. The panchayats prescribed the
----------------------
code of conduct which was rigidly observed by its members. Its non-observance
---------------------- resulted in expulsion from the community.
---------------------- Trade unions, as understood today however, originated in the first quarter
of the 20th century, although the groundwork was laid during the last quarter of
---------------------- the 19th century. In Bombay, as early as in 1875, a movement was started by
reformers under the leadership of Sorabaji Shapurji. They protested against the
---------------------- appalling conditions of the factory workers and appealed for the introduction of
---------------------- an adequate legislation to prevent them. The credit for laying the foundation of
the organised labour movement in India is at times accorded to N.M. Lokhande,
---------------------- a factory worker himself. An agitation was organised by him in Bombay in
1884. This resulted in certain amenities being extended to the mill workers
---------------------- which led to the organisation of the Bombay Mill Hands Association.
---------------------- Actually a real organised labour movement in India started at the end of
the First World War. Rising prices, without a corresponding increase in wages,
---------------------- despite the employers making huge profits, led to a new awakening. Many trade
---------------------- unions were formed throughout India. There were a number of strikes from
1919 to 1922. To this was added the influence of the Russian Revolution, the
---------------------- establishment of the International Labour Organisation (ILO) and the All-India
Trade Union Congress. This speeded up the pace of the trade union movement.
---------------------- Following the Second World War, there was a spiraling of prices. The workers
---------------------- once again became restive. This further indirectly strengthened the movement
in India.
---------------------- The Objectives of Trade Unions
---------------------- The following are some of the aims and objectives of trade unions:
---------------------- i. To secure for the worker fairer wages in the light of the cost of living and
the prevailing standard of living in India;
----------------------
ii. To improve the workers’ working conditions by securing shorter working
---------------------- hours, better leave facilities, adequate social security benefits, appropriate
educational facilities and other welfare benefits;
----------------------
iii. o assure the worker a share in the increased profitability of an industrial
T
---------------------- unit by providing him payment of an adequate bonus;
---------------------- iv. o protect the workers’ interest and more specifically, to avoid their
T
exploitation;
----------------------

v. To ensure the workers’ security of employment by resisting retrenchment Notes
and victimisation likely to harm them; and
----------------------
vi. To protect the larger interest of society by aiding in the improvement of
trade and industry. ----------------------
----------------------
----------------------
Fill in the blanks.
----------------------
1. With a view to____________ and self-help, labour has organised
itself under employee associations and unions. ----------------------
2. The____________ prescribed the code of conduct which was rigidly ----------------------
observed by its members.
----------------------
3. To maintain good industrial relations, recognition by the employer
that the workers are a part of a _________working towards a ----------------------
common objective, is essential.
----------------------
4. The aims and objects of________are to secure for the worker
fairer wages in the light of the cost of living and the prevailing standard of ----------------------
living in India.
----------------------
5. A real organised labour movement in India started at the end of the
__________World War. ----------------------
----------------------
Activity 6 ----------------------
----------------------
Does your organisation have a trade union? If yes, mention some of the
activities carried out by the union. If no, then how do the employees of your ----------------------
organisation put forth their demands in front of the management?
----------------------
Summary ----------------------
• Trade unions today can get the best professional assistance. They are thus ----------------------
in a position to meet the employer on an equal footing. This can induce a ----------------------
spirit of self-reliance and self-respect among the workers, thereby helping
to build up national character. ----------------------
• All workers want that they are paid a fair share of the results based on the ----------------------
actual work produced. As unions act as an organised body, the workers can
negotiate with the employer on the basis of status and self-respect. ----------------------
• Pressure can be brought by the trade unions on the employer to ensure that ----------------------
the factories are maintained in a healthy condition and that the hours of
work are arranged conveniently. ----------------------
----------------------

Notes • In case of a grievance, the case can be presented through the union, thereby
preventing unnecessary strife and disruption of work.
----------------------
---------------------- Keywords
---------------------- • Commodity: Anything that can be bought and sold.
• Negotiate: To have formal discussions with someone in order to reach an
----------------------
agreement.
---------------------- • Professional: Done as a job, or relating to a skilled type of work.
---------------------- • Union: The act or the state of being joined together.
---------------------- • Victim: A person who has suffered the effects of violence or illness or bad
luck.
----------------------

---------------------- 1. Define industrial relations and examine its nature and scope.
---------------------- 2. What are the objectives of industrial relations?

3. Examine the various approaches to industrial relations.
----------------------
4. Examine the evolution of industrial relation policies in India.
----------------------
5. Give two examples of advantages of having the National Commission on
---------------------- Labour and Industrial Relation Policies (1969).
---------------------- Answers to Check your Progress

----------------------
---------------------- 1. The Britishers enacted all the laws to safeguard their interests and to
prevent the labour from uniting and going on strikes.
----------------------
2. V. V. Giri proclaimed that industrial adjudication was labour’s enemy No.
---------------------- 1.
---------------------- 3. Labour Courts were empowered to certify unions as sole bargaining agents.
----------------------
State True or False.
----------------------
1. True
---------------------- 2. True
---------------------- 3. False
---------------------- 4. False
5. False
----------------------

Multiple Choice Single Response.
----------------------
1. he unions should be made strong organisationally and financially, and a
T
multiplicity of unions and intra-union rivalries should be discouraged by: ----------------------
i. Providing compulsory registration for unions ----------------------
Fill in the blanks.
----------------------
1. With a view to self-protection and self-help, labour has organised itself
under employee associations and unions. ----------------------
2. The panchayats prescribed the code of conduct which was rigidly observed ----------------------
by its members.
----------------------
3. To maintain good industrial relations, recognition by the employer that
the workers are a part of a team working towards a common objective, is ----------------------
essential.
----------------------
4. The aims and objectives of trade unions are to secure for the worker fairer
wages in the light of the cost of living and the prevailing standard of living ----------------------
in India.
----------------------
5. A real organised labour movement in India started at the end of the First
World War. ----------------------
----------------------
Suggested Reading
----------------------
1. Mammoria, C.B., S. Mammoria and S.V. Gankar. 2011. Dynamics of
Industrial Relations. Mumbai: Himalaya Publishing House. ----------------------
2. Punekar, S. D., S. B. Deodhar and Saraswathi Sankaran. 2004. Labour ----------------------
Publishing House. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Industrial Disputes
UNIT
3
Structure:
3.1 Introduction
3.2 Definitions
3.3 Causes of Industrial Disputes
3.4 Types of Industrial Disputes
3.4.1 Strikes
3.4.2 Lockouts
3.5 Prevention of Industrial Disputes
3.6 Machinery for Settlement of Industrial Disputes
Summary
Key Words
Suggested Reading
Industrial Disputes 39
Notes
Objectives
----------------------
----------------------
• Evaluate the nature and causes of the industrial disputes
----------------------
• Analyse the role of the preventive measures in solving industrial disputes
---------------------- • Identify the machinery for settlement of industrial disputes
----------------------
----------------------
3.1 INTRODUCTION
----------------------
An industrial dispute may be defined as a conflict or difference of opinion
---------------------- between management and workers on the terms of employment. It is a
disagreement between an employer and employees’ representative, usually a
---------------------- trade union, over pay and other working conditions and can result in industrial
---------------------- actions. When an industrial dispute occurs, both the parties, that is the
management and the workmen, try to pressurise each other. The management
---------------------- may resort to lockouts while the workers may resort to strikes, picketing or
gheraos.
----------------------
---------------------- 3.2 DEFINITIONS

---------------------- According to Patterson, “Industrial strife constituent militant and organised
protest against existing industrial conditions. They are symptoms of industrial
---------------------- unrest in the same way that boils are symptoms of disorder of body.”
---------------------- As per Section 2(k) of Industrial Disputes Act, 1947, an industrial dispute
is defined as ‘any dispute or difference between employers and employers, or
---------------------- between employers and workmen, or between workmen and workmen and
---------------------- which is connected with the employment or non-employment or the terms of
employment or with the conditions of labour of any person.
----------------------
This definition includes all the aspects of a dispute. It not only includes
---------------------- the disagreement between employees and employers, but also emphasises on
the difference of opinion between workers. The disputes generally arise on
---------------------- account of poor wage structure or poor working conditions. This disagreement
or difference could be on any matter concerning the workers individually or
----------------------
collectively. It must be connected with employment or non-employment or with
---------------------- the conditions of labour.
From the definition it may be concluded that an industrial dispute means a
----------------------
conflict or unrest or dispute or any sort of difference between employees and
---------------------- employers which may relate with the employment or the terms of employment
or working conditions.
----------------------
For a dispute to become industrial dispute there must be a dispute difference
---------------------- between:

1. Employers and employees Notes
2. Employers and workmen
----------------------
3. Workmen and workmen
----------------------
It is connected with the employment or terms of employment or with the
conditions of labour. From the point of view of the employer, an industrial ----------------------
dispute resulting in stoppage of work means a stoppage of production. This
results in increase in the average cost of production since fixed expenses ----------------------
continue to be incurred. It also leads to a fall in sales and the rate of turnover,
----------------------
leading to a fall in profits. The employer may also be liable to compensate his
customers with whom he may have contracted for regular supply. Apart from ----------------------
the immediate economic effects, loss of prestige and credit, alienation of the
labour force and other non-economic, psychological and social consequences ----------------------
may also arise. Loss due to destruction of property, personal injury and physical
----------------------
intimidation or inconvenience also arises.
For the employee, an industrial dispute entails loss of income. The regular ----------------------
income by way of wages and allowance ceases, and great hardship may be ----------------------
caused to the worker and his family. Employees also suffer from personal injury
if they indulge into strikes and picketing; and the psychological and physical ----------------------
consequences of forced idleness. The threat of loss of employment in case of
failure to settle the dispute advantageously or the threat of reprisal action by ----------------------
employers also exists. ----------------------
According to the Act, the term industrial dispute means “any dispute or
difference between employers and employers, or between employers and ----------------------
workmen, or between 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”. The basic objectives of the Act are: ----------------------
●● To provide a suitable machinery for the just, equitable and peaceful ----------------------
settlement of industrial disputes.
----------------------
●● To promote measures for securing and preserving amity and good relations
between employers and employees. ----------------------
●● To prevent illegal strikes and lockouts.
----------------------
●● To provide relief to workers against layoffs, retrenchment, wrongful
dismissal and victimisation. ----------------------
●● To promote collective bargaining. ----------------------
●● To ameliorate the conditions of workers. ----------------------
●● To avoid unfair labour practices.
----------------------
3.3 CAUSES OF INDUSTRIAL DISPUTES ----------------------
The causes of industrial disputes can be broadly classified into two categories: ----------------------
economic and non-economic causes. The economic causes will include issues
relating to compensation like wages, bonus, allowances, and conditions of work, ----------------------
Notes working hours, leave and holidays without pay, unjust layoffs and retrenchments.
The non-economic factors will include victimisation of workers, ill treatment
---------------------- by staff members, sympathetic strikes, political factors, indiscipline, etc.
---------------------- 1. Wages and allowances: Since the cost of living index is increasing,
workers generally bargain for higher wages to meet the rising cost of
---------------------- living index and to increase their standards of living. In 2002, 21.4%
of disputes were caused by demand of higher wages and allowances.
----------------------
This percentage was 20.4% during 2003 and during 2004 increased up to
---------------------- 26.2%. In 2005, wages and allowances accounted for 21.8% of disputes.
2. Personnel and retrenchment: The personnel and retrenchment have
----------------------
also been an important factor which accounted for disputes. During the
---------------------- year 2002, disputes caused by personnel were 14.1% while those caused
by retrenchment and layoffs were 2.2% and 0.4% respectively. In 2003, a
---------------------- similar trend could be seen, wherein 11.2% of the disputes were caused by
personnel, while 2.4% and 0.6% of disputes were caused by retrenchment
----------------------
and layoffs. In the year 2005, only 9.6% of the disputes were caused by
---------------------- personnel and only 0.4% were caused by retrenchment.
3. Indiscipline and violence: In 2002, 29.9% of disputes were caused
----------------------
because of indiscipline, which rose up to 36.9% in 2003. Similarly in 2004
---------------------- and 2005, 40.4% and 41.6% of disputes were caused due to indiscipline
respectively. During the year 2003, indiscipline accounted for the highest
---------------------- percentage (36.9%) of the total time loss of all disputes, followed by
cause-groups wage and allowance and personnel with 20.4% and11.2%
----------------------
respectively. A similar trend was observed in 2004 where indiscipline
---------------------- accounted for 40.4% of disputes.
---------------------- 4. Bonus: Bonus has always been an important factor in industrial disputes.
6.7% of the disputes were because of bonus in 2002 and 2003 as compared
---------------------- to 3.5% and 3.6% in 2004 and 2005 respectively.
---------------------- 5. Leave and working hours: Leave and working hours have not been so
important causes of industrial disputes. During 2002, 0.5% of the disputes
---------------------- were because of leave and hours of work while this percentage increased
to 1% in 2003. During 2004, only 0.4% of the disputes were because of
---------------------- leave and working hours.
---------------------- 6. Miscellaneous: The miscellaneous factors include:
---------------------- ●● Inter/intra-union rivalry
●● Charter of demands
----------------------
●● Workload
----------------------
●● Standing orders/rules/service conditions/safety measures
---------------------- ●● Non-implementation of agreements and awards, etc.
----------------------
----------------------

Notes
----------------------
Fill in the blanks. ----------------------
1. ___________ are not very important causes of industrial disputes.
----------------------
----------------------
Activity 1
----------------------
Write about any two causes of industrial disputes which you have ----------------------
observed in your organisation.
----------------------
----------------------
3.4 TYPES OF INDUSTRIAL DISPUTES
----------------------
Industrial disputes are basically of two types: strikes and lockouts.
INDUSTRIAL DISPUTES
----------------------
----------------------
Strike Lock-outs ----------------------
----------------------
----------------------
Primary Strikes Secondary Strikes Others
----------------------
Sympathy Strikes ----------------------
----------------------
----------------------
Sit Down Strike Slow Down Strike Sick-out (or sick-in) Wild Cat Strikes
----------------------
----------------------
Fig. 3.1: Types of Industrial Disputes
3.4.1 Strikes ----------------------
A strike is a very powerful weapon used by trade unions and other labour ----------------------
associations to get their demands accepted. It generally involves quitting of
work by a group of workers for the purpose of bringing the pressure on their ----------------------
employer so that their demands get accepted. When workers collectively cease ----------------------
to work in a particular industry, they are said to be on strike.
According to Sec 2 (q) of the Industrial Disputes Act 1947, ----------------------
A strike is “a cessation of work by a body of persons employed in an industry ----------------------

acting in combination; or a concerted refusal of any number of persons who
----------------------
are or have been so employed to continue to work or to accept employment;
Notes or a refusal under a common understanding of any number of such persons to
continue to work or to accept employment”.
----------------------
In view of the definition, a strike postulates three main things:
---------------------- 1. Plurality of workmen
---------------------- 2. Cessation of work or refusal to do work
---------------------- 3. Combined or concerted action

This definition throws light on a few aspects of strike. Firstly, a strike is
---------------------- referred to as stoppage of work by a group of workers employed in a particular
---------------------- industry. Secondly, it also includes the refusal of a number of employees to
continue work under their employer.
---------------------- In a strike, a group of workers agree to stop working to protest against
---------------------- something they think is unfair where they work. Labours withhold their services
in order to pressurise their employer or government to meet their demands.
---------------------- Demands made by strikers can range from asking for higher wages or better
benefits to seeking changes in the workplace environment. Strikes sometimes
---------------------- occur so that employers listen more carefully to the workers and address their
---------------------- problems.
Causes of Strikes
----------------------
Strike action, also called labour strike, on strike or simply strike, is a work
---------------------- stoppage caused by the mass refusal of employees to work. A strike usually takes
---------------------- place in response to employee grievances. Strikes became important during
the industrial revolution, when mass labour became important in factories and
---------------------- mines. Most western countries partially legalised striking in the late 19th or
early 20th century.
----------------------
Strikes are sometimes used to put pressure on governments to change
---------------------- policies. Occasionally, strikes destabilise the rule of a particular political party.
---------------------- Strikes can occur because of the following reasons:
●● Dissatisfaction with company policy
----------------------
●● Salary and incentive problems
----------------------
●● Increment not up to the mark
---------------------- ●● Wrongful discharge or dismissal of workmen
---------------------- ●● Withdrawal of any concession or privilege
---------------------- ●● Hours of work and rest intervals
●● Leaves with wages and holidays
----------------------
●● Bonus, profit sharing, provident fund and gratuity
----------------------
●● Retrenchment of workmen and closure of establishment
---------------------- ●● Dispute connected with minimum wages
----------------------

Types of Strike Notes
1. Economic strike: Under this type of strike, labourers stop their work to
----------------------
enforce their economic demands such as wages and bonus. In these kinds
of strikes, workers ask for increase in wages, allowances like travelling ----------------------
allowance, house rent allowance, dearness allowance, bonus and other
facilities such as increase in privilege leave and casual leave. ----------------------
2. Sympathetic strike: When workers of one unit or industry go on strike ----------------------
in sympathy with workers of another unit or industry who are already
on strike, it is called a sympathetic strike. The members of other unions ----------------------
involve themselves in a strike to support or express their sympathy with
----------------------
the members of unions who are on strike in other undertakings. The
workers of sugar industry may go on strike in sympathy with their fellow ----------------------
workers of the textile industry who may already be on strike.
----------------------
3. General strike: It means a strike by members of all or most of the
unions in a region or an industry. It may be a strike of all the workers in a ----------------------
particular region of industry to force demands common to all the workers.
These strikes are usually intended to create political pressure on the ruling ----------------------
government, rather than on any one employer. It may also be an extension
----------------------
of the sympathetic strike to express generalised protest by the workers.
4. Sit-down strike: In this case, workers do not absent themselves from their ----------------------
place of work when they are on strike. They keep control over production ----------------------
facilities, but do not work. Such a strike is also known as ‘pen down’
or ‘tool down’ strike. Workers show up to their place of employment, ----------------------
but they refuse to work. They also refuse to leave, which makes it very
difficult for employer to defy the union and take the workers’ places. In ----------------------
June 1998, all the Municipal Corporation employees in Punjab observed ----------------------
a pen-down strike to protest against the non-acceptance of their demands
by the state government. ----------------------
5. Slowdown strike: Employees remain on their jobs under this type of ----------------------
strike.
They do not stop work, but restrict the rate of output in an organised ----------------------
manner. They adopt go-slow tactics to put pressure on the employers. ----------------------
Strictly speaking, slowdown strike is not a strike. The Supreme Court
has held that a slowdown strike is worse than a strike because there is ----------------------
an element of cheating in this form of strike. The Supreme Court in the
case of T.S. Kalawala v/s Bank of India (1989) has held that wages are ----------------------
to be paid in consideration of work performed and not for mere physical ----------------------
attendance.
----------------------
6. Sick-out (or sick-in): In this strike, all or a significant number of union
members call in sick on the same day. They don’t break any rules, because ----------------------
they just use their sick leave that was allotted to them on the same day.
However, the sudden loss of so many employees all on one day can show ----------------------
the employer just what it would be like if they really went on strike.
----------------------
Notes 7. Wildcat strike: These strikes are conducted by workers or employees
without the authority and consent of unions. In 2004, a significant number
---------------------- of advocates went on wildcat strike at the City Civil Court premises in
Bangalore. They were protesting against some remarks allegedly made
---------------------- against them by an Assistant Commissioner.
---------------------- 3.4.2 Lockouts
---------------------- A lockout may happen for several reasons. When only part of a trade union
votes to strike, the purpose of a lockout is to put pressure on a union by reducing
---------------------- the number of members who are able to work. For example, if the anticipated
---------------------- strike severely hampers work of non-striking workers, the employer may declare
a lockout until the workers end the strike. Another case in which an employer
---------------------- may impose a lockout is to avoid slowdowns or intermittent work-stoppages.
---------------------- Lockout, when legal

The Act treats strikes and lockouts on the same basis; it treats one as the
----------------------
counterpart of the other. The circumstances under which the legislature has
---------------------- banned strike, it has also at the same time banned the lockout. Thus, what
holds good-bad, legal-illegal, justified-unjustified for strikes, holds the same
---------------------- for the lockout. As such, the provisions of the Act which prohibit the strike also
prohibit the lockout.
----------------------
The object and reasons for which the lockout are banned or prohibited are
---------------------- the same for which strikes are banned or prohibited. It is because the employer
and the employees are not discriminated in their respective rights in the field of
----------------------
industrial relationship between the two. As such, lockout, if not in conflict with
---------------------- Section 22 and 23 may be said to be legal or not legal. Sections 24(1) (iii), 10(3)
and 10A (4A) similarly controls the lockout. A lockout in consequence of illegal
---------------------- strike is not deemed to be illegal. But if lockout is illegal, Section 26(2), 27 and
---------------------- 28 will come in operation to deal with the situation. The Act does not lay
down any guidelines to settle the claims arising out of illegal lockout. The
---------------------- courts, therefore, have adopted the technique of apportioning the blame between
---------------------- the employer and employees. This once again brings to the fore the concept of
justifiability of lockout.
----------------------
The Statutory Definition
---------------------- Section 2(1) of the Industrial Disputes Act, 1947 defines lockout as “the
temporary closing of place of employment or the suspension of work, or the
----------------------
refusal by an employer to continue to employ any number of persons employed
---------------------- by him.”
A lockout is an antithesis and counterpart of a strike. Just as the employees
----------------------
by going on a strike stops working, in a lockout the employer has a weapon
---------------------- against the employees to prevent them to continue to work in the premises.
---------------------- It generally refers to the action of an employer in temporarily closing down

or shutting down the undertaking or refusing to provide its employees with
---------------------- work, with the intention of forcing them either to accept the demands made by
them or to withdraw the demands made by them on him.
A delineation of the nature of this weapon of industrial warfare requires Notes
description of:
----------------------
i. The acts which constitute it
ii. The party who uses it ----------------------
iii. The party against whom it is directed ----------------------
iv. The motive which prompts resort to it ----------------------
Prohibition of lockout
----------------------
Section 22 (2) of the Act provides that no employer carrying on any public
utility service shall lock out any of his workmen: ----------------------
1. Without giving them notice of lockout as hereinafter provided, within six ----------------------
weeks before locking out; or
----------------------
2. Within 14 days of giving of such notice; or
3. Before the expiry of the day of lockout specified in any such notice as ----------------------
aforesaid; or ----------------------
4. During the pendency of any conciliation proceedings before a Conciliation
Officer and seven days after the conclusion of such proceedings. ----------------------
It makes clear that the employer has to comply with the same conditions ----------------------
before he declares lockout in his industrial establishment which the workmen
----------------------
are required to comply with before they go on strike.
----------------------
----------------------
1. In this case, workers do not absent themselves from their place of
----------------------
work when they are on strike.
i. Sit-down strike ----------------------
ii. Wildcat strikes
----------------------
iii. Slowdown strike
iv. Economic strike ----------------------
----------------------
Activity 1 ----------------------
----------------------
Write about any two types of strikes which you have seen occurring in
your state. ----------------------
----------------------
----------------------
----------------------
Notes 3.5 PREVENTION OF INDUSTRIAL DISPUTES
---------------------- The consequences of an industrial dispute will be harmful to the owners
of industries, workers, economy and the nation as a whole, which results in
---------------------- loss of productivity, profits, market share and even closure of the plant. Hence,
industrial disputes need to be averted by all means. Prevention of industrial
----------------------
disputes is a pro-active approach in which an organisation undertakes various
---------------------- actions through which the occurrence of industrial disputes is prevented. Like
the old saying goes, “prevention is better than cure”.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
---------------------- Fig.3.2: Preventive Measures of Industrial Disputes

1. Model Standing Orders: Standing orders define and regulate terms and
----------------------
conditions of employment and bring about uniformity in them. They also
---------------------- specify the duties and responsibilities of both employers and employees
thereby regulating standards of their behaviour. Therefore, standing
---------------------- orders can be a good basis for maintaining harmonious relations between
employees and employers.
----------------------
Under Industrial Employment (Standing Orders) Act, 1946, every
---------------------- establishment employing 100 workers or more is required to frame
standing orders in consultation with the workers. These orders must be
----------------------
certified and displayed properly by the employer for the information of
---------------------- the workers.
---------------------- 2. Code of Industrial Discipline: The Code of Industrial Discipline defines

duties and responsibilities of employers and workers. The objectives of
---------------------- the code are:
---------------------- ●● To secure settlement of disputes by negotiation, conciliation and

voluntary arbitration
----------------------
●● To eliminate all forms of coercion, intimidation and violence
---------------------- ●● To maintain discipline in the industry
---------------------- ●● To avoid work stoppage
---------------------- ●● To promote constructive co-operation between the parties concerned

at all levels.
3. Works Committee: Every industrial undertaking employing 100 or more Notes
workers is under an obligation to set up a work’s committee consisting of
equal number of representatives of employer and employees. The main ----------------------
purpose of such committees is to promote industrial relations. According
to Indian Labour Conference, work committees are concerned with: ----------------------
●● Administration of welfare and fine funds. ----------------------

●● Educational and recreational activities. ----------------------
●● Safety and accident prevention.
----------------------
●● Occupational diseases and protective equipment.
----------------------
●● Conditions of work such as ventilation, lightening, temperature and
sanitation including latrines and urinals. ----------------------
●● Amenities such as drinking water, canteen, dining rooms, medical ----------------------
and health services.
----------------------
The following items are excluded from the perview of the work
committees. ----------------------
●● Wages and allowances
----------------------
●● Profit sharing and bonus
----------------------
●● Programmes of planning and development
●● Retirement benefits ----------------------
●● PF and gratuity ----------------------

●● Housing and transport schemes ----------------------
●● Incentive schemes
----------------------
●● Retirement and layoff
----------------------
4. Joint Management Councils: Just to make a start of labour participation
in management, the Government suggested in its Industrial Resolution, ----------------------
1956, powers to set up joint management councils. It consists of equal
number of workers and employers (minimum six and maximum 12). ----------------------
Decisions of the JMC should be unanimous and should be implemented ----------------------
without any delay. JMC members should be given proper training. JMC
should look after three main areas: ----------------------
1. Information sharing ----------------------
2. Consultative
----------------------
3. Administrative
----------------------
Representation of workers to the JMCs should be based on the nomination
by the representation. ----------------------
Its objectives are: ----------------------
●● Satisfy the psychological needs of workers
----------------------
Notes ●● Improve the welfare measures
●● Increase workers’ efficiency
----------------------
●● Improve the relation and association between workers, managers
---------------------- and promoters.
---------------------- JMC deals with matters like:
---------------------- ●● Employee welfare

●● Apprenticeship scheme
----------------------
5. Suggestion Schemes: The objective of these schemes is to encourage the
---------------------- employees to come up with suggestions which will help the organisation
to improve the productivity and solve problems by which the quality will
---------------------- improve. The viable suggestions are rewarded with cash prizes and other
---------------------- incentives.
6. Joint Councils: Joint Councils are set up for the whole unit and deals with
----------------------
matters relating to optimum production and efficiency and the fixation of
---------------------- productivity norms for man and machine for the unit as a whole. In every
industrial unit employing 500 and more workers, there should be a Joint
---------------------- Council for the whole unit.
---------------------- Features and functions of joint councils
---------------------- ●● Members of the council must be actually engaged in the unit.

●● The chief executive of the unit will be the chairman of the council
---------------------- and vice-chairman will be nominated by worker members.
---------------------- ●● Term of the council will be two years.
---------------------- ●● JC shall meet at least once in a quarter.
●● Decision of the council will be based on consensus and not on
----------------------
voting.
---------------------- ●● Optimum use of raw materials and quality of finished products.
---------------------- ●● Optimum production, efficiency and function of productivity norms
of man and machine as a whole.
----------------------
●● Preparation of schedules of working hours and of holidays.
---------------------- ●● Adequate facilities for training.
---------------------- ●● Rewards for valuable and creative suggestions received from
workers.
----------------------
7. Collective Bargaining: Collective bargaining is a process in which
---------------------- the representatives of the employer and of the employees meet and
attempt to negotiate a contract governing the employer-employee-union
----------------------
relationships. Collective bargaining involves discussion and negotiation
---------------------- between two groups as to the terms and conditions of employment.
----------------------

8. Labour Welfare Officer: The Factories Act, 1948 provides for the Notes
appointment of a labour welfare officer in every factory employing 500 or
more workers. The officer looks after all facilities in the factory provided ----------------------
for the health, safety and welfare of workers. He maintains liaison with
both the employer and the workers, thereby serving as a communication ----------------------
link and contributing towards healthy industrial relations through proper ----------------------
administration of standing orders, grievance procedure, etc.
----------------------
9. Tripartite Bodies: Several tripartite bodies have been constituted at
central, national and state levels. The Indian Labour Conference, Standing ----------------------
Labour Committees, Wage Boards and Industrial Committees operate at
the central level. At the state level, State Labour Advisory Boards have ----------------------
been set up. All these bodies play an important role in reaching agreements
----------------------
on various labour-related issues. The recommendations given by these
bodies are however advisory in nature and not statutory. ----------------------
3.6 MACHINERY FOR SETTLEMENT OF INDUSTRIAL ----------------------

DISPUTES ----------------------
The machineries for settlement of disputes are: ----------------------
1. Conciliation: Conciliation refers to the process by which representatives ----------------------
of employees and employers are brought together before a third party with
a view to discuss, reconcile their differences and arrive at an agreement ----------------------
through mutual consent. The third party acts as a facilitator in this process.
Conciliation is a type of state intervention in settling industrial disputes. ----------------------
The Industrial Disputes Act, 1947 empowers the Central and state ----------------------
governments to appoint conciliation officers and a Board of Conciliation
as and when the situation demands. ----------------------
Conciliation or mediation signifies third-party intervention in promoting ----------------------
the voluntary settlement of disputes. It is equated with mediation. The
International Labour Organisation describes “conciliation” as the practice ----------------------
by which the services of a neutral third party are used in a dispute as
a means of helping the disputing parties to reduce the extent of their ----------------------
differences and to arrive at an amicable settlement or agreed solution. ----------------------
Conciliation Officer: The appropriate government may, by notification
in the official gazette, appoint such number of persons as it thinks fit to be ----------------------
the conciliation officer. The duties of a conciliation officer are: ----------------------
●● To hold conciliation proceedings with a view to arrive at amicable
----------------------
settlement between the parties concerned
●● To investigate the dispute in order to bring about the settlement ----------------------
between the parties concerned
----------------------
●● To send a report and Memorandum of Settlement to the appropriate
government ----------------------
----------------------
Notes ●● To send a report to the Government stating forth the steps taken by
him in case no settlement has been reached at
----------------------
The conciliation officer, however, has no power to force a settlement.
---------------------- He can only persuade and assist the parties to reach an agreement. The
Industrial Disputes Act, 1947 prohibits strikes and lockouts during the
---------------------- time when the conciliation proceedings are in progress.
---------------------- 2. Arbitration: A process in which a neutral third party listens to the
disputing parties, gathers information about the dispute, and then takes
---------------------- a decision which is binding on both the parties. The Conciliator simply
assists the parties to come to a settlement, whereas the Arbitrator listens
----------------------
to both the parties and then gives his judgement. Arbitration can be either
---------------------- voluntary or mandatory (although mandatory arbitration can only come
from a statute or from a contract that is voluntarily entered into, where
---------------------- the parties agree to refer all disputes to arbitration, without knowing,
specifically, what disputes will ever occur) and can be either binding or
----------------------
non-binding.
---------------------- Non-binding arbitration is, on the surface, similar to mediation. However,
the principal distinction is that whereas a mediator will try to help the
----------------------
parties find a middle ground on which to compromise, the (non-binding)
---------------------- arbitrator remains totally removed from the settlement process and will
only give a determination of liability and, if appropriate, an indication of
---------------------- the quantum of damages payable.
---------------------- Advantages of Arbitration
---------------------- ●● It is established by the parties themselves and therefore both parties
have good faith in the arbitration process.
----------------------
●● The process in informal and flexible in nature.
---------------------- ●● It is based on mutual consent of the parties and therefore helps in
building healthy Industrial Relations.
----------------------
Disadvantages of Arbitration
----------------------
●● Delay often occurs in settlement of disputes.
----------------------
●● Arbitration is an expensive procedure and the expenses are to be
---------------------- shared by the labour and the management.
●● Judgment can become arbitrary when the arbitrator is incompetent
----------------------
or biased.
---------------------- There are two types of arbitration:
---------------------- ●● Voluntary arbitration: In voluntary arbitration, the arbitrator is
appointed by both the parties through mutual consent and the
----------------------
arbitrator acts only when the dispute is referred to him.
---------------------- ●● Compulsory arbitration: It implies that the parties are required
to refer the dispute to the arbitrator whether they like him or not.
----------------------

Usually, when the parties fail to arrive at a settlement voluntarily, or Notes
when there is some other strong reason, the appropriate government
can force the parties to refer the dispute to an arbitrator. ----------------------
3. Adjudication: Adjudication is the ultimate legal remedy for settlement of ----------------------
industrial disputes. Adjudication means intervention of a legal authority
appointed by the government to make a settlement which is binding ----------------------
on both the parties. In other words, adjudication means a mandatory
----------------------
settlement of an industrial dispute by a labour court or a tribunal. For
the purpose of adjudication, the Industrial Disputes Act provides a 3-tier ----------------------
machinery:
----------------------
a) Labour court: The appropriate government may, by notification in the
official gazette, constitute one or more labour courts for adjudication of ----------------------
industrial disputes relating to any matters specified in the second schedule
of Industrial Disputes Act. They are: ----------------------
●● Dismissal or discharge or grant of relief to workmen wrongfully ----------------------
dismissed.
----------------------
●● Illegality or otherwise of a strike or lockout.
●● Withdrawal of any customary concession or privileges. ----------------------
Where an industrial dispute has been referred to a Labour Court for ----------------------
adjudication, it shall hold its proceedings expeditiously and shall, within
the period specified in the order referring such a dispute, submit its report ----------------------
to the appropriate government. ----------------------
The Labour Court was established in 1946 (following the enactment of the
----------------------
Industrial Relations Act, 1946). Its main functions were to adjudicate in
trade disputes and to provide a conciliation service. Other functions given ----------------------
to the Court included the establishment of Joint Labour Committees and
the registration of employment agreements and Joint Industrial Councils. ----------------------
The Labour Court provides a free, comprehensive service for the resolution ----------------------
of industrial relations disputes and deals also with matters arising under
employment equality, organisation of working time, national minimum ----------------------
wage, part-time work, fixed-term work and safety, health and welfare at
----------------------
work legislation.
The Labour Court is not a court of law. It operates as an industrial ----------------------
relations tribunal, hearing both sides in trade disputes and then issuing ----------------------
recommendations setting out its opinion on the dispute and the terms
on which it should be settled. While these recommendations are not ----------------------
binding on the parties concerned, the parties are expected to give serious
consideration to the Court’s recommendation. Ultimately, however, ----------------------
responsibility for the settlement of a dispute rests with the parties. ----------------------
b) Industrial tribunal: The appropriate government may, by notification
in the official gazette, constitute one or more industrial tribunals for the ----------------------
adjudication of industrial disputes relating to the following matters: ----------------------
Notes ●● Wages
●● Compensatory and other allowances
----------------------
●● Hours of work and rest intervals
---------------------- ●● Leave with wages and holidays
●● Bonus, profit-sharing, PF, etc.
----------------------
●● Rules of discipline
---------------------- ●● Retrenchment of workmen
---------------------- ●● Working shifts other than in accordance with standing orders
It is the duty of the industrial tribunal to hold its proceedings expeditiously
----------------------
and to submit its report to the appropriate government within the specified
---------------------- time. The tribunal hears disputes in the public but it may hold private
sittings. Statements of cases are asked of the parties who are then given
---------------------- an opportunity to support their cases by oral pleading. Subject to the rules
laid down under the Act, the tribunal is free to regulate its own procedures
----------------------
but it is expected to observe the rules of natural justice and to decide on
---------------------- the substantive merits of the case in front of it. Awards or decisions are
binding on both parties.
----------------------
The parties are not free unilaterally to seek a revision within a year. They
---------------------- may, however, ask for an interpretation if the need arises. Enforcement
of the tribunal’s decisions vests in the tribunal itself. The minister is
---------------------- empowered to ask the tribunal for advice in regard to matters relating to
trade disputes.
----------------------
In cases of unfair dismissal, the tribunal may order re-instatement of the
---------------------- employee or award compensation. In its awards, the tribunal is expected
---------------------- to refrain from any decision or consistent with any law or regulation
regarding conditions of employment. The tribunal is forbidden from
---------------------- encroaching upon the Public Service Commission.
---------------------- No application fee or court fees are payable. The only real expenses are
the transcripts which are obtained at a reasonable fee from the law courts’
---------------------- transcribes, and the fee due to the person assisting the applicant.
---------------------- c) National tribunal: The Central Government may, by notification in

the official gazette, constitute one or more national tribunals for the
---------------------- adjudication of industrial disputes in:
---------------------- ●● Matters of national importance.
●● Matters which are of a nature such that industries in more than one
----------------------
state are likely to be interested in, or are affected by the outcome of
---------------------- the dispute.
It is the duty of the national tribunal to hold its proceedings expeditiously and
----------------------
to submit its report to the Central Government within the stipulated time. The
---------------------- Central Government may, by notification in the Official Gazette, constitute one
or more national industrial tribunals for the adjudication of industrial disputes
---------------------- which, in the opinion of the Central Government, involve questions of national

importance or are of such a nature that industrial establishments situated in Notes
more than one state are likely to be interested in, or affected by, such disputes.
----------------------
A national tribunal shall consist of one person only to be appointed by the
Central Government. A person shall not be qualified for appointment as the ----------------------
presiding officer of a national tribunal unless he is, or has been, a Judge of
a High Court. The Central Government may, if it so thinks fit, appoint two ----------------------
persons as assessors to advise the national tribunal in the proceeding before it.
----------------------
----------------------
1. Adjudication means intervention of a legal authority appointed by the ----------------------
government to make a settlement which is binding on both the parties. ----------------------
----------------------
Activity 3 ----------------------
Write your views about an appropriate preventive measure for settlement ----------------------
of industrial disputes.
----------------------
----------------------
Summary
----------------------
●● Industrial disputes are the disputes which arise due to any disagreement
in an industrial relation. The term ‘industrial relation’ involves various ----------------------
aspects of interactions between the employer and the employees; among
----------------------
the employees as well as between the employers.
●● In such relations, whenever there is a clash of interest, it may result in ----------------------
dissatisfaction for either of the parties involved and hence lead to industrial
----------------------
disputes or conflicts. These disputes may take various forms such as
protests, strikes, demonstrations, lockouts, retrenchment, dismissal of ----------------------
workers, etc.
----------------------
●● In India, the Industrial Disputes Act, 1947 is the main legislation for
investigation and settlement of all industrial disputes. The Act enumerates ----------------------
the contingencies when a strike or lockout can be lawfully resorted to,
when they can be declared illegal or unlawful, conditions for laying off, ----------------------
retrenchment, discharging or dismissing a workman, circumstances under ----------------------
which an industrial unit can be closed down and several other matters
related to industrial employees and employers. ----------------------
----------------------
Keywords
----------------------
●● Industrial dispute: Aconflict or difference of opinion between
management and workers on the terms of employment. ----------------------
Notes ●● Strike: When workers collectively cease to work in a particular industry,
they are said to be on strike.
----------------------
●● Lockouts: The temporary closing of place of employment or the
---------------------- suspension of work, or the refusal by an employer to continue to employ
any number of persons employed by him.
----------------------
●● Code of industrial discipline: It defines the duties and responsibilities of
---------------------- employers and workers.
●● Collective bargaining: A process in which the representatives of the
----------------------
employer and of the employees meet and attempt to negotiate a contract
---------------------- governing the employer-employee-union relationships.

---------------------- 1. What do you understand by industrial dispute?
---------------------- 2. What are the causes of industrial dispute?
---------------------- 3. Examine the role of preventive measures while solving industrial disputes.
4. Explain the functions of the conciliation officer.
----------------------
5. Discuss the features and the functions of joint council.
----------------------
----------------------
----------------------
Fill in the blank.
----------------------
2. Leave and working hours are not very important causes of industrial
---------------------- disputes.

----------------------
1. In this case, workers do not absent themselves from their place of work
---------------------- when they are on strike.
---------------------- i. Sit-down strike

----------------------
1. True
----------------------
Suggested Reading
----------------------
1. Industrial Disputes Act, 1947 with Rules (Annotated by P.L. Malik). 2005.
----------------------
Lucknow: Eastern Book Company.
---------------------- 2. Eldridge, J.E.T. 1968. Industrial Disputes: Essays in the Sociology of
---------------------- Industrial Relations. New York: Humanities Press.

Mediation and Conciliation, Arbitration and Adjudication
UNIT
4
Structure:
4.1 Introduction
4.2 Functions and Process of Mediation
4.3 Kind of Mediators
4.4 Conciliation
4.5 Arbitration
4.5.1 Conciliation, Arbitration and Mediation: A Comparison
4.5.3 Disadvantages of Arbitration
4.5.4 Procedure for Investigation
4.6 Qualities of a Conciliator and an Arbitrator
4.6.2 Qualities of an Arbitrator
4.7 Role of the Conciliator
4.8 Adjudication in India
Summary
Key Words
Suggested Reading
Mediation and Conciliation, Arbitration andAdjudication 57

Notes
Objectives
----------------------
----------------------
●● Evaluate the nature of mediation
----------------------
●● Analyse the role and importance of conciliation
---------------------- ●● Appraise the applications of mediation and conciliation
----------------------
----------------------
4.1 INTRODUCTION
----------------------
After collective bargaining, “Mediation” and “Conciliation” are equivalent
---------------------- terms referring to the same kind of third-party intervention in promoting the
voluntary settlement of disputes.
----------------------
“Conciliation” is limited to encouraging the parties to discuss their differences
---------------------- and to help them develop their own proposed solutions. “Mediation” on the
other hand, implies a stronger form of intervention, and a mediator may be
----------------------
permitted to offer proposals to the parties for settlements.
---------------------- The distinction between the two terms tends to disappear in industrial
relations practice and there is no consistency in their use from one country to
----------------------
another.
---------------------- Conciliation and mediation, together with good offices, have always been
---------------------- important in the field of international relations for the peaceful settlement
of conflicts between states. Conciliation and mediation likewise have their
---------------------- importance in industrial relations as well. In this field, this method of settling
disputes has been used most frequently and intensively.
----------------------
“Mediation” is the ancient art of the peacemaker. It has been practiced in a
---------------------- number of areas when people disagree; it is an ancient and honourable process
for the settlement of disputes between two warring nations, between litigants,
---------------------- between labour and management and in general disputes between people.
----------------------
4.2 FUNCTIONS AND PROCESS OF MEDIATION
----------------------
Mediation is a process by which a third party brings together the opposing
---------------------- groups not only to iron out the differences between them but also to find an
---------------------- answer to problems or specified proposals and offer alternative suggestions.
Mediation is an attempt at settling disputes with the help of an outsider who
---------------------- assists the parties in their negotiations. The mediator has been described as
---------------------- a confidential adviser and an industrial diplomat. He performs a messenger’s
service for the parties and does not impose his will or his judgement upon them.
---------------------- He helps the two parties to come to an agreement of their own accord. He
suggests solutions based on knowledge and experience, which both parties, if
---------------------- they have confidence in him, may agree to accept. He has a wide range of

manoeuvre. At one end of the range, mediation simply means getting the Notes
parties to talk to each other until they reach a settlement. At the other extreme,
mediation means the deliberate effort to introduce and explore proposals which ----------------------
might lead to settlement
----------------------
Mediation contemplates affirmative and positive action by a third party to
bring about a settlement of disputes. It encourages the employers and the union ----------------------
to come to a decision without any force or orders from the mediator. He does
----------------------
not exercise any compulsion; he cannot and should not undertake to decide
what parties should do; he may advance various considerations, but certain ----------------------
evaluations and judgements must be left to the parties themselves.
----------------------
In this section we have tried to analyse the role of mediation.
----------------------
4.3 KINDS OF MEDIATORS
----------------------
In this section we will discuss the different kinds of mediations. According to
----------------------
Professor Pigou, there are three kinds of mediators:
i) The eminent outsider ----------------------
ii) The non-governmental board ----------------------
iii) The board connected with some part of the governmental system of the ----------------------
country
These mediators are not mutually incompatible but can be advantageously used ----------------------
to supplement one another. ----------------------
Essentials of success of Mediation
----------------------
Mediation can be made a more effective and successful device if the following
measures are adopted: ----------------------
(i) Mediation can work only in a climate of consent. A mediator has to be ----------------------
acceptable to both parties.
----------------------
(ii) The mediator must be an impartial and unprejudiced person, having
influence on the parties, and must infuse confidence in them. He must ----------------------
have full knowledge of the case and have extraordinary patience and
willingness to hear both the parties. ----------------------
(iii) Mediation should take place in a proper setting. ----------------------
(iv) Mediation should not be used as a substitute for bargaining but as a ----------------------
supplement when such bargaining reaches an impasse. It should basically
try to strengthen collective bargaining. ----------------------
----------------------
----------------------
----------------------
----------------------
Mediation and Conciliation, Arbitration and Adjudication 59

Notes
----------------------

1. ___________ is limited to encouraging the parties to discuss their
----------------------
differences and to help them develop their own proposed solutions.
---------------------- 2. ____________ implies a stronger form of intervention, and a mediator
may be permitted to offer proposals to the parties for settlements.
----------------------
3. Mediation can work only in a climate of ____________
----------------------
4. The mediator must be an ____________ and _________ person.
----------------------
---------------------- Activity 1
----------------------
Visit any factory and meet the personnel manager/industrial relations
---------------------- manager and find out recent two instances of mediation attempted at settling
disputes.
----------------------
----------------------
4.4 CONCILIATION
----------------------
Conciliation is the most important method for the prevention and settlement
---------------------- of industrial disputes through third party intervention.
---------------------- Conciliation may be described as “the practice by which the services of a
neutral third party are used in a dispute as a means of helping the disputing
---------------------- parties to reduce the extent of their differences and to arrive at an amicable
settlement or an agreed solution. It is a process of rational and orderly
----------------------
discussion of differences between the parties to a dispute under the guidance of
---------------------- a conciliator.”
It is a process by which representative of workers and employers are brought
----------------------
together before a third person or a group of people with a view to persuading
---------------------- them to arrive at an agreement by mutual discussion between them.
---------------------- As a process of peacemaking in industrial relations, conciliation tends to

bring about a speedy settlement of disputes without resorting to strikes or
---------------------- lockouts, and to hasten the termination of work stoppages when these have
occurred.
----------------------
Its function is to assist the parties to move towards a mutually acceptable
---------------------- compromise or solution.
---------------------- The conciliator is a neutral party who, without using force, seeks to find
some middle course for mutual agreement between the disputants. He tries to
---------------------- bridge the gulf between the two contending parties; and if he does not succeed,
he at least tries to reduce the differences, as far as possible, by tendering advice
----------------------

to the parties and bringing them close to a settlement. Thus, he is a mere Notes
go-between; his duty is not to suggest solutions of the dispute, but to make
suggestions for alternative solutions. He tries to persuade the parties to have a ----------------------
fresh viewpoint and a different outlook. He acts as a catalyst in the process of
reaching an agreement. He never gives his judgement on the issues. He may ----------------------
suggest possible lines of solution, or he himself may propose terms of settlement ----------------------
if such a course is in accordance with national practice, but the parties have the
right to decide whether to accept or not to accept the suggestions or proposals. ----------------------
He cannot impose terms of settlement on them.
----------------------
A unique and essential characteristic of the conciliation process is its
flexibility, informality and simplicity, which sets it apart from other methods ----------------------
of settling industrial disputes. A conciliator generally does not follow the same
----------------------
procedure in every case. He adjusts his approach, strategy and techniques to the
circumstances of each dispute. ----------------------
Conciliation and Collective Bargaining ----------------------
The practice of conciliation in industrial disputes has developed mainly
in connection with disputes arising from the failure of collective bargaining. ----------------------
Conciliation has thus been described as an extension of collective bargaining ----------------------
with third party assistance, or simply as assisted collective bargaining.
The voluntary settlement which is the aim of conciliation implies that the ----------------------
parties have reached an agreement, which is as much a collective bargaining ----------------------
agreement as the one resulting from unaided direct negotiations between the
parties. Viewed from another angle, collective bargaining is a process of joint ----------------------
decision making. Essentially, the same process is involved in conciliation, and
although the conciliator participates in it, the joint decision which is aimed at is ----------------------
one made by the parties themselves. ----------------------
Conciliation Machinery
----------------------
Conciliation Officer and Conciliation Board
----------------------
Conciliation has essentially been regarded as a one man job. In other
countries, it is variously called a board, a council or a committee of conciliation, ----------------------
or simply referred to as a conciliation board.
----------------------
In India, the government may appoint a conciliation officer for a specific area
or even for a specific industry, if it thinks fit under Section 4 of the Industrial ----------------------
Disputes Act, 1947. He may be appointed either permanently or for a limited
period. Under Section 5 of the same Act, the government may also, as occasion ----------------------
arises, appoint a Board of Conciliation, consisting of a Chairman and two to ----------------------
four other members, to promote the settlement of disputes.
----------------------
The Boards of Conciliation are rarely appointed by the Government these
days. The original intention was that a major dispute should be referred to a ----------------------
board and minor disputes should be handled by the conciliation officer.
----------------------
Conciliation as a method of settling disputes appears to be effective when it
is carried on by means of permanent machinery. ----------------------

Notes As regards the constitution of the machinery, it is essential that the
representatives (especially of the employees) should have confidence in their
---------------------- clients. With regard to procedures, it may be noted that everything that may
generate irritation and bad blood should be excluded from the machinery. This
---------------------- obviously means that technicalities and lawyers should not be admitted before
---------------------- such machinery. This will reduce the intensity of opposition between the parties.
---------------------- Activity 2
----------------------
What initiatives would you take as a conciliator to make the conciliation
---------------------- process successful?
----------------------
---------------------- 4.5 ARBITRATION

---------------------- Arbitration is a means of securing an award on a conflict issue by referring
it to a third party. It is a process in which a dispute is submitted to an impartial
---------------------- outsider who makes a decision which is usually binding on both the parties It
is a process where there is a hearing and a determination of a cause between
----------------------
parties in dispute with each other, by a person or persons chosen by them, or
---------------------- appointed under a statutory provision. The main objective of arbitration is
adjudication and hence there is no place for compromise in awards though the
---------------------- parties are at a liberty to do so. The arbitrator enforces his own point of view
on the contending parties and the opinions of the disputants are not given any
----------------------
predominance. Moreover arbitration is more judicial in character.
---------------------- 4.5.1 Conciliation, Arbitration and Mediation: A Comparison
---------------------- The basic differences among conciliation, arbitration and mediation can
be specified as follows. Conciliation is different from arbitration, not only by
----------------------
reason of the fact that the decision under arbitration is binding on both the
---------------------- parties, but also by reason of its different approach and spirit. The main objective
of arbitration is adjudication and hence, there is no place for compromise in
---------------------- awards though the parties are at liberty to come to a compromise. A conciliator,
on the other hand, has to reconcile the recommendations of the parties. As long
----------------------
as he brings about an agreement between the contending parties, an arbitrator’s
---------------------- aim is to make an award which he considers would be mutually acceptable to
the parties. An arbitrator usually conducts a hearing of the parties and makes his
---------------------- award or decision afterwards. Arbitration proceedings do not necessarily follow
the formal course of judicial proceedings. Conciliation proceedings are less
----------------------
formal. While arbitration proceedings require the presence of both the parties,
---------------------- the holding of a joint meeting is only one of the ways in which a conciliator
performs his task.
----------------------
Arbitration is a judicial process while mediation has a legislative tinge.
---------------------- The award of the arbitrator is based on equity and justice; there is no scope
for compromise, while compromise is the very essence of mediation. The
---------------------- arbitrator’s award is binding whereas that of the mediator is not. Arbitration

often leads to the termination of the dispute, but mediation may or may not end Notes
the dispute.
----------------------
(i) Arbitration has been popular in foreign countries, particularly USA, ----------------------
Canada, New Zealand, Malaysia, because of the advantages of this system, ----------------------
which are: Since it is established by the parties themselves, arbitration
has the particular advantage of bringing the dispute settlement procedure ----------------------
sown to the level of the parties to the dispute.
----------------------
(ii) Since arbitration is established by agreement, it is more flexible than other
procedures and can be adjusted to the views, desires and experience of the ----------------------
parties and to the circumstances obtaining in the undertaking or industry.
(iii) This procedure, operating at the level closest to the parties to the ----------------------
disputes, has the advantage of enabling the arbitrators to acquire much ----------------------
greater familiarity with the characteristics of the particular industry or
undertaking than most courts or tribunals. ----------------------
(iv) The procedure is relatively expeditious when compared to that in ordinary
----------------------
courts or labour tribunals. It cuts down delays and results in a prompt
settlement of differences. ----------------------
(v) It is informal in character because the disputes are handled by the parties
themselves, often without recourse to lawyers. Arbitration, therefore, is ----------------------
less expensive than other procedures. ----------------------
(vi) Awards are capable of implementation without any grudge on the part of
both the parties to dispute and do lead to further chances of litigation. ----------------------
(vii) Since arbitration is based on the consent of both the parties, it helps build ----------------------
up a sound base for healthy industrial relations, mutual understanding and
co-operation. ----------------------
(viii) It is popular because it is suitable and compelling. It is far better than a ----------------------
costly work- stoppage, even though not wholly satisfactory from either
parties’ point of view. ----------------------
4.5.3 Disadvantages of Arbitration ----------------------
Contrary to these claims, arbitration has also been opposed on the following
----------------------
grounds:
(i) It deprives labour of its right to go on a strike, for there is often a provision ----------------------
in the agreement that the trade unions and workers will refrain from a
strike during the continuance of the agreements. ----------------------
(ii) Judgement is often arbitrary and ill-advised as the arbitrators are not well- ----------------------
versed in the economic and technical aspects of industry.
----------------------
(iii) Arbitrators are often biased against labour and the award is therefore,
usually not in its favour. ----------------------
(iv) Delay often occurs in arriving at the award and settlement of disputes.
This leads to a breakdown in the morale of members. ----------------------
(v) Though arbitration is an essential element for better labour-management ----------------------

Notes relations, its availability may lead to less dependence on negotiations and
the conditions imposed by a third party may be resented.
---------------------- (vi) Too much arbitration is not a sign of a healthy relationship which finds
it necessary to leave the disposition of disputes to third parties. They do
----------------------
so often because they have not learnt how to solve their own problems
---------------------- or how to live with one another. Therefore, too frequent arbitration is
not only costly and time-consuming but promotes a hostile and rigid
---------------------- relationship between the parties.
---------------------- 4.5.4 Procedure for Investigation
---------------------- After the dispute has been referred to the arbitrator, he will hear out both the
parties. Hearing involves mastery of the facts of a particular dispute as well as
---------------------- the relevance provisions of the past practices of the parties in relation to matters
relevant to the dispute.
----------------------
After the collection of facts and supporting materials, arguments take place.
---------------------- Certain principles are followed by an arbitrator while dealing with a particular
dispute, namely:
----------------------
(i) Fair hearing, which demands that an opportunity should be given to be
---------------------- heard and cross-examined.
(ii) Principle of natural justice requires that a party should have due notice of
---------------------- proceedings, and it must know what are the issues involved and what part
---------------------- it has to play.
(iii) The party should be firm to give any evidence which is relevant to the
---------------------- enquiry and on which it relies for its arguments. The evidence given by
one party should be taken in the presence of the other party so that the
----------------------
other party may place counter evidence, if necessary.
---------------------- (iv) The arbitrator should not rely on any document which is not shown and
explained to the other party and to which a reply has not been received.
----------------------
He has to be completely impartial without any bias or prejudice against
---------------------- anybody.

----------------------
----------------------
1. Conciliation is the most important method for the prevention and
---------------------- settlement of industrial disputes through third party intervention.
2. Arbitrators are usually not biased against labour and the award is
---------------------- therefore, usually in its favour.
---------------------- 3. Arbitration is a means of securing an award on a conflict issue by
referring it to a third party.
---------------------- 4. Boards of Conciliation are frequently appointed by the Government
---------------------- these days.
5. Arbitration is a legislative process while mediation has a judicial
---------------------- tinge.

4.6 QUALITIES OF A CONCILIATOR AND AN ARBITRATOR Notes
There are certain basic characteristics which are essential to the work of ----------------------
a conciliation and arbitration. For conciliation as well as arbitration to be
successful, the conciliators and an arbitrators must have some specific qualities. ----------------------
In the subsequent sections we will discuss about these qualities –
----------------------
----------------------
The qualities needed in a conciliator are as follows:
----------------------
(i) Independence and impartiality are the two attributes which every
conciliator should possess. He must be above suspicion; and both parties - - - - - - - - - - - - - - - - - - - - - -
must have confidence in his integrity and neutrality. He should be
independent enough not to be swayed or influenced by others. He should - - - - - - - - - - - - - - - - - - - - - -
be able to resist undue pressures or persuasion from powerful employers
----------------------
or unions.
(ii) A conciliator should be physically and psychological fit for the rigorous - - - - - - - - - - - - - - - - - - - - - -
task. He must have a strong and deeply held conviction of the importance ----------------------
and usefulness of conciliation. Conciliation is an expression of one of the
highest virtues which can be practiced. ----------------------
(iii) A conciliator should never allow conciliation proceedings before him to ----------------------
constitute a mere formality or a step on the road to arbitration.
(iv) A conciliator must have the ability to get along well with people. He must ----------------------
be a specialist in human relations. He must be honest, polite, tactful, self- ----------------------
confident, even-tempered and patient in trying to achieve results.
----------------------
(v) He must have not only the tact and ability to guide and control their joint
discussions, but must also have a sense of responsibility, clear-headedness ----------------------
and mature judgement. He must be able to show others that he possesses
enough common sense and practical mindedness. ----------------------
(vi) A conciliator should have a friendly personality, a sense of humour and ----------------------
have a gift for relieving tensions at joint discussions. A nimbleness of
mind will enable him to grasp quickly and analyse rapidly the main ----------------------
elements of a controversy.
----------------------
(vii) A conciliator should be well acquainted with the laws and regulations
concerning industrial relations and the settlement of industrial disputes. ----------------------
He should be familiar with the industrial relations system e.g. the
----------------------
development and structure of a trade union and employer’s associations
the prevailing methods of collective bargaining; negotiating procedures ----------------------
and practices; the operation of the agreed negotiating bodies set up by the
parties; the main causes and patterns of disputes. ----------------------
(viii) He should be well-trained in different aspects of the management process. ----------------------
He should have some knowledge of products and services, the production ----------------------
methods, practices etc. knowledge about wage rates and other financial
matters, incentive schemes and an understanding of traditional outlooks ----------------------

Notes and cultural peculiarities and of the way in which they affect labour
relations.
----------------------
(ix) He must have the ability and versatility to form judgements. He should,
---------------------- therefore, acquire knowledge from personal experience and observations.
---------------------- 4.6.2 Qualities of an Arbitrator

The arbitrator must have the qualities to ensure that they fulfill the responsibilities
---------------------- for making decisions related to the disputes, which the disputants have entrusted
---------------------- upon them. These qualities are:
(i) An understanding of the complexities of the labour-management
---------------------- relationships.
---------------------- (ii) Knowledge of collective bargaining and the operation of the arbitration
procedures as well as skill and experience in the interpretation of collective
----------------------
agreements and familiarity with the personnel policies, industrial
---------------------- discipline and human relations.
(iii) High integrity. Arbitrators should be unbiased persons with a deep sense
----------------------
of impartiality. They should be free from any commitment to, or prejudice
---------------------- in favour of one side or the other.
(iv) Commitment to the maintenance of harmonious labour-management
----------------------
relations and strong belief in the importance of successful arbitration
---------------------- (v) They must be acceptable to both the parties.
----------------------
Activity 3
----------------------
---------------------- Explain why the boards of conciliation are rarely appointed by the
Government these days.
----------------------
---------------------- 4.7 ROLE OF THE CONCILIATOR

----------------------
The conciliator induces the parties to a course of action. His intervention
---------------------- in the dispute creates for the parties a situation different from one of direct
confrontation. The conciliator opens to the parties a variety of available options
---------------------- besides those which they can think of themselves. By promoting their attitudes
and screening in what fields they may be prepared to show some flexibility,
----------------------
he gains a perspective of the issues in dispute and of alternative possibilities
---------------------- of settlement. These options may vary in number according to the nature of
the issues involved, and they may be available in respect of a single issue or a
---------------------- combination of issues.
---------------------- The conciliator controls the timing for the selection of an option, the
acceptable settlement of which, by the parties, may vary from time to time.
----------------------
The role of a conciliator may be discussed under following heads:
---------------------- 1. Discussion leader: As a discussion leader, the conciliator reduces

irrationality and antagonism between the parties. He guides them towards Notes
a problem solving approach to their dispute; he ensures that they discuss
their differences in as friendly a manner as possible; he helps them to ----------------------
analyse their problem, always striving to keep the analysis on a rational
plane; he identifies the elements of the problem, both for the parties ----------------------
benefit and for his own. ----------------------
2. Safety valve: The conciliator places himself in the position of an
----------------------
alternative target when he feels that the parties are in an aggressive mood.
By setting a substitute target, the parties can achieve an emotional release ----------------------
without direct and immediate damage to the negotiations.
----------------------
3. Communication link: The conciliator fulfills an important function as
a communication link between the parties. Serving as a communication ----------------------
link may either constitute his main conciliatory effort or be a contribution
to it. ----------------------
4. Innovator: The conciliator acts as an invaluable source of new information ----------------------
and new thoughts, particularly in providing the parties with different
views of the issues, with possible alternative solutions and possible an ----------------------
entirely new approach.
----------------------
5. Sounding board: He is often described as a flying ambulance squad,
appearing whenever or wherever a collision or conflict, which threatens to ----------------------
disturb harmonious relations, occurs or is apprehended to occur between ----------------------
interests of the parties.
6. Protector: The conciliator plays a protecting role, for he readies the ----------------------
parties for collective bargaining positions by exploring alternative ----------------------
solutions during separate meetings.
7. Fail-safe device: The conciliator often assists a party which has ----------------------
overstated its position to the extent of bluff or exaggeration of its reaction ----------------------
to some move on the part of the other or taken a clearly untenable stance
to withdraw gracefully under the banner of reason. ----------------------
8. Stimulator: Sensing the need for positive action, the conciliator can ----------------------
provide the necessary impulse to a settlement, he makes a concise
statement, supplies some date, gives a hint or suggestion. He crystallises ----------------------
changes of opinion in the course of discussions by intervening at the
----------------------
appropriate moment and giving such ideas a concrete form.
9. Adviser: The conciliator tries to remove misunderstandings regarding ----------------------
the other’s position, intention and capabilities. He tries to see that
----------------------
misinterpretation does not occur and that each side thoroughly understands
the other’s point of view, obtains a picture of the opponent’s strength and ----------------------
realises its own limitations and weaknesses.
----------------------
----------------------
----------------------

Notes
----------------------
---------------------- Match the following.

i. Discussion leader a. The conciliator provides the necessary
---------------------- impulse to a settlement.
---------------------- ii. Advisor b. The conciliator acts as an invaluable
source of new information and new
---------------------- thoughts.
---------------------- iii. Stimulator c. The conciliator reduces irrationality and
antagonism between the parties.
---------------------- iv. Innovator d. The conciliator places himself as an
alternative target when the parties are in
----------------------
an aggressive mood.
---------------------- v. Safety valve e. The conciliator tries to
remove misunderstandings regarding
---------------------- the other’s position, intention and
---------------------- capabilities.
----------------------
4.8 ADJUDICATION IN INDIA
----------------------
The last recourse for the settlement of an unresolved dispute is its reference
----------------------
to adjudication by the government. Adjudication involves intervention in the
---------------------- dispute by a third party appointed by the government for the purpose of deciding
the nature of final settlement.
----------------------
On receiving the failure report of the conciliation, the government has to decide
---------------------- whether it would be appropriate to refer the dispute to adjudication. The reason
behind opting for adjudication is that the developing countries cannot afford to
---------------------- suffer the loss of production resulting out of strikes and lock outs. Hence, the
government intervenes and refers the disputes to the adjudication machinery.
----------------------
The Supreme Court has emphasised the importance of adjudication by
---------------------- considering it on par with the decisions on fundamental rights under the
Constitution in the following words:
----------------------
“As in the decision of the constitutional question of this kind, so in adjudication, it
---------------------- is always a matter of making reasonable adjustments between the two competing
---------------------- claims. The fundamental right of the individual citizen is guaranteed and its
reasonable restriction is permissible in the interest of the general public. So the
---------------------- claims of the interests of the general public have to be weighed and balanced
against the claims of the individual citizen in regard to his fundamental right.
---------------------- So, too, in this case of adjudication, the claims of the employer based on the
---------------------- freedom of contract have to be adjusted with the claims of industrial employees
for social justice”.
---------------------- Hence, the adjudication machinery has to consider not only the demands of social

justice but also the claims of the national economy. This requires attempts to Notes
secure a fair share for the workers in the national income. On the other hand, the
adjudication machinery has also to take care that this attempt at fair distribution ----------------------
does not dry out the source of the national income itself.
----------------------
----------------------
Once the government receives a report on the failure of conciliation proceeding,
it has to decide whether it would be appropriate to refer the dispute to arbitration. ----------------------
When both the parties agree to refer the dispute to adjudication, at their own
accord, it becomes obligatory on the part of the government to make a reference ----------------------
to adjudication. This is called as Voluntary Adjudication as it is made by the ----------------------
parties. On the other hand, when reference is made to adjudication by the
government without the consent of either or both the parties to the dispute it is ----------------------
known as Compulsory Adjudication.
----------------------
----------------------
In India, we have a three-tier system of adjudication, which has been provided
for in the Industrial Disputes Act, 1947. The following are the adjudicating ----------------------
bodies which decide the disputes referred to them by the appropriate government
and pass awards. ----------------------
1. Labour Courts: The labour courts adjudicate upon disputes listed in the ----------------------
Schedule II of the Industrial Disputes Act. The Labour court usually deals
with matters which arise out of the day-to-day working of an undertaking. ----------------------
One or more labour courts may be constituted by the appropriate
----------------------
government.
Constitution ----------------------
A labour court shall consist of one person only who: ----------------------

i. Is or has been a judge of a High Court; or ----------------------
ii. Has been, for a period of not less than 3 years, a District Judge; or
----------------------
iii. Has held any judicial office in India for not less than 7 years.
----------------------
No person shall be appointed or continue in the office of the labour court if he
is not an independent person, or if he has attained the age of 65. ----------------------
The duties of the labour court are: ----------------------
i. To hold adjudication proceedings expeditiously; and
----------------------
ii. Submit its award to the appropriate government as soon as possible on the
conclusion of the proceedings. ----------------------
Jurisdiction ----------------------
The jurisdiction of the labour courts extends to the adjudication of the following ----------------------
disputes relating to matters specified in the Second Schedule:
----------------------
1. The propriety or legality of an order passed by an employer under the
Standing Orders. ----------------------

Notes 2. The application and interpretation of Standing Orders.
3. Discharge or dismissal of workers, including reinstatement of, or grant of
----------------------
relief to workers wrongfully dismissed.
---------------------- 4. Withdrawal of any customary concession or privilege
---------------------- 5. Illegality or otherwise of a strike or lockout.
---------------------- 6. All matters other than those specified in the Third Schedule of the Act.
Labour courts do not have supervisory jurisdiction, i.e., it cannot act as a
---------------------- guardian of an industrial establishment.
---------------------- 2. Industrial Tribunals: The industrial tribunals adjudicate upon disputes
listed in Schedule II or III of the Industrial Disputes Act. The appropriate
---------------------- government may appoint one or more industrial tribunals. The matters
---------------------- which are in the form of new demands and give rise to industrial disputes
which affect the working of a company or industry are usually referred
---------------------- to an industrial tribunal. The industrial tribunal may be appointed for a
limited period on an ad hoc basis or permanently.
----------------------
Constitution
----------------------
A tribunal shall consist of one or more persons, such as:
---------------------- i. Are or have been Judge(s) of a High Court;
---------------------- ii. Are or have been District Judge(s) for a period of not less than 3 years;
---------------------- iii. Hold or have held the office of the chairman or any other member of the
Labour Appellate Tribunal or any tribunal for a period of not less than 2
---------------------- years
---------------------- The government may, if it thinks fit, also appoint two persons as assessors to
advise the tribunal in the proceedings before it.
----------------------
The functions and duties of the industrial tribunal are very similar to those of
---------------------- a body discharging judicial functions. Although it is not a court, it has all the
necessary attributes of a court of justice. It may create new obligations or modify
---------------------- contracts. In the interest of industrial peace, protect legitimate trade union
activities and prevent unfair trade practices and victimisation. The tribunals are
----------------------
required to give awards based on circumstances peculiar to each dispute; and
---------------------- they are to a large extent, free from restrictions of technical consideration or
rules of evidence imposed on courts.
----------------------
Jurisdiction
---------------------- An industrial tribunal has a wider jurisdiction than the labour courts. It has
---------------------- jurisdiction over any matter specified in the Second or the Third Schedule.
The jurisdiction covers the promotion of social justice, that is, fairness in the
---------------------- adjudication proceedings to all the concerned parties. The matters specified in
the Third Schedule are:
----------------------
1. Wages, including the period and mode of payment.
---------------------- 2. Compensatory and other allowances.

3. Hours of work and rest intervals Notes
4. Leave with wages and holidays.
----------------------
5. Bonus, profit-sharing, provident fund and gratuity.
----------------------
6. Shift working, otherwise than in accordance with the standing orders.
7. Classification of grades. ----------------------
8. Rules of discipline ----------------------

9. Rationalisation. ----------------------
10. Retrenchment of workmen and closure of an establishment.
----------------------
11. Any other matter that may be prescribed.
----------------------
The Industrial Tribunal has to hold the judicial proceedings expeditiously and
submit its award to the appropriate government as soon as practicable, on the ----------------------
conclusion of the proceedings
----------------------
3. National Tribunals: The national tribunals adjudicate upon disputes
which are of national importance, or when the dispute is of such a ----------------------
nature that it will affect industrial establishments in more than one state.
The Central government may, by a notification in the Official Gazette, ----------------------
constitute one or more national tribunals. ----------------------
Constitution
----------------------
A national tribunal shall consist of one person only to be appointed by the
Central Government, who: ----------------------
i. Is or has been a judge of a High Court; or ----------------------
ii. Has held the office of the chairman or any other member of the Labour
----------------------
Appellate Tribunal for a period of not less than 2 years.
If the Central Government thinks fit, it may appoint two persons as assessors to ----------------------
advise the National Tribunal on the proceedings before it. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
---------------------- Multiple Choice Multiple Response.

1. The matters under the jurisdiction of the Industrial Tribunal are:
----------------------
i. Hours of work and rest intervals
----------------------
ii. Wages, including the period and mode of payment
---------------------- iii. Classification of grades
---------------------- iv. No other matter that may be prescribed
---------------------- 2. The matters under the jurisdiction of the Labour Court are:
i. The application and interpretation of Standing Orders ii.
----------------------
Illegality or otherwise of a strike or lockout
---------------------- iii. All the matters specified in the Third Schedule of the Act
---------------------- iv. Withdrawal of any customary concession or privilege
----------------------
---------------------- Activity 4
---------------------- Specify why arbitration and adjudication are more effective than conciliation
---------------------- in India.
----------------------
Summary
----------------------
●● It has been strongly observed that collective bargaining is not enough
---------------------- to have smooth conduct of the industrial peace, hence the importance
---------------------- and application of mediators and conciliation is a must which in turn has
brought about a number of conflict solutions in an organisation.
---------------------- ●● In India, the first step towards resolving the disputes is conciliation and
---------------------- mediation. Conciliation machinery consists of either the conciliator or the
Conciliation Board.
----------------------
●● If the conflicts are not resolved by conciliation or mediation then the next
---------------------- step is arbitration. Arbitration can be compulsory or voluntary.
●● If disputes are still not resolved through arbitration then it may go for
----------------------
adjudication, at the discretion of the government.
---------------------- ●● The Adjudication process in India comprises a three-tier system – the
labour court, the industrial tribunal and the national tribunal.
----------------------
●● o handle manpower management better than before, proper and ethical
T
---------------------- use of the machinery provided by the government is expected.
----------------------

Keywords Notes
----------------------
●● Conduct: The manner in which a person behaves.
●● Conciliation: Make calm and content, placate or mediate in a dispute. ----------------------
●● Impulse: A sudden strong and unreflective urge to act. ----------------------
●● Intervention: The action or process of intervening / interference by a ----------------------
state in another’s affairs.
●● Peace: Freedom from disturbance, tranquility. ----------------------
●● Proceedings: An event or a series of activities with a set procedure. ----------------------

●● Smooth: Without problems or difficulties. ----------------------
●● Settlement: The action or process of settling.
----------------------
Self-Assessment Questions ----------------------
1. What is meant by mediation? Explain the procedure involved in mediation. ----------------------
2. What is meant by conciliation? Explain how the process of conciliation ----------------------

takes place for prevention and settlement of disputes.
----------------------
3. Examine the qualities that are required to be possessed by a conciliator.
----------------------
4. Explain the role of a conciliator while conducting conciliation proceedings.
5. Examine the procedure and practice followed in India in holding ----------------------
conciliation proceedings. ----------------------
Answers to Check your Progress ----------------------

1. Conciliation is limited to encouraging the parties to discuss their ----------------------
differences and to help them develop their own proposed solutions.
----------------------
2. Mediation implies a stronger form of intervention, and a mediator may be
permitted to offer proposals to the parties for settlements. ----------------------
3. Mediation can work only in a climate of consent
----------------------
4. The mediator must be an impartial and unprejudiced person.
----------------------
1. True ----------------------
2. False ----------------------
3. True
----------------------

Notes 4. False
5. False
----------------------
----------------------
Match the following.
---------------------- i. − c. ii. – e. iii. – a. iv. – b. v. – d.
1. The matters under the jurisdiction of the Industrial Tribunal are:
----------------------
i. Hours of work and rest intervals.
----------------------
ii. Wages, including the period and mode of payment.
---------------------- iii. Classification of grades
---------------------- 2. The matters under the jurisdiction of the Labour Court are –
---------------------- i. The application and interpretation of Standing Orders
ii. Illegality or otherwise of a strike or lockout
----------------------
iv. Withdrawal of any customary concession or privilege
----------------------
---------------------- Suggested Reading

---------------------- 1. Mammoria, C.B., S. Mammoria and S.V. Gankar. 2011. Dynamics of
----------------------
2. Punekar, S. D., S. B. Deodhar and Saraswathi Sankaran. 2004. Labour
---------------------- Welfare, Trade Unionism and Industrial Relations. Mumbai: Himalaya
Publishing House.
----------------------
3. Rao, Dr. P. Subba. 2011. Essentials of Human Resource Management and
---------------------- Industrial Relations. Mumbai: Himalaya Publishing House.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Grievance Procedure
UNIT
5
Structure:
5.1 Introduction
5.2 Meaning of Grievance
5.3 Causes of Grievance
5.4 Procedure for Settlement
5.5 Public Grievance Redressal
5.6 The Principles for Model Grievance Procedure
Summary
Key Words
Suggested Reading
Grievance Procedure 75
Notes
Objectives
----------------------
----------------------
●● Identify the causes of grievance
----------------------
●● Analyse the procedure for settlement of grievance
---------------------- ●● State the principles of model grievance procedure
----------------------
----------------------
5.1 INTRODUCTION
----------------------
In the last unit, we have seen the evolution of industrial relations policies.
---------------------- There is hardly a company where employees do not have grievances which may
be real or false. The term grievance is used to designate claims by workers of a
----------------------
trade union concerning their individual or collective rights under an applicable
---------------------- collective agreement, individual contract of employment, law, regulations,
work rules, custom or usage. Such claims involve questions relating to the
---------------------- interpretation or application of the rules. The term grievance is used in some
countries to designate this type of claim, while in some other countries reference
----------------------
is made to disputes over “right” or “legal” disputes. Grievances can arise due to
---------------------- any reason. Generally, a complaint affecting one or more workmen constitutes
a grievance. It may relate to the quantum of wages, mode of payment, overtime,
---------------------- leave, etc. Many of the industrial disputes that result in grave repercussions
originate from minor grievances. If such grievances are amicably settled in
----------------------
time, many disputes could be prevented.
----------------------
5.2 MEANING OF GRIEVANCE
----------------------
Defining a grievance is a difficult task. Personnel experts have attempted to
----------------------
distinguish between dissatisfaction, complaint and grievance. Dissatisfaction
---------------------- is any state of feeling of discontent, whether innate and unexpressed or
expressed. A dissatisfaction which is made known by one employee to another,
---------------------- verbally, is known as a complaint. A complaint becomes a grievance when this
dissatisfaction, which is mostly related to work, is brought to the notice of the
----------------------
management.
---------------------- Definitions
---------------------- “A written complaint filed by an employee, claiming unfair treatment or
any real or imagined feelings of personal injustice which an employee has
---------------------- concerning his employment relationship.”
---------------------- “Grievance is any discontent or dissatisfaction, whether expressed or not,
whether valid or not, arising out of anything connected with the company which
----------------------
an employee thinks, believes and even feels to be unfair, unjust or inequitable.”
----------------------

“A complaint of any one or more workers in respect of wages, allowances, Notes
conditions of work and interpretation of service stipulations, covering such
areas as overtime, leave, transfer, promotion, seniority, work assignment and ----------------------
discharge constitute grievance.”
----------------------
Grievance covers dissatisfaction and may have the following characteristics:
----------------------
a) It may be unvoiced or expressly stated.
b) It may be written or verbal. ----------------------
c) It may be valid and legitimate, untrue or false or ridiculous. ----------------------
d) It may arise out of something connected with the organisation or work − ----------------------
an employee feels injustice has been done to him.
Grievance generally gives rise to unhappiness, frustration, discontent, poor ----------------------
morale, etc. ----------------------

----------------------
Fill in the blanks.
----------------------
1. A complaint affecting one or more workmen constitutes a _______.
2. _______ is any state of feeling of discontent, whether innate and ----------------------
unexpressed or expressed. ----------------------
3. A dissatisfaction which is made known by one employee to another,
----------------------
verbally, is known as a _______.
4. Grievance may be _______ or expressly stated. ----------------------
5. Grievance generally gives rise to _______, _______, discontent, poor ----------------------
morale, etc.
----------------------
----------------------
Activity 1
----------------------
Visit any company and find out any two cases of written complaint filed
----------------------
by employees claiming unfair treatment.
----------------------
5.3 CAUSES OF GRIEVANCE ----------------------
Grievance generally arise from the day-to-day working relations in an ----------------------

undertaking, usually with a worker or trade union protesting against an act
or omission of management that is considered to be violating workers’ rights. ----------------------
Grievances arise because of issues like discipline and dismissal, the payment ----------------------
of wages and other fringe benefits, working time, over-time and time-off
entitlements, promotions, demotion and transfer, rights deriving from seniority, ----------------------
rights of supervisors and union officers, job classification problems, the
relationship of work rules to the collective agreement and the fulfillment of ----------------------
Notes obligations relating to safety and health as laid down in the agreement. If these
grievances are not resolved at the earliest than they may lead to industrial strife.
----------------------
Now we will look at some of the causes of grievances specified by some
---------------------- management specialists.
---------------------- Calhoon observes:

“Grievances existing in the minds of individuals are produced and dissipated
---------------------- by situations, are fostered or healed by group pressures, are adjusted or made
---------------------- worse by supervisors and are nourished or dissolved by the climate in the
organisation which is affected by all the above factors and by the management.”
----------------------
Bether and others have given causes of grievance as follows:
---------------------- ●● Concerning wages
---------------------- ●● Concerning supervision
---------------------- ●● Concerning individual advancement

●● General working conditions
----------------------
●● Collective bargaining
----------------------
Wages
----------------------
Supervision
----------------------
Causes of Grievance Promotion
----------------------
Work Condition
----------------------
Bargaining
----------------------
Fig. 5.1: Causes of Grievance
----------------------
According to S. Chandra, the main causes of grievances are:
---------------------- ●● Promotion
---------------------- ●● Amenities
---------------------- ●● Continuity of service

●● Compensations
----------------------
●● Disciplinary matters
----------------------
●● Fines
---------------------- ●● Increments
---------------------- ●● Leave
---------------------- ●● Medical benefit

●● Nature of job
----------------------
●● Payment of wages, etc.
----------------------

Notes
Activity 2
----------------------
Visit two companies and find out any three real-life causes of grievance. ----------------------
----------------------
5.4 PROCEDURE FOR SETTLEMENT ----------------------
In this section, we will discuss the need for a grievance procedure. The need ----------------------
can be divided into primary need and secondary need.
----------------------
Primary Need
----------------------
i. Without a proper analysis of a grievance, its nature and pattern, the cause
of employee dissatisfaction can’t be removed. ----------------------
ii . Moreover, a detailed study helps in finding out the best possible method ----------------------
of settling them.
----------------------
Secondary Need
i. The procedure brings uniformity in handling the grievance. ----------------------
ii. It serves as an outlet for employee gripes, discontent and frustrations. ----------------------
iii. If an explosive situation develops, it can be promptly attended to if a ----------------------
grievance handling procedure is already in existence.
iv. Supervisors are not adequately trained to handle all sorts of grievance, ----------------------
and thus a proper machinery is required. It also reduces the burden on the ----------------------
supervisors.
----------------------
v. The Management has the complete authority to operate the business as
it sees fit, abiding by the legal and moral obligations and the contracts it ----------------------
has entered into with its employees or their representative Trade Unions
.If the Trade Union does not like the way the management functions, they ----------------------
can submit their grievance in accordance with the procedure laid down.
----------------------
The procedure for the settlement of grievances is sometimes established
by way of legislation or often with the help of general agreements between ----------------------
the central organizations of the employees and workers. In India the matter
----------------------
regarding the formulation of a grievance procedure was referred to the 15th
session of the Indian Labour Conference, 1957 which formulated the Code of ----------------------
Discipline, laying down that the management and unions would “establish upon
a mutually agreed basis, a grievance procedure which will ensure speedy and ----------------------
full investigation leading to settlement.” The guiding principles to be adopted
----------------------
by the parties for the Model Grievance Procedure were settled in a tripartite
committee in September 1958. ----------------------
The Industrial Disputes (Amendment) Act, 1982, provides for the reference
----------------------
of certain individual disputes to grievance settlement authorities. Section 9C
of the Act stipulates that in every establishment in which one hundred or more ----------------------
Notes workmen are employed or have been employed on any one day in the preceding
twelve months, the employer shall set up a time bound grievance redressal
---------------------- procedure.
---------------------- A grievance procedure is a formal process which is primarily for an arbitration,
which enables the parties involved to attempt to resolve this difference in a
---------------------- peaceful, orderly and expeditious manner. It has been pointed out that adequate
measures for the examination of a grievance are essential for promotion and
----------------------
maintenance of good labour management relation and high degree of efficiency.
---------------------- The detail of the grievance procedure varies from industry to industry
depending upon various factors. The procedure may have as few as two steps
----------------------
or as many as ten depending upon the size of the organisation. Although all the
---------------------- grievances must necessarily be processed step by step, some formal steps may,
in special circumstances be skipped with a view to settling the grievance in an
---------------------- expeditious manner.
---------------------- The handling of a special grievance may involve special steps as well as the
skipping of certain steps within normal grievance channels.
----------------------
The procedure may be
---------------------- ●● Open door
---------------------- ●● Step ladder type
---------------------- In the open door procedure, the employee can even meet the head of the firm
directly to have his grievance properly attended to. It is useful in small units.
----------------------
In the step ladder procedure, proper steps have to be followed. There is a
---------------------- proper channel and it is followed in large organisations. The person may first
report to the supervisor and then the next authority, then the next and so on. At
---------------------- any step a decision is made which is agreeable to both, the management and
employees, is final and is binding upon both.
----------------------
----------------------
Voluntary arbitration
----------------------
---------------------- Higher Management

----------------------
Grievance Committee
----------------------
Dept. Head
----------------------

---------------------- Office designated
----------------------
Worker with a grievance
----------------------
---------------------- Fig. 5.2: Basic Grievance Procedure

Notes
----------------------
1. According to Bether and others, the causes of grievance are:
----------------------
i. Concerning wages
----------------------
ii. Concerning supervision
iii. Concerning individual advancement ----------------------
iv. Concerning medical benefit ----------------------

2. The secondary need for the grievance procedure helps: ----------------------
i. Increase the burden on the supervisors.
----------------------
ii. Bring uniformity in handling the grievance.
----------------------
iii. Serve as an outlet for employee gripes, discontent and
frustrations. ----------------------
iv. When an explosive situation develops, it can be promptly ----------------------
attended to if a grievance handling procedure is already in
existence. ----------------------
----------------------
5.5 PUBLIC GRIEVANCE REDRESSAL
----------------------
Grievance handling is a very important and sensitive area of the government’s ----------------------
work profile. It is, nonetheless, an area that is, at best, taken for granted and,
at worst, grossly neglected by the service providers as it does not fall into the ----------------------
category of ‘urgent matters’. Its importance is very often not appreciated by
those who ought to recognise the value of grievances in order to develop a ----------------------
diagnosis of what ails a government ministry, department or agency. There is, ----------------------
perhaps, a reasonable justification for this perception of the grievance-handling
mechanism among the citizens at large. Every grievance points to a missed ----------------------
pulse beat somewhere in the organisation, and when grievance-prone areas
are identified and analysed, it can frequently prevent “cardiac arrest” or avoid ----------------------
a “moment of truth” for the organisation. One does not have to await public ----------------------
interest litigations and contempt proceedings in a court of law before addressing
grievances and grievance-prone areas. ----------------------
There are specific factors that make for a sound complaints-handling system. ----------------------
It should ideally be accessible, simple, quick and fair. It should also respect
confidentiality, be responsive, effective and accountable. It should provide ----------------------
feedback to management for systematic reform.
----------------------
The mechanism for grievance handling and its redress in the Government of
India attempts to cover all these parameters through a set of guidelines issued ----------------------
by the nodal agency for policy formulation on grievance handling, namely, the
Department of Administrative Reforms and Public Grievances (DARPG). ----------------------
Notes Accessibility
Grievance handling is decentralised and grievances are settled independently
----------------------
by each ministry, department or agency. There is a provision for accessibility of
---------------------- publicly notified grievance officers to meet the aggrieved persons at specified
times and on specified days of the week. Telephone numbers and contact
---------------------- addresses of the Grievance Officers are widely publicised. Complaint boxes
are placed at or near the reception desks. Information and Facilitation Counters
----------------------
(IFCs) have been set up by the organisations with a large public interface.
---------------------- Simplicity
---------------------- The streamlining of complaints handling is essential and, though an outline
of the Government’s requirements to assess a grievance is publicised, no strict
---------------------- proforma for application is laid down. Nodal agencies, such as the DARPG, the
---------------------- Department of Pensions and Pensioners’ Welfare (DP&PW) and the Directorate
of Public Grievance (DPG) in the Cabinet Secretariat facilitate the setting up of
---------------------- grievance mechanisms by government bodies and monitor the movement and
disposal of individual grievances on a selective basis.
----------------------
Speed
----------------------
Time limits have to be fixed and notified for grievance handling and final
---------------------- disposal by each organisation. The DAPRG has recommended 15 days for
acknowledgement and three months for interim reply or final disposal and reply.
----------------------
Fairness
---------------------- It is not as easy as it sounds, as it requires balancing fairness towards
---------------------- the complainant with fairness towards the organisation and the individual
complained against. Perception of fairness can vary sometimes even in the
---------------------- face of true impartiality. Transparency on the part of the decision-making and
implementing authority goes a long way towards ensuring fairness.
----------------------
Confidentiality
----------------------
It needs to be maintained in all cases, particularly in matters such as
---------------------- dispute settlement in land revenue or police cases. With the increasing use of
information technology, provisions for maintaining confidentiality are being
---------------------- built into grievance software too.
---------------------- A reply to any grievance must cover all the points which have been raised
and not address the grievance partially. Moreover, if an application is rejected,
---------------------- the reasons for such a rejection must be made explicit. If there is any follow-
---------------------- up action, it must be pursued. This is not to say that such consideration is to
be given to frivolous or fictitious complaints or to those which are persistently
---------------------- repeated, despite a well-argued final reply having been sent.
---------------------- In order to be effective, the grievance redressal mechanism should provide
specific remedies. Remedies vary from compensations and refunds to repairs
---------------------- and replacements, from giving requisite information to tendering an apology.
The concept of providing remedies requires a paradigm shift from an inherently
----------------------

defensive stance to one which is based on reaching out with goodwill to the Notes
aggrieved person. It also requires a degree of sensitive handling and can differ
from case to case. Remedies also work towards ensuring both organisational ----------------------
and individual accountability.
----------------------
An accountable grievance-handling system is open to scrutiny by clients,
government and agency staff. Agencies can make their grievance redressal ----------------------
mechanism more accountable by publishing information on the system and
----------------------
service delivery standards, and reporting on the outcomes of complaints and
citizen satisfaction levels in annual reports and other public documents. ----------------------
Grievances are an indicator of the agency’s health and require regular trend
----------------------
analysis. For this purpose, a monitoring mechanism is prescribed in each
Government organisation and monitoring and evaluation is undertaken from ----------------------
time to time by the nodal agencies too. Recommendations for systemic changes
are made on the basis of such analysis and lead to simplification or improvement ----------------------
of procedures.
----------------------
----------------------
Activity 3
----------------------
According to you, how should an accountable grievance-handling ----------------------
system be?
----------------------
5.6 THE PRINCIPLES FOR MODEL GRIEVANCE ----------------------

PROCEDURE ----------------------
The need for model grievance procedure had been felt for a very long time. ----------------------
But it was only in the 16th session of the Indian Labour Conference when they
were adopted. ----------------------
The Principles for Model Grievance Procedure are as follows: ----------------------

i. An aggrieved employee shall present his grievance verbally in person to
----------------------
the officer designated and the answer should be given within 48 hrs.
ii. If the worker is not satisfied with the answer, he, along with one department ----------------------
representative, will present his grievance to the department head. He will
----------------------
give his judgement in three days or state the reason for the delay.
iii. If he is not satisfied, then he may be requested to refer the case to ----------------------
the grievance committee. The grievance committee will make a
recommendation within seven days. The management has to implement ----------------------
it. ----------------------
iv. If even, then he remains unsatisfied, he can report the matter to the higher
tier of management for revision. ----------------------
v. If the worker is still not satisfied with the decision then the union may ask ----------------------
for voluntary arbitration the decision of which will be binding on both the
parties. ----------------------
Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
Fig. 5.3: Model Grievance Procedure
---------------------- But this model may be changed to suit the local conditions keeping in mind
the following factors:
----------------------
a) Prompt, well defined and time bound.
----------------------
b) Settled at the lowest level.
----------------------
c) It should be in conformity with the existing legislation.
---------------------- d) The help of trade union should also be sought.
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
1. Grievance handling is a very important and sensitive area of the
----------------------
government’s work profile.
2. Grievance handling is centralised and cannot be settled independently ----------------------
by each ministry, department or agency.
----------------------
3. Even if the worker is unsatisfied with the recommendation of the
grievance committee, he cannot go to the higher tier of management ----------------------
for revision ----------------------
4. A reply to any grievance must cover all the points which have been
raised and not address the grievance partially. ----------------------
5. Grievances are an indicator of the agency’s health and require regular ----------------------
trend analysis.
----------------------
----------------------
Summary
----------------------
●● There is hardly a company where employees do not have grievances
which may be real or false. ----------------------
●● Generally, a complaint affecting one or more workmen constitutes a ----------------------
grievance. It may relate to the quantum of wages, mode of payment,
overtime, leave, etc. ----------------------
●● Grievance generally arises from the day-to-day working relations in an ----------------------

undertaking, usually with a worker or trade union protesting against an
act or omission of management that is considered to be violating workers’ ----------------------
rights. ----------------------
●● If grievances are not resolved at the earliest, then they may lead to
industrial strife. ----------------------
●● The procedure for the settlement of grievances is sometimes established ----------------------

by way of legislation or often with the help of general agreements between
----------------------
the central organisations of the employees and workers.
●● In India the matter regarding the formulation of a grievance procedure ----------------------
was referred to the 15th session of the Indian Labour Conference, 1957
----------------------
which formulated the Code of Discipline.
●● The Code of Discipline lays down that the management and unions would ----------------------
“establish upon a mutually agreed basis, a grievance procedure which
----------------------
will ensure speedy and full investigation leading to settlement.”
●● The grievance procedure may be open door type or step ladder type. ----------------------
●● In the open door procedure, the employee can even meet the head of the ----------------------
Notes firm directly to have his grievance properly attended to whereas in the
step ladder procedure, proper steps have to be followed.
----------------------
●● The Department of Administrative Reforms and Public Grievances
---------------------- (DARPG), is the agency to redress the grievances set up by the Government
of India for grievances in different ministries, departments or agencies.
----------------------
●● Nodal agencies, such as the DARPG, the Department of Pensions and
---------------------- Pensioners’ Welfare (DP&PW) and the Directorate of Public Grievance
(DPG) in the Cabinet Secretariat facilitate the setting up of grievance
---------------------- mechanisms by government bodies and monitor the movement and
disposal of individual grievances on a selective basis.
----------------------
●● The model grievance procedure was adopted in the 16th session of the
---------------------- Indian Labour Conference.
---------------------- ●● Grievance awareness has brought about a number of complexities which
have created the need for the machinery of redress in an organisation.
----------------------
●● Difficult-to-handle and complicated grievance has procedures available
---------------------- for justice.
---------------------- ●● This awareness of redressal system has succeeded to establish a healthy
industrial relations relating to human resources.
----------------------
---------------------- Keywords
---------------------- ●● Avenue: A method or way of doing something; a possibility.
---------------------- ●● Adapt: To change something to suit different conditions or uses.

●● Evaluation: To judge or calculate the quality, importance, amount or
---------------------- value of something.
---------------------- ●● Feedback: Information or statements of opinion about something, such
as a new product, that provides an idea of whether it is successful or liked.
----------------------
●● Grievance: A complaint or a strong feeling that you have been treated
---------------------- unfairly.
---------------------- ●● Obligations: When you are obliged to do something.
●● Redress: To put right a wrong or give payment for a wrong that has been
----------------------
done.
----------------------
---------------------- 1. What is meant by a grievance? What are the causes of grievances? Give
two examples.
----------------------
2. Why is it necessary to redress the grievances of employees?
---------------------- 3. Give a diagrammatic representation and explain the model grievance
procedure adopted in the 16th session of the Indian Labour Conference.
----------------------

4. What grievance system structures are available in the government Notes
machinery?
----------------------
Fill in the blanks.
----------------------
1. A complaint affecting one or more workmen constitutes a grievance.
----------------------
2. Dissatisfaction is any state of feeling of discontent, whether innate and
unexpressed or expressed. ----------------------
3. A dissatisfaction which is made known by one employee to another,
----------------------
verbally, is known as a complaint.
4. Grievance may be unvoiced or expressly stated. ----------------------
5. Grievance generally gives rise to unhappiness, frustration, discontent, ----------------------

poor morale, etc.
----------------------
----------------------
1. According to Bether and others, the causes of grievance are: ----------------------
i. Concerning wages ----------------------
ii. Concerning supervision ----------------------
iii. Concerning individual advancement
----------------------
2. The secondary need for the grievance procedure helps:
----------------------
ii. Bring uniformity in handling the grievance.
iii. Serve as an outlet for employee gripes, discontent and frustrations. ----------------------
iv. When an explosive situation develops, it can be promptly attended ----------------------
to if a grievance handling procedure is already in existence.
----------------------
1. True ----------------------
2. False ----------------------
3. False ----------------------
4. True
----------------------
5. True
----------------------
----------------------
----------------------
Notes
Suggested Reading
----------------------
1. Mammoria, C.B., S. Mammoria and S.V. Gankar. 2011. Dynamics of
----------------------
---------------------- Publishing House.
---------------------- 3. Rao, Dr. P. Subba. 2011. Essentials of Human Resource Management and
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Industrial Relations in Public Sector Units
UNIT
6
Structure:
6.1 Introduction
6.2 Reasons for Creation of Public Sector
6.3 Legal Standing of Trade Unions
6.4 Issues of Conflict in Public Sector
6.5 Social Objectives of Public Sector
Case Study on Industrial Relations in Public Sector
Summary
Key Words
Suggested Reading
Industrial Relations in Public Sector Units 89

Notes
Objectives
----------------------
----------------------
●● Evaluate the nature of industrial relations in the public sector
----------------------
●● Analyse the role of industrial relations in the public sector
---------------------- ●● Identify the condition of industrial relations in the public sector
----------------------
---------------------- 6.1 INTRODUCTION

---------------------- We have understood the procedure of mediation, conciliation, arbitration
and adjudication in Unit 4. Now we have to know the reasons for the growth of
----------------------
industrial relations in the public sectors.
---------------------- Dale Yoder defines Industrial Relations as a “whole field of relationship
that exists because of men and women in the employment process of the
----------------------
industry”. According to Ordway Tead and Henry Metcalf, “Industrial Relations
---------------------- are the composite result of the attitudes and approaches of employers and
employees towards each other with regard to planning, supervision, direction
---------------------- and coordination of the activities of an organisation with a minimum of human
efforts and friction with an animating spirit of cooperation and with proper
----------------------
regard for the genuine well-being of all members of the organisation.” In India,
---------------------- the public sector came into being with the adoption of the Industrial Policy
Resolution of 1948, which laid down that the industries of basic and strategic
---------------------- subjects emphasised on the production and distribution of national wealth. Prior
to Independence, the major objective of the Government was not to be involved
----------------------
in the industrial development but this later became one of the major objectives
---------------------- of Government policies. Public Sector Enterprises play a dominant role in the
growing and labour abundant industrial economy like India. Harmonious and
---------------------- constructive industrial relations are essential for promoting the productivity of
the enterprises thereby contributing to the accelerated growth of the nation’s
----------------------
economy. In this unit, we are going to critically review the manifestation and
---------------------- the magnitude of industrial disputes so as to understand the nature of industrial
relations in the public sector.
----------------------
---------------------- 6.2 REASONS FOR CREATION OF PUBLIC SECTOR
---------------------- The public sector was viewed as an instrument for creating resources for
planned finance and development. It was advocated for three reasons:
----------------------
●● To gain control towards commanding the height of economy
---------------------- ●● o promote critical development in terms of social gain of strategic values
T
---------------------- rather than primarily on considerations of profit
●● To provide commercial surplus with which to finance further economic
---------------------- development

After Independence, India adopted mixed economy, i.e., an economic Notes
framework consisting of both public and private sectors. The public sector has
been the largest employer in India. In fact, from the 60s to the 80s, employment ----------------------
has grown by about 120 % in the public sector as against a marginal growth of
a little over 47 % in the private sector during the same period. ----------------------
Public sector employees are those workers who work in the companies owned ----------------------
or managed by the Government, including nationalised banks, the employees of
----------------------
the departmental undertakings such as Post and Telegraphs, defence industrial
units or various other government departments, while the employees of public ----------------------
corporations and companies are public sector industrial workers.
----------------------
With the change in Governments, there have been changes in policy
formulations also. Policy formulations have also been affected by the changing ----------------------
world scenario. In 1991, Dr. Manmohan Singh, then the Finance Minister,
had adopted a new and bold policy of economic liberalisation which not only ----------------------
loosened up the protective barrier around the public sector units and opened
----------------------
them to stiff competition, but also diverted some traditional key sector areas
like power generation, petroleum drilling and refining, airlines, insurance etc. ----------------------
to the private sector where PSUs will either survive, develop themselves further
or perish in the face of the competition. Since the public sector accounts for ----------------------
the largest share of workers employed in the country, industrial relations in the
----------------------
same deserves special attention. Government policies have aimed at ensuring
the maximum satisfaction to the employees of the public sector and have ----------------------
thrived to become a model employer. The profit motive is not the objective of
the public sector and various Five Year Plans aim at following healthy labour ----------------------
policies which are conductive to securing and keeping a competent workforce
----------------------
while maintaining a higher rate of wage. Thus, the public sector is expected
to maintain cordial industrial relations in order to project a progressive model ----------------------
employer image. It has to serve the national objective and contribute to the
social good. ----------------------
Industrial employees are governed by various labour enactments in matters ----------------------
like working conditions, payment of wages, industrial relations and social
security. These enactments include the Payment of Wages Act, 1936, the Factories ----------------------
Act, 1948, the Trade Unions Act, 1926, and the Industrial Disputes Act, 1947.
----------------------
However, all labour enactments do not apply to the industrial employees of the
Government; like the Industrial Standing Orders Act, 1946 does not apply to ----------------------
workers to whom “the Fundamental and Supplementary Rules, Civil Services
Rules, revised Leave Rules, Civil Service Regulation, Civilians in Defence ----------------------
services Rules or the Indian Railways Establishments Code or any other rules
----------------------
or regulations that may be notified in this behalf by the appropriate Government
in the Official Gazette, apply.” ----------------------
----------------------
----------------------
----------------------

Notes
----------------------

1. ____________ Enterprises play a dominant role in the growing and
----------------------
labour abundant industrial economy like India.
---------------------- 2. The public sector has been the largest ____________ in India.
---------------------- 3. ____________ policies have aimed at ensuring the maximum
satisfaction to the employees of the public sector and have thrived to
---------------------- become a model employer.
----------------------
---------------------- 6.3 LEGAL STANDING OF TRADE UNIONS

---------------------- There is a legal standing for trade unions in the public sector enterprises.
There are no major restrictions imposed on the workers in the public sector
---------------------- units to organise themselves into unions. Consequently, the public sector units
---------------------- are plagued with a multiplicity of trade unions, inter-union and intra-union
rivalries being rampant in the present scenario. Since the Trade Union Act,
---------------------- 1926, allows for 50% membership for outsiders, there is political interference
---------------------- to a large extent. This provision was made by taking into consideration that
since the workers could not put forward their views in front of the management
---------------------- without fear of repercussions during the pre-independence era. Though the
situation has changed today, the provision has still not been amended to suit the
---------------------- current demand. This has been made easier for the political parties in power to
---------------------- encourage trade unions affiliated to them, while the opposition political trade
unions wait for an opportunity for their political parties to come to power. Power
---------------------- politics has corrupted the trade union movement in the public sector by rampant
favouritism and nepotism.
----------------------
In the public sector, the top boss is not empowered to initiate any policies or
---------------------- commitments. He can only send recommendations to the higher authorities who
need not necessarily be directly connected with that sector.
----------------------
The Industrial Disputes Act, 1947, enabled labour to seek constant wage
---------------------- revision upwards and bonus or profits. However, the demand for higher
wage is seldom made on the basis of higher productivity. The public sector
----------------------
management enjoys a considerable amount of immunity from labour pressures
---------------------- in such matters. Very often the Industrial Dispute Act is not applicable or is so
administered by the State Government in favour of the public sector management
---------------------- that in effect, labour has no recourse but direct action. Because of belated and
posthumous probes by Public Committees or Estimating Committees, public
----------------------
sector management enjoys freedom from immediate accountability to anyone.
---------------------- Secondly, very few of the top public sector executives enjoying authority have
any longstanding relations with the industry in which they are placed because
---------------------- they are administrators put in the charge of industrial undertakings only for a

specific period. Before they get themselves well acquainted with the unit and its Notes
environment, they are liable to be transferred to some other assignment. These
perennial factors influence the labour-management relations to a great deal. ----------------------
Thus, one usually sees incompetence in exercising proper authority on the ----------------------
part of top executives. At the same time, there is an acute consciousness of
security in all the public sector enterprises as far as the workers are concerned. ----------------------
This security mentality paves the way for indiscipline to a large extent which
----------------------
facilitates the conversion of the simple industrial process into violations of law
and order, provoking the government to make use of their entire might to deal ----------------------
with them. Thus, there is always a possibility that the public sector employees
may resort to frequent strikes because of the security, overconfidence, collective ----------------------
strength and limited obligations to the management personnel, provided because
----------------------
of the philosophy and role of the public sector in a developing economy like
ours. ----------------------
However, the public sector has been, by and large, successful in fulfilling
----------------------
its social objectives like the development of the generation of additional
employment and protection of the employment in the backward regions. But in ----------------------
the context of its poor corporate performance, there is the imperative need for
complete reorientation. ----------------------
By and large, the public sector employees do not have a sense of belongingness ----------------------
and are also not concerned about productivity. Though public sector provides
the best of the welfare facilities, yet one does not find a relatively high morale ----------------------
among the employees. This is also reflected in the industrial relations between
----------------------
the worker and the management of the public sector units.
Moreover, due to lack of autonomy in the public sector, the chain of ----------------------
command has gone lengthening in the shape of board of directors, the ministry, ----------------------
the minister, inter-ministerial committees, planning authorities, committees set
up by representatives of the people and the people themselves. Thus, there is ----------------------
no delegation and decentralisation of authority on important decision-making
powers to the public sector management where, if the agreement is to be reached ----------------------
in an establishment of a large size, it is the minister concerned who would like ----------------------
to be involved in the final settlement, as in the day to day performance of the
public sector organisation, the power/decision centre is located at the top. But in ----------------------
certain matters, such as wages, allowances, strategies etc. there is no enterprise
level power/decision centre. The workers and the managers in the public sector, ----------------------
individually and collectively, face the basic problem of identifying the power- ----------------------
decision centres. Furthermore, there is no proper co-relationship between
authority and responsibility in the public sector, in which every officer has a ----------------------
huge load of responsibility but practically no authority.
----------------------
The public sector has seen trade union strategies other than strikes to protest
or create an effect. Trade unions in the public sector units resort to go slow, tool ----------------------
down, pen down and work to rule, which does not affect formal attendance but
the actual productivity suffers very badly. ----------------------
In the public sector unit, goals are more difficult to determine and evaluate. ----------------------

Notes There is a vast range of policies with aims which are complex and frequently
difficult to establish and the performance in achieving them is usually a
---------------------- matter of judgement and is rarely measurable. Most of the time the goals are
set through political means rather than any internal process, and to permit too
---------------------- much flexibility would be to substitute executive for political judgement. The
---------------------- tendency therefore, to play safe at both, the personal and the organisational level
because the avoidance of error is thought to be more important than initiative
---------------------- for the individual manager. There is also the tendency to centralise financial
decision-making within the sector. In total, the system is one of bureaucracy, in
---------------------- which rules are paramount. Individual decision making plays a relatively small
---------------------- role, and the primary objective is consistency. There is the practice of transfer
of personnel in specialist cadres, within the public sector enterprises without
---------------------- due appreciation to the consequences, or even the need of transfers affecting
efficiency adversely. As the tenures of the senior managers are not long, they
---------------------- do not own responsibility for events. Thereby, in the public sectors we observe
---------------------- mediocrity rather than initiative, conformity rather than innovativeness and
procedure oriented instead of a result - oriented performance.
----------------------
---------------------- Activity 1
----------------------
Find out two examples of how power politics has corrupted the trade
---------------------- union movement.
----------------------
----------------------
6.4 ISSUES OF CONFLICT IN PUBLIC SECTOR
---------------------- Issues taken up for collective bargaining include revision of wage and pay
scales, dearness allowance, house rent allowance, etc. For other allowances like
---------------------- loans and advances, medical, residential and other facilities, welfare measures,
service conditions and so on, prior to negotiations, preparations are made in
---------------------- advance, at least a year ahead of the date of expiry of the wage settlement
---------------------- agreement. Exercises are carried out to collect voluminous data from within the
organisation and many other undertakings. A hike in the annual expenditure on
---------------------- account of increase in pay, dearness and other allowances, and fringe benefits
are assessed. Thereafter, a tentative allocation of resources for ensuring the
---------------------- wage revision is made and modalities of extending the benefits are worked out.
---------------------- Attention is then paid to plan the overall strategy and tactics to be employed
in conducting the negotiations. In the course of collective bargaining, various
---------------------- pressures develop. Sometimes powerful external forces intervene. The negations
drag on and there is a compulsion to compromise in order to settle the issues by
---------------------- a deadline.
---------------------- There is complete absence of intellectual commitment to the philosophy of
the public sector among most of the existing management personnel. The top
---------------------- executives are either drawn from the administrative services or larger private
---------------------- services generally, with no adequate interest in the performance of the units

they are in charge of and conduct themselves as if they are birds of passage. Notes
Their approach to discipline management is bureaucratic and not result-
oriented. Those recruited from the private sector are devoid of any awareness ----------------------
of the philosophy of or the need for public sector. Many of them continue to
win their loyalty to the private sector which views the public sector as a rival. ----------------------
Besides, they import private sector practices in the public sector with a few top ----------------------
executives drawn from the police or armed forces or retired persons also being
inducted to top positions in the public sector units and they find themselves ----------------------
in strange waters. There is a need, therefore, for imparting education to the
management personnel on the philosophy and the role of public sector in a ----------------------
developing economy like ours. ----------------------
----------------------
----------------------
1. The Industrial Disputes Act, 1947 prevented labour from seeking
constant wage revision upwards and bonus or profits. ----------------------
2. There is no legal standing for trade unions in the public sector ----------------------
enterprises.
3. In the course of collective bargaining in the public sector, sometimes ----------------------
powerful external forces also intervene. ----------------------
4. The public sector has seen trade union strategies other than strikes to
----------------------
protest or create an effect.
5. Though public sector provides the best of the welfare facilities, yet ----------------------
one does not find a relatively high morale among the employees.
----------------------
----------------------
Activity 2
----------------------
Jot down at least any three issues of conflict in any public sector ----------------------
undertaking company.
----------------------
6.5 SOCIAL OBJECTIVES OF PUBLIC SECTOR ----------------------
However, the public sector has been, by and large, successful in fulfilling its ----------------------
social objectives like the development of the backward regions, the generation ----------------------
of additional employment and the protection of the employment already
existing. But in the context of its poor cooperation in its performance, there is ----------------------
a need for a complete reorientation in our approach to the management of the
various public enterprises. ----------------------
The Bureau of Public Enterprise was set up to give broad guidelines and ----------------------
assistance to the management of the public enterprises. Unfortunately, the
----------------------

Notes Bureau is manned by bureaucrats and hence the whole objective failed. Many
public sector enterprises have started the scheme of workers’ participation in
---------------------- the management. An example of this is the steel industry where the workers are
involved in different tripartite bodies. The gamut of participation will not be on
---------------------- the basis of equality and not ensuring full democratic rights to workers as there
---------------------- is no secret ballot for selecting workers representatives.
Appropriate handling of industrial relations in the public sector will always
----------------------
remain a challenge for managers. The overall responsibility for a nationwide,
---------------------- coordinated labour policy will naturally rest with the Government. The middle
level managers and their first-line supervisors need to be helped to exercise their
---------------------- functions more effectively. There must be a delegation of authority to ensure
public accountability. The ultimate aim of the relationship scenario between the
----------------------
union and the management in the public sector should be a creation of trust and
---------------------- mutual appreciation and understanding of each other’s functions and limitations.

----------------------
----------------------
1. The public sector has been, by and large, successful in fulfilling its
---------------------- social objectives like:
---------------------- i. The development of the backward regions
ii. The generation of additional employment
----------------------
iii. The protection of the employment already existing
----------------------
iv. Increasing the productivity and morale of the existing employees
----------------------
----------------------
Activity 3
----------------------
---------------------- 1. Search on the Internet and find any two examples of industrial
relations activities and labour welfare activities.
----------------------
2. State any one example of an agreement made by the union for the
---------------------- betterment of the workers.
----------------------
CASE STUDY ON INDUSTRIAL RELATIONS IN PUBLIC
----------------------
SECTOR
----------------------
We will discuss the case of Air India, which is a classic example of the dire
----------------------
state of the Industrial Relations in the Public Sector Units. Though the case
---------------------- study is from the 90s, the situation still remains the same.
----------------------

AIR India Notes
This is perfect example of the state of industrial relations in most of the
----------------------
public sector units in India. It is all pervasive. Most of the dozens of people
who did business in India did not even know where to begin. The national ----------------------
carrier is a monument to government folly and its saga a sordid narration of
how self- serving aviation ministers, incompetent bureaucrats and eager-to- ----------------------
please managements destroyed an airline, which, at one point, was hailed to
----------------------
be among the best in the world. So ridiculous is the situation that despite the
dire straits the airline has now sunk into, the government has still not found the ----------------------
solution to it.
----------------------
We will have a glance at how the senior management functioned in this
organisation during the mid-90s. Brijesh Kumar, by his own admission, was ----------------------
a part-time managing director, and he spent half his time at his full-time job
of joint secretary in the ministry of civil aviation. The situation was in effect ----------------------
quite comical. The airline headquartered in Bombay, the chairman Russi Mody
----------------------
used to sit in Calcutta, while the acting managing director had an office in
Delhi. Even at the Bombay end, AI needed to gain its act together. Only the ----------------------
commercial and planning departments are situated in the Air-India building on
Marine Drive; other key departments like operations, engineering, in-flight and ----------------------
HRD are situated at the Bombay airport, a good two hours’ drive away. The
----------------------
joke in AI circles is that it does not matter whether the MD calls for a meeting
with all the heads of departments in Bombay or Delhi; it takes them almost as ----------------------
long to reach either place.
----------------------
What is even more ludicrous is that, since February in 1995, Air India did
not have a single representative on its own board. Both Kumar and Mody ----------------------
were outsiders technically, while the rest were non-executive directors drawn
from outside. At least in all the other public sector companies, there are many ----------------------
executive directors, who are on the board and who manage the company. The
----------------------
board had recommended that Kumar be made the full-time managing director
of the airline, a proposition that he had no objection to, but the government did ----------------------
not find it appropriate to respond − not that the board was unusually bothered.
Many of the directors were on the board as political appointees, not to look after ----------------------
Air India’s interests, but to get the free tickets that accrue when you are there.
----------------------
Air India has had as many as eight heads in the 10 years prior to the 90s −
probably a record for any airline in the world. Not one of them lasted beyond ----------------------
three years. Some like S. R. Gupte − the Vice-chairman of the UB group − had ----------------------
the ignominy of being demoted to a position of deputy managing director later.
The airline’s experiment with bringing in outside directors had failed as well. ----------------------
Ranjan Jetley stayed for three years, before suddenly announcing his departure,
while Yogi Deveshwar was around for only two years. One chairman, a senior ----------------------
bureaucrat stuck on to the position for six months only so that he could be ----------------------
ensured a life-time first class travel that the chairman and managing directors
are entitled to. ----------------------
This frequent change of managing directors has had all-around repercussions. ----------------------

Notes The most important of these has been the impact on the airline’s expansion.
“All managing directors were out to prove that they were the best,” says a
---------------------- top official. “The only way you can do this is by showing good profits and
the least union problems.” The upshot of this was that union demands were
---------------------- pandered to in a manner that would never happen in a private company; and
---------------------- more importantly, no new capital investment could be made. A new 747-400
costs over Rs. 500 crore, which means a straight Rs. 75 crore depreciation effect
---------------------- on the bottomline. “No managing director would want to blemish his profit
making record by absorbing such a huge depreciation in the balance sheet,” the
---------------------- official adds.
---------------------- Further, most managing directors were there at the sufferance of the minister
for civil aviation. “He is the super chairman and managing director of the
----------------------
airline,” said one former manager, “Nothing moves here without his consent.”
---------------------- Brijesh Kumar is at least based in Delhi itself and can respond to the minister’s
summons, but his predecessors did not have even that luxury, half of their
---------------------- time in office was spent shooting between the headquarters in Bombay and the
ministry in Delhi.
----------------------
So heavy is the interference of the government, that there have been ministers
---------------------- in the not too distant past, who wanted to be involved in the selection of the
design for the air-hostesses’ uniform and the buying of the on-board crockery.
----------------------
Besides, Air India’s high profile image meant that its managing director was
---------------------- answerable not just to the board and the minister but to almost every Member
of Parliament. There are as many as five parliamentary committees that make
---------------------- demands on his time, including the committee on scheduled castes and schedule
tribes, the committee on the implementation of Hindi, and the public accounts
----------------------
committee. Every time Air India wants to buy a plane, it has to seek eight
---------------------- different approvals from the government, including one from the Union cabinet.
The other, more damaging effect of the uncertainty at the top was the
----------------------
devastation it left at the middle and lower levels of the management, “It is
---------------------- management by abdication,” said one working director. “No one wants to take
responsibility; issues that should be tackled automatically, at other places could
---------------------- take weeks and even months here.” Another manager added, “Management
depth is a team that is unknown in Air India. Cronyism and favouritism are the
----------------------
only things that work here, promotion and lucrative foreign postings are decided
---------------------- by the Aviation Ministry rather than by the board or the managing directors.”
One former managing director says that he did not even have the power to
---------------------- sack a recalcitrant traffic assistant for fear that he might approach the minister
and have the order rescinded. The former managing director D.S. Mathur
----------------------
commented, “Air India is the only airline in the world, where the managing
---------------------- director cannot sack a peon. But he himself can be sacked.”
---------------------- Bad image coupled with the fact that, being part of the public sector set-up,
the management lacks the ability to change pay scales to match the market has
---------------------- meant that Air India has lost all its aura of the much-in-demand workplace it
enjoyed in the 1960s and 1970s. Despite the high salary earned by the pilots and
---------------------- engineers, the top management cadre continued to be badly paid. According to

the 1994 balance sheet, the managing director’s salary amounted to less than Notes
Rs. 15,000. So it wasn’t surprising that when Air India wanted to appoint a
director, HRD, from the private sector, it hardly got any responses. Two senior ----------------------
executives, one from Indian Oxygen and the other from UTI, who expressed
interest, backed off at the last minute. The deputy director, HRD, was finally ----------------------
promoted to the position, after 18 months. ----------------------
As is the want in most public sectors, promotions in Air India come because
----------------------
of age and experience rather than merit. Consequently, the airline has had as
many as three finance directors in the early 90s. The third one retired in four ----------------------
months’ time. Air India, managers spend more time officiating in other people’s
position than in their own. Six out of the current 12 directors were officiating, ----------------------
even in the recent appointment of three deputy managing directors. As part of
----------------------
a management upgradation programme, to help the managing director run the
airline was done in the typically public sector way. Ranga Rao, director, Airport ----------------------
Services, was promoted because he was the senior most and had less than a year
to go before retiring, another appointee. N.C. Padhi was at that time Director, ----------------------
Vigilance; so it was a question as to what help he would be in streamlining the
----------------------
commercial or technical aspects of the airline. The people who gained the most
out of this wishy-washy style of management were the unions. There have been ----------------------
as many as 17 strikes that affected the working of the airline in the early 90,
leading to the loss of more than 10,000 man-days and over a 1,000 cancelled ----------------------
flights. “The sad part was that the unions prevailed every time, because the
----------------------
government pressurised the management into accepting the settlements.” says
a senior manager. Take, for example, the case flight engineers’ agitation in ----------------------
1993 when the airline was virtually shut down for two months and lost Rs.
100 crore in revenue. Eventually, the then cabinet secretary prevailed upon the ----------------------
management to accept the demand of the engineers. The management lost out
----------------------
despite its initial command, and the unions have continued to gain. When the
airline put the four new Boeing 747-400s into operation in the early 90s, all ----------------------
employees across the board were given various kinds of raises, which increased
the airline’s airfare bill. ----------------------
The way settlements were arrived at between unions and the management ----------------------
had become some kind of a joke in Air India. The pilots negotiated a deal in
June 1993 with the management, whereby they would be paid $107 for every ----------------------
hour of flying. It ensured that the pilots monthly dollar equivalent emoluments
----------------------
of around Rs. 2.5 lakh were not only protected from the vagaries of the Indian
inflation, but it would increase every time the dollar strengthened. Going by ----------------------
the fact that the rupee depreciated by a minimum of 10% that year, the pilots’
allowances went up by more than Rs.25,000 a month. B P Singh, the general ----------------------
secretary of the powerful Indian Pilots Guild said, “We also run the risk of our
----------------------
earning going down, if the rupee appreciates”− a remote possibility.
One more example of the industrial relations condition in Public Sector is ----------------------
that of the Role Model of Pilots Agreement in India.
----------------------
What was interesting about the pilots’ agreement is that it protects the senior
pilots’ allowances, even when they are not flying. Due to a shortage of aircraft ----------------------

Notes and a multiplicity of aircraft types (Airbuses and Boeings) in the Air India fleet,
it so happened that the senior pilots ended up flying only around 50 to 60 hours a
---------------------- month, while some of the junior co-pilots ended up flying around 80 hours. The
agreement ensured the seniors something called as shortfall payment, which
---------------------- means that without doing any work; they get paid allowances for the excess
---------------------- hours that their juniors fly around 30 hours every month. “We have offered
to fly as much as Air India wants; so we should not be penalised, because the
---------------------- airline does not have the fleet strength to utilise us fully,” said Singh of IPG.
Air India incurred an additional expenditure of Rs. 68 crore, as a result of this
---------------------- deal − of which Rs. 23 crore went for shortfall payments.
---------------------- But, after a chairman took over, he felt that his predecessor had signed
an agreement which was paying pilots for not working and so cancelled the
----------------------
agreement. But in typical Air-India style, no action was contemplated against
---------------------- those officials, who were a part of the negotiating team then. The pilots were not
expected to take the cancellation lying down. They confronted the management
---------------------- and another round of labour strife was in the offing.
---------------------- When the pilots were sanctioned shortfall payment not unexpectedly, soon
after the deal was signed, the aircraft maintenance engineers demanded a similar
---------------------- deal, started a go-slow that was responsible for much of the airlines’ woes.
The management struck a deal with the senior engineers, which gave them an
----------------------
increase in allowance, ranging from Rs. 26,000 to Rs. 44,000 a month.
---------------------- The junior engineers continued with the strike − as they wanted as much as
66% of what the pilots get. Many of the managers within Air India were upset
----------------------
that the management had given in. One of the managers commented, “Like in
---------------------- the past, there was not much of a discussion within the management. Before
signing the deal, most of these engineers were merely technicians.”
----------------------
Today, the condition is still the same with strikes still being heard of and
---------------------- the same pattern of management existing in the organisation, with the control
finally being with the ministry of aviation.
----------------------
---------------------- Summary
---------------------- ●● The modern industrial society is characterised by rapid change, industrial
unrest and conflicting ideologies in the national and international spheres.
----------------------
●● Strictly the term “Industrial Relations” means the relationship between
---------------------- the management and workmen in a unit or an industry, trade unions.
---------------------- ●● Collective bargaining, the government policies etc. are all included in the
sphere of industrial relations.
---------------------- ●● Industrial Relations in the public sector are more complex than in the
---------------------- private sector.
●● I n the public sector, the interference of the trade unions affiliated to the
----------------------
political parties is much more than the private sector.
---------------------- ●● The employees of the Public Sector feel secure and overconfident and

hence resort to strikes because of their collective strength, to get their Notes
demands fulfilled.
----------------------
●● The management of the Public Sector usually has to give in to the
employee’s demands as the control of these sectors finally rests with the ----------------------
concerned ministries.
----------------------
●● Strong measure needs to be taken so that the unions and employees do
not take undue advantage of the way the public sector functions, which ----------------------
may finally harm the economy of the nation. The growth of public sector
should go hand in hand with industrial relations and economic growth. ----------------------
----------------------
Keywords
----------------------
●● Civil rights: The rights that each person has in a society, whatever their
religion. ----------------------
●● Democratic: The belief in freedom and equality between people, or a ----------------------

system of government based on this belief.
----------------------
●● Global: Relating to the whole world.
----------------------
●● Labour: Workers, especially people who do practical work with their
hands. ----------------------
●● Secret ballot: A method of voting in which each person writes their
----------------------
choice on a piece of paper without any identification enclosed so that no
one else knows who they have voted. ----------------------
●● Welfare: Physical and mental health and happiness, especially of a ----------------------
person.
----------------------
1. Explain the industrial relations scenario in the public sector. ----------------------
2. Examine the impact of globalisation and liberalisation on the working of
----------------------
public sector undertakings.
3. Explain the role of a public sector undertaking in the economic growth. ----------------------
4. Examine the Industrial Relations practice followed in two Indian public ----------------------
sector undertakings.
----------------------
5. Write the reasons for the growth of public sector undertakings in India.
----------------------
Fill in the blanks.
----------------------
1. Public Sector Enterprises play a dominant role in the growing and labour
abundant industrial economy like India. ----------------------

Notes 2. The public sector has been the largest employer in India.
3. Government policies have aimed at ensuring the maximum satisfaction to
----------------------
the employees of the public sector and have thrived to become a model
---------------------- employer.
----------------------
----------------------
1. False
---------------------- 2. False
---------------------- 3. True
---------------------- 4. True
5. True
----------------------
----------------------
---------------------- 1. The public sector has been, by and large, successful in fulfilling its social
---------------------- objectives like:
i. The development of the backward regions
----------------------
ii. The generation of additional employment
----------------------
iii. The protection of the employment already existing
----------------------
---------------------- 1. Mammoria, C.B., S. Mammoria and S.V. Gankar. 2011. Dynamics of

----------------------
---------------------- Welfare, Trade Unionism and Industrial Relations. Mumbai: Himalaya
Publishing House.
----------------------
3. Rao, Dr. P. Subba. 2011. Essentials of Human Resource Management and
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Trade Unions and Collective Bargaining
UNIT
7
Structure:
7.1 Introduction to Trade Union

7.2 Definitions
7.3 Features of Trade Union
7.4 Functions of Trade Union
7.5 Role of Trade Unions
7.6 Trade Unions in India
7.7 The Trade Unions Act, 1926
7.8 Application for Trade Union Registration
7.9 Provisions in the Rules of Trade Union
7.10 Registration and Cancellation of Trade Unions
7.11 Introduction to Collective Bargaining
7.12 Pre-Requisites of Collective Bargaining
7.13 Findings of Study Groups on Industrial Relations
7.14 International Labour Organisation (ILO)
7.15 Issues Pertaining to Collective Bargaining in India
7.16 Industrial Harmony
7.17 Pre-Negotiation Preparation
Summary
Key Words
Suggested Reading
Trade Unions and Collective Bargaining 103

Notes
Objectives
----------------------
----------------------
• Evaluate the nature of a trade union
----------------------
• Analyse the functions of a trade union
---------------------- • Discuss the role of unions
---------------------- • Appraise the nature of collective bargaining
---------------------- • Analyse the role of bargaining

• Identify the advantages of collective bargaining
----------------------
---------------------- 7.1 INTRODUCTION TO TRADE UNION

---------------------- In the past, millions from the working class have struggled hard to get
protection against the inhuman treatment meted out to them by the employers.
----------------------
They have learned to make themselves secure against the ills over which they
---------------------- had no control. Individually the labourers can do very little to bring about the
reforms they want. They are only effective if they act in unison. The very idea of
---------------------- joint action laid down the foundation of their instrument to struggle for security
and advancement – the trade union/labour union.
----------------------
A trade union is an organisation of employees formed on a continuous
---------------------- basis for the purpose of securing diverse range of benefits. It is a continuous
association of wage earners for the purpose of maintaining and improving the
----------------------
conditions of their working lives.
---------------------- A trade union is an organisation created to improve conditions in the
---------------------- workplace. Whether the issue is wages, illness or medical benefits, trade unions
negotiate with employers on behalf of union members. When employees and
---------------------- employers are unable to reach an agreement, trade union leadership works with
employers to negotiate a compromise. Regardless of the outcome, all members
---------------------- of the trade union must follow the agreed upon solution.
----------------------
7.2 DEFINITIONS
----------------------
The classic definition of trade union was given by Sidney and Beatric
---------------------- Webb. According to them, “it is a continuous association of wage earners for
the purpose of maintaining and improving the conditions of their working lives.”
----------------------
Dale Yoder has defined trade union as “a continuing long-term association
---------------------- of employee, formed and maintained for the specific purpose of advancing and
---------------------- protecting the interests of members in their working relationships.”
S. D. Punekar has defined trade union as “a monopolistic combination of
---------------------- wage earners who as individual producers are complementary to one another
---------------------- but who stand to employers in a relation of dependence for the sale of their
labour and production, and that the general purpose of association is in view
of that dependence to strengthen their power to bargain with the employers or Notes
bargain collectively.”
These definitions may sound good, but a legalistic definition of trade union ----------------------
is desirable in understanding its concept as prevalent in a particular society. ----------------------
The British Trade Union Act defines it as “a combination with the main
objective of regulating the relation between workmen and masters or between ----------------------
workmen and workmen or between masters and masters for imposing of
----------------------
restrictive conditions on the conduct of any trade or business and also provision
of benefits to members.” ----------------------
As per the Indian Trade Union Act, 1926, “A trade union is 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, and includes any federation ----------------------
of two or more trade unions.
----------------------
This definition is very exhaustive as it includes associations of both
the workers and employers and the federations of their associations. Here, the ----------------------
relationships that have been spoken about are both temporary and permanent.
This means it applies to temporary workers (or contractual employees) as well. ----------------------
Then this definition, primarily, talks about three relationships. They are the
----------------------
relationships between:
●● Workmen and workmen ----------------------
●● Workmen and employers
----------------------
●● Employers and employers
Thus, a trade union can be seen as a group of employees in a particular ----------------------
sector, whose aim is to negotiate with employers over pay, job security, working ----------------------
hours, etc., using the collective power of its members. In general, a union
is there to represent the interests of its members, and may even engage in ----------------------
any political activity where legislation affects their members. Trade unions
are voluntary associations formed for the pursuit of protecting the common ----------------------
interests of its members and also promote welfare. They protect the economic, ----------------------
political and social interests of their members.
----------------------
7.3 FEATURES OF TRADE UNION
----------------------
Trade unions usually include workers from a particular industry, such
as steel workers, or a particular agency such as state or local government. ----------------------
In addition, many trade unions have minimum requirements all members must ----------------------
meet before official membership is extended. For example, many labour unions
require members to have license or certification to gain membership, whereas ----------------------
others require members to pay dues. Trade unions include both blue-collar
workers as well as business professionals. Because trade unions are so diverse ----------------------
in membership and industry, the features and qualifications vary greatly. It is an ----------------------
association either of employers or employees or of independent workers. Some
of the features of the trade union are mentioned below. ----------------------

Notes 1. The trade union is an association either of the employers or employees or
of independent workers. In India such unions may consist of:
---------------------- ●● Employers’ association (e.g., Employer’s Federation of India, Indian
---------------------- Paper Mills Association, the All India Manufacturers Organisation,
the Tea Planters Association of North India, etc.)
---------------------- ●● General labour unions
---------------------- ●● Friendly societies
●● Unions of intellectual labour (e.g., The All India Teachers
----------------------
Association, the All-India Bank Employees’ Association, the All
---------------------- India Medical Doctors’ Association, etc.)
2. It is formed on a continuous basis. It is a permanent body and not a casual
----------------------
or temporary one.
---------------------- 3. It is formed to protect and promote all kinds of interests – economic,
political and social − of its members. The dominant interest with which a
----------------------
union is concerned is, however, economic.
---------------------- 4. It achieves its objectives through collective action and group effort.
Negotiations and collective bargaining are the tools for accomplishing
----------------------
objectives.
---------------------- 5. he origin and growth of trade unions have been influenced by a number
T
of ideologies. The socio-economic and even political movements have
---------------------- influenced trade unions in one or the other way. The creation of industrial
---------------------- democracy is a prerequisite for the establishment of a socialist society.
Trade unions have shown remarkable progress since their inception;
----------------------
moreover, the character of trade unions has also been changing. In spite of only
---------------------- focusing on the economic benefits of workers, the trade unions are also working
towards raising the status of labour as a part of industry.
----------------------

----------------------
Fill in the blanks.
---------------------- 1. __________, the labourers can do very little to bring about the reforms
---------------------- they want.
2. A__________ is an organisation created to improve conditions in
---------------------- the workplace.
---------------------- 3. Trade unions are__________associations formed for the pursuit of
protecting the common interests of its members and also promote
---------------------- welfare.
---------------------- 4. Trade unions are formed to _______ the economic, political and social
interests of its members.
----------------------
5. Trade unions include both __________ workers as well as business
---------------------- professionals.

Notes
Activity 1
----------------------
Meet the union Leader of any trade union and find out the activities carried ----------------------
out by them.
----------------------
7.4 FUNCTIONS OF TRADE UNION ----------------------
Trade unions work to improve the work environment and salaries of union ----------------------
members. The leaders of the trade union negotiate with employers on behalf of ----------------------
the entire union for wage increase, more vacation time, better working hours
and benefits. Any decisions agreed upon by the union leadership and employers ----------------------
are binding on all union members. However, trade unions meet regularly to
discuss complaints and concerns, as well as to vote on these decisions prior to ----------------------
negotiations. If negotiations stall, many trade unions reserve the right to strike. ----------------------
The trade unions generally perform the following functions:
1. Collective bargaining with the management to settle terms and conditions ----------------------
of employment. ----------------------
2. Advise the management on personnel policies and practices.
----------------------
3. Taking up the individual and collective grievances of the workers with the
management. ----------------------
4. Work for achieving better say of workers in the management of affairs of ----------------------
the enterprise which influence the lives of the workers directly.
----------------------
5. Organising demonstrations, strikes, etc. to press demands of workers.
6. Education of workers and their children. ----------------------
7. Welfare and recreational activities for their members. ----------------------

8. Representing workers in various national and international forums. ----------------------
9. Securing legislative protection for workers from the government.
----------------------
Trade unions perform a number of functions in order to achieve the objectives
of fighting for the rights of the workers, improving the work environment and ----------------------
getting better pay and facilities for the workers.
----------------------
Some of the functions can also be broadly classified into five categories:
----------------------
1. Militant functions: One set of activities performed by trade unions leads
to the betterment of the position of their members in relation to their ----------------------
employment. The aim of such activities is to ensure adequate wages,
secure, better conditions of work and employment, get better treatment ----------------------
from employers, etc. When the unions fail to accomplish these aims by ----------------------
the method of collective bargaining and negotiations, they adopt a tough
approach and put up a fight with the management in the form of go-slow ----------------------
tactics, strikes, boycotts, gheraos, etc. Hence, these functions of the trade
----------------------

Notes unions are known as militant or fighting functions. Thus, the militant
functions of trade unions can be summed up as:
----------------------
●● Achieving higher wages and better working conditions
---------------------- ●● Raising the status of workers as a part of industry
---------------------- ●● Protecting labours against victimisation and injustice
---------------------- 2. Fraternal functions: Another set of activities performed by trade unions

aim at rendering help to its members in times of need, and improving their
---------------------- efficiency. Trade unions try to foster a spirit of cooperation and promote
friendly industrial relations and diffuse education and culture among their
---------------------- members. They take up welfare measures for improving the morale of
---------------------- workers and generate self-confidence among them. They also arrange for
legal assistance to its members, if necessary. Besides, these, they undertake
---------------------- many welfare measures for their members, e.g., school for the education
of children, library, reading-rooms, indoor and out-door games, and other
---------------------- recreational facilities. Some trade unions even undertake publication of
---------------------- some magazine or journal. These activities, which may be called fraternal
functions, depend on the availability of funds, which the unions raise by
---------------------- subscription from members and donations from outsiders, and also on
their competent and enlightened leadership. Thus, the fraternal functions
---------------------- of trade unions can be summed up as:
---------------------- ●● Taking up welfare measures for improving the morale of workers
---------------------- ●● Generating self-confidence among workers
●● Encouraging sincerity and discipline among workers
----------------------
●● Providing opportunities for promotion and growth
----------------------
●● Protecting women workers against discrimination
---------------------- 3. Social functions: These functions include carrying out social service
---------------------- activities, discharging social responsibilities through various sections of
the society like educating the customers.
---------------------- 4. Political functions: These functions include affiliating a union to a
---------------------- political party, helping the political party in enrolling members, collecting
donations, canvassing during election period, seeking the help of political
---------------------- parties during the strikes and lockouts.
---------------------- 5. Ancillary functions: Ancillary functions of trade union include:
i. Communication: Trade union communicates its activities,
----------------------
programmes decisions achievement, etc. to its members through
---------------------- publication of newsletters or magazines.
ii. Welfare activities: Trade unions undertake welfare activities
----------------------
like acquiring of land, construction of houses, establishment
---------------------- of cooperative housing societies, cooperative credit societies,
organising training activities, etc.
----------------------

iii. Education: Trade union provides educational facilities to its Notes
members and their family members.
----------------------
iv. Research: Trade unions arrange to conduct research programmes.
They systematically collect and analyse data and information for ----------------------
collective bargaining. They prepare notes for union officials, for
court cases, etc. and also arrange to analyse macro data about the ----------------------
economy, industry and different sectors, etc.
----------------------
----------------------
----------------------
1. The fraternal function of trade unions is to:
i. Take up welfare measures for improving the morale of ----------------------
workers
ii. Reduce self-confidence among workers ----------------------
iii. Discourage sincerity and discipline among workers
----------------------
iv. Prevent opportunities for promotion and growth
----------------------
----------------------
Activity 2
----------------------
Visit any factory and find out what initiatives the trade union has taken to ----------------------
help the employees to improve their overall condition.
----------------------
7.5 ROLE OF TRADE UNIONS ----------------------
Trade unions are unique organisations whose role is variously interpreted ----------------------
and understood by different interest groups in the society. Traditionally, trade
----------------------
union’s role has been to protect jobs and real earnings, secure better conditions
of work and life and fight against exploitation and arbitrariness to ensure fairness ----------------------
and equity in employment contexts. In the wake of a long history of union
movement and accumulated benefits under collective agreements, a plethora ----------------------
of legislations and industrial jurisprudence, growing literacy and awareness
----------------------
among the employees and the spread of a variety of social institutions including
consumer and public interest groups, the protective role must have undergone a ----------------------
qualitative change. It can be said that the protective role of trade unions remains
in form, but varies in substance. ----------------------
There is a considerable debate on the purposes and role of trade unions. The ----------------------
predominant view, however, is that the concerns of trade unions extend beyond
‘bread and butter’ issues. Trade unions through industrial action (such as protests ----------------------
and strikes) and political action (influencing Government policy) establish
----------------------
minimum economic and legal conditions and restrain abuse of labour wherever
the labour is organised. Trade unions are also seen as moral institutions, which ----------------------

Notes will uplift the weak and downtrodden and render them the place, the dignity and
justice they deserve.
----------------------
Trade unionism in India developed quite slowly as compared to the
---------------------- western nations. The Indian trade union movement can be divided into three
phases.
----------------------
The First Phase (1850 to 1900)
---------------------- During this phase, the inception of trade union took place. During this
period, the working and living conditions of the labour were poor and their
----------------------
working hours were long. Capitalists were only interested in their productivity
---------------------- and profitability. In addition, the wages were also low and general economic
conditions were poor in industries. In order to regulate the working hours and
---------------------- other service conditions of the Indian textile labourers, the Indian Factories Act
was enacted in 1881. As a result, employment of child labour was prohibited.
----------------------
The growth of trade union movement was slow in this phase and later on
---------------------- the Indian Factory Act of 1881 was amended in 1891. Many strikes took place
---------------------- in the two decades following 1880 in all industrial cities. These strikes taught
workers to understand the power of united action even though there was no
---------------------- union in real terms. Small associations like Bombay Mill - Hands Association
came up by this time.
----------------------
The Second Phase (1900 to 1946)
---------------------- This phase was characterised by the development of organised trade
---------------------- unions and political movements of the working class. Between 1918 and 1923,
many unions came into existence in the country. The first trade union that was
---------------------- formed in our country was the Madras Textiles Association formed on 27th April
1918 in the Binny Mills at Madras. This union was formed with the help of
---------------------- Mr. B.P. Wadia, a social worker of Bombay. The union was formed to arrest the
---------------------- harassment from the European officers of the mills. The management of the mill
refused to concede any demands of the union. In fact, the management decided
---------------------- to crush the union. The union therefore decided to call a strike. The strike lasted
for more than a month. In the meanwhile, the management approached the
---------------------- Madras High Court. There was no law in India at that time for governing strikes.
---------------------- The European judges of the High Court wanted to help their counterparts in the
mills. As per the law in England called the ‘Workmen’s Breach of Contract Act
---------------------- 1859’, they asked B.P. Wadia and his associates to pay a sum of Rs. 75,000/- as
damage to the management of the mills for the loss caused on account of the
---------------------- strike. It was beyond the capacity of B.P. Wadia and his associates to pay such a
---------------------- huge amount. This decision of Madras High Court sent shock waves across the
world. Representation was made by the management of the mills to waive the
---------------------- amount. At first, the management of the mills was reluctant to waive the amount
of damages, but when pressure was brought about on the management from
---------------------- various quarters, it agreed to waive on the condition that B.P. Wadia should
---------------------- pack his bag and baggage and leave Madras by the first available train. B.P.
Wadia had no other option but to accept the condition. This was the fate of the
---------------------- first union that was formed on systematic lines.

At Ahmedabad, under the guidance of Mahatma Gandhi, occupational Notes
unions like spinners’ unions and weavers’ unions were formed. A strike was
launched by these unions under the leadership of Mahatma Gandhi who ----------------------
turned it into a Satyagraha. These unions federated into industrial union known
as Textile Labour Association in 1920. In 1920, the first national trade union ----------------------
organisation (The All India Trade Union Congress (AITUC)) was established. ----------------------
Many of the leaders of this organisation were leaders of the National Movement.
In 1926, Trade Union Law came up with the efforts of Mr. N. N. Joshi, which ----------------------
became operative from 1927. During 1928, All India Trade Union Federation
(AITUF) was formed. ----------------------
The Third Phase ----------------------

The third phase began with the emergence of independent India (in 1947). The ----------------------
partition of country affected the trade union movement particularly in Bengal
and Punjab. By 1949, four central trade union organisations were functioning ----------------------
in the country:
----------------------
1. The All India Trade Union Congress
----------------------
2. The Indian National Trade Union Congress
3. The Hindu Mazdoor Sangh ----------------------
4. The United Trade Union Congress ----------------------

The working class movement was also politicised along the lines of ----------------------
political parties. For instance, Indian National Trade Union Congress (INTUC)
is the trade union arm of the Congress Party. The AITUC is the trade ----------------------
union arm of the Communist Party of India. Besides workers, white-collar
----------------------
employees, supervisors and managers are also organised by the trade unions,
for example in the Banking, Insurance and Petroleum industries. ----------------------
We can summarise the various roles which trade unions have undertaken:
----------------------
1. Political role: By using collective power to influence decisions on behalf
of members and the wider society ----------------------
2. Market role: By intervening for wage bargaining and thus making an ----------------------
impact on the economy
----------------------
3. Regulatory role: By setting standards in relation to jobs and terms and
conditions ----------------------
4. Democratising role: By creating industrial democracy at the workplace ----------------------
5. Service role: By promoting the intervention of members
----------------------
6. Enhancement role: By helping to develop the human potential of members
----------------------
7. Welfare role: By providing assistance to particular groups
----------------------
----------------------
----------------------

Notes
----------------------
---------------------- i. Welfare role a. Helping to develop the human potential of

members
---------------------- ii. Market role b. Creating industrial democracy at the
---------------------- workplace
iii. Democratising role c. Promoting the intervention of members
---------------------- iv. Service role d. Providing assistance to particular groups
---------------------- v. Enhancement role e. Intervening for wage bargaining and
making an impact on economy
----------------------
---------------------- 7.6 TRADE UNIONS IN INDIA

---------------------- The Indian workforce consists of 430 million workers, growing 2%
annually. The Indian labour markets consist of three sectors:
----------------------
1. The rural workers, who constitute about 60 % of the workforce.
----------------------
2. Organised sector, which employs 8% of workforce.
---------------------- 3. The urban informal sector (which includes the growing software industry
---------------------- and other services, not included in the formal sector) which constitutes the
rest 32% of the workforce.
---------------------- At present, there are twelve Central Trade Union Organisations in India:
---------------------- 1. All India Trade Union Congress (AITUC)
---------------------- 2. Bharatiya Mazdoor Sangh (BMS)
3. Centre of Indian Trade Unions (CITU)
----------------------
4. Hind Mazdoor Kisan Panchayat (HMKP)
----------------------
5. Hind Mazdoor Sabha (HMS)
---------------------- 6. Indian Federation of Free Trade Unions (IFFTU)
---------------------- 7. Indian National Trade Union Congress (INTUC)
---------------------- 8. National Front of Indian Trade Unions (NFITU)
9. National Labour Organisation (NLO)
----------------------
10. Trade Unions Co-ordination Centre (TUCC)
----------------------
11. United Trade Union Congress (UTUC) and
---------------------- 12. United Trade Union Congress - Lenin Sarani (UTUC - LS)
----------------------
----------------------

7.7 THE TRADE UNIONS ACT, 1926 Notes
The Trade Unions Act came into force in 1926, and its details are as follows: ----------------------
Short title extent and commencement ----------------------
(i) This Act may be called the Trade Unions Act, 1926. (ii) It extends to the
whole of India. ----------------------
(iii) It shall come into force as the Central Government may declare it by ----------------------
notification in the official gazette.
----------------------
Definitions
----------------------
(a) “Executives” means the body, by whatever name called, to which the
management of the affairs of a Trade Union is entrusted; ----------------------
(b) O
ffice-bearer - in the case of a Trade Union, includes any member of the ----------------------
executive thereof, but does not include an Auditor;
(c) “Registered Trade Union” means a Trade Union registered under this Act; ----------------------
(d)
“Registrar” means a Registrar of Trade Unions appointed by theAppropriate ----------------------
Government under Sec. 3 and includes any Additional or Deputy Registrar
of Trade Unions; ----------------------
(e) “Trade Union” means any combination, whether temporary or permanent, ----------------------
formed primarily for the purpose of regulating the relations between
----------------------
workmen or employer, or between workman and workmen or between
employers and employers, or for imposing restrictive conditions on the ----------------------
conduct of any trade or business, and includes any federation of two or
more trade unions; ----------------------
(f) “Trade disputes” means any dispute between employers and workmen or ----------------------
between workmen and workmen or between employers and employers
which is connected with the employment or non-employment, or the terms ----------------------
of employment or the conditions of labour of any person, and “workmen”
----------------------
means all persons employed in trade or industry whether or not in the
employment of the employer with whom the trade dispute arises. ----------------------
According to the new amended Act “trade union dispute” means any
----------------------
dispute:
(a) Between one trade union and another, or ----------------------
(b) B
etween one or members or office-bearers of a trade union and ----------------------
the trade union (whether also with any of the other members nor
office- bearers of the trade union or not) relating to its affairs, ----------------------
including the appointment of the members of the executive or other ----------------------
office-bearers of the trade union, validity of any such appointment,
the area of the operation of the trade union, verification of the ----------------------
membership and any other matter arising out of the rules of the
trade union, but excluding matters involving determination of issues ----------------------
as to the title to, or ownership of, any building or other property or ----------------------
any funds.

Notes The Trade union Act does not affect:
(i) Any agreement between partners as to their business;
----------------------
(ii) Any agreement between an employer and those employed by him as to
---------------------- such employment;
---------------------- (iii)
Any agreement in consideration of the sale of the goodwill of a
business or of instruction in any profession, trade or handicraft.
----------------------
A trade union is not only a combination of workmen but also of the
---------------------- employers; and such the Act applies not only to the unions of workers but
also the association of employers.
----------------------
---------------------- 7.8 APPLICATION FOR TRADE UNION REGISTRATION

---------------------- 1. Every application for Registration of a Trade Union shall be made to the
Registrar, and shall be accompanied by a copy of the rules of the Trade
---------------------- Union. Any 10% or 100, whichever is less, subject to a minimum of seven
or more members of a Trade Union may apply for registration of a Trade
----------------------
Union under this Act, after complying with the provisions of this Act and
---------------------- furnishing the statement of the following particulars, namely:
---------------------- (a) The names, occupations and addresses of the members making
the application;
---------------------- (b) The name of the Trade Union and the address of its head office;
---------------------- (c) The titles, names, ages, addresses and occupations of the office
bearers of the Trade Union.
----------------------
2. general statement of the assets and liabilities of the Trade Union in the
A
---------------------- prescribed form if existing for more than one year before the making of an
application for its registration.
----------------------
However, the 2001 amendment to the Trade Unions Act, which has come
---------------------- into force from 9 January 2002, provides that for the registration of a union,
there has to be at least 10% of the employees or minimum 100, whichever is
----------------------
less actually employed in the establishment where the union is to be registered
---------------------- subject of course to a minimum of seven members. To be more specific if the
number of employees in the particular establishment is less than 100, then
----------------------
10% of the total employees is required to form a trade union. If the number of
---------------------- employees in a particular establishment is more than 100, then the minimum
number of members required to form a trade union is 100.
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
1. The Trade union Act can affect the agreement between partners as to ----------------------
their business.
2. The Indian labour market consists of four sectors namely the rural ----------------------
sector, organised sector, urban informal sector and urban formal sector. ----------------------
3. The Trade Unions Act shall come into force as the Central Government
----------------------
may declare it by notification in the official gazette.
----------------------
7.9 PROVISIONS IN THE RULES OF TRADE UNION ----------------------
A trade union shall not be entitled for registration under this Act, unless ----------------------
the executive thereof is constituted in accordance with the provisions of this
Act, and the rules thereof provide for the following matters, namely: ----------------------
a) The name of the Trade Union ----------------------
b) The whole of the objects for which the Trade Union has been established ----------------------
c) The whole of the purposes for which the general fund of the Trade Union
----------------------
shall be applicable (spent for), all of which purposes shall be purposes to
which such funds are lawfully applicable under this Act. ----------------------
d) The maintenance of a list of the members of the Trade Union and adequate
----------------------
facilities for the inspection thereof by the office-bearers and members of
the trade union ----------------------
e) The admission of ordinary members who will be persons actually engaged
----------------------
or employed in any industry with which the trade union is connected,
and the admission of the number of honorary or temporary members as ----------------------
officers to form the executive of the trade unions.
----------------------
f) he conditions under which any member shall be entitled to any benefit
T
assured by the rules and under which any fine or forfeiture may be imposed ----------------------
on the members.
----------------------
g) The manner in which the rules shall be amended, varied or rescinded.
h) he manner in which the members of the executive and the other officers
T ----------------------
of the Trade Union shall be appointed and removed. ----------------------
i) The safe custody of the funds of the Trade Union, and annual audit, in
----------------------
such a manner as may be prescribed, of the accounts thereof, and adequate
facilities for the inspection of the account books by the [office-bearers] and ----------------------
the members of the Trade Union.
----------------------
----------------------

Notes j) The manner in which the Trade Union may be dissolved.
Rights of Registered Trade Union
----------------------
A registered trade union has the right to:
----------------------
a) Spend its general fund
---------------------- b) Constitute a separate political fund
---------------------- c) Claim protection, i.e., immunity from criminal and from civil suits in
certain cases
----------------------
d) Change its name
----------------------
e) Amalgamate with any other union f) Carry out social/cultural
---------------------- activities
Obligation of Registered Trade Unions
----------------------
Registration makes it obligatory for a registered trade union to:
----------------------
i) Allow any person to be a member of the union and enjoy all the privileges
---------------------- attached to a membership.
---------------------- ii) Keep account books and the register of members for inspection by any
member of the union.
----------------------
iii) Submission of the Annual Return to the Registrar regularly for the year
---------------------- ending in the prescribed form, within the specified time limit, along with
the statement of assets and liabilities of the union audited in the prescribed
---------------------- manner.
----------------------
Activity 3
----------------------
---------------------- Visit a trade union office and make a list of the records maintained by them.
----------------------
7.10 REGISTRATION AND CANCELLATION OFTRADE UNIONS
----------------------
The Registrar on being satisfied that the Trade Union has complied with
---------------------- all the requirements of this Act in regard to registration, shall register the trade
union by entering it in a prescribed register. However, if the Registrar does not
---------------------- communicate with the Union and keeps quiet for a period exceeding 6 months,
---------------------- the Union can file a writ of Mandamus before the High Court. This has been
decided by the Patna High Court in the case of ACC Rajanka Lime Stones Vs
---------------------- the Registrar of Trade Unions, 1969.
---------------------- The Registrar on registering a trade union under Sec. 8 shall issue a
certificate of registration in the prescribed form which shall be conclusive
---------------------- evidence that the Trade Union has been duly registered under this Act.
----------------------
----------------------

Cancellation of Registration Notes
A certificate of registration of Trade Union may be withdrawn or cancelled by
----------------------
the Registrar.
a) On application of the trade union. ----------------------
b) If the Registrar is satisfied that the certificate has been obtained by mistake, ----------------------
misrepresentation or fraud.
----------------------
c) The trade union has ceased to exist or has willfully and after notice from
the Registrar contravened any of the provisions of this Act. ----------------------
d) The membership of the Union has fallen below the minimum required ----------------------
number under the Act, (as per the 2001 amendment).
Change of name ----------------------
Any registered trade union may, with the consent of not less than two- ----------------------
thirds of the total number of its members and subject to the provision of Sec.
----------------------
25 change its name.
Amalgamation of Trade Unions ----------------------
Any two or more registered trade unions may amalgamate together as ----------------------
one trade union with or without dissolution or division of the funds of such
trade unions, provided that the votes of at least one half of the total members ----------------------
of each and every such trade union entitled to vote are recorded and that at least
----------------------
60% of the votes recorded are in favour of the proposal.
Notice of change of name or amalgamation ----------------------
Notice in writing of every change of name and every amalgamation signed ----------------------
in case of change of name, by the secretary and by seven members of the Trade
Union changing its name, and in case of amalgamation, by the secretary and by ----------------------
seven members of each and every Trade Union which is a party thereto, shall ----------------------
be sent to the Registrar of the place where the Head Office of the amalgamated
trade union is situated and also to the respective Registrars of each and every ----------------------
union which is a party to the amalgamation.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
---------------------- 1. The rights of a registered trade union are:

i. To spend its general fund
----------------------
ii. To change its name
----------------------
iii. To carry out social/cultural activities
---------------------- iv. To constitute a joint political fund
---------------------- 2. certificate of registration of Trade Union may be withdrawn or
A
cancelled by the Registrar if:
----------------------
i. The trade union applies for cancellation.
----------------------
ii. The membership of the Union is above the minimum required
---------------------- number under the Act (as per the 2001 amendment).
iii. The Registrar is satisfied that the certificate has been obtained
----------------------
by mistake, misrepresentation or fraud.
---------------------- iv. The trade union has ceased to exist or has willfully and after
notice from the Registrar contravened any of the provisions of
----------------------
this Act.
----------------------
---------------------- 7.11 INTRODUCTION TO COLLECTIVE BARGAINING

---------------------- In the last unit, we studied about the grievance procedure. It is equally
important to know the collective bargaining skills, as they may help the union
---------------------- to achieve the pre-requisite legal expectations to solve the labour problems with
---------------------- the management. Collective bargaining is an arrangement in which the wage
component of remuneration and conditions of employment of workmen are
---------------------- settled through a bargain between the employer and the workmen collectively
whether represented through their union or by some of them on behalf of all
---------------------- of them. Thus, collective bargaining means bargaining between an employer
---------------------- or group of employers and a bona fide Labour Union. Collective bargaining
is “the process of employer-union negotiation for the purpose of reaching an
---------------------- agreement for a specific period.”
---------------------- Definition
Collective bargaining has been defined as the negotiations about working
---------------------- conditions and the terms of employment between an employer, a group of
---------------------- employers or one or more employers’ organisations on one hand and one or
more representative organisations of workmen on the other, with a view to
---------------------- reach an agreement.
----------------------

Collective bargaining has been defined in the Encyclopedia of Social Notes
Sciences as “a process of discussion and negotiation between two parties, one
or both of whom is a group of persons actively in concert. More specifically, ----------------------
collective bargaining is the procedure by which an employer and a group of
employees agree upon the conditions of work.” ----------------------
Collective bargaining plays a significant role in improving the - - - - - - - - - - - - - - - - - - - - - -

labour- management relations and in ensuring industrial harmony.
----------------------
7.12 PRE-REQUISITES OF COLLECTIVE BARGAINING ----------------------
Collective bargaining is the technique that has been adopted by unions ----------------------
and managements to reconcile their conflicting interests. It is called collective
because the employees, as a group, select representatives to meet and discuss ----------------------
differences with the employer. Collective bargaining is the opposite of individual ----------------------
bargaining which takes place between the management and the worker as an
individual. The negotiations for collective bargaining require joint sessions of ----------------------
the representatives of labour and management. These help a lot in promoting
a better understanding of each other’s point of view as well as the problems ----------------------
confronting them. Through discussions and interactions, each party learns more ----------------------
about the other, and misunderstandings are often removed. The role of collective
bargaining in conflict resolution is very significant. But there are certain pre- ----------------------
requisites which are essential for collective bargaining to be successful. These
pre-requisites are as follows: ----------------------
1. Freedom of association and the independence of unions. ----------------------

2. Stability of the organisations of the workers and the employers. ----------------------
3. Favourable political climate. The Government should not only be
----------------------
sympathetic, but also encourage collective bargaining and agreements.
4. Mutual trust and respect and also willingness on the part of the parties ----------------------
concerned to settle all matters by collective bargaining or negotiations. ----------------------
5. The bargaining power of each party depends on the:
----------------------
(a) Strength of its organisation
----------------------
(b) Knowledge and skill of negotiation of its representatives
(c) Trade recession, boom and shortages ----------------------
(d) Surplus of labour, particularly in regard to semi-skilled and unskilled ----------------------
workers
----------------------
Reasons for lack of success of Collective Bargaining in India
Collective bargaining in India has not made that much of headway as ----------------------
compared to some other countries because of the following factors: ----------------------
i) Absence of an enlightened management. Some managements or employers
----------------------
are still allergic to trade unions.
----------------------

Notes ii) Weakness of trade unions due to their multiplicity, intra and inter-union
rivalries, poor financial conditions, lack of leadership.
----------------------
iii)
Easy availability of government intervention for conciliation and
---------------------- compulsory adjudication of disputes.
iv) Surplus manpower
----------------------
v) Restricted rights of workers and employers to strike and lockout.
----------------------
vi) ifferent political affiliations of the unions and the consequent political
D
---------------------- rivalries make it difficult to settle the disputes amicably by mutual
negotiations.
----------------------
vii) Lack of mutual trust, respect and the spirit of give and take.
---------------------- viii) Unfavourable political and economic climate since the Government,
---------------------- though wanting to encourage collective bargaining, is not prepared for
endless trials of strength for the fear of planned economy of the country
---------------------- being disrupted.
---------------------- Subject Matter of Collective Bargaining
For improvement of collective bargaining to reach at mutually benefited
----------------------
level, following points should be considered:
---------------------- a) Union recognition and the scope of the bargaining unit
---------------------- b) Management rights
---------------------- c) Union security

d) Strikes and lockouts
----------------------
e) Union activities and responsibilities
----------------------
f) Wages
---------------------- g) Working hours and working conditions
---------------------- h) Job rights and seniority
---------------------- i) Discipline, suspension and discharge
j) Grievance handling and arbitration
----------------------
k) Health and safety
----------------------
l) Insurance and benefit programmes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
1. The bargaining power of each party depends on the: ----------------------
i. Weakness of its organisation
----------------------
ii. Knowledge and skill of negotiation of its representatives
----------------------
iii. Trade recession, boom and shortages
iv. Surplus of labour, particularly in regard to semi-skilled and ----------------------
unskilled workers ----------------------
2. Collective bargaining in India has not made that much of headway
because of the following factors: ----------------------
i. Surplus labour ----------------------

ii. Lack of mutual trust, respect and the spirit of give and take ----------------------
iii. String and powerful trade unions
----------------------
iv. Restricted rights of workers and employers to strike and lockout
----------------------
Activity 4 ----------------------
----------------------
Visit any company to find out the subject matter of collective bargaining
and write briefly about any three of them. ----------------------
----------------------
7.13 FINDINGS OF STUDY GROUPS ON INDUSTRIAL ----------------------
RELATIONS
----------------------
Studies were conducted by various groups to find out the means to improve
the relations between the workers and the management in different sectors. In ----------------------
this section, we will look at the recommendations given by these groups, ----------------------
Madras Study Group
----------------------
The group recommended that:
----------------------
a) The enactments of legislation by the government should be reduced to the
minimum so as to give a chance to negotiations and collective bargaining ----------------------
machinery to settle industrial disputes.
----------------------
b) The practice of frequent intervention by the state and the reference of
disputes to adjudication should be avoided. ----------------------
c) Either the works committees should be abolished or the procedure for the ----------------------
nomination of workers representatives should be changed, so that only the
recognised unions may have the right to send their representatives to this ----------------------
body.
Notes d) Since the joint management councils have failed in the southern states,
such councils need not be forced upon the employers.
----------------------
e) Independent machinery should be used to verify the membership of the
---------------------- union so as to give recognition to it as a representative union for dealing
with matters for consultation.
----------------------
f) rade union office should be closed to all those workers who are found to
T
---------------------- be guilty of a breach of the Code of Discipline.
Study Group on Iron and Steel Industry
----------------------
The group made the following recommendations for improvements in
---------------------- labour-management relations:
---------------------- a) The union representing a majority of employees should be granted
recognition.
----------------------
b) Closer association should be developed between the management and the
---------------------- employees at all levels in the plant.
---------------------- c) Grievances should be redressed by mutual discussion.
d) To discuss matters relating to wages, conditions of service, leave, etc., it
----------------------
would be useful if the recognised unions of all the steel plants are federated
---------------------- into one body.
---------------------- e) Collective bargaining should be preferred, both at plant and the industry
levels, and adjudication should be resorted to when all other methods have
---------------------- failed.
---------------------- f) A two-way communication system should be developed in the plant, for

which bipartite committees may be formed.
---------------------- Study Group on Oil Industry
---------------------- The group made the following recommendations:
---------------------- a) Workers should be given a sympathetic treatment by the management.
b) Collective bargaining should be developed.
----------------------
c) Workers should be educated to enable them to understand not only their
---------------------- rights but their obligations too, towards the industry, management and
---------------------- towards the public.
d) Adjudication should be resorted to only when negotiation, conciliation and
---------------------- voluntary arbitration have failed.
---------------------- e) A suitable atmosphere should be created by the government by restricting
strikes and lockouts during the period when negotiations are continuing.
----------------------
f) Multiplicity of unions should go.
----------------------
g) Mutual faith should be encouraged between the parties for promoting
---------------------- economy in the industry regarding hours of work, overtime work and a
weekly holiday.
----------------------

Notes
Activity 5
----------------------
Find out the industrial relations’ status between workers’ union and the ----------------------
management in the hotel industry.
----------------------
7.14 INTERNATIONAL LABOUR ORGANISATION (ILO) ----------------------
The International Labour Organisation (ILO) was established on April ----------------------

19, 1919 by Versailles Peace Conference as an autonomous body associated ----------------------
with the League of Nations. It was formed as a result of the peace conference
at the end of the World War I at Versailles. India became member of ILO in ----------------------
1919, as an original signatory to the treaty of peace. ILO became the specialised
agency of United Nations (UN) in 1946. ----------------------
The ILO is a social institution trying to make the world conscious that ----------------------
world peace may be affected by unjust conditions of its working population.
It deals with international labour problems. The unique feature of ILO is that ----------------------
it is a tripartite body consisting of representations of employers, labour and ----------------------
government. There are three constituents:
----------------------
●● The governments which finance it.
●● The workers, for whose benefit it is created. ----------------------
●● The employers, who share the responsibility for the welfare of the workers. ----------------------
The principles of ILO are: ----------------------
a) Labour is not a commodity.
----------------------
b) Freedom of expression and of association is essential to substantial
progress. ----------------------
c) Poverty constitutes a danger to prosperity everywhere. ----------------------
d) T
he war against want requires to be carried on with unrelenting vigour
----------------------
within each nation, and by continuous and concerted international effort in
which the representatives of workers and employers enjoying equal status ----------------------
with those of governments in free discussion and democratic decision with a
view to the promotion of the common welfare. ----------------------
Objectives of ILO ----------------------
A conference was convened in Philadelphia during the Second World ----------------------
War. During the discussions at this conference, the aims of ILO were reframed.
The declaration of Philadelphia enunciated 10 objectives which the ILO was ----------------------
to further and promote among the nations of the world. These objectives are:
----------------------
1. Full employment and the raising of standards of living.
----------------------
2. The employment of workers in the occupation in which they can have
the satisfaction of giving the fullest measure of their skill and make their ----------------------
contribution to the common well being.
Notes 3, The provision, as a means to the attachment of this end and under adequate
guarantees for all concerned, of facilities for training and the transfer of
---------------------- labour including migration for employment and settlement.
---------------------- 4. Policies in regard to wages and earnings, bonus and other conditions of
work calculated to ensure a just share of the fruits of progress to all and a
---------------------- minimum living wage to all employed and in need of protection.
---------------------- 5. The effective recognition for the right of collective bargaining, the
co- operation of management and labour in continuous improvement of
---------------------- productive efficiency and the collaboration of workers and employers in
social and economic measures.
----------------------
6. The extension of social security measures to provide a basic income to all
---------------------- in need of such protection and comprehensive medical care.
---------------------- 7. Adequate protection for the life and health of workers in all occupations.
---------------------- 8. Provision for child welfare and maternity protection.

9. The provision of adequate nutrition, housing and facilities for recreation
---------------------- and culture.
---------------------- 10. The assurance of educational and vocational opportunity.
---------------------- Structure of ILO
---------------------- The ILO is organised around three sub-systems. They are as follows:
●● International Labour Conference
----------------------
●● Governing Body
----------------------
●● International Labour Office
---------------------- ILO
----------------------
---------------------- International Labour

Conference
Governing
Body
International
----------------------
Representatives Research
---------------------- 1. Examine Social
Problems
of the Investigation
(a) Governments Technical
----------------------
2. Adopts conventions
(b) Employers Corporation
governments (c) Workers in the Publications
---------------------- 3. It is the electroal
college of the
ratio of 2:1:1
conference
---------------------- that elects the
Governing Body
International
----------------------
International
Centre for Institute of
Advanced Labour Studies
Technical and
---------------------- Vocational
Training
----------------------
Fig. 7.1: Structure and Functions of ILO
----------------------

Impact of ILO on the Indian Labour Notes
India is a member of the ILO since its inception and it gave a great boost
----------------------
to the labour legislation in India. India has adopted many of the conventions and
recommendations on international standards to improve the labour conditions ----------------------
under Article 3 of the constitution of the ILO. India has also been nominating
non-government delegates and advisors to the International Labour Conference ----------------------
every year.
----------------------
The ILO standards have influenced the Indian labour legislation. The
ILO conventions have formed the sheet anchor of Indian Labour legislation ----------------------
especially after 1947 when the Indian National Government assumed office at
----------------------
the Centre.
Industrial relations, previously bipartite in nature, has become tripartite. ----------------------
In the early 50s, V.V. Giri, the then Labour Minister, put forward the Giri
----------------------
Approach, which emphasised the importance of voluntary negotiations between
workers and their management in resolving disputes. Gandhi’s approach to ----------------------
labour relations was also based on the moral principles of truth, non-violence
and voluntary arbitration of disputes. The situation has changed since after ----------------------
independence, the government with its concern of accelerated economic
----------------------
development and distribution of social justice is gradually playing a vital role
in the shaping of labour-management relations and policies. ----------------------
The tripartite concept of industrial relations has also undergone a radical ----------------------
change with the changes in the expectations of people under the influence of a
welfare state envisaged for India. ----------------------
Indian industrial relations today needs to widen its horizon to concern ----------------------
itself with the larger social and national interests. The system should curb its
preoccupation with wages, bonus and allowances. As Kudchedkar has pointed ----------------------
out, Indian Industrial Relations is vested in terms of profits, dividends and
wages to the determent of social and national interest. When these social and ----------------------
national interests play a role, only then do the industrial relations become a ----------------------
national responsibility.
Indian Industrial Relations, as already mentioned, is changing. It is ----------------------
witnessing the emergence of new forces. As soon as Emergency was lifted, ----------------------
the country faced industrial strikes. In order to tackle this situation, the Janata
Party Government tried to placate the workers by taking certain steps which ----------------------
culminated in the enactment of the Industrial Relations Bill, 1978.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
---------------------- 1. The International Labour Organisation (ILO) was established on April

19, 1919 by the _________ Peace Conference.
---------------------- 2. Freedom of___________ and freedom of_________ are essential to
---------------------- substantial progress.
3. ILO deals with international __________ problems.
----------------------
4. The ILO standards have influenced the Indian _____________
----------------------
Industrial relations, previously________ in nature, has become
5.
---------------------- ______in India.
----------------------
----------------------
Activity 6
---------------------- Visit the ILO website and find out more about the ILO sub-systems.
----------------------
----------------------
7.15 ISSUES PERTAINING TO COLLECTIVE BARGAINING
IN INDIA
----------------------
The Indian Government wants to encourage collective bargaining between
---------------------- the management and the trade unions rather than them resorting to adjudication
for resolving the disputes and their problems. The Government wants them to
----------------------
become self-reliant. But there are certain issues which we need to discuss.
---------------------- ●● The first is the issue of strengthening collective bargaining by trying to
determine a sole bargaining agent for negotiation. The state of Maharashtra
----------------------
has already passed a law for the creation of a sole bargaining agency in
---------------------- every unit and industry. Collective bargaining is advocated where the
parties involved have a fuller understanding. This will help to arrive at a
---------------------- speedier settlement of disputes between themselves.
---------------------- ●● The second issue relates to the gaps that are occurring as a result of the
variations that occur in the Central and State legislation as far as labour
---------------------- matters are concerned. In India, labour falls under the Concurrent List,
---------------------- though National Commission on Labour has made a recommendation for
forming a common labour code which is yet to be adopted. Adoption of
---------------------- this recommendation will go a long way in solving some of the problems
that India’s legislation process in facing.
----------------------
●● Another issue is that of the workers’ participation in management. India
---------------------- has already experienced working of many forms of worker participation
schemes but none of them seems to have made any headway. The reasons
---------------------- for the failure of these schemes need to be probed into.

Its strategic importance extends beyond the limited frontiers of union- Notes
management relationship and overlaps with the future prospects for Indian
democracy on one hand, and the basic concepts and assumptions of economic ----------------------
development on the other. The set of strategic choices must be made in the
midst of economic development on the other. The set of strategic choices must ----------------------
be made in the midst of economic and political difficulties that the country is ----------------------
undergoing.
----------------------
7.16 INDUSTRIAL HARMONY ----------------------
While industrial peace calls for both, a negative and a positive approach, the ----------------------
attainment of industrial harmony necessarily calls for a positive and constructive
approach to the solution of industrial disputes. Therefore, the Commission laid ----------------------
emphasis on the freedom of industrial relations machinery from the “political
partisan” influence. This was necessary in view of the multiparty governments ----------------------
that were emerging in the country. ----------------------
The Commission has referred to certain weaknesses in the working
of the existing industrial relations machinery, namely the delays involved, the ----------------------
expenditure, the largely ad hoc nature of the machinery and the discretion ----------------------
vested in the government in matters of reference for disputes. Therefore, to
make the industrial machinery more effective and more acceptable, a suitable ----------------------
modification in the existing machinery should be made.
----------------------
In lieu of the Indian Labour Conference, a Tripartite Labour Conference
was held in May 1977. This conference led to the setting up of a Tripartite ----------------------
Committee on Comprehensive Industrial Relations Law to recommend:
----------------------
i. The categories of workmen and industries to which the proposed legislation
be made applicable. ----------------------
ii.
The organisation, structure and functions of the industrial relations ----------------------
machinery so as to make it an effective instrument of promoting and
maintaining industrial peace. ----------------------
iii. The conditions for the registration of unions and listing of unfair labour ----------------------
practices on the part of workers’ unions and employees.
----------------------
iv. The method of determining the representative character of the union for
the purpose of recognition as a bargaining agent by the management in a ----------------------
unit or industry.
----------------------
v. To review the question of constituting the judicial sole bargaining agent
with proportional representation of various unions, possibly ascertained ----------------------
through secret ballot.
----------------------
A Panch Sheel, comprising five basic considerations, was formulated
to govern the choice of the collective bargaining agent. They are as follows: ----------------------
i. The collective bargaining agent should represent all workmen in the ----------------------
bargaining process.
----------------------

Notes ii. All workmen should be associated in the choice of the collective bargaining
agent.
----------------------
iii. Free choice of collective bargaining agent should be ensured by secret
---------------------- ballot in which all the workmen participate.
iv. On all collective bargaining issues, the jurisdiction of the bargaining agent
----------------------
should be exclusive.
---------------------- v. The collective bargaining decision, whether for settlement or strike, should
be endorsed by all the workmen whom it binds and/or on whose behalf it
----------------------
is made.
---------------------- In 1977, a tripartite committee was also set up under the chairmanship
---------------------- of the Union Labour Minister to formulate a constructive and meaningful
comprehensive scheme of worker participation. It recommended:
---------------------- i. The adoption of a three-tier system of participation, namely, at the corporate
---------------------- level, plant level and shop-floor level.
ii. Workers representatives on the participative forms should be selected
---------------------- through secret ballot.
---------------------- iii. The setting up of an organisation, both at the centre and in the state, to
monitor the implementation of the scheme with a view to reviewing its
----------------------
working from time to time.
---------------------- iv. Introduction of legislative measures to implement the scheme.
---------------------- v. The decision on issues related to new technology product mix; or expansion
schemes at the board level.
----------------------
vi. he decision on issues like wages, bonus, housing and other fringe benefits
T
---------------------- by collective bargaining machinery.
---------------------- As a means of preventing disputes, a large number of voluntary measures

have been evolved by the state. These consist of:
----------------------
a) Codes of behaviour for employers and workers in their day-to-day dealings
---------------------- with each other.
b) The holding of meetings at the national level between employers and
----------------------
workers organisation under the auspices of the Indian National Labour
---------------------- Conference to discuss problems of mutual interest and to evolve criteria or
principles for the resolution of disputes or issues of controversy.
----------------------
---------------------- Activity 7
---------------------- Explain the industrial harmony status after making a survey of a minimum
---------------------- of five companies in your state.
----------------------
----------------------

7.17 PRE-NEGOTIATION PREPARATION Notes
Before starting the bargaining process both the parties need to make some ----------------------
preparations. In this section, we will see how both the parties prepare for the
negotiation. ----------------------
Objectives of Pre-Negotiation Preparation ----------------------
A party wishing to arrive at a satisfactory conclusion or arrangement ----------------------
through collective bargaining should first identify the objectives of the exercise.
Some objectives common to employers are the following: ----------------------
i. Ensuring that the enterprise is not rendered uncompetitive. ----------------------
ii. The need to keep wage increases below the level of productivity increases
----------------------
and/or within the inflation rate.
iii. Guarantees of industrial peace during the period of operation of the ----------------------
agreement.
----------------------
As far as possible, managers should be consulted in determining objectives;
their priorities should be solicited, and they should be aware of the company’s ----------------------
views in regard to objectives so that they could be tested against the managers’ ----------------------
views.
It is insufficient to merely determine objectives. A tentative plan to achieve ----------------------
these objectives, which can be modified during the course of the negotiations, ----------------------
could be formulated. Such a plan should include the company’s requests to the
union. For instance, work reorganisation to increase productivity to absorb the ----------------------
cost increases consequent upon collective bargaining, may form a part of the
company’s plan. Negotiations on the union’s demands are generally an ideal ----------------------
setting in which the management can achieve some of its objectives through ----------------------
agreement. In order to achieve this, the management must be clear about
its own priorities. If there is an existing collective agreement, it would be a ----------------------
useful starting point. An analysis should be made of how it has worked, its
unsatisfactory features from the company’s point of view should be identified, ----------------------
and the changes should be necessary determined. ----------------------
Negotiating Team
----------------------
The negotiating team, and the respective roles of the members, should be
determined before the negotiations. Employers would find it useful to include ----------------------
in the team people from different disciplines.
----------------------
Research and Study
----------------------
The union’s demands should be carefully studied. The following are some
of the matters to which attention should be paid: ----------------------
a) Assess the economic impact of the demands on the company. ----------------------
b) Make a comparative study, e.g., in a wage demand one should ascertain the
comparative wage rates in the industry and in allied or similar businesses, ----------------------
the minimum wage, if any, and the rates applicable in other collective ----------------------
agreements.

Notes c) eparate the demands which the company has no intention of fulfilling or
S
giving, either on a question of principle or due to economic incapacity.
----------------------
d) Prepare the company’s position in regard to the other demands, for example,
---------------------- the conditions on which the company may be prepared to grant them or to
compromise upon the same.
----------------------
e) Identify the demands which may be of a crucial importance to the union
---------------------- or to the employees as the case may be. This is crucial to the success in
negotiations because, without a proper assessment of such demands, a
---------------------- negotiated settlement may not result or, if one does result, it may lack
durability because it has not addressed the main problems. The issues
----------------------
which may be of crucial importance may not be the same in the case of
---------------------- both (union and employees) as they may have differing interests. Having
identified the crucial demands, the company should formulate its strategy
---------------------- in relation to them, for example, the possibility of trading some of the
company’s demands in return for the union’s demands.
----------------------
Responding to the Union’s Requests
----------------------
It is a matter of assessment in each situation as to whether the management
---------------------- should make an initial response in writing to the union before the negotiations
commence.
----------------------
Usually, it is desirable that written positions stated before negotiations
---------------------- commence should not contain a flat or blanket refusal. At this stage, it is
preferable to couch a refusal in language which does not give the impression
---------------------- of an out-of-hand rejection or a rejection without consideration of the merits.
---------------------- Negative answers may sometimes be better given during the negotiations
because it affords greater opportunities for explanations of the reasons for the
---------------------- negative answers. A rejection during negotiations would more likely give the
impression to the union and employees that such a rejection was made only
---------------------- after negotiations and not before. It is always useful from the point of view of
---------------------- reaching an agreement on other matters to first listen to the reasons adduced
by the union for a demand which the company does not propose to accept. A
---------------------- rejection during negotiations also enables the employer to convince a union of
at least some of the reasons why the demand is not acceptable. It also prevents a
---------------------- union from resorting to trade union action on the issue of a refusal to negotiate,
---------------------- as distinct from rejection of the demands after negotiation.
Inventing Options
----------------------
Since negotiations may not proceed or take place in the way a party may
---------------------- plan, a party should be able to provide alternative options to what he, or the
other party, expects. For example, if it transpires that the wage increase sought
----------------------
is not acceptable, the employer should be prepared with alternatives to cushion
---------------------- the impact of an increase in excess of what it had planned to agree to.
Strategy
----------------------
A party to collective bargaining negotiations has to formulate a strategy
---------------------- for all stages of the negotiation, including the pre-negotiation stage. Before

negotiations commence, the strategy should include matters such as: Notes
a) Options as referred to above.
----------------------
b) How much to offer while leaving room for further negotiation if the offer
fails. The offer should be sufficiently attractive so as not to lead to a ----------------------
breakdown in negotiations.
----------------------
c) How to link one’s requirements to the concessions one makes.
----------------------
----------------------
1. A party to collective bargaining negotiations has to formulate a strategy ----------------------
for all stages of the negotiation, including the pre-negotiation stage. ----------------------
2. Workers’ representatives on the participative forms should be selected
through secret ballot. ----------------------
3. Collective bargaining is advocated where the parties involved have a ----------------------

fuller understanding.
----------------------
4. The negotiating team and the respective roles of the members should
not be determined before the negotiations. ----------------------
5. The Panch Sheel suggested that the collective bargaining agent should ----------------------
not represent all workmen in the bargaining process.
----------------------
Summary ----------------------
----------------------
●● Trade unions evolve to protect workers’ rights against management’s
atrocities in the modern industry. They raise a collective voice for the ----------------------
improvement of workers’ wages, working conditions and their social
welfare. ----------------------
●● Basically, workers join trade unions to protect their economic, social and ----------------------
political interests and to satisfy their need for belongingness.
----------------------
●● Trade unions have been classified either on the basis of purpose or on the
basis of membership structure or on the basis of the function. The unions ----------------------
handle militant, fraternal, social, political and ancillary functions. The
trade unions also have to play various roles like political role, market role, ----------------------
regulatory role, democratising role, service role, enhancement role and ----------------------
welfare role.
●● With the advent of globalisation and privatisation, these unions fear that ----------------------
their importance and power will decline. ----------------------
●● The survival of these unions largely depends on their adaptability and
improvement in their functioning. Their future success depends on their ----------------------
ability to develop healthy relations with employers and the government by ----------------------
redesigning their objectives, roles and strategies.

Notes ●● A trade union has a legal platform to publish the demands of the worker
community to the management. There has to be fair treatment from the
---------------------- management in giving due consideration to the demands made from the
trade union from time to time.
----------------------
●● If the proper coordination is made between trade union and the management
---------------------- of the organisation, smooth conduct of the business activity is assured so as
to accordingly make sure the achievement of the organisational goals and
----------------------
mission accordingly.
---------------------- ●● A registered trade union can also utilise the funds available for the
betterment of the welfare activities of the worker community and the
----------------------
organisational setup improvement as well.
---------------------- ●● Elections of the trade unions are not to be carried out in an unfair manner.
If the people selected on the board of governance of the trade union are
----------------------
selected without the interference of the management, only then can the
---------------------- workers’ demands be upheld as a prime responsibility of the trade union
and it also provides solutions to the management without affecting the
---------------------- workers’ interests in the on-going administration such as management
by objective and with a meaningful contribution of the trade union in the
----------------------
management of the organisation along with the board of management.
---------------------- ●● Collective bargaining is an arrangement to achieve the expected demands
---------------------- of the workers’ community from the management.
●● It has legal sanction, in the sense that it is legally allowed to have collective
---------------------- bargaining.
---------------------- ●● If the proper use of collective bargaining is made, then the problems could
be solved without any litigation and the smooth conduct of the industrial
---------------------- workforce can be mainlined.
---------------------- ●● The leaders of the workers’union should know the importance of collective
bargaining.
----------------------
---------------------- Keywords
---------------------- ●● Employer: A person or company that pays people to work for them.
---------------------- ●● Welfare activities: Trade unions undertake welfare activities like acquiring
of house sites, construction of houses, establishment of co-operative housing
---------------------- societies, cooperative credit societies, organising training activities, etc.
---------------------- ●● Participation: Mental and emotional involvement rather than mere
physical presence.
----------------------
●● Industrial unrest: Industrial conflict is a struggle between two organised
---------------------- groups.
---------------------- ●● Bargaining: An agreement between two people or groups in which each
promises to do something in exchange for something else.
----------------------

●● Collective: Of or shared by every member of a group of people. Notes
●● Demand: To ask for something forcefully, in a way that shows that a
----------------------
refusal is not expected.
●● Harmony: When people are peaceful and agree with each other, or when ----------------------
things seem right or suitable together.
----------------------
●● Industrial action: When workers act in a way that is intended to force an
employer to agree to something, especially by stopping work. ----------------------
●● Intention: Something that you want and plan to do. ----------------------
●● Incapacity: When you are unable to do something because you do not ----------------------
have the ability or you are too weak.
●● Negotiation: The process of discussing something with someone in order ----------------------
to reach an agreement with them, or the discussions themselves. ----------------------
●● Objective: Something which you plan to do or achieve.
----------------------
●● Preparation: The things that you do or the time that you spend preparing
for something. ----------------------
●● Survey: An examination of opinions, behaviour, etc. made by asking ----------------------
people questions.
----------------------
1. What do you understand by a Trade Union? ----------------------

2. Explain the objectives of Trade Union. ----------------------
3. Examine the role of Trade Union.
----------------------
4. Explain the functions of Trade Union.
----------------------
5. xplain the procedure laid down under the Trade Unions Act, 1926 for the
E
registration of unions. ----------------------
6. Examine the rights that are available to registered trade unions under the ----------------------
Trade Unions Act, 1926.
----------------------
7. Define collective bargaining and examine its nature and scope.
8. What are the objectives of collective bargaining? ----------------------
9. How will you prepare before the negotiation process in collective ----------------------
bargaining?
----------------------
10. Examine the evolution of collective bargaining in India.
----------------------
----------------------
----------------------
----------------------

Notes Answers to Check your Progress

1.
Individually, the labourers can do very little to bring about the reforms they
---------------------- want.
---------------------- 2. A trade union is an organisation created to improve conditions in the
workplace.
----------------------
3. Trade unions are voluntary associations formed for the pursuit of protecting
---------------------- the common interests of its members and also promote welfare.
---------------------- 4. Trade unions are formed to protect the economic, political and social
interests of its members.
----------------------
5. Trade unions include both blue-collar workers as well as business
---------------------- professionals.

----------------------
1. The fraternal function of trade unions is to:
----------------------
i. Take up welfare measures for improving the morale of workers
---------------------- i. – d. ii. – e. iii. – b. iv. – c. v. – a.

----------------------
----------------------
1. False
---------------------- 2. False
---------------------- 3. True
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

----------------------
1. The rights of a registered trade union are:
----------------------
i. To spend its general fund ii. To change its name
iii. To carry out social/cultural activities ----------------------
2. certificate of registration of Trade Union may be withdrawn or cancelled
A ----------------------
by the Registrar if
----------------------
i. The trade union applies for cancellation
----------------------
iii. he Registrar is satisfied that the certificate has been obtained
T
by mistake, misrepresentation or fraud. ----------------------
iv. The trade union has ceased to exist or has willfully and after notice from
----------------------
the Registrar contravened any of the provisions of this Act.
1. The bargaining power of each party depends on the: ----------------------
ii. Knowledge and skill of negotiation of its representatives
----------------------
iii. Trade recession, boom and shortages
----------------------
iv. Surplus of labour, particularly in regard to semi-skilled and unskilled
workers ----------------------
2. Collective bargaining in India has not made that much of headway because ----------------------
of the following factors:
i. Surplus labour ----------------------
ii. Lack of mutual trust, respect and the spirit of give and take. ----------------------
iv. Restricted rights of workers and employers to strike and lockout ----------------------
----------------------
Fill in the blanks.
----------------------
1. The International Labour Organisation (ILO) was established on April 19,
1919 by the Versailles Peace Conference. ----------------------
2. Freedom of expression and freedom of association are essential to ----------------------
substantial progress.
----------------------
3. ILO deals with international labour problems.
4. The ILO standards have influenced the Indian labour legislation. ----------------------
5. Industrial relations, previously bipartite in nature, has become tripartite in ----------------------
India.
----------------------
----------------------

Notes Check your Progress 8
----------------------
1. True
----------------------
2. True
---------------------- 3. True
---------------------- 4. False
---------------------- 5. False
----------------------
Suggested Reading
----------------------
Mammoria, C.B., S. Mammoria and S.V. Gankar. 2011. Dynamics of
1.
---------------------- 2. Punekar, S. D., S. B. Deodhar and Saraswathi Sankaran. 2004. Labour

---------------------- Publishing House.
---------------------- 3. Rao, Dr. P. Subba. 2011. Essentials of Human Resource Management and
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Workers’ Participation in Management
UNIT
8
Structure:
8.1 Introduction
8.2 Definitions
8.3 Features of Workers’ Participation in Management
8.4 Objectives of WPM
8.5 Importance of WPM
8.6 Essential Conditions for WPM
8.7 Scope and Ways of Participation
8.8 Evolution of Participative Management in India
8.8.1 Reasons for Failure of Workers Participation Movement in India
Summary
Key Words
Suggested Reading
Workers’ Participation in Management 137

Notes
Objectives
----------------------
---------------------- After going through this unit, you will be able to:
• Explain industrial democracy
----------------------
• Analyse labour-management cooperation and thus maintain industrial
---------------------- peace and harmony
---------------------- • Describe the evolution of participative management in India
----------------------
8.1 INTRODUCTION
----------------------
Workers’ participation is a system where workers and management share
---------------------- important information with each other and participate in decision-making.
It is the distribution of social power in industry so that it tends to be shared
----------------------
among all who are engaged in the work rather than concentrated in the hands of
---------------------- minority. Thinkers like Comte and Owen advocated the participation of workers
in management for achieving distributive social justice. Karl Marx proposed
---------------------- complete control of the enterprise by workers and socialisation of the means
of the production. Marx wanted trade unions to be developed as an alternative
----------------------
for self-government. Thinkers favoured guilds of all classes of workers to be
---------------------- controlled under a charter from the state. With the outbreak of the First World
War, an acute industrial unrest was experienced. Labour was largely regarded as
---------------------- a “Commodity of Commerce” and exploited to the maximum in England, West
Germany, France and the USA. The main concern of ideologists in advocating
----------------------
workers’ participation in management was the sharing of a part of managerial
---------------------- power with workers. Participation refers to involvement of individuals or
group of individuals for common purpose. It will be effective only if there is
---------------------- interaction among individuals or groups.
---------------------- Workers’ Participation in Management (WPM) refers to the emotional
and mental involvement of an employee to contribute to the goals and share
---------------------- responsibilities of an organisation. Workers’ participation in management is an
essential ingredient of industrial democracy. The concept of workers’participation
----------------------
in management is based on Human Relations approach to Management which
---------------------- brought about a new set of values to labour and management. Traditionally,
the concept of workers’ participation in management refers to participation of
---------------------- non-managerial employees in the decision-making process of the organisation.
Workers’ participation is also known as ‘labour participation’ or ‘employee
----------------------
participation’ in management. In Germany, it is known as co-determination
---------------------- while in Yugoslavia it is known as ‘self-management’. The International Labour
Organisation has been encouraging member nations to promote the scheme of
---------------------- workers’ participation in management.
---------------------- Workers’ participation in management implies mental and emotional
involvement of workers in the management of the enterprise. It is considered as
---------------------- a mechanism where workers have a say in the decision-making.

8.2 DEFINITIONS Notes
The concept of WPM is a broad and complex one. Depending on the ----------------------
socio-political environment and cultural conditions, the scope and contents of
participation change. Let’s have a look at some of the definitions of Workers ----------------------
Participation in Management.
----------------------
International Institute of Labour Studies: WPM is the participation
resulting from the practices which increase the scope for employees’ share of ----------------------
influence in decision-making at different tiers of organisational hierarchy with ----------------------
concomitant (related) assumption of responsibility.
John Leitch: The organisation of any factory or other business institution ----------------------
into a little democratic state with the representative government which shall ----------------------
have both the legislative and executive phases.
----------------------
ILO: Workers’ participation may broadly be taken to cover all terms
of association of workers and their representatives with the decision-making ----------------------
process, ranging from exchange of information, consultations, decisions and
negotiations, to more institutionalised forms such as the presence of workers’ ----------------------
member on management or supervisory boards or even management by workers
----------------------
themselves.
The main implications of workers’ participation in management as ----------------------
summarised by ILO:
----------------------
• Workers have ideas which can be useful.
----------------------
• Workers may work more intelligently if they are informed about the
reasons for and the intention of decisions that are taken in a participative ----------------------
atmosphere.
----------------------
According to Keith Davis, “Participation refers to the mental and emotional
involvement of a person in a group situation which encourages him to contribute ----------------------
to group goals and share the responsibility of achievement.”
----------------------
According to G. S. Walpole, “Participation in Management gives the
worker a sense of importance, pride and accomplishment; it gives him the ----------------------
freedom of opportunity for self-expression; a feeling of belongingness with the
place of work and a sense of workmanship and creativity.” ----------------------
The concept of workers’ participation in management encompasses ----------------------

the following:
----------------------
• It provides scope for employees in decision-making of the organisation.
----------------------
• The participation may be at the shop level, departmental level or at the top
level. ----------------------
• The participation includes the willingness to share the responsibility of the ----------------------
organisation by the workers.
----------------------
----------------------

Notes 8.3 FEATURES OF WORKERS’ PARTICIPATION IN MANAGEMENT
---------------------- Some of the important features of Worker’s Participation in Management are:
---------------------- 1. Participation means mental and emotional involvement rather than mere
physical presence.
---------------------- 2. Workers participate in management not as individuals but collectively as a
---------------------- group through their representatives.
3. Workers’ participation in management may be formal or informal. In
----------------------
both the cases, it is a system of communication and consultation whereby
---------------------- employees express their opinions and contribute to managerial decisions.
There can be 5 levels of Workers’ Management Participation or WPM:
----------------------
1. Information participation: It ensures that employees are able to receive
---------------------- information and express their views pertaining to the matter of general
economic importance.
----------------------
2. Consultative importance: Here workers are consulted on the matters
---------------------- of employee welfare such as work, safety and health. However,
---------------------- final decision always rests with the top-level management, as employees’
views are only advisory in nature.
---------------------- 3. Associative participation: It is an extension of consultative participation
---------------------- as management here is under the moral obligation to accept and implement
the unanimous decisions of the employees. Under this method, the
---------------------- managers and workers jointly take decisions.
---------------------- 4. Administrative participation: It ensures greater share of workers’
participation in discharge of managerial functions. Here, decisions already
---------------------- taken by the management come to employees, preferably with alternatives
for administration and employees have to select the best from those for
---------------------- implementation.
---------------------- 5. Decisive participation: Highest level of participation where decisions are
jointly taken on matters relating to production, welfare, etc.
----------------------
---------------------- 8.4 OBJECTIVES OF WPM

---------------------- According to Gosep, workers’ participation may be viewed as:
---------------------- • An instrument for increasing the efficiency of enterprises and establishing
harmonious relations.
----------------------
• A device for developing social education for promoting solidarity among
---------------------- workers and for tapping human talents.
• A means for achieving industrial peace and harmony which leads to higher
----------------------
productivity and increased production.
---------------------- • A humanitarian act, elevating the status of a worker in the society.
----------------------

• An ideological way of developing self-management and promoting Notes
industrial democracy.
----------------------
Other objectives of WPM can be cited as:
• To improve the Quality of Work Life (QWL) by allowing workers greater ----------------------
influence and involvement in work and satisfaction obtained from work.
----------------------
• To secure the mutual co-operation of employees and employers in achieving
industrial peace; greater efficiency and productivity in the interest of the ----------------------
enterprise, the workers, the consumers and the nation.
----------------------
8.5 IMPORTANCE OF WPM ----------------------
We have seen that workers participation in management is an initiative ----------------------

where workers have a say in the decision-making process of an enterprise. This
----------------------
definitely makes an impact on the employees. Let’s have a look at the effect of
workers’ participation in management on the industry. ----------------------
1. Higher Productivity: The increased productivity is possible only when
----------------------
there exists fullest co-operation between labour and management. It has
been found that poor labour management relations do not encourage the ----------------------
workers to contribute anything more than the minimum desirable to retain
their jobs. Thus, participation of workers in management is essential to ----------------------
increase industrial productivity.
----------------------
2. Greater Commitment: An important prerequisite for forging greater
individual commitment is the individual’s involvement and opportunity to ----------------------
express himself. Participation allows individuals to express themselves ----------------------
at the workplace rather than being absorbed into a complex system of
rules, procedures and systems. If an individual knows that he can express ----------------------
his opinion and ideas, a personal sense of gratification and involvement
takes place within him. Participation increases the level of commitment ----------------------
and the employees start relating to the organisation. ----------------------
3. Reduced Industrial Unrest: Industrial conflict is a struggle between two
organised groups, which are motivated by the belief that their respective ----------------------
interests are endangered by the self-interested behaviour of the other. ----------------------
Participation cuts at the very root of industrial conflict. It tries to remove or
at least minimise the diverse and conflicting interests between the parties, ----------------------
by substituting it with cooperation, homogeneity and common interests.
Both sides are integrated and decision arrived at are mutual rather than ----------------------
individual. ----------------------
4. Improved Decisions: Communication is never a one-way process. Also
note that it is seldom, if ever, possible for managers to have knowledge of ----------------------
all alternatives and all consequences related to the decisions which they ----------------------
must make. Because of the existence of barriers to the upward flow of
information in most enterprises, much valuable information possessed by ----------------------
subordinates never reaches their managers. Participation tends to break
----------------------

Notes down the barriers, and makes the information available to managers. To
the extent such information alters the decisions, the quality of decisions is
---------------------- improved.
---------------------- 5. Human Resource Development: Participation provides education to
workers in the management of industry. It fosters initiative and creativity
---------------------- among them. It develops a sense of responsibility. Informal leaders get an
opportunity to reinforce their position and status by playing an active role
----------------------
in decision-making and by inducing the members of the group to abide by
---------------------- them.
6. Reduced Resistance to Change: Last but not the least, it should be noted
----------------------
that changes are arbitrarily introduced from above without explanation.
---------------------- Subordinates tend to feel insecure and take counter measures aimed at
sabotage of changes. But when they have participated in the decision-
---------------------- making process, they have had an opportunity to be heard. They know
what to expect and why. Their resistance to change is reduced.
----------------------
---------------------- Multiple Choice Single Response.
---------------------- 1. It ensures greater share of workers’ participation in discharge of
managerial functions:
----------------------
i. Administrative participation
---------------------- ii. Information participation
---------------------- iii. Consultative importance
---------------------- iv. Associative participation
----------------------
Activity 1
----------------------
---------------------- Write about two instances of workers’ participation in management in your

institution.
----------------------
---------------------- 8.6 ESSENTIAL CONDITIONS FOR WPM

----------------------
The success of workers’ participation in management depends upon
---------------------- the following conditions:
• The attitude and outlook of the parties should be enlightened and impartial
----------------------
so that a free and frank exchange of thoughts and opinions could be possible.
---------------------- Where a right kind of attitude exists and proper atmosphere prevails, the
process of participation is greatly stimulated.
----------------------
• Both parties should have a genuine faith in the system and in each
---------------------- other and be willing to work together. The management must give the

participating institution its right place in the managerial organisation of Notes
the undertaking and implementing the policies of the undertaking. The
labour, on the other hand, must also whole heartedly co-operate with the ----------------------
management through its trade unions. The foremen and supervisory cadre
must also lend their full support so that the accepted policies could be ----------------------
implemented without any resentment on either side. ----------------------
• Participation should be real. The issues related to increase in production and
----------------------
productivity, evaluation of costs, development of personnel and expansion
of markets should also be brought under the jurisdiction of the participating ----------------------
bodies. These bodies should meet frequently and their decisions should
be timely implemented and strictly adhered to. Further, participation must ----------------------
work as complementary body to help collective bargaining, which creates
----------------------
conditions of work and also creates legal relations.
----------------------
8.7 SCOPE AND WAYS OF PARTICIPATION
----------------------
One view is that workers or the trade unions should, as equal partners, sit
with the management and take joint managerial decisions. The other view is ----------------------
that workers should only be given an opportunity, through their representatives, ----------------------
to influence managerial decisions at various levels.
----------------------
In practice, the participation of workers can take place by one or all
the methods listed below: ----------------------
1. Participation at the Board level: This would be the highest form of
----------------------
industrial democracy. The workers’ representative on the Board can play a
useful role in safeguarding the interests of workers. He or she can serve as ----------------------
a guide and a control element. He or she can prevail upon top management
not to take measures that would be unpopular with the employees. He or ----------------------
she can guide the Board members on matters of investment in employee
----------------------
benefit schemes like housing, etc.
The Government of India took the initiative and appointed workers’ ----------------------
representatives on the Board of Hindustan Antibiotics (Pune), HMT
----------------------
(Bangalore), and even nationalised banks. The Tatas, DCM, and a few
others have adopted this practice. ----------------------
Problems associated with this method ----------------------
• Focus of workers’ representatives is different from the focus of
the remaining members of the Board. ----------------------
• Communication and subsequently relation between the workers’ ----------------------

representative and the workers suffers after the former assumes
directorship. ----------------------
• He or she tends to become alienated from the workers. ----------------------

• As a result, he or she may be less effective with the other members ----------------------
of the Board in dealing with employee matters.
----------------------

Notes • Because of the differences in the cultural and educational backgrounds,
and differences in behaviour and manners, such a representative
---------------------- may feel inferior to the other members, and he or she may feel
suffocated. Hence, his or her role as a director may not be satisfying
---------------------- for either the workers or the management.
---------------------- • Such representatives of workers’ on the Board place them in a
minority and the decisions of the Board are arrived at on the basis
----------------------
of the majority vote.
---------------------- 2. Participation through ownership: This involves making the workers
shareholders of the company by inducing them to buy equity s h a r e s
----------------------
. In many cases, advances and financial assistance in the form of easy
---------------------- repayment options are extended to enable employees to buy equity shares.
Examples of this method are available in the manufacturing as well as the
---------------------- service sector.
---------------------- • Advantage: Makes the workers committed to the job and to the
organisation.
----------------------
• Drawback: Effect on participation is limited because ownership
---------------------- and management are two different things.
---------------------- 3. Participation through complete control: Workers acquire complete

control of the management through elected boards. The system of self-
---------------------- management in Yugoslavia is based on this concept. Self-management
gives complete control to workers to manage directly all aspects of
---------------------- industries through their representatives.
---------------------- Advantages
---------------------- • Ensures identification of the workers with their organisation.
• Industrial disputes disappear when workers develop loyalty to
----------------------
the organisation.
---------------------- • Trade unions welcome this type of participation.
---------------------- Conclusion
---------------------- Complete control by workers is not an answer to the problem of participation

because the workers do not evince interest in management decisions.
----------------------
4. Participation through staff and works councils: Staff Councils or
---------------------- Works Councils are bodies on which the representation is entirely of the
employees. There may be one council for the entire organisation or a
---------------------- hierarchy of councils. The employees of the respective sections elect the
members of the councils. Such councils play a varied role.
----------------------
Their role ranges from seeking information on the management’s intentions
---------------------- to a full share in decision-making. Such councils have not enjoyed too
much of success because trade union leaders fear the erosion of their power
----------------------
and prestige if such workers’ bodies were to prevail.
----------------------

5. Participation through joint councils and committees: Joint councils Notes
are bodies comprising representatives of employers and employees. This
method sees a very loose form of participation, as these councils are mostly ----------------------
consultative bodies. Work committees are a legal requirement in industrial
establishments employing 100 or more workers. Such committees discuss ----------------------
a wide range of topics connected to labour welfare. ----------------------
Examples of such committees are welfare committee, safety committee,
----------------------
etc. Such committees have not proven to be too effective in promoting
industrial democracy, increasing productivity and reducing labour unrest. ----------------------
6. Participation through collective bargaining: Through the process
----------------------
of collective bargaining, management and workers may reach collective
agreement regarding rules for the formulation and termination of the ----------------------
contract of employment, as well as conditions of service in an establishment.
Even though these agreements are not legally binding, they do have some ----------------------
force. For collective bargaining to work, the workers’ and the employers’
----------------------
representatives need to bargain in the right spirit. But in practice, while
bargaining, each party tries to take advantage of the other. This process ----------------------
of collective bargaining cannot be called WPM in its strongest sense as in
reality; Collective bargaining is based on the crude concept of exercising ----------------------
power for the benefit of one party. WPM, on the other hand, brings both the
----------------------
parties together and develops appropriate mutual understanding and brings
about a mature responsible relationship. ----------------------
7. Participation through job enlargement and job enrichment: Excessive
----------------------
job specialisation that is seen as a by-product of mass production in
industries, leads to boredom and associated problems in employees. Two ----------------------
methods of job designing – job enlargement and job enrichment – are seen
as methods of addressing the problems. ----------------------
Job enlargement means expanding the job content – adding task elements ----------------------
horizontally.
----------------------
Job enrichment means adding ‘motivators’ to the job to make it more
rewarding. This is WPM in that it offers freedom and scope to the workers ----------------------
to use their judgement. But this form of participation is very basic as
it provides only limited freedom to a worker concerning the method of ----------------------
performing his/her job. ----------------------
The worker has no say in other vital issues of concern to him – issues such
as job and income security, welfare schemes and other policy decisions. ----------------------
8. Participation through suggestion schemes: Employees’ views are ----------------------

invited and reward is given for the best suggestion. With this scheme, the
----------------------
employees’ interest in the problems of the organisation is aroused and
maintained. Progressive managements increasingly use the suggestion ----------------------
schemes. Suggestions can come from various levels. The ideas could
range from changes in inspection procedures to design changes, process ----------------------
simplification, paperwork reduction and the like. Out of various
----------------------

Notes suggestions, those accepted could provide marginal to substantial benefits
to the company. The rewards given to the employees are in line with the
---------------------- benefits derived from the suggestions.
---------------------- 9. Participation through quality circles: The concept originated in Japan in
the early 1960s and has now spread all over the world. A QC consists of
---------------------- seven to ten people from the same work area who meet regularly to define,
analyse and solve quality and related problems in their area. These circles
----------------------
require a lot of time and commitment on the part of members for regular
---------------------- meetings, analysis, brainstorming, etc. Most QCs have a definite life cycle
---------------------- – one to three years. Few circles survive beyond this limit either because
they lose steam or they face simple problems. QCs can be an excellent
---------------------- bridge between participative and non-participative approaches. For QCs
to succeed in the long run, the management needs to show its commitment
---------------------- by implementing some of the suggestions of the groups and providing
---------------------- feedback on the disposition of all suggestions.
10. Empowered teams: Empowerment occurs when authority and
----------------------
responsibility are passed on to the employees who then experience a
---------------------- sense of ownership and control over their jobs. Employees may feel more
responsible, may take initiative in their work, may get more work done,
---------------------- and may enjoy the work more.
---------------------- 11. Total quality management: TQM refers to the deep commitment, almost
obsession, of an organisation to quality. Every step in company’s processes
---------------------- is subjected to intense and regular scrutiny for ways to improve it. Some
---------------------- traditional beliefs like the following are discarded:
• High quality costs more.
----------------------
• Quality can be improved by inspection.
----------------------
• Defects cannot be completely eliminated.
----------------------
• Quality in the job of the QC personnel. New principles of TQM are:
----------------------
• Meet the customer’s requirement on time, the first time, and 100%
---------------------- of the time.
---------------------- • Strive to do error-free work.

• Manage by prevention, not correction.
----------------------
• Measure the cost of quality.
----------------------
TQM is called participative because it is a formal programme involving
---------------------- every employee in the organization, making each one responsible for
improving quality every day.
----------------------
12. Financial participation: This method involves less consultations or even
---------------------- joint decisions. Performance of the organisation is linked to the performance
of the employee. The logic behind this is that if an employee has a financial
----------------------

stake in the organisation, he/she is likely to be more positively motivated Notes
and involved. Some schemes of financial participation are:
----------------------
• Profit-linked pay
• Profit sharing and Employees’ Stock Option schemes ----------------------
• Pension-fund participation ----------------------
Measures for making Participation effective ----------------------
1. Employer should adopt a progressive outlook. They should consider the
industry as a joint endeavour in which workers have an equal say. Workers ----------------------
should be provided and enlightened about the benefits of their participation ----------------------
in the management.
2. Employers and workers should agree on the objectives of the industry. ----------------------
They should recognise and respect the rights of each other. Workers and ----------------------
their representatives should be provided education and training in the
philosophy and process of participative management. Workers should be ----------------------
made aware of the benefits of participative management.
----------------------
3. There should be effective communication between workers and management
and effective consultation of workers by the management in decisions that ----------------------
have an impact on them. Participation should be a continuous process. To
----------------------
begin with, participation should start at the operating level of management.
A mutual co-operation and commitment to participation must be developed ----------------------
by both management and labour.
----------------------
Modern scholars are of the view that the old adage “a worker is a worker,
a manager is a manager; never the twain shall meet” should be replaced by ----------------------
“managers and workers are partners in the progress of business.
----------------------
1. Job enrichment means adding ____________ to the job to make it ----------------------
more rewarding.
2. Job enlargement means expanding the ____________ adding task ----------------------
elements horizontally. ----------------------
----------------------
Activity 2
----------------------
Write an example of job enrichment. ----------------------
----------------------
----------------------
----------------------

Notes 8.8 EVOLUTION OF PARTICIPATIVE MANAGEMENT IN INDIA
---------------------- The beginning of WPM was made with the Industrial Disputes Act,
1947, which made works committees mandatory in industrial establishments
---------------------- employing 100 or more workers.
---------------------- Section 3 of the Industrial Disputes Act, 1947 empowered appropriate
governments to require employers employing 100 or more workmen in any
---------------------- industrial establishment to constitute works committees. The Act and rules
---------------------- made under it provide that the total number of representatives on the works
committee including those of the employer should not exceed 20, and that
---------------------- the number of representatives of workers should not be less than that of the
employer. The functions that the Act visualised for the works committees were:
----------------------
• To promote measures for securing and preserving amity and good relations
---------------------- between employers and workmen
---------------------- • To that end, comment upon matters of common interest or concern
• To endeavour to compose any material difference of opinion between the
----------------------
employer and the workmen in respect of such matters
---------------------- The Industrial Policy Resolution adopted by the government in 1956 stated
that there should be some joint consultation to ensure industrial peace, and
----------------------
improve employer-employee relations. The functions of both these joint bodies
---------------------- were to be consultative and not binding on the management. The response to
these schemes was encouraging to begin with, but gradually waned.
----------------------
A study team was appointed in 1962 to report on the working of joint
---------------------- councils and committees. The team identified some reasons for their failure.
No concrete steps were taken to remove the difficulties, or change the pattern
---------------------- of participative management.
---------------------- During the emergency of 1975-77, the interest in these schemes was revived
by the then Prime Minister by including Workers’ Participation in industry in
---------------------- the government’s 20-point programme (refer for detail Page 246 of Industrial
---------------------- Relations, Trade Unions and Labour Legislation by P.R.N. Sinha, Indubala
Sinha, Seema Priyadarshini Shekhar). The government started persuading large
---------------------- enterprises to set up joint consultative committees and councils at different
levels.
----------------------
The Janata Government who came to power in 1977 carried on this initiative.
---------------------- It was again emphasised by the Congress government who came back in 1979.
This continued in a “non-statutory vein” till the late 1980s, and the response from
---------------------- the employers and employees stayed lukewarm. Then, the 42nd Amendment to
---------------------- the Constitution was made.
Now, Article 43-A of the Constitution reads: The State shall take steps, by
----------------------
suitable legislation, or in any other way, to secure the participation of workers in
---------------------- the management of undertakings, establishments or other organisations engaged
in any industry. Thus, participative management is a constitutional commitment
---------------------- in India.

8.8.1 Reasons for Failure of Workers’ Participation Movement in India Notes
The reasons for the failure of workers’ participation movement in India are:
----------------------
1. Employers resist the participation of workers in decision-making. This is
because they feel that workers are not competent enough to take decisions. ----------------------
2. Workers’ representatives who participate in management have to perform ----------------------
the dual roles of workers’ spokesman and a co-manager. Very few
representatives are competent enough to assume the two incompatible ----------------------
roles.
----------------------
3. Generally, trade unions’ leaders who represent workers are also active
members of various political parties. While participating in management ----------------------
they tend to give priority to political interests rather than the workers’ ----------------------
cause.
4. Schemes of workers’ participation have been initiated and sponsored by ----------------------
the Government. However, there has been a lack of interest and initiative ----------------------
on the part of both the trade unions and employers.
5. In India, labour laws regulate virtually all terms and conditions of ----------------------
employment at the workplace. Workers do not feel the urge to participate ----------------------
in management, having an innate feeling that they are born to serve and not
to rule. ----------------------
6. The focus has always been on participation at the higher levels, lower ----------------------
levels have never been allowed to participate much in the decision-making
in the organisations. ----------------------
7. The unwillingness of the employer to share powers with the workers’ ----------------------
representatives, the disinterest of the workers and the perfunctory attitude
of the government towards participation in management act as stumbling ----------------------
blocks in the way of promotion of participative management.
----------------------

1. A mutual co-operation and commitment to participation must be ----------------------
developed by both management and labour.
----------------------
----------------------
Activity 3
----------------------
Write down your views on what an employer should do for making
participation effective. ----------------------
----------------------
----------------------
----------------------

Notes Summary
---------------------- • Workers’ participation in management implies mental and emotional
involvement of workers in the management of the enterprise. It is considered
----------------------
as a mechanism where workers have a say in the decision.
---------------------- • Worker participation in India has achieved only partial success due to
---------------------- factors like lack of proper education among workers, lack of understanding
between the management and the workers and multi-unionism.
---------------------- • A good organisational environment built on mutual trust and confidence
---------------------- between the management and the workers would help in effective and
successful worker participation in management.
----------------------
---------------------- Keywords
---------------------- • Participation: Mental and emotional involvement rather than mere

physical presence.
----------------------
• Industrial unrest: Industrial conflict is a struggle between two organised
---------------------- groups.
• Quality circle: It consists of seven to ten people from the same work
----------------------
area who meet regularly to define, analyse and solve quality and related
---------------------- problems in their area.
----------------------
----------------------
1. What do you understand by workers’ participation in management?
----------------------
2. Explain the objectives of workers’ participation in management.
---------------------- 3. Examine the conditions for workers’ participation in management.
----------------------
----------------------
----------------------
---------------------- 1. It ensures greater share of workers’participation in discharge of managerial
---------------------- functions:
i. Administrative participation
----------------------
----------------------
Fill in the blanks.
---------------------- 1. Job enrichment means adding motivators to the job to make it more
rewarding.
----------------------
2. Job enlargement means expanding the job content, adding task elements
---------------------- horizontally.

----------------------
1. True
----------------------
Suggested Reading ----------------------
----------------------
2. Varandani, Gursharan. 1987. Workers’Participation in Management: With
Special Reference to India. New Delhi: Deep & Deep Publications. ----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Domestic Enquiry
UNIT
9
Structure:
9.1 Introduction
9.2 Definition of Domestic Enquiry
9.3 Principles of Domestic Enquiry
9.4 Role of Participants in Domestic Enquiry
9.4.1 Who should be the Enquiry Officer?
9.5 Charge Sheet
9.6 Suspension
9.7 Procedure Prior to Enquiry
9.8 Show-Cause Notice
9.9 Proper Domestic Enquiry
9.10 Notes of Enquiry
9.11 Procedure Subsequent to Enquiry
Summary
Key Words
Suggested Reading
Domestic Enquiry 153

Notes
Objectives
----------------------
---------------------- After going through this unit, you will be able to:
• Define domestic enquiry
----------------------
• State the principles of domestic enquiry
----------------------
• Analyse the stages of domestic enquiry
---------------------- • Discuss the procedure in a domestic enquiry from a statutory point of
view
----------------------
----------------------
9.1 INTRODUCTION
----------------------
For the smooth functioning of an industry, the defined codes of discipline,
---------------------- contracts of service by awards, agreements and standing orders must be adhered
to. In the event of an employee not complying with these codes of conduct, he is
---------------------- liable to face disciplinary actions initiated by the Management according to the
---------------------- Standing Order. This procedure is called Domestic Enquiry and it is conducted
in accordance with the standing order/agreements.
----------------------
Domestic enquiry is similar to a trial in a court of law, but while a trial
---------------------- in a court is for crimes done against society, domestic enquiry is conducted
for misconducts committed against the establishment punishable under the
---------------------- standing orders, rules and regulations of the organisation. Further, while a trial
in a court is in accordance with the Criminal Procedure Code, Civil Procedure
----------------------
Code, Evidence Act, the domestic enquiry is conducted in terms of what is
---------------------- known as ‘Natural Justice’.
A domestic inquiry is an internal hearing held by an employer to establish
----------------------
whether an employee is guilty of misconduct and to provide an opportunity for
---------------------- the employee to state his case. Misconduct related to duty, discipline or morality
could either be a minor misconduct or a major one. Preliminary investigation
---------------------- to establish this would need to be carried out almost immediately on receiving
the complaint. All those involved need to be interviewed and their evidence/
----------------------
statements recorded in writing. For a minor misconduct an employee could be
---------------------- issued a warning letter while for a major misconduct it becomes necessary to
conduct a domestic enquiry.
----------------------
Also, the enquiry officer while examining the evidence and pronouncing
---------------------- on the guilt is not authorised to penalise the employee. It is only the employer
or the appointing authority, also known as notified disciplinary authority, who
---------------------- can pronounce the penalty.
---------------------- Domestic enquiry is not considered a legal requirement under the
Industrial Disputes Act, or other substantive laws such as the Factories Act,
---------------------- Mines Act, etc. but has been provided under the standing orders to be framed
---------------------- under the Industrial Employment (Standing Order Act), 1946. As a result, it is

now well established that such standing orders have the force of law and Notes
constitute statutory terms of employment.
----------------------
The case law established over a long period has made it obligatory
for the employers to hold a fair and just enquiry to prove the misconduct before ----------------------
awarding any serious punishment.
----------------------
Dismissal of an employee without holding a fair and just domestic enquiry
amounts to the violation of the principles of natural justice and is frowned upon ----------------------
by the Labour Courts/Industrial Tribunals and adverse conclusions may be
drawn against the employer for not holding a domestic enquiry, in so much so ----------------------
that the dismissal without holding a domestic enquiry is deemed to be illegal.
----------------------
9.2 DEFINITION OF DOMESTIC ENQUIRY ----------------------
Based on the above description of domestic enquiry, we understand that ----------------------

the term domestic enquiry is mainly used to refer to an enquiry into the charges
----------------------
of indiscipline and misconduct by an employee. In common parlance, domestic
enquiry means departmental enquiry or domestic tribunal. In such enquiries, the ----------------------
matter is decided by administrative officers and not by courts of law. In cases of
alleged indiscipline, it is common for disciplinary authorities in a department ----------------------
or in an industry to appoint an officer or officers to enquire into the allegations
----------------------
against an employee. These enquiries are commonly known as ‘Domestic
Enquiries’. ----------------------
A domestic enquiry is an internal hearing held by an employer to ascertain
----------------------
whether an employee is guilty of misconduct. The purpose of a domestic enquiry
is to find out the truth of the allegations made against the workman. ----------------------
The Industrial Court, in the course of adjudicating whether a dismissal is
----------------------
without just cause or excuse within the context of law does not merely examine
whether there were proper grounds for the employer to terminate the services ----------------------
of the employee but also examines whether the process by which the employee
was terminated was fair or unfair. ----------------------
This aspect of “procedural fairness” in the taking of disciplinary action ----------------------
against an employee may often be a crucial factor in deciding whether the
dismissal will be upheld by the Court. It is therefore, imperative to recognise that ----------------------
upholding a dismissal in the Industrial Court involves satisfying two criteria: ----------------------
• That there were proper grounds for terminating the employee;
----------------------
• That the procedure by which the employee was terminated was fair.
----------------------
In conducting a domestic enquiry the rules of natural justice must be adhered
to. Justice must not only be done but must be seen to be done; the “twin pillars” ----------------------
of natural justice being “no person shall be condemned unheard” and “no person
shall sit in judgment in his own cause or in any in which he is interested”. It ----------------------
is in this context that the importance of conducting a proper domestic enquiry
----------------------
assumes significance. The domestic enquiry should not be regarded by the
employer as a “mere formality” nor an unnecessary inconvenience but an ----------------------

Notes integral part of the disciplinary process whereby the employer can establish that
the termination of the employee was with just cause or excuse. The objective
---------------------- of holding a domestic enquiry is two-fold. Firstly, to give the opportunity to the
employer to prove the charges of misconduct against a delinquent employee
---------------------- before punishment is meted out and secondly to give the employee sufficient
---------------------- opportunity to defend himself. Rather than view the domestic enquiry as burden
on the management, and an unnecessary waste of time, resources and expense,
---------------------- the employer, should view the process of the enquiry as a means to show that
every possible means was made available to avail the employee of meeting the
---------------------- charges against him and, if possible, clearing himself.
---------------------- Position under the Employment Act, 1955
---------------------- Under Section 14(1) of the Employment Act, 1955, it is stated that
an employer may, “After Due Enquiry”, dismiss the employee or take other
---------------------- disciplinary action including downgrading and suspension of the employee
on grounds of misconduct inconsistent with the fulfillment of the express or
----------------------
implied conditions of service.
---------------------- The effect of the incorporation of the term “Due Enquiry” into the provisions
of Section 14(1) of the Employment Act, 1955 was considered in detail in the
----------------------
recent Federal Court decision of Said Dharmalingam v. Malayan Breweries
---------------------- (Malaya) Sdn Bhd (1997) 1 CLJ 646 where the Court stated as follows:
---------------------- “In R. v. BBC, ex parte Lavelle (1982) 1 RId 404, Woolf J indicated, albeit
obiter, that when there is a procedure for dismissal in an employment not covered
---------------------- by statute at all, employers must comply with that procedure for the dismissal
to be valid. If the contractual procedure was infringed, an injunction should
---------------------- be issued to prevent the dismissal. This view was partly based on the notion
---------------------- that employment protection legislation had substantially changed the position
at common law, so that ‘the ordinary contract between master and servant now
---------------------- has many of the attributes of an office.
---------------------- In the present case, there is a statutory requirement, to wit, s. 14(1) of the
Act, providing for the elementary safeguard of the right to “due enquiry” by the
---------------------- employer. It follows, that at least, prima facie, a dismissal in breach of s. 14(1)
would be void.
----------------------
Having said that, we must add, that when, as here, a claimant is an employee
---------------------- within the meaning of the Act, he has by s. 14(2) thereof a statutory right to
“due enquiry” by his employer, and so, the approach of the Industrial Court or
---------------------- for that matter the High Court, in considering the question whether the claimant
---------------------- had been dismissed without just cause or excuse, would be, to examine the
decision not just for substance but for process as well.”
----------------------
The decision of the Federal Court in Said Dharmalingam clearly states in
---------------------- respect of employees governed by the Employment Act that unless there is due
enquiry prior to dismissal for misconduct, the dismissal can be struck down
---------------------- by the Industrial Court even if the employer can show sufficient grounds to
dismiss. Hence, “procedural fairness” is crucial in successfully upholding the
----------------------
dismissal.

It should perhaps be noted that an earlier Federal Court decision in Milan Notes
Auto Sdn Bhd v Wong Sen Yen (1996) 1 AMR 49 held that the requirement of
“due enquiry” before dismissal in Section 14(1) of the Employment Act was not ----------------------
mandatory and, even if there was a defective enquiry, it was “curable” in the
sense the Industrial Court could still enquire into the decision to dismiss and ----------------------
uphold the same if proper grounds were made out. ----------------------
It is respectfully suggested that the decision in the Milan Auto case can
----------------------
be explained on the basis that there, the Industrial Court wrongly struck down a
dismissal without inquiring into the merits of the dismissal which it was required ----------------------
to do under Section 20 of the Industrial Relations Act, 1967. However, given
that the most recent pronouncement on the question of due enquiry, is as set out ----------------------
in the Said Dharmalingam’s case, it is respectfully suggested that all prudent
----------------------
employers should, when dealing with complaints of misconduct of employees
governed by the Employment Act, ensure that a proper enquiry is conducted or ----------------------
run the risk of dismissal being struck down.
----------------------
It is suggested that as a matter of good industrial practice and irrespective
of which the employee is governed by the Employment Act or not, a domestic ----------------------
enquiry should be held whenever a complaint of misconduct is brought to ensure
that the employee is accorded fair treatment in answering the charge. ----------------------
----------------------
----------------------
Fill in the blank.
----------------------
1. The purpose of a ______________ is to find out the truth of the
allegations made against the workman. ----------------------
----------------------
Activity 1 ----------------------
Mention about any one domestic enquiry, if any, held in your organisation. ----------------------
----------------------
9.3 PRINCIPLES OF DOMESTIC ENQUIRY
----------------------
We shall now examine the principles of the domestic enquiry and the
----------------------
necessary procedures to ensure that no challenge can be successfully taken to
claim the enquiry as unfair. Rule of Natural Justice must be observed. ----------------------
• The delinquent is entitled to a just hearing.
----------------------
• He can call for his own evidence.
----------------------
• Cross-examine any witness called by the prosecution.
• Where rules are laid down, the procedure of such rules must be followed. ----------------------
----------------------
----------------------

Notes • Disclose to the employee concerned, the documents of records and offer
him an opportunity to deal with it.
----------------------
• Do not examine any witness in the absence of the employee.
---------------------- • The enquiry officer is at liberty to disallow any evidence after recording
the reasons in writing.
----------------------
Requirements in a Domestic Enquiry
----------------------
• Panel of enquiry to consider
---------------------- • Evidence
---------------------- • Proof of facts by oral evidence
---------------------- • Proof of contents of documents
• Burden of Proof
----------------------
• Adverse Inference (Section 144, Evidence Act, 1950)
----------------------
---------------------- 9.4 ROLE OF PARTICIPANTS IN DOMESTIC ENQUIRY
---------------------- The persons concerned with domestic enquiry are:
---------------------- a) Enquiry officer: The Enquiry Officer is the officer appointed by the
disciplinary authority to conduct an enquiry into the allegations leveled
---------------------- against the charge sheeted employee. The Enquiry Officer’s job is to
listen to and record the statements of both the parties, i.e., the accused
---------------------- employee and the management representative; allow both the parties to
---------------------- submit to him the relevant documents in support of their contentions; allow
both the parties to examine their witnesses as well as cross-examine the
---------------------- other’s witnesses; allow both the parties to submit arguments and counter
arguments in respect of the charges and evidence adduced in the enquiry;
---------------------- and finally submit his enquiry report to the disciplinary authority.
---------------------- b) Presenting officer: Presenting Officer is the officer appointed to present the
case of the management before the Enquiry Officer relating to the charges
---------------------- leveled against the accused employee. The Presenting Officer will produce
---------------------- in the enquiry; all the relevant documents relating to the charges levelled
against the employee and also examine the witnesses of the Company
---------------------- as well as cross-examine the witnesses of the charge sheeted employee.
In other words, he plays the role of the Prosecutor. In cases where felt
---------------------- appropriate, complainant may also be appointed as Presenting Officer.
---------------------- c) Charge sheeted employee: It is necessary that the enquiry should be
held in the presence of the accused. If, however, the employee fails to
---------------------- report for the enquiry at the appointed place, date and time, the Enquiry
---------------------- Officer may proceed with the enquiry ex-parte, provided the charge sheet
or the enquiry notice included a provision to that effect.
----------------------
d) Defence assistant of the accused employee: If the accused employee
---------------------- wishes another employee of his choice to assist him at the enquiry in the

conduct of his defence, it should be allowed, if a request is made for a non- Notes
employee union office-bearer, he may be allowed if there is a provision to
that effect under the Conduct, Discipline and Appeal Rules. ----------------------
e) Interpreter: The presence of an interpreter, from amongst the employees, ----------------------
would be desirable in case the accused employee is not familiar with the
language in which the enquiry is conducted. ----------------------
f) Management witnesses: These are the persons who appear in the enquiry ----------------------
to give their statements in support of the charges leveled against the charge
sheeted employee. ----------------------
g) Charge sheeted employee’s witnesses: These are the persons who appear ----------------------
in the enquiry to give their statements in defence of the charge sheeted
employee. ----------------------
9.4.1 Who should be the Enquiry Officer? ----------------------
a) If a person is the witness in the case, he should not be Enquiry Officer. ----------------------
b) The Enquiry Officer should not be appointed by an officer who is a witness
in the case. ----------------------
c) Enquiry Officer can be any officer of the Company. In exceptional cases, if ----------------------
it is felt desirable, any public servant or retired honest public servant may
----------------------
be appointed as enquiry officer (*Subject to the provisions of Rules).
d) Aperson to be an Enquiry Officer must be a responsible officer commanding ----------------------
respect from the employee. He should not be a judge in his own case.
----------------------
e) A person to be an Enquiry Officer should be open-minded and unbiased.
----------------------
9.5 CHARGE SHEET ----------------------
If on the basis of preliminary enquiry or otherwise, the disciplinary authority ----------------------
is satisfied that a prima facie case exists and decides to take disciplinary action
against the employee concerned, the first thing to be done is to issue a charge ----------------------
sheet to the delinquent employee. Charge sheet is a memorandum of charges or
----------------------
allegations leveled against the employee which are acts of misconduct as per
the Conduct, Discipline and Appeal Rules. ----------------------
When the management comes to know that a particular act of misconduct ----------------------
has been committed by an employee, they should hold a preliminary enquiry
into the matter. Such an enquiry may be termed as fact-finding enquiry. The ----------------------
delinquent may also be interrogated during the enquiry. The object is to arrive
at a conclusion whether a prima facie case exists for taking disciplinary action ----------------------
against the workman concerned. In the preliminary enquiry, if the management ----------------------
is satisfied that an act of misconduct has been committed which would
necessitate taking some disciplinary action against the employee concerned, ----------------------
then the charge sheet will be issued.
----------------------
Charge sheet is not an accusation made or information given in abstract but
an accusation made against a person in respect to an act committed or omitted ----------------------

Notes in violation. In other words, it is an accusation made against a person in respect
to an offence alleged to have been committed by him. The employer cannot
---------------------- justify his action on any grounds other than those contained in the charge sheet.
The charge sheet, however, is not expected to be a record of evidence. The
---------------------- person signing the charge sheet is not an accuser. He does not make himself
---------------------- responsible for the truth of the facts set out in the charge sheet. He merely tells
the accused what he is supposed to have done (Bennet Coleman & Co. LAC
---------------------- p.2 1956).
---------------------- Checklist for preparation of Charge Sheet
While framing a charge sheet, the following items may be kept in mind
----------------------
so that nothing relevant would be missing from the charge sheet:
---------------------- a) Date of charge sheet.
---------------------- b) Correct Name and Card No./Employee No. of delinquent employee.
---------------------- c) Specify date of incident.

d) Description of incident.
----------------------
e) Reproduce the language in verbatim if there are words of abuse, defamation
---------------------- or threat.
---------------------- f) Give reference of relevant rules of Conduct, Discipline and Appeal Rules.
---------------------- g) Specify within how much time and to whom the reply should be submitted.
h) Check the authority competent to issue the charge sheet (See Conduct,
---------------------- Discipline and Appeal Rules or Delegation of Powers, as the case may be).
---------------------- i) Decide whether employee is to be kept under suspension or not.
---------------------- j) Decide whom to send the copies of charge sheet.
Guidelines for preparing Charge Sheet
----------------------
a) The charge sheet should be specific and must spell out all the relevant
---------------------- particulars of the misconduct.
---------------------- b) As far as possible, it should be precisely mentioned in the charge sheet as
to under which rule or clause, the charges constitute acts of misconduct so
---------------------- as to enable the employee as to which rules are applicable to him in this
---------------------- context.
c) The charge sheet must be signed by the competent authority so as to avoid
---------------------- facing a situation where the charge sheet is made invalid because it is
---------------------- signed by incompetent authority.
Time for reply to Charge Sheet
----------------------
A reasonable period of time should be given to the employee to submit his
---------------------- reply to the charge sheet. Time as stipulated in the Conduct, Discipline & Appeal
Rules, but not less than 48 hours from the receipt of the charge sheet by the
----------------------
employee should be allowed for submission of his reply. If the charge-sheeted
----------------------

employee requests for extension of time, such request(s) may be considered on Notes
its own merits.
----------------------
Who signs the Charge Sheet?
Unless it is delegated otherwise, Disciplinary Authority is the Competent ----------------------
Authority to sign charge sheet. From the Annexure, it may be seen that for
----------------------
major penalties, the Disciplinary Authorities are different from those for minor
penalties. At the stage of issuing the charge sheet, it may always not be very clear ----------------------
whether the offence is such that a major penalty may be imposed ultimately or
the decision would be only in favour of a minor penalty. Except for very simple ----------------------
cases where beyond doubt the offence may lead to imposition of only a minor
----------------------
penalty, it will be desirable to have the charge sheet issued under the signature
of Disciplinary Authorities empowered to impose major penalty. ----------------------
Service of Charge Sheet
----------------------
Serving the charge sheet on the delinquent employee plays a very
important role in disciplinary proceedings. Hence, all efforts should be made by ----------------------
the employer to see that the charge sheet is served on the delinquent employee. ----------------------
The charge sheet may be handed over to the employee and his signature or
thumb impression of his having received the same obtained on the office copy. ----------------------
In case he refuses to accept the charge sheet, an endorsement to the effect ----------------------
should be made on the office copy in the presence of at least two witnesses
whose signatures should be obtained. ----------------------
In case the concerned employee receives the charge sheet but refuses to ----------------------
sign or give his thumb impression on the office copy, an endorsement to the
effect should be made on the office copy and signatures of at least two witnesses ----------------------
may be taken.
----------------------

1. It is not an accusation made or information given in abstract but an ----------------------
accusation made against a person in respect of an act committed or
omitted in violation. ----------------------
i. Charge sheet ----------------------
ii. Report ----------------------
iii. Enquiry
----------------------
iv. Domestic enquiry
----------------------
----------------------
----------------------
----------------------

Notes
Activity 2
----------------------
Try to collect the specimen of a charge sheet issued by any organisation.
----------------------
----------------------
9.6 SUSPENSION
----------------------
Suspension from duty means keeping an employee away from workplace
---------------------- temporarily for reasons of discipline. Suspension does not mean removal from
service. If a person is suspended, he continues to be in service, but is in a state,
----------------------
as it were of suspended animation.
---------------------- When to Suspend
---------------------- The suspension of an employee from duty often arises under the following
three different types of situations:
----------------------
a) Suspension pending domestic enquiry: If an employee has committed
---------------------- serious acts of misconduct such as assault, sabotage, etc. and his presence
inside the work premises poses a threat to the safety of the men and material,
---------------------- he may be kept under suspension immediately, pending investigations.
---------------------- This is called Suspension Pending Domestic Enquiry. At this stage, a
suspension cannot be called a punishment. It is desirable to issue the order
---------------------- of suspension along with charge sheet but if it is not possible, the charge
sheet must follow within 7 days of issue of suspension order.
----------------------
b) Suspension pending court’s order: The disciplinary authority has the
---------------------- right to keep an employee under suspension, if he is accused in a court of
law for any criminal offence, until the disposal of the trial.
----------------------
When an employee is suspended pending enquiry, he should be paid
---------------------- subsistence allowance at the following rates:
---------------------- a. For the first 90 days of suspension, 50% of the wage.
b. After the first 90 days of suspension, subsistence allowance should
----------------------
be paid at the rate of 75% of the wage.
---------------------- The standing order further states that if there is any law that provides for
higher subsistence allowance, the employee shall be entitled for the higher
----------------------
subsistence allowance.
---------------------- c) Suspension as Punishment
---------------------- Even though an employee is not suspended pending enquiry, if it is decided
to punish him by way of suspension for the acts of misconduct committed
---------------------- by him, the disciplinary authority may do so after the conclusion of enquiry
---------------------- in which case the suspended employee will not be entitled to any payment
for the period of suspension since it is a punishment imposed on him.
----------------------
----------------------

Status of Suspended Employee Notes
(a) During the period of suspension, the suspended employee shall not enter
----------------------
the work premises without the permission of the disciplinary authority or
any other authority competent to do so. ----------------------
(b) The suspended employee shall not leave the station without the written
----------------------
permission of the competent authority.
(c) The employee suspended pending enquiry shall be paid subsistence ----------------------
allowance as admissible to him under CDA Rules, which will increase/
----------------------
decrease depending upon the merits of the case if the period of suspension
gets prolonged. ----------------------
(d) No leave shall be granted to a suspended employee during the period of ----------------------
suspension.
(e) The suspended employee will not be paid subsistence allowance if he is ----------------------
engaged in any other employment, business, profession or vocation. ----------------------
(f) If it is decided after the conclusion of enquiry not to remove the suspended
employee from service, he will be simply allotted the job treating the period ----------------------
of suspension as on duty or leave as decided by the disciplinary authority. ----------------------
(g) If an employee suspended pending enquiry submits resignation, it is
----------------------
normally not accepted unless it is in the company interest.
----------------------
----------------------
----------------------
1. The Suspended employee shall not leave the station without the written
permission of the competent authority. ----------------------
----------------------
Activity 3 ----------------------
Write down the procedure of suspension of employees in your organisation. ----------------------
----------------------
9.7 PROCEDURE PRIOR TO ENQUIRY ----------------------
Investigation of Complaint ----------------------
Normally, the source of the complaint comes from the employee’s
----------------------
immediate superior or a fellow employee.
It is essential to investigate the complaint as soon as possible. This ----------------------
has the double advantage of obtaining the relevant evidence before it becomes
----------------------
difficult or impossible to trace and also to avoid any allegation by the employee
----------------------
----------------------

Notes subsequently that the employers have “condoned” the alleged misconduct.
It is always useful to interview all parties concerned in the complaint and
----------------------
have their statements recorded. In charges involving financial irregularities
---------------------- and misconduct, it is best that an internal audit be conducted and full and
comprehensive report be compiled. A difficulty can sometimes arise, if the
---------------------- complaint is from an outside source, i.e., not within the employment, organisation
and such person is reluctant to give any written statement to substantiate his
----------------------
complaint. There could be difficulties if the employee, when confronted, makes
---------------------- a total denial of the allegation.
To obviate the difficulty, it is suggested that the outsider complainant
----------------------
(i.e., the third party), should be persuaded to reduce his complaint in writing
---------------------- so that disciplinary action can be instituted against the employee concerned. At
the same time, the investigation officer should ascertain if other supporting
---------------------- evidences from within the Company can be obtained to corroborate or support
the complaint so that the third party’s complaint does not stand by itself.
----------------------
It is also important that the investigating officer is unconnected with
---------------------- the allegations and not a person who is likely to be selected to sit on the
Enquiry Panel. If the investigation involves some special expertise and skill or
----------------------
understanding of a particular area of the operations, a suitably qualified person,
---------------------- well versed in the area should be approached to assist in the investigation.
---------------------- 9.8 SHOW-CAUSE NOTICE

----------------------
If the investigation establishes a prima facie case justifying the complaint
---------------------- which calls for an explanation from the employee, the employer should then
proceed to issue a show-cause notice.
----------------------
The letter should be drafted in clear and unambiguous language setting out
---------------------- all the allegations to which the employee is requested to “show cause”. It should
normally be signed by the Personnel Manager or Head of the Department.
---------------------- Where the charges are of a technical nature, i.e., misappropriation or breach of
trust, it is best to draft the same in the format of a charge in a criminal case. This
----------------------
will immediately highlight the elements of the offence that need to be proved
---------------------- and would also provide for precision in the drafting.
---------------------- Where possible, the charge should specifically refer to which rules or
regulations, there has been a breach. If no specific rules have been breached, it
---------------------- is best to state that the charges constitute either a breach of both the express and/
or implied terms of the contract of employment.
----------------------
The show-cause notice should be confidential and preferably delivered
---------------------- to the employee personally. If this is not possible, the letter should be sent to
the employee’s address.
----------------------
Suspension during Period to Show Cause
----------------------
Care must be taken that the period of suspension and the amount of pay
---------------------- the employee receives during the period of suspension are in accordance with

the provisions of the Employment Act or relevant Collective Agreement, Notes
where applicable.
If extension of the period of suspension is required to complete ----------------------
investigations, especially upon receipt of the employee’s reply to the ----------------------
show-cause notice, the employee must be notified accordingly. It is advisable
to ensure that the employee receives his full salary for any extended period of ----------------------
suspension.
----------------------
It is normal that suspension is invoked where the presence of the employee
is likely to jeopardise the safety and discipline of the Company and hence, should ----------------------
only be resorted to where charges of major misconduct are made or there are
several charges. ----------------------
Furthermore, the letter of suspension should not give instructions that the ----------------------
employee should stay at his place of residence during working hours as such
an order amounts to house arrest and is unlawful. Malayan Banking Berhad v. ----------------------
Association of Bank Officers Peninsula Malaysia (Award 347 of 1986). ----------------------
Depending on the reply received from the employee, the Company
may proceed to institute a domestic enquiry. This may be necessary even if an ----------------------
employee, in his reply to the show-cause letter, gives a vague response and
----------------------
appears to admit to only some of the charges or just part of the charge.
----------------------
9.9 PROPER DOMESTIC ENQUIRY
----------------------
The first step is to send a notice of the domestic enquiry to the employee
----------------------
concerned. The notice should give particulars of the date, time and place of
the enquiry and should stipulate that the employee would be entitled to cross- ----------------------
examine the employer’s witnesses and, may himself, produce witnesses or
documents to rebut the charges. ----------------------
Where there are several charges of a detailed nature, care must be taken ----------------------
to ensure that the period of time between the notice of domestic enquiry and the
actual enquiry is of a reasonable period to prepare his defence. ----------------------
In the meanwhile, the employers should proceed to select the panel ----------------------
of members for the enquiry. The basic criteria for the selection should be:
(a) Officers who are not involved directly with the investigation and ----------------------
circumstances of the case. ----------------------
(b) Officers should normally be of a rank or status above the employee facing
the disciplinary charges. ----------------------
(c) The Chairman should be adequately well versed with the general legislation ----------------------
involving employment and the Industrial Court awards.
----------------------
Of particular importance is the rule that the Panel should not be seen to
be biased or even appear biased. In a number of cases, the Industrial Court has ----------------------
held that the element of bias vitiates the fairness of the dismissal.
----------------------
In Oriental Bank Ltd. v/s Zulkiflee b. Hassan, Kaiang (1986) 2 ILR 1332,
the Claimant was dismissed for breach of the express terms and limit of authority ----------------------

Notes by which he was bound and/or breach of general duty of care obligatory upon
him. The Claimant contended that the enquiry held was not carried out properly
---------------------- and his dismissal was unlawful, mala fide and amounted to an unfair labour
practice.
----------------------
In this case, the Chairman of the Enquiry was fully informed of the
---------------------- results of the investigation conducted by the investigator. Subsequently, he had
a meeting with the Claimant before the Enquiry where the Claimant gave his
----------------------
own story. Another member of the enquiry was also present during the meeting.
---------------------- The Chairman and the member knew all the facts of the allegation prior to the
enquiry.
----------------------
It was held that there was an element of bias because some of the members
---------------------- of the enquiry had known the facts of the allegations. Although the claimant
was guilty of gross negligence and was rightly dismissed, since there was bias
---------------------- in the enquiry, the Claimant was entitled to get back the wages.
---------------------- Similarly, care must be taken to ensure that the Panel does not appear overly
keen to question the employee. This role should be left to the employer’s
---------------------- representative presenting the case. While the Panel may always clarify points
arising during the course of the proceedings, they should not turn the enquiry
----------------------
into an inquisition.
----------------------
9.10 NOTES OF ENQUIRY
----------------------
All statements given in the enquiry should be carefully recorded either
----------------------
by the panel member or a member of staff for that purpose. Further, the notes
---------------------- should be typed and made available for the employee to countersign to avoid
any challenge subsequently by the employee. See OYL Condoir Industries Sdn
---------------------- Bhd v. Kulijan a/i Muthusamy & 2 ors (1992) 2 ILR 33 where the Court held
that the domestic enquiry was conducted unfairly and unjustly as the Claimants
----------------------
were not allowed to call witnesses, no notes of proceedings were recorded nor
---------------------- made.
The general procedure at the enquiry would normally be as follows:
----------------------
The charge must be read to the employee and explained to him at the
---------------------- commencement of the enquiry. If he admits the charge, he should be given the
---------------------- opportunity to express the circumstances that led him to commit the offence and
mitigate his case. The Chairman then will ask the officer presenting the case to
---------------------- briefly state the facts of the case including how the offence was committed to
enable the Panel to recommend the appropriate punishment or continue with
---------------------- the proceedings.
---------------------- If the employee concerned is absent without an explanation offered, the case
may still be heard in his absence and the outcome of it must be communicated
---------------------- to him.
---------------------- Any witness, called by either party to give statements, is to be subjected to
cross-examination by the other party. In other words, there will be an examination
----------------------

in chief by one party, cross-examination by the other party and re-examination Notes
by the former party of witnesses. Statements made by these witnesses must be
recorded and signed by them. They must not be in the room where the enquiry ----------------------
is being held until called in by the Chairman. It must also be noted that while
an employee may be accompanied by a Union representative at the enquiry, ----------------------
he is not entitled to insist on legal representation. Petroliam Nasional Bhd v. ----------------------
Mohd Radzuan B. Rarnli 1993 1 ILP. 100 and Sime Darby Plantation Sdn Bhd
v. Wong Chu Meng 1983 2 ILR 210. ----------------------
However, in the case of Chairman Board of Trustees, Bombay Port ----------------------
Trust v/s Dilip Kumar Nadkarni (1983), the Supreme Court has held that if the
management representative or the presenting officer is a legally trained person, ----------------------
then denying the workman opportunity of being defended by a legal practitioner
----------------------
will amount to denial of Natural Justice.
----------------------
9.11 PROCEDURE SUBSEQUENT TO ENQUIRY
----------------------
After the enquiry, the Chairman should discuss the case with the
panel members and decide upon the merits of the case. ----------------------
Findings should be contained in a report which should be based on the ----------------------

material and evidence produced at the enquiry giving reasons in brief for
----------------------
conclusions on the charges.
In Standard Chartered Bank v. Cliff a/l James (1991) 2 ILR 1168, the ----------------------
Court held that as no finding of the enquiry was recorded at the end of the
----------------------
notes of enquiry, this effectively invalidated the enquiry and the Court was
entitled to disregard the notes of enquiry. ----------------------
The Report, once finalised, is then sent to the appropriate executive or officer
----------------------
in management for taking the requisite action. Unless it is expressly empowered
to do so, the Panel should refrain from determining what punishment should ----------------------
be meted out although they may merely recommend disciplinary actions. The
reason is that the question of meting out the appropriate punishment does not ----------------------
involve the deliberation of the finding of the charges but other factors such as
----------------------
the employee’s previous records, warnings, etc. which would not normally be
available to the Panel. ----------------------
Once management is in a position to fully consider all the relevant factors, ----------------------
then the appropriate disciplinary action can be taken. If dismissal is decided, the
employee should be informed as soon as possible and also on what grounds he is ----------------------
being dismissed. If there is a right of appeal within the disciplinary procedures
against the decision, the employee should be directed to that fact and informed ----------------------
of the period and to whom he may exercise his right of appeal. In this regard, ----------------------
the decision of Said Dharmalingam is again of importance. In that case, the
Court held that it is incumbent on an employer to provide the employee an ----------------------
opportunity to make a plea in mitigation.
----------------------
After receiving the report and findings of the Enquiry Officer/Panel, the
management has to forward a copy of the Report and findings to the employee ----------------------

Notes Notes calling upon him to go through the report and submit his view, if any on
the report and findings. After doing so, the management can impose punishment
---------------------- on the delinquent employee.
---------------------- If without going through the copy of the report and findings of the
Enquiry officer/panel to the employee, the management awards punishment
---------------------- to the employee, the punishment can be set aside by the courts for violating the
principles of Natural Justice. This has been held by the Supreme Court in
----------------------
the case of Managing Director, Electronic Corporation of India Ltd. v/s B.
---------------------- Karunakarn 1994.
---------------------- Summary
---------------------- • For the smooth functioning of an industry, the defined codes of discipline,
---------------------- contracts of service by awards, agreements and standing orders must be
adhered to.
----------------------
• In the event of an employee not complying with these codes of conduct, he
---------------------- is liable to face disciplinary actions initiated by the management according
to the standing order.
----------------------
• This procedure is called Domestic Enquiry and it is conducted in accordance
---------------------- with the standing order, agreements. It is essential to bear in mind, at all
times, that there are no fixed criteria as to what constitutes a proper enquiry.
----------------------
• Every case must necessarily depend on the particular circumstances and
---------------------- the degree of formality and rules adopted would also be determined by the
prevailing circumstances. What is of utmost importance, however, is that
---------------------- the basic principles of natural justice are observed.
----------------------
Keywords
----------------------
• Enquiry officer: The officer appointed by the disciplinary authority to
---------------------- conduct an enquiry into the allegations leveled against the charge-sheeted
---------------------- employee.
• Domestic enquiry: An enquiry into the charges of indiscipline and
----------------------
misconduct by an employee.
---------------------- • Charge sheet: A memorandum of charges or allegations leveled against
the employee, which are acts of misconduct as per the Conduct, Discipline
----------------------
and Appeal Rules.
---------------------- • Suspension: Keeping an employee away from workplace temporarily for
reasons of discipline.
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
1. What do you understand by domestic enquiry?
2. Explain the procedure for framing the charge sheet. ----------------------
3. Examine the reason for the domestic enquiry. ----------------------
4. Explain the procedures prior to the enquiry. ----------------------
Fill in the blank. ----------------------

1. The purpose of a domesticenquiry is to find out the truth of the allegations ----------------------
made against the workman.
----------------------
1. It is not an accusation made or information given in abstract but an ----------------------
accusation made against a person in respect of an act committed or omitted
in violation. ----------------------
i. Charge sheet ----------------------
State True or False
----------------------
i. True
----------------------
1. Basu Majumdar, P.K. 2010. Law of Domestic Enquiry. New Delhi: ----------------------
Universal Law Publishing.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

The Regulative Labour Legislations
UNIT
10
Structure:
10.1 Introduction to Industrial Disputes Act, 1947

10.3 Closure of an Industry
10.4 Settlement of Disputes
10.5 Authorities under the Industrial Dispute Act
10.6 National Tribunals
10.7 Introduction to Industrial Employment [Standing Orders] Act, 1946.
10.8 The Model Standing Order
10.9 Temporary Employees
10.10 Matters to be provided in the Standing Order under this Act
10.11 Subsistence Allowance
10.12 Habitual Breach of any Standing Order
Summary
Key Words
Suggested Reading
The Regulative Labour Legislations 171

Notes
Objectives
----------------------
----------------------
• Explain the nature and consequences of industrial disputes
----------------------
• Distinguish between strikes, lockout, layoff and retrenchment
---------------------- • Analyse the constitution and roles of the various machineries in
settlement of industrial disputes
----------------------
• Recognise the need of standing orders
----------------------
• Classify workmen
---------------------- • Analyse the role of standing orders in industrial peace
----------------------
10.1 INTRODUCTION INDUSTRIAL DISPUTES ACT, 1947
----------------------
The Industrial Disputes Act has been an endeavour on the part of the
----------------------
Government to regulate industrial relations in India and it is designed to ensure
---------------------- industrial peace and harmony. It lays down authorities and procedure for
investigation and settlement of industrial disputes by negotiation, conciliation,
---------------------- adjudication instead of trial of strength through strikes and lockouts as part of
objective of preventing work stoppage.
----------------------
Short title, extent and commencement
----------------------
1. This act may be called the Industrial Disputes act, 1947,
----------------------
2. It extends to the whole of India,
---------------------- 3. It shall come into force on the first day of April 1947.
----------------------
10.2 IMPORTANT DEFINITIONS
----------------------
In this act, unless there is anything repugnant in the subject of context,
----------------------
1. ‘Industry’means any systematic activity carried on by co-operation between
---------------------- any employer and his workmen (whether such workmen are employed by
such employer directly or by or through any agency, including a contractor
---------------------- for the production supply or distribution of goods or services with a view
to satisfy human wants or whishes (not being wants or wishes which are
----------------------
merely spiritual or religious in nature).
---------------------- 2. “Industrial Dispute” means any dispute or difference between employers
and employers or between employers and workmen, or between 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;
---------------------- i. ‘Industrial establishment’ or ‘undertaking’ means an establishment

or undertaking in which any industry is carried on;
----------------------

ii . ‘Lay-off’ means the failure, refusal or inability of an employer Notes
on account of shortage of coal, power or raw materials or the
accumulation of stocks or the break-down of machinery or natural ----------------------
calamity to give employment to a workman whose name is born
on the muster-rolls of his industrial establishment and who has not ----------------------
been retrenched, he is paid lay-off composition. ----------------------
iii.. ‘Lock-out’means the temporary closing of work place of employment
----------------------
or the suspension of work or the refusal by an employer to continue
to employ any number of persons employed by him. ----------------------
Activity 1 ----------------------
----------------------
Has there been any dispute recently in any organisation in your knowledge?
What was the cause of the dispute? As a manager, how would you attempt ----------------------
to resolve that dispute? ----------------------
----------------------
10.3 CLOSURE OF AN INDUSTRY
----------------------
1. Means the permanent closing down of a place of employment or part-
thereof. ----------------------
●● It means working totally comes to a standstill. ----------------------
●● It is unemployment of all workmen.
----------------------
●● n employer intending to close the establishment should give 90-
A
days notice to the appropriate government. ----------------------
(i) Notice on sufficient grounds. ----------------------

(ii) If no notice is given and if permission is refused, the closure will be ----------------------
illegal.
----------------------
2. Workmen means any person employed in industry to do any skilled,
unskilled, manual, supervisory, technical or clerical work for reward or ----------------------
wages but does not include such persons.
----------------------
●● Employment in police service
●● Army, navy, air force act ----------------------
●● Who is employed mainly in a managerial or administrative capacity. ----------------------
●● Who being employed in a supervisory. ----------------------
3. Individual dispute means any disputes or differences between employers.
----------------------
It shall be individual disputes.
4. Industrial disputes means any dispute or difference between employers ----------------------
and workmen or between employers and employers and between workmen
----------------------
and workmen, which is connected with the employment or the terms of
employment or with the condition of labour. ----------------------

Notes A dispute connected with dismissal discharge retrenchment or termination shall
be an industrial dispute,
----------------------
a) If a group of interest is involved.
---------------------- b) here must be collective will of workmen to fight against employer for
T
their demands.
----------------------
c) The industrial dispute cannot be industrial dispute unless it is sponsored by
---------------------- a Trade Union or by a substantial number of workers.
----------------------
----------------------
---------------------- 1.
_________ means the permanent closing down of a place of
employment or part-thereof.
----------------------
2. ‘_________’ means any systematic activity carried on by co-operation
---------------------- between any employer and his workmen.
3. The industrial dispute cannot be industrial dispute unless it is sponsored
----------------------
by a___________ or by a substantial number of workers.
----------------------
---------------------- Activity 2
----------------------
According to you, what is the contribution of the Trade Union in resolving
---------------------- the industrial dispute in today’s organisations? Give two examples.
----------------------
10.4 SETTLEMENT OF DISPUTES
----------------------
Settlement means a settlement arrived at in course of conciliation
----------------------
proceeding peacefully amicable before the conciliation officer or before the
---------------------- conciliation machinery.
It is a written agreement between employer and workmen signed by both the
----------------------
parties, employer and workmen before the conciliation officer mentioning there
---------------------- in the date of its implementation, the copy of which is sent to the appropriate
government. It must be fair and amicable.
----------------------
Award means an interim or final determination of any Industrial Tribunal
---------------------- or national tribunal and includes Arbitration award.
---------------------- The date of its operation as fixed under this act is one year. This can be
terminated by giving two months notice given by one of the parties intimating
---------------------- its intention to terminate the award.
---------------------- 1.
Public utility service means any transport services used for passengers
and goods, telegraph, telephone, supply of power light, air transport, major
---------------------- port, post, docks, safety department any system of public conservancy or
sanitation.
2.
Strike means cessation of work by a body of person employed in any Notes
industry acting in combination or refusal to work or abstain from working
under a common- understanding. ----------------------
3.
Retrenchment means the termination of services of a workman by the ----------------------
employer for any reason.
----------------------
a. Voluntary retirement or retirement on reaching on the age of
superannuation and termination on the ground of continued ill ----------------------
health are not considered as retrenchment.
----------------------
b. It means discharge of surplus labour for any reason by the employer.
c. Gets retrenchment allowance as per provisions under this act. ----------------------
d. Notice to be sent and to put on notice board.
----------------------
e. It is the termination of service of workmen due to inability of the
employer to keep the establishment fully working for an indefinite ----------------------
period due to shortage of work or surplus in workmen.
----------------------
i) If a workman is retrenched and if he has completed one
year of continuous service - he is entitle for retrenchment ----------------------
compensation 15 days average pay for every year of service
or any part in excess of 6 months. ----------------------
ii) One month’s notice pay ----------------------
iii) In case of Retrenchment the employer has to make the
following compliance : ----------------------
• A notice to be served on the appropriate government. ----------------------
• The last person employed in that category should be retrenched first.
• Preference to be given to the retrenched person for the re- ----------------------
employment. ----------------------
• A copy of notice should be displayed on the notice board.
• It should be published in newspaper. ----------------------
• It should be sent to the workmen by registered post. ----------------------
----------------------
Activity 3
----------------------
List some Public Utility Services. Has there been any strike recently in any
of these Public Utility Services? Did they follow proper procedure to go on ----------------------
a strike? If not, was any action taken against them? ----------------------
----------------------
10.5 AUTHORITIES UNDER THE INDUSTRIAL DISPUTES ACT
----------------------
Conciliation Proceedings means including the parties to come to or to arrive at
amicable, peaceful, fair settlement on the Industrial disputes. ----------------------
This provides the Machinery and procedure for investigation and settlement of ----------------------
Industrial disputes.
----------------------

Notes Section 3: Works Committee
For promoting dialogue between the employer and the workmen and for
----------------------
securing and preserving amity, the act provides that every industrial establishment
---------------------- employing 100 or more workers is to establish a work committee, comprising
equal representatives of management and workmen. The main function of this
---------------------- committee is to endeavour to compose any difference of opinion in matters of
common interest and thereby promote cordial relations between employers and
----------------------
workmen. The representatives of workmen are to be chosen from among the
---------------------- workers engaged in the establishment in the manner specified under the act and
in consultation with their trade union if any registered under the Trade Union
---------------------- Act, 1926.
---------------------- List of the items to be discussed in the works committee:
(a) Condition of work, e.g. ventilation, lighting, temperature and sanitation. (b)
----------------------
Amenities such as drinking water, canteens, lunchrooms, crèches, medical
---------------------- equipment.
---------------------- (c) Adjustment of festival and national holidays.

(d) Administration of welfare funds, educational and recreational activities
---------------------- such as libraries, reading rooms, cinema shows, sports, games, picnic,
---------------------- community, welfare and celebrations, promotions of thrift and savings.
Following will not be dealt in the works committee:
----------------------
i. Wages and allowances
----------------------
ii. Management policies
---------------------- iii. Rationalisation
---------------------- iv. Matters connected with the fixation or work load
---------------------- Duties of the works committee

It shall be the duty of the works committee to promote measures for
----------------------
securing and preserving amity and good relations between the employer and
---------------------- workmen and to that end to comment upon matters of their common interest
or concern and endeavour to compose any material difference of opinion in
---------------------- respect of such matters.
---------------------- Section 4: Conciliation Officer
The appropriate Govt. may, by notification in the official gazette, appoint
----------------------
such number of persons as it thinks fit to be conciliation officers charged with
---------------------- the duty of mediating in and promoting the settlement of Industrial disputes.
He may be appointed for a specified area or for specified industries either
---------------------- permanently or for a limited period
---------------------- Section 5: Board of Conciliation
---------------------- (1) T
he appropriate government may, as occasion arises, by notification in
the official gazette, constitute a board of conciliation for promoting the
---------------------- settlement of an industrial dispute.

(2) A board shall consist of a chairman and two or four other members as the Notes
appropriate government thinks fit.
----------------------
(3) The Chairman shall be an independent person and the other members shall
be persons appointed in equal number to represent the parties to the dispute ----------------------
and any person appointed to represent a party shall be appointed on the
recommendation of that party. ----------------------
Section 6: Court of inquiry ----------------------
1. The appropriate government may, as occasion arises, by notification in the
----------------------
official gazette, constitute a court of inquiry into any matter appearing to
be connected with or relevant to an industrial dispute. ----------------------
2. A court may consist of one independent person or such number of ----------------------
independent persons as the appropriate government may think fit and where
a court consists of two or more members one of them shall be appointed as ----------------------
the chairman.
----------------------
Section 7: Labour Court
(1) T
he appropriate Government may, by notification in the Official Gazette, ----------------------
constitute one or more Labour Courts for the adjudication of industrial ----------------------
disputes relating to any matter specified in the Second Schedule and for
performing such other functions as may be assigned to then-, under this ----------------------
Act.
----------------------
(2) A Labour Court shall consist of one person only to be appointed by the
appropriate Government. ----------------------
(3) A
person shall not be qualified for appointment as the presiding officer of ----------------------
a Labour Court, unless.
----------------------
(a) He is, or has been, a Judge of a High Court; or
(b) He has, for a period of not less than three years, been a District ----------------------
judge or an Additional District Judge; or ----------------------
(c) e has held any judicial office in India for not less than seven
H
years; or ----------------------
(d) H
e has been the presiding officer of a Labour Court constituted ----------------------
under any provincial Act or State Act for not less than five years.
----------------------
INDUSTRIAL TRIBUNAL
----------------------
1. he appropriate government may by notification in the official gazette
T
constitute one more Industrial Tribunals for the adjudication of Industrial ----------------------
disputes in the second scheme or the Third schedule.
----------------------
2. person shall not be qualified for appointment as the presiding officer of
A
the tribunal unless ----------------------
a. He is or has been a judge of high court. ----------------------
b. He has for a period not less than three years been a District judge.
----------------------

Notes The appropriate Government, if it thinks fit, appoints two persons as
assessors to advise the tribunal in proceeding before it.
----------------------
●● Grievance Settlement Authorities:
---------------------- 9C. Setting up of Grievance Settlement Authorities and reference of
certain individual disputes to such authorities.-
----------------------
(1) The employer in relation to every industrial establishment in which
---------------------- fifty or more workmen are employed or have been employed on any day
in the preceding twelve months, shall provide for, in accordance with
----------------------
the rules made in that behalf under this Act, a Grievance Settlement
---------------------- Authority for the settlement of industrial disputes connected with an
individual workman employed in the establishment.
----------------------
(2) Where an industrial dispute connected with an individual workman
---------------------- arises in an establishment referred to in sub-section (1), a workman
or any trade union of workmen of which such workman is a
---------------------- member, refer, in such manner as may be prescribed such dispute to
---------------------- the Grievance Settlement Authority provided for by the employer
under that sub-section for settlement.
---------------------- (3) The Grievance Settlement Authority referred to in sub-section (1)
---------------------- shall follow such procedure and complete its proceedings within
such period as may be prescribed.
---------------------- (4) No reference shall be made under Chapter III with respect to any
---------------------- dispute referred to in this section unless such dispute has been
referred to the Grievance Settlement Authority concerned and the
---------------------- decision of the Grievance Settlement Authority is not acceptable to
any of the parties to the dispute.
----------------------

----------------------
----------------------
1. The works committee does not deal with the following matters:
---------------------- i. Wages and allowances
----------------------
iii. Matters connected with the fixation or workload
---------------------- iv. Adjustment of festival and national holidays
---------------------- 2. In case of retrenchment, the employer has to make the following
compliance:
---------------------- i. A notice to be served on the appropriate government
---------------------- ii. The last person employed in that category should be retrenched last
iii. Preference to be given to the retrenched person for re-
----------------------
employment
---------------------- iv. It should be published in newspaper

Notes
Activity 4
----------------------
1. Enumerate the activities of the Work Committee in any one factory in ----------------------
your area.
----------------------
2. List down the issues coming under the purview of the Labour Court
and the Industrial Tribunal ----------------------
----------------------
10.6 NATIONAL TRIBUNAL
----------------------
The central government by notification in the official gazette constitute one or
more National Industrial Tribunals for the adjudication of Industrial disputes ----------------------
which, in the opinion of the Central government involve question of National
----------------------
importance or are of such a nature that industrial establishments situated in
more than one state are likely to be interested in or affected by such disputes. ----------------------
●● A National Tribunal shall consist of one person only to be appointed by the
----------------------
Central government.
●● A person shall not be qualified for appointment as the presiding officer of ----------------------
National Tribunal (unless he is or have been a judge of a high court. ----------------------
●● The Central government may, if it is so thinks fit, appoint two persons as
assessors to advise the national tribunal in the proceeding before it. ----------------------
Section 34: Notice of change in Employment Conditions ----------------------

If the employer wants to make a change in respect of any matter specified below, ----------------------
he has to give 21 days’ notice to the trade union and then affix the same on the
notice board. ----------------------
1. Wage-period and the mode of payment. ----------------------
2. Contribution paid or payable by the employer to any provident fund or ----------------------
pension fund or for the benefit of the workmen under any law for the time
being in force. ----------------------
3. Compensatory and other allowances. ----------------------
4. Hours of work and rest intervals.
----------------------
5. Leave with wages and holidays.
----------------------
6. Starting, alteration or discontinuance of shift working otherwise than in
accordance with standing orders. ----------------------
7. Classification by grades.
----------------------
8. Withdrawal of any customary concession or privilege or change in usage.
----------------------
9. Introduction of new rules of discipline or alteration of existing rules except
in so far as they are provided in the standing orders. ----------------------
10. Rationalisation, standardisation or improvement of plant or technique, ----------------------
which is likely to lead to retrenchment of workmen.

Notes 11. Any increase or reduction (other than casual) in the number of persons
employed or to be employed in any occupation or process or department of
---------------------- shift.
---------------------- Section 22: Prohibition of strikes and lock-outs
1. No person employed in a public utility service shall go on strike, in breach
----------------------
of contract
---------------------- a. Without giving to the employer notice of strike, as hereinafter
provided, within six weeks before striking; or
----------------------
b. Within fourteen days of giving such notice; or
----------------------
c. efore the expiry of the date of strike specified in any such notice
B
---------------------- as aforesaid; or
---------------------- d. During the pendency of any conciliation proceedings before a
conciliation officer and seven days after the conclusion of such
---------------------- proceedings.
---------------------- 2. No employer carrying on any public utility service shall lockout any of his
workman.
----------------------
a. Without giving them notice of lock-out as hereinafter provided,
---------------------- within six weeks before locking-out ; or
---------------------- b. Within fourteen days of giving such notice; or

c. Before the expiry of the date of lockout specified in any such notice
---------------------- as aforesaid or
---------------------- d. During the pendency of any conciliation proceedings before a
conciliation officer and seven days after the conclusion of such
---------------------- proceedings.
---------------------- 3. The notice of lock-out or strike under this section shall not be necessary
where there is already in existence a strike or, as the case may be, lock-out
----------------------
in the public utility service, but the employer shall send intimation of such
---------------------- lockout or strike on the day on which it is declared, to such authority as
may be specified by the appropriate Government either generally or for
---------------------- a particular area or for a particular class of public utility services.
---------------------- 4. The notice of strike referred to in sub-section (1) shall be given by such
number of persons to such person or persons and in such manner as may
---------------------- be prescribed.
---------------------- 5. The notice of lockout referred to in sub-section (2) shall be given in such
manner as may be prescribed.
----------------------
6. If on any day an employer receives from any person employed by him any
---------------------- such notices as are referred to in sub-section (1) or gives to any persons
employed by him any such notices as are referred to in sub-section (2),
---------------------- he shall within five days, thereof report to the appropriate Government or
---------------------- to such authority as that Government may prescribe the number of such
notices received or given on that day.
Section 23: General prohibition of strikes and lockouts Notes
No workman who is employed in any industrial establishment shall go on strike
----------------------
in breach of contract and no employer of any such workman shall declare a
lockout. ----------------------
(a) During the pendency of conciliation proceedings before a Board and seven
----------------------
days after the conclusion of such proceedings;
(b) During the pendency of proceedings before a Labour Court, Tribunal ----------------------
or National Tribunal] and two months, after the conclusion of such
----------------------
proceedings;
(bb) During the pendency of arbitration proceedings before an arbitrator and ----------------------
two months after the conclusion of such proceedings, where a notification ----------------------
has been issued under sub-section (3A) of section 10A; or
(c) 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. ----------------------
Section 24: Illegal strikes and lockouts
----------------------
(1) A strike or a lockout shall be illegal if-
----------------------
(i) It is commenced or declared in contravention of section 22 or section
23; or ----------------------
(ii) It is continued in contravention of an order made under sub-section
----------------------
(3) of section 10 or sub-section (4A) of section 10 A.
(2) Where a strike or lock-out in pursuance of an industrial dispute has already ----------------------
commenced and is in existence at the time of the reference of the dispute ----------------------
to a Board, an arbitrator, a Labour Court, Tribunal or national Tribunal, the
continuance of such strike or lock-out shall not be deemed to be illegal, ----------------------
provided that such strike or lock-out was not at its commencement in
contravention of the provisions of this Act or the continuance thereof was ----------------------
not prohibited under sub-section (3) of section 10 or sub-section (4A) of ----------------------
section 10A.
(3) A lockout declared in consequence of an illegal strike or a strike declared ----------------------
in consequence of an illegal lockout shall not be deemed illegal. ----------------------
Section 25C: Right of workmen laid-off for compensation
----------------------
Right of workmen laid-off for compensation. Whenever a workman (other
than a badli workman or a casual workman) whose name is borne on the muster ----------------------
rolls of an industrial establishment and who has completed not less than one
----------------------
year of continuous service under an employer is laid off, whether continuously
or intermittently, he shall be paid by the employer for all days during which he ----------------------
is so laid-off, except for such weekly holidays as may intervene, compensation
which shall be equal to fifty per cent, of the total of the basic wages and dearness ----------------------
allowance that would have been payable to him had he not been so laid-off :
----------------------
Provided that if during any period of twelve months, a workman is so laid-
off for more than forty-five days, no such compensation shall be payable in ----------------------

Notes respect of any period of the lay-off after the expiry of the first forty-five days, if
there is an agreement to that effect between the workman and the employer:
----------------------
Provided further that it shall be lawful for the employer in any case falling
---------------------- within the foregoing proviso to retrench the workman in accordance with the
provisions contained in section 25F at any time after the expiry of the first forty
---------------------- five days of the lay-off and when he does so, any compensation paid to the
workman for having been laid-off during the preceding twelve months may be
----------------------
set off against the compensation payable for retrenchment.
---------------------- Explanation: ‘Badli workman” means a workman who is employed in an
industrial establishment in the place of another workman whose name is borne
----------------------
on the muster rolls of the establishment, but shall cease to be regarded as such
---------------------- for the purposes of this section, if he has completed one year of continuous
service in the establishment.
----------------------
Section 25E: Workmen not entitled to compensation in certain cases
---------------------- No compensation shall be paid to a workman who has been laid-off-
---------------------- (i) If he refuses to accept any alternative employment in the same establishment
from which he has been laid-off, 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, if, in
the opinion of the employer, such alternative employment does not call for
---------------------- any special skill or previous experience and can be done by the workman,
provided that the wages which would normally have been paid to the
---------------------- workman are offered for the alternative employment also ;
---------------------- (ii) If he does not present himself for work at the establishment at the appointed
time during normal working hours at least once a day;
----------------------
(iii) 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.
---------------------- Section 25F: Conditions precedent to retrenchment of workmen
---------------------- No workman employed in any industry who has been in continuous service for
not less than one year under an employer shall be retrenched by that employer
---------------------- until-
---------------------- (a) The workman has been given one month’s 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;
----------------------
(b) The workman has been paid, at the time of retrenchment, compensation
---------------------- which shall be equivalent to fifteen days’ average pay for every completed
year of continuous service or any part thereof in excess of six months; and
----------------------
(c) Notice in the prescribed manner is served on the appropriate Government
---------------------- for such authority as may be specified by the appropriate Government by
notification in the Official Gazette.
----------------------

Section 25H: Re-employment of retrenched workmen Notes
Where any workmen are retrenched, and the employer proposes to take into
----------------------
his employ any persons he shall, in such manner as may be prescribed,
give an opportunity to the retrenched workmen who are citizens of India to ----------------------
offer themselves for reemployment, and such retrenched workmen who offer
themselves for reemployment shall have preference over other persons, ----------------------
Section 25O: Procedure for closing down an undertaking ----------------------
(1) An employer who intends to close down an undertaking of an industrial
----------------------
establishment to which this Unit applies shall, in the prescribed manner,
apply, for prior permission at least ninety days before the date on which the ----------------------
intended closure is to become effective, to the appropriate Government,
stating clearly the reasons for the intended closure of the undertaking ----------------------
and a copy of such application shall also be served simultaneously on the
----------------------
representatives of the workmen in the prescribed manner:
Provided that nothing in this sub-section shall apply to an undertaking set ----------------------
up for the construction of buildings, bridges, roads, canals, and dams or for ----------------------
other construction work.
----------------------
1. A lockout declared in consequence of an illegal strike or a strike ----------------------

declared in consequence of an illegal lockout shall be deemed illegal.
----------------------
2. No person employed in a public utility service shall go on strike,
in breach of contract without giving notice of strike to the employer, ----------------------
within six weeks before striking.
----------------------
3. A National Tribunal shall consist of one person to be appointed by the
State government only. ----------------------
4. The employer cannot retrench an employee until and unless he pays ----------------------
fifteen days’ average pay for every completed year of continuous
service or any part thereof in excess of six months. ----------------------
5. Compensation shall be paid to a workman who has been laid-off even ----------------------
if he does not present himself for work at the establishment at the
appointed time during normal working hours at least once a day. ----------------------
----------------------
Activity 5 ----------------------
Analyse the cause of industrial unrest in the Maruti, Manesar Plant. How ----------------------
did the officials under the Industrial Disputes’ machinery help in resolving ----------------------
the issue?
----------------------

Notes 10.7 INTRODUCTION TO INDUSTRIAL EMPLOYMENT
[STANDING ORDERS] ACT, 1946
----------------------
An act to require employers in Industrial establishments to formally define
---------------------- conditions of employment under them and make the said conditions known to
---------------------- workmen employed by them.
Short title, extent and application
----------------------
1. This act is called the Industrial Employment (Standing Orders) Act, 1946.
----------------------
2. It extends to the whole of India.
---------------------- 3. It applies to every industrial establishment wherein one hundred or more
---------------------- workmen are employed on any day of the preceding twelve months,
provided that the appropriate government may after giving not less than
---------------------- two months’ notice of this act to any industrial establishment employing
number of persons less than one hundred as may be specified in the
---------------------- notification. Under the provisions of this act, the employer has to submit
---------------------- draft standing orders, which are on the lines of the model standing orders
embodied in the act to the certifying authority. The certifying officer has to
---------------------- hear to the representatives of employers as well as employees and finalise
the standing orders.
----------------------
Submission of Draft Standing Orders Section 3
----------------------
1. he employer shall submit to the Certifying Officer five copies of
T
---------------------- the draft standing orders proposed by him for adoption in his industrial
establishment.
----------------------
2. Provision shall be made in such draft for every matter applicable to
---------------------- the industrial establishment and where model standing orders have been
prescribed, shall be, so far as practicable, in conformity with such model.
----------------------
3. The draft standing orders submitted shall be, accompanied by a statement giving
---------------------- prescribed particulars of the workmen employed in the industrial establishment
including the name of the trade union, if any, to which they belong.
----------------------
4. Subject to such conditions as may be prescribed, a group of employers
---------------------- in similar industrial establishments may submit a joint draft of standing
orders under this section.
----------------------
---------------------- 10.8 THE MODEL STANDING ORDER

---------------------- The representatives of the workmen for this purpose will be of Trade
Unions operating in the establishment. If there is no Trade Union, the certifying
---------------------- officer will hold the meeting of the workmen and will elect five representatives
and these elected workmen will be deemed to be the union for the purpose.
----------------------
The model standing orders classify the workmen as under:
----------------------
(i) A permanent workman is one who has been employed on a permanent
---------------------- basis or who has been confirmed in writing or who has completed a

probationary period of three months. Notes
(ii) ‘ Probationer’ is a workman who is provisionally employed to fill a
----------------------
permanent vacancy and who has not completed three months service.
(iii) ‘Badli’ or ‘Substitute’ is one who is appointed to the post of permanent or ----------------------
probationer workman and who is temporarily absent.
----------------------
----------------------
----------------------
1. It is the responsibility of the employer to make the conditions of
employment known to each workman. ----------------------
2. This Act applies to the establishment where 20 or more workmen are ----------------------
employed on any day of the preceding 12 months.
3. The draft standing orders need to be on the lines of model standing ----------------------
order. ----------------------
----------------------
Activity 6
----------------------
Try to find out why there is a mention of the words ‘Standing Orders’ in the ----------------------
Industrial Employment (Standing Orders) Act, 1946.
----------------------
10.9 TEMPORARY EMPLOYEES ----------------------
a. Temporary Workman is one who is appointed for a limited period of work ----------------------
which is essentially of temporary nature or who is employed temporarily
----------------------
as an additional workman in connection with temporary increase in work
of a permanent nature. ----------------------
b. ‘Casual Worker’ is one who is employed for work, which is essential of a
----------------------
casual nature.
c. ‘Apprentice’ is one who is a learner and who has not completed a training ----------------------
period of one year. ----------------------
d. Every workman is required to be given a separate ticket indicating his
number and the department. The act specifying provides for certain matters ----------------------
to be included in the standing orders of the industry. ----------------------
Calculation of Wages
----------------------
The calculation of the wages is done based on the period and hours of work
completed by the worker. The shift working is paid extra if the overtime is ----------------------
made. The attendance and late coming record is observed for deduction of the
----------------------
wages accordingly.
----------------------

Notes 10.10 MATTERS TO BE PROVIDED IN STANDING ORDER
UNDER THIS ACT
----------------------
1.
Classification of workmen, e.g. whether permanent, temporary, apprentices,
---------------------- probationers or badlis.
---------------------- 2. Manner of intimating to workmen periods and hours of work, holidays,
paydays and wage rates.
----------------------
3. Shift working.
----------------------
4. Attendance and late coming.
---------------------- 5. Conditions of procedure in applying for, and the authority, which may
---------------------- grant, leave and holidays. Requirement to enter premises by certain gates
and liability to search.
---------------------- 6. Closing and re-opening of sections of the industrial establishment and
---------------------- temporary stoppages of work and the rights and liabilities of the employer
and workmen arising therefrom.
----------------------
7. Termination of employment and the notice thereof to be given by employer
---------------------- and workmen.
8. Suspension or dismissal for misconduct and acts or omissions, which
----------------------
constitute misconduct.
---------------------- 9. Means of redress for workmen against unfair treatment or wrongful
exactions by the employer or his agents or servants.
----------------------
10. Any other matter, which may be prescribed.
----------------------
Posting of Standing Orders
---------------------- The text of the standing orders as finally certified under this Act shall be
---------------------- prominently posted by the employer in English and in the language understood
by the majority of his workmen on special boards to be maintained for the
---------------------- purpose at or near the entrance through which the majority of the workmen
enter the industrial establishment and in all departments thereof where the
---------------------- workmen are employed.
----------------------
----------------------

---------------------- 1. _______is one who is employed for work, which is essentially of a
casual nature.
----------------------
2. One who is appointed to the post of permanent or probationer workman
---------------------- who is temporarily absent is called ___________.
---------------------- 3. ___________ is one who is a learner and who has not completed a
training period of one year.
----------------------

Notes
Activity 7
----------------------
Visit any labour-intensive unit and find out three differences between a ----------------------
Temporary and a Permanent worker.
----------------------
10.11 SUBSISTENCE ALLOWANCE ----------------------
If a workman is suspended for pending enquiry, he has to be paid ----------------------

subsistence allowance @ 50 % of his wages for the first 90 days of suspension
----------------------
and thereafter @ 75 % of the wages. If the enquiry is delayed due to reasons
totally attributable to the workman, then the subsistence allowance can be paid ----------------------
@ 50 % of the wages.
----------------------
Misconducts under the Model Standing Orders framed under the Bombay
Industrial Employment Rules, 1959 ----------------------
Standing Order No. 24 provides that the following acts and commissions ----------------------
on the part of a workman shall amount to misconduct.
1. Willful insubordination or disobedience, whether in combination with ----------------------
another or otherwise, of any lawful and reasonable order of a superior ----------------------
2. Going on an illegal strike or abetting, inciting, instigating or acting in
----------------------
furtherance thereof
3. Willful slowing down in performance of work or abetment or instigation ----------------------
thereof
----------------------
4. Theft, fraud or dishonesty in connection with the employers’ business or
property or the theft or property of another workman within the premises ----------------------
of the establishment ----------------------
5. Taking or giving bribes or any illegal gratification
----------------------
6. Habitual absence without leaves or absence without leave for more than
ten consecutive days or overstaying the sanctioned leave without sufficient ----------------------
grounds or proper or satisfactory explanation
----------------------
7. Late attendance on not less than four occasions within a month
----------------------
10.12 HABITUAL BREACH OF ANY STANDING ORDER ----------------------
The habitual breach conditions of any standing order or any law applicable to ----------------------
the establishment or any rules are as under:
----------------------
●● Collection without the permission of the Manager of any money within the
premises of the establishment except as sanctioned by any law for the time ----------------------
being in force
----------------------
●● Engaging in trade within the premises of the establishment
----------------------

Notes ●● Drunkenness, riotous, disorderly or indecent behaviour on the premises of
the establishment
----------------------
●● Commission of any act subversive of discipline or good behaviour on the
---------------------- premises of the establishment
●● Habitual neglect of work; or gross or habitual negligence
----------------------
●● Habitual breach of any rules or instruction for the maintenance and running
---------------------- of any department, or the maintenance of the cleanliness of any portion of
the establishment
----------------------
●● Habitual commission of any act or omission for which a fine may be
----------------------
●● imposed under the Payment of Wages Act, 1936
---------------------- ●● Canvassing for union membership or the collection of union dues within
---------------------- the premises of the establishment except in accordance with any law or
with the permission of the Manager
----------------------
●● Willful damage to work in process or to any property of the establishment
---------------------- ●● Holding meeting inside the premises of the establishment without the
previous permission of the Manager or except in accordance with the
----------------------
provisions of any law for the time being in force
---------------------- ●● Disclosing to any unauthorised person any information in regard to the
---------------------- processes of the establishment, which may come into the possession of the
workman in course of his work
---------------------- ●● Gambling within the premises of the establishment
---------------------- ●● Smoking or spitting on the premises of the establishment, where it is
prohibited by the employer
----------------------
●● Failure to observe safety instructions notified by the employer or interference
---------------------- with any safety device or equipment installed within the establishment
---------------------- ●● Distributing or exhibiting within the premises of the establishment
handbills, pamphlets, posters and such other things or causing to be
---------------------- displayed by means of sign or writing or other visible representation on
any matter without previous sanction of the Manager
----------------------
●● Refusal to accept a charge sheet, order or other communication served in
---------------------- accordance with these Standing Orders
---------------------- ●● Unauthorised possession of any lethal weapon in the establishment
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
1. Going on an illegal strike or abetting, inciting and instigating amounts ----------------------
to misconduct.
2. Engaging in trade within the premises of the establishment is a breach ----------------------
of standing orders. ----------------------
3. Holding meetings inside the premises without the permission of the
----------------------
manager amounts to breach of standing orders.
4. Collecting trade union membership contribution from the workmen ----------------------
within the premises of establishment amounts to misconduct.
----------------------
----------------------
Summary
----------------------
●● This Act has made provision for the investigation and settlement of
industrial disputes and for certain other purposes. ----------------------
●● It provides for a special machinery of conciliation officers, work committees, ----------------------
court of inquiry, Labour courts, Industrial Tribunals and national Tribunals,
defining their powers, functions and duties and also the procedure to be ----------------------
followed by them.
----------------------
●● It also enumerates the contingencies when a strike or lockout can be lawfully
resorted to, when they can be declared illegal or unlawful, conditions for ----------------------
laying off, retrenching discharging or dismissing a workman, circumstances
----------------------
under which an industrial can be closed down and several other matters
related to industrial employees and employers. ----------------------
●● The Industrial Employment (Standing Order) Act has been constituted to ----------------------
regulate the Industrial Employment and work conditions.
●● Norms and guidelines have been suggested to have better Industrial ----------------------
Employment. Indian Industries and foreign establishments with their work ----------------------
force at India have been successfully making compliance of the Industrial
Employment (Standing Orders) Act to avoid conflict in between working ----------------------
force and the management.
----------------------
●● This Act is to require employers in industrial establishments to formally
define conditions of employment under them and submit draft standing ----------------------
orders to certifying Authority for its Certification.
----------------------
●● It applies to every industrial establishment wherein 100 (reduced to 50 by
the Central Government in respect of the establishments for which it is the ----------------------
Appropriate Government) or more workmen are employed.
----------------------
----------------------

Notes Keywords
----------------------
●● Factory: A building or set of buildings where large amounts of goods are
---------------------- made using machines.
●● Manufacturing: To produce goods in large numbers, usually in a factory
----------------------
using machines.
---------------------- ●● Process: A series of actions that you take in order to achieve a result.
---------------------- ●● Accumulation: To gradually increase in number or amount.
---------------------- ●● Employer: A person or company that pays people to work for them.
●● Employees: Someone who is paid to work for someone else.
----------------------
●● Prescribe: To say officially what people must do to rules prescribed by law.
----------------------
●● Particulars: Formal details about something or someone.
---------------------- ●● Records: Information that is written on paper or stored on computer so
that it can be used in the future.
----------------------

----------------------
1. efine the term ‘Industry’ in the light of the judgement of the Supreme
D
---------------------- Court in case of Bangalore Water Supply and Sewerage Board Vs. Rajappa
and others
----------------------
2. efine Lay off and Retrenchment and highlight the distinction between
D
---------------------- then.
---------------------- 3. efine an ‘Industrial Dispute’. Examine the circumstance as to when an

D
individual dispute becomes an industrial dispute.
---------------------- 4. Critically examine the various authorities that have been constituted under
---------------------- the Industrial Dispute Act, 1947.
5. efine ‘Strikes’ and ‘Lock Outs’. Explain as to when the strikes and
D
---------------------- lockouts become illegal under the Industrial Dispute Act, 1947.
---------------------- 6. Explain the procedure laid down under the Industrial Employment (Standing
Orders) Act, 1946 for certification and modification of Standing Orders.
----------------------
7. What are the matters on which the Standing Orders can be framed?
----------------------
8. Enumerate any ten misconducts under the Model Standing Orders.
---------------------- 9. Write a note on ‘Subsistence Allowance’.
---------------------- 10. Write a note on ‘Breach of Standing Order’.
----------------------
----------------------
----------------------

Answers to Check your Progress Notes
1.
Closure means the permanent closing down of a place of employment or
part-thereof. ----------------------
2. ‘Industry’ means any systematic activity carried on by co-operation ----------------------

between any employer and his workmen.
----------------------
3. The industrial dispute cannot be industrial dispute unless it is sponsored by
a Trade Union or by a substantial number of workers. ----------------------
1. The works committee does not deal with the following matters:
----------------------
i. Wages and allowances
----------------------
iii. Matters connected with the fixation or workload ----------------------
2. In case of retrenchment, the employer has to make the following compliance: ----------------------
i. A notice to be served on the appropriate government ----------------------
iii. Preference to be given to the retrenched person for re-employment
----------------------
iv. It should be published in newspaper
----------------------
1. False ----------------------
2. True ----------------------
3. False
----------------------
4. True
----------------------
5. False
1. True ----------------------
----------------------
----------------------
----------------------
----------------------

Notes 2. False
3. True
----------------------
----------------------
Fill in the blanks.
---------------------- 1.
Casual worker is one who is employed for work which is essentially of a
---------------------- casual nature
2. One who is appointed to the post of permanent or probationer workman
---------------------- who is temporarily absent is called as ‘Badli’ or ‘Substitute’.
---------------------- 3.
Apprentice is one who is a learner and who has not completed a training
period of one year.
----------------------
----------------------
---------------------- 1. True
---------------------- 2. True
---------------------- 3. True
4. False
----------------------

---------------------- 1. Bare Act of Industrial Dispute Act, 1947.
---------------------- 2. Kodianthara, Adv. Joy Joseph. Commentaries on Industrial Disputes Act,
1947.
----------------------
3.
Babu, Sharath, Rashmi Shetty. 2007. Social Justice and Labour
---------------------- Jurisprudence: Justice V.R. Krishna Iyer’s Contributions. New Delhi:
SAGE Publications.
----------------------
4. Kumar, H.L. Practical Guide to Industrial Employment Standing Order
---------------------- Acts and Rules. Universal Law Publishing Company.
---------------------- 5. h ttp://labour.nic.in/upload/uploadfiles/files/
THEINDUSTRIALDISPUTES_ACT1947.pdf
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

The Protective Labour Legislations
UNIT
11
Structure:
11.1 Introduction to Factories Act. 1948

11.2 Meaning of Manufacturing Process
11.3 The Inspecting Staff ( Inspectors and Certifying Surgeons)
11.4 Health and Hygiene Measures
11.5 Safety Measures
11.6 Welfare Measures
11.7 Working Hours and Leave with Wages
11.8 Introduction to Contract Labour (Regulation and Abolition) Act, 1970
11.9 Definitions of the Contract Labour (R&A) Act, 1970
11.10 The Advisory Boards (Section 3−5)
11.11
Registration of Establishments Employing Contract Labour (Section
6−10)
11.12 Licensing of Contractors (Section 11−15)
11.13 Welfare and Health of Contract Labour (Section 16−21)
11.14 Penalties and Procedure (Section 22−35)
Summary
Key Words
Suggested Reading
The Protective Labour Legislations 193

Notes
Objectives
----------------------
----------------------
• Describe the nature and functions of the factories
----------------------
• State the measures taken by the government to ensure health, safety
---------------------- and welfare of the employees in factories
• Analyse the working conditions at factories
----------------------
• Identify the need of Contract Labour Act
----------------------
• Recognise the role of the Advisory Board
---------------------- • State the procedure for Grant of Licence
---------------------- • Analyse the prohibition of employment of contract labour
---------------------- • Assess the welfare and health provisions for contract labourers
---------------------- 11.1 INTRODUCTION FACTORIES ACT, 1948

---------------------- The objective of the Factories Act is to provide protection to the workers
from being exploited by the business establishments and to provide for the
----------------------
improvement of working conditions within the factory premises.
---------------------- As per the requirement of fast growing industrialisation, the Factories
---------------------- Act aimed to define the norms for ensuring health, safety and welfare of the
employees and also define the powers, rights and duties of the authorities under
---------------------- this Act.
---------------------- The short title, extend and commencement of the Factory Act is as under:
●● It shall be called the Factories Act, 1948.
----------------------
●● It is applicable to the whole of India.
----------------------
●● It shall come in to force on the 1st day of April 1949.
---------------------- Definition
---------------------- Definition of the factory or workplace or commercial establishment
pertaining to the Factories Act, 1948 can be evaluated as under (i.e., various
---------------------- points mentioned in the incorporation of the Factories Act, 1948)
---------------------- a) “Adult” means a person who has completed his eighteenth year of age.
---------------------- b) “ Adolescent” means a person who has completed his fifteenth year of age
but not completed his eighteenth year.
----------------------
c) “Child” means a person who has not completed his fifteenth year of age.
---------------------- d) “Young person” means a person who is either a child or an adolescent.
---------------------- e) “Power” means electrical energy, motor or any other form of energy which
is mechanically transmitted and is not generated by human or animal
---------------------- agency.

f)
“Prime mover” means any engine, motor or other appliance which generates Notes
of otherwise provided power.
----------------------
11.2 MEANING OF MANUFACTURING PROCESS ----------------------
The manufacturing process is an essence of the factory, the meaning which ----------------------
is as per the Act, legally explained for ‘Manufacturing Process’ is as under:
i) aking, altering, repairing, ornamenting, finishing, packing. Oiling,
M ----------------------
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 etc. ----------------------
Note: ----------------------
(a) The establishment of hotel would not fall for classification as a
----------------------
factory under Section 2(m) of the Act; Lal Bovta Hotel Aur Bakery
Mazdoor Union v. Ritz Private Ltd., 2007 (113) FLR 568. ----------------------
(b) T
he definition of “manufacturing process” does not depend upon
----------------------
and is not co-related with any end product being manufactured
out of a manufacturing process. It includes even repair, finishing, ----------------------
oiling or cleaning process with view to its use, sale, transport,
delivery or disposal. ----------------------
ii) “Worker” means a person employed directly or through any agency ----------------------
(including contractor) whether on remuneration or not, in any
manufacturing process or cleaning any part of the machinery but does not ----------------------
include any member of the armed forces of the union. ----------------------
iii) “Factory” means any premises including the precincts thereof
----------------------
a) Where 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 ordinary so
carried on. ----------------------
b) Where on 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 ordinary
so carried on but does not include a mine subject to operations of ----------------------
the Mines Act, 1952 or railway running shed.
----------------------
c) “Occupier” of a factory means the person who has ultimate control
over the affairs of the factory. ----------------------
Provided that, ----------------------
i) I n the case of a firm or other association of individuals, any one of
the individual partners or members there of shall be deemed to be the ----------------------
occupier; ----------------------
ii) In the case of a company, any one of the directors shall be deemed to be
the occupier; ----------------------

Notes iii) In case of a factory owned or controlled by the Central Government or
any State Government or any local authority, the persons appointed to
---------------------- manage the affairs of the factory by the Central Government, the State
Government or the local authority as the case may be shall be deemed to
---------------------- be the occupier.
---------------------- In the case of J K Industries Vs. Chief Inspector of Factories - 1995 the
Supreme Court has held that in case of a company having a factory only a
----------------------
director can be appointed as an occupier.
---------------------- Section 6: Approval - Licensing and Registration of Factories
---------------------- The State Government may make rules -
---------------------- a) Requiring the submission of plans of any class or description of factories

to the chief inspector or the State Government.
---------------------- b) Requiring the previous permission in writing of the State Government or
---------------------- the Chief Inspector to be obtained for the site on which the factory is to be
situated and for construction or extension of any factory.
---------------------- c) equiring submission of plans and specifications and by whom they shall
R
---------------------- be certified factories − the prescribed fees payable for such registration and
licensing.
----------------------
d) egularising submission of plans and specifications and by whom they
R
---------------------- shall be certified.
e) Requiring the registration and licensing of factories - the prescribed fees
----------------------
payable for such registration and licensing.
---------------------- f) Where a State Government or Chief Inspector refuses to grant permission
---------------------- to the site, construction or extension of a factory or the registration and the
licensing of a factory, the applicant may within 30 days of the date of such
---------------------- refusal appeal to the Central Government.
---------------------- Section 8: Inspectors

Appointment
----------------------
1) The State Government, by notification in the Official Gazette, appoint such
---------------------- persons as possessing the prescribed qualifications to be inspectors for the
purposes of this Act and may assign to them such local limits as it may
----------------------
think fit.
---------------------- (2) The State Government may, by notification in the Official Gazette, appoint
any person to be a Chief Inspector who shall, in addition to the powers
----------------------
conferred on a Chief Inspector under this Act, exercise the powers of an
---------------------- Inspector throughout the State.
(2A) The State Government may, by notification in the Official Gazette, appoint
----------------------
as many Additional Chief Inspectors, Joint Chief Inspectors and Deputy
---------------------- Chief Inspectors and as many other officers as it thinks fit to assist the
Chief Inspector and to exercise such of the powers of the Chief Inspector
---------------------- as may be specified in such notification.

(2B) Every Additional Chief Inspector, Joint Chief Inspector, Deputy Chief Notes
Inspector and every other officer appointed under sub-section (2A) shall,
in addition to the powers of a Chief Inspector specified in the notification ----------------------
by which he is appointed, exercise the powers of an Inspector throughout
the State. ----------------------
(3) No person shall be appointed under sub-section (1), sub-section (2)1 sub- ----------------------
section (2A), or having been so appointed, shall continue to hold office,
----------------------
who is or becomes directly or indirectly interested in a factory or in
any process or business carried on therein or in any patent or machinery ----------------------
connected therewith.
----------------------
----------------------
i. A person who has completed his fifteenth a. Adolescent ----------------------
year of age but not completed his eighteenth
----------------------
year
ii. A person who is either a child or an adolescent b. Child ----------------------
iii. a person who has not completed his fifteenth c.Young person ----------------------
year of age
----------------------
----------------------
1. The provisions of the Factories Act are also applicable to the hotels
and restaurants. ----------------------
2. The term ‘worker’also includes any member of the armed forces of the
----------------------
union.
----------------------
Activity 1 ----------------------
----------------------
Visit a nearby factory to observe the manufacturing process and list down the
activities performed by the workers in the manufacturing process. ----------------------
----------------------
11.3 THE INSPECTING STAFF ( INSPECTORS AND ----------------------
CERTIFYING SURGEONS)
----------------------
Section 8
----------------------
The state Government may by notification in the Official Gazette may
appoint such persons who possess the prescribed qualification to be inspectors for ----------------------
the purpose of this Act and may assign them such local limits as it may think fit.
----------------------
Section 9: Powers of Inspectors
a) Enter in the factory. ----------------------

Notes b) Make examinations of the premises, plant, machinery, articles or substance.
c) Inquire in to any accident or dangerous occurrence.
----------------------
d) Require production of Registers/Records relating to the factory.
----------------------
e) Seize or take copies of any Register, Record. f) Examination of place and
---------------------- registers/Records.
---------------------- g) Examination of any article or substance found in premises.

Function: Implementation of the provisions of this Act.
----------------------
Section 10: Certifying Surgeons
----------------------
1) he State Government may appoint qualified Medical Practitioners to
T
---------------------- be certifying surgeons for the purpose of this Act within local limits as
assigned.
----------------------
2) The certifying surgeons shall carry on such duties as may be prescribed,
---------------------- namely:
---------------------- ●● The examination and certification of young persons under this Act.
●● The examination of persons engaged in factories in such dangerous
---------------------- occupations or processes, as may be prescribed.
---------------------- ●● The exercising of such medical supervision as may be prescribed
for any factory.
----------------------
3) Examination of cases of illness and other conditions of work prevailing
---------------------- therein and the nature of manufacturing process.
---------------------- 4) Examination of young persons who are, or are about to be employed in any
work which is likely to cause injury to their health.
----------------------

----------------------
---------------------- 1. What are the duties of a certifying surgeon?
---------------------- i. The examination and certification of young persons
---------------------- ii. The examination of persons engaged in factories in dangerous
occupations or processes
----------------------
iii. Seize or take copies of any register/record
---------------------- iv. Examination of any article/substance found in the premises
----------------------
----------------------
Activity 2
---------------------- Inspectors and Certifying surgeons are the two important authorities under the
Factories Act. List down their roles and responsibilities.
----------------------

11.4 HEALTH AND HYGIENE MEASURES Notes
Section 11: Cleanliness ----------------------
Every factory shall be kept clean: ----------------------
a) Accumulation of dirt and refuse shall be removed daily by sweeping or by
any other effective method from the floors and benches of workrooms and ----------------------
from staircases and passages and disposed of in a suitable manner. ----------------------
b) All inside walls, partitions, all ceilings of passages and staircases shall be
----------------------
whitewashed or varnished and be repainted or re-varnished at least once in
every period of five years. ----------------------
Section 12: Disposal of wastes and effluents
----------------------
Effective arrangements shall be made in every factory for the treatment
of wastes and effluents due to the manufacturing process carried on therein, so ----------------------
as to render them innocuous, and for their disposal.
----------------------
Section 13: Ventilation and temperature
----------------------
Effective and suitable provisions shall be made in every factory for
securing and maintaining - ----------------------
a) Adequate ventilation by the circulation of fresh air. ----------------------
b) Such a temperature, well secure to workers therein providing reasonable
----------------------
conditions of comfort and prevention from injury to health.
Section 14: Dust and fume ----------------------
In every factory in which, by reason of the manufacturing process carried ----------------------
on, there is given off any dust or fume or other in purity of such a nature and to such
an extent as is likely to be injurious or offensive to the workers employed there ----------------------
in. Effective measures shall be taken to prevent its inhalation and accumulation
----------------------
in any workroom.
Section 15: Artificial humidification ----------------------
a) Preserving the standards of humidification. ----------------------

b) egulations of the methods used for artificially increasing the humidity of
R ----------------------
the air.
----------------------
c) Directing the prescribed tests for determining the humidity of the air to be
correctly carried out and recorded. ----------------------
d) Prescribing methods to be adopted for securing adequate ventilation and
----------------------
cooling of the air in the work area.
Section 16: Overcrowding ----------------------
1) No room in any factory shall be overcrowded to an extent which is injurious ----------------------
to the health of the workers employed there in.
----------------------
2) Without prejudice to the generality of sub-section (1) there shall be in every
workroom of a factory in existence of the data of the commencement of ----------------------

Notes this at least 9.9 cubic meters and of a factory built after the commencement
of this Act at least 14.2 cubic metres of space for every worker employed
---------------------- there in, and for the purposes of this sub-section no account shall be taken
of any space which is more than 4.2 metres above the level of the floor of
---------------------- the room.
---------------------- Section 17: Lighting
---------------------- In every part of a factory where workers are working or passing, there
shall be provided and maintained sufficient and suitable lighting natural or
---------------------- artificial or both.
---------------------- In every factory effective provision shall, so far as is practicable, be
made for the prevention of -
----------------------
(a) lare, either directly from a source of light or by reflection from a smooth
G
---------------------- or polished surface;
---------------------- (b) The formation of shadows to such an extent as to cause eye strain or the
risk of accident to any worker.
---------------------- Section 18: Drinking water
---------------------- 1) In every factory effective arrangements shall be made to provide and
maintain at suitable points conveniently situated for all workers employed
----------------------
therein a sufficient supply of drinking water.
---------------------- 2) All such points shall be legibly marked “drinking water” in the local
language and in English and no such point shall be situated within six
----------------------
metres of any washing place, urinal, latrine, spittoon, open drain carrying
---------------------- sullage or effluent or any other source of contamination.
---------------------- 3) Provision shall be made for cooling drinking water during the hot weather
wherein more than two hundred and fifty workers are ordinarily employed.
---------------------- Section 19: Latrines and urinals
---------------------- In every factory -
---------------------- a) ufficient latrine and urinal accommodation of prescribed types shall be
S
provided conveniently situated and accessible to workers at all times while
---------------------- they are at the factory.
---------------------- b) Separate enclosed accommodation shall be provided for male and female
workers.
----------------------
c) Such accommodations shall be adequately lighted and ventilated.
---------------------- d) All such accommodations shall be maintained in clean and sanitary
---------------------- conditions at all times.
e) Sweepers shall be employers for cleaning the latrines, urinals and washing
---------------------- place.
----------------------
----------------------

Section 20: Spittoons Notes
1) I n every factory, there shall be provided a sufficient number of spittoons
----------------------
in convenient places and they shall be maintained in a clean and hygienic
condition. ----------------------
2) No person shall spit within the premises of a factory except in the spittoons
----------------------
provided for the purpose in contravention of this the worker shall be
punishable with fine not exceeding five rupees. ----------------------
----------------------
----------------------
Fill in the blanks.
----------------------
1. Provision shall be made for cool drinking water during the hot weather
where in more than ___________workers are ordinarily employed. ----------------------
2. All the side walls, partitions, ceiling, staircase, etc. of the factory has ----------------------
to be repainted at least once in every ________ years.
----------------------
----------------------
Activity 3
----------------------
Identify the manufacturing process where artificial humidification is very
----------------------
much required. Give two examples
----------------------
11.5 SAFETY MEASURES ----------------------
Section 21: Fencing of machinery ----------------------

In every factory dangerous parts of machines, e.g., every moving part of ----------------------
a prime mover and every fly wheel connected to the prime mover etc. shall be
securely fenced by safeguards of substantial construction which shall be kept in ----------------------
position while the parts of machinery they are fencing are in motion or in use. ----------------------
Section 22: Work on or near machinery in motion
----------------------
No women or young person shall be allowed to clean, lubricate or adjust
any part of a prime mover or of any transmission machinery while the prime mover ----------------------
or transmission machinery is in motion, or to clean, lubricate, or adjust any part
of any machine, if the cleaning, lubrication or adjustment thereof would expose ----------------------
the woman or young person to risk of injury from any moving part either of that ----------------------
machine or of any other adjacent machinery.
----------------------
Section 23: Employment of young persons on dangerous machine
1) No young person shall be required or allowed to work at any machine ----------------------
unless he has been fully instructed as to the danger arising in connection
----------------------
with the machine.
2) Has received sufficient training in work on the machine, or ----------------------

Notes 3) Is under adequate supervision by a person who has a thorough knowledge
and experience of the machine.
----------------------
Section 24: Striking gear and devices for cutting off power
---------------------- 1) In every factory-
---------------------- (a) uitable striking gear or other efficient mechanical appliance
S
shall be provided and maintained and used to move belts to and
---------------------- from fast and loose pulleys which form part of the transmission
machinery, such gear or appliances shall be so constructed, placed
----------------------
and maintained as to prevent the belt from creeping back on to the
---------------------- fast pulley;
---------------------- (b) Driving belts when not in use shall not be allowed to rest or ride
upon shafting in motion.
---------------------- 2) In every factory suitable devices for cutting off power in emergencies from
---------------------- running machinery shall be provided and maintained in every workroom.
Section 25: Self-acting machines
----------------------
No person should be allowed to run on the outward or inward traverse
---------------------- within a distance of forty-five centimetres from any fixed structure which is
not part of the machine.
----------------------
Section 26: Casing of new machinery
----------------------
Every set, screw bolt or key or any revolving shaft, spindle, wheel or
---------------------- pinion shall be so sunk, encased or otherwise effectively guarded as to prevent
danger.
----------------------
Section 27: Prohibition of employment of women and children near cotton
---------------------- openers
---------------------- No woman or child shall be employed in any part of a factory for pressing
cotton in which a cotton opener is at work.
----------------------
Section 28: Hoists and lifts
---------------------- Every hoist and lift shall be
---------------------- i) Of good mechanical construction, sound material and adequate strength.
---------------------- ii) Properly maintained and thoroughly examined by a competent person at

least once in every period of six months and register shall be maintained
---------------------- thereof.
---------------------- iii) The maximum safe working load shall be plainly marked on every hoist
or lift, and no load greater than such load shall be carried thereon.
---------------------- Section 29: Lifting machines, ropes and lifting tackles
---------------------- In every factory the following provisions shall be complied with in respect
of every chain rope and lifting tackle for the purpose of raising or lowering
----------------------
persons, goods or materials.
----------------------

It should be: Notes
a) Of good construction, sound material and adequate strength and free from
----------------------
defects.
b) Properly maintained, and ----------------------
c) Thoroughly examined by a competent person at least once in every period ----------------------
of twelve months.
----------------------
Section 30: Revolving machinery
Effective measures shall be taken in every factory to ensure that the safe ----------------------
working peripheral speed of every revolving vessel, cage, basket, fly wheel, ----------------------
pulley, disc or similar appliance driven by power is not exceeded.
Section 31: Pressure plant ----------------------
If in any factory, any plant or machinery or any part thereof is operated ----------------------
at a pressure above atmospheric pressure, effective measures shall be taken
----------------------
to ensure that the safe working pressure of such plant or machinery or part is
not exceeded. ----------------------
Section 32: Floors, stairs and means of access
----------------------
All floors, steps, stairs, passages and gangway shall be of sound construction
and properly maintained and shall be kept free from obstructions and substances ----------------------
likely to cause persons to slip and if necessary to ensure safety, steps, stairs,
----------------------
passages and gangways shall be provided with substantial hand rails.
Section 33: Pits, sumps, opening in floors, etc. ----------------------
In every factory fixed vessel, sump, tank, pit or opening in the ground ----------------------
or in a floor which, by reasons of its depth, situation, construction or contents,
is or may be a source of danger, shall be either securely covered or securely ----------------------
fenced. ----------------------
Section 34: Excessive weights
----------------------
No person shall be employed in any factory to lift, carry of move any load
so heavy as to be likely to cause him injury. The State Government may make ----------------------
rules prescribing the maximum weights which may be lifted, carried or moved
----------------------
by adult men, adult women, adolescents and children employed in factories
Section 35: Protection of eyes ----------------------
a) Risk of injury to the eyes from particles of fragments thrown off in the ----------------------
course of the process, or
----------------------
b) Risk to the eyes by reason of exposure to excessive light - effective screens
or suitable goggles shall be provided for the protection of persons employed ----------------------
on or in the immediate vicinity of, the process.
----------------------
Section 36: Precautions against dangerous fumes, etc.
----------------------
1) No person shall be required or allowed to enter any chamber tank, vat,
pit, pipe, flue or other confined space in any factory. To prevent this injury ----------------------
effective measures are to be taken in this respect.
Notes 2. Such person shall wear suitable breathing apparatus and a belt securely
attached to a rope, the free end of which is held by a person outside the
---------------------- confined space.
---------------------- Section 36 A: Precautions regarding the use of portable electric light in any
factory unless adequate safety devices are provided.
----------------------
If any inflammable gas, fume or dust is likely to be present in such chamber,
---------------------- tank, vat, pit, pipe, flue or other confined space, no lamp or light other than that
of flame-proof construction shall be permitted to be used therein.
----------------------
Section 37: Explosive or inflammable dust, gas etc.
---------------------- In every factory, all practicable measures shall be taken to prevent any
---------------------- such explosion by
a) Effective enclosure of the plant and machinery used in the process.
----------------------
b) Removal or prevention of the accumulation of such dust, gas, fume or vapour.
----------------------
Section 38: Precautions in case of fire
---------------------- 1) In every factory, all practicable measures shall be taken to prevent outbreak
of its size and its spread.
----------------------
a) afe means of escape for all persons in the event of a fire and b)
S
---------------------- The necessary equipment and facilities for extinguishing fire.
---------------------- 2) Effective measures shall be taken to ensure that all the workers are familiar
with the means of escape from fire are adequately trained.
----------------------
3) uckets full of sand and water are conveniently kept and fire extinguishers
B
---------------------- are kept at convenient places.
---------------------- Section 39: Power to require specifications of defective parts or tests of
stability
----------------------
If it appears to the Inspector that any building or part of a building or any part
---------------------- of the ways, machinery or plant in a factory is in such a condition that it may
be dangerous to human life or safety, he may serve on the occupier or manager
---------------------- or both of the factory an order in writing requiring him before a specified date -
---------------------- (a) o furnish such drawings, specifications and other particulars as may be
T
necessary to determine whether such building, ways, machinery or plant
---------------------- can be used with safety, or
---------------------- (b) T
o carry out such test in such manner as may be specified in the order, and
to inform the Inspector of the results thereof.
----------------------
Section 40: Safety of buildings and machinery
---------------------- (1) If it appears to the Inspector that any building or part of a building or any
---------------------- part of the ways, machinery or plant in a factory is in such a condition that
it is dangerous to human life or safety, he may serve on the occupier or
---------------------- manager or both of the factory an order in writing specifying the measures
which in his opinion should be adopted, and requiring them to be carried
---------------------- out before a specified date.

Section 40A: Maintenance of buildings Notes
If it appears to the Inspector that any building or part of a building in a
----------------------
factory is in such a state of disrepair as is likely to lead to conditions detrimental
to the health and welfare of the workers, he may serve on the occupier or ----------------------
manager or both of the factory an order in writing specifying the measures
which in his opinion should be taken ----------------------
Section 40B: Safety officers ----------------------
1) In every factory -
----------------------
Wherein one thousand or more workers are ordinarily employed or which
process or operations involves any risk or disease to the persons employed ----------------------
in the factory the occupier shall, if so required by the State Government by ----------------------
Notification in the official gazette, employ such number of safety officers
as may be specified in that Notification. ----------------------
2) he duties, qualifications and conditions of service of safety officers shall
T ----------------------
be such as may be prescribed by the State Government.
Comments: ----------------------
(i) safety officer is appointed for the purpose of Factory Act only. A safety
A ----------------------
officer in terms of Rule 5 is merely given the status of a departmental head
----------------------
or a senior executive in the factory. Such status is conferred because he
would be posted under the chief executive of the factory and would report ----------------------
only to him. As regards safety aspects, other officers would be bound by
his direction; BHEL v. B.K. Vijay, 2006 (108) FLR 113 ----------------------
----------------------
11.6 WELFARE MEASURES
----------------------
Section 42: Washing facilities
----------------------
Adequate and suitable facilities for washing shall be provided and
maintained for the use of the workers therein separately for male and female ----------------------
employees.
----------------------
Section 43: Facilities for storing and drying clothing
The State Government may, in respect of any factory or class or description ----------------------
of factories, make rules requiring the provision therein of suitable places for
----------------------
keeping clothing not worn during working hours and for the drying of wet
clothing. ----------------------
Section 44: Facilities for sitting ----------------------
In every factory suitable arrangements for sitting shall be provided and
maintained for all workers obliged to work in a standing position in order that ----------------------
they may take advantage of any opportunity for rest which may occur in the ----------------------
course of their work.
----------------------
Section 45: First-aid appliances
a) First-aid appliances shall be provided in every factory and maintained ----------------------

Notes so as to be readily accessible during all working hours − first-aid boxes
well equipped with the prescribed contents. The number of such boxes
---------------------- or cupboards to be provided and maintained shall not be less than one
for every one hundred and fifty workers ordinarily employed at any one
---------------------- time in the factory, and under the supervision of the senior supervisor who
---------------------- is trained in first-aid training and who shall always be readily available
during the working hours of the factory.
----------------------
b) I n every factory wherein more than five hundred workers are ordinarily
---------------------- employed there shall be provides and maintained an ambulance room of
the prescribed size, and well equipped under the care of Medical staff.
----------------------
Section 46: Canteen
---------------------- Wherein more than two hundred and fifty workers are ordinarily employed,
a canteen or canteens shall be provided and maintained by the occupier for
----------------------
the use of the workers and a managing committee for the canteen shall be
---------------------- constituted consisting of the representatives of the workers.
---------------------- Section 47: Shelters, rest rooms and lunch rooms

In every factory where in more than one hundred and fifty workers
---------------------- are ordinarily employed, adequate and suitable shelter or rest rooms or lunch
---------------------- rooms with the provisions of drinking water shall be provided and maintained
for the use the workers.
---------------------- Section 48: Creches
---------------------- In every factory where in more than thirty women workers are ordinarily
employed, suitable rooms shall be provided and maintained for the use of
----------------------
children under the age of six years of such women.
---------------------- Section 49: Welfare officers
---------------------- In every factory wherein five hundred or more workers are ordinarily
employed the occupier shall employ in the factory such number of welfare
---------------------- officers as may be prescribed. The State Government may prescribe the duties,
---------------------- qualifications and conditions of service of officers employed.
Comments
----------------------
An Assistant Personnel Officer of a factory cannot be held that he was in
---------------------- fact appointed as a Labour Welfare Officer simply because as an Assistant and
Personnel officer he was looking after the problems of the labourers and the
---------------------- welfare of the labourers and when the number of labourers in the concerned
---------------------- factory was less than 100 and there was no statutory requirement to appoint
a Labour Welfare Officer; Shyam Vinyals Ltd. v. T. Prasad, (1993) 83 FJR 18
---------------------- (SC).
----------------------
----------------------
----------------------

Notes
----------------------
Match the following. ----------------------
i. First-aid box a. For every 150 workers ----------------------
ii. Ambulance room b. For 30 or more women workers
iii. Canteen facility c. For more than 500 workers ----------------------
iv. Creche facility d. For 250 or more workers
----------------------
v. Welfare officer e. For more than 500 workers
----------------------
Activity 4 ----------------------
----------------------
Try to collect information on the roles and responsibilities of the welfare
officer appointed under the Factories Act, 1948. ----------------------
----------------------
11.7 WORKING HOURS AND LEAVE WITH WAGES ----------------------
Section 51: Weekly hours ----------------------
No adult workers shall be required or allowed to work in a factory for ----------------------
more that forty-eight hours in any week.
Section 52: Weekly holidays ----------------------
1) No adult worker shall be required or allowed to work in a factory on the ----------------------
first day of the week unless
----------------------
a) He has or will have a holiday for a whole day on one of the three
days immediately before or after the said day, and ----------------------
b) The manager of the factory has, before the said day or the substituted ----------------------
day under clause (a) whichever is earlier
----------------------
●● Delivered a notice at the office of the Inspector of his intention
to require the worker to work on the said day and on the day ----------------------
which is to be substituted, and
----------------------
●● Displayed a notice to that effect in the factory.
Section 53: Compensatory holidays ----------------------
Where as a result of the passing of an order or the making of a rule under ----------------------
the provisions of this Act exempting a factory or the workers therein from the
----------------------
provisions of the Section 52, a worker is deprived of any of the weekly holidays
for which provision is made in sub-section (1) of that Section, he shall be ----------------------
allowed within the month in which the holidays were due to him or within the
two months immediately following that month compensatory holidays of equal ----------------------
number to the holidays so lost.
----------------------

Notes Section 54: Daily hours
Subject to the provisions of Section 51, no adult worker shall be required
----------------------
or allowed to work in a factory for more than nine hours in any day provided
---------------------- that, subject to the previous approval of the Chief Inspector.
Section 55: Intervals for rest
----------------------
The period of work of adult workers in a factory each day shall be so fixed
---------------------- that no period shall exceed five hours and no worker shall work for more than
five hours before he has an interval for rest of at least half an hour.
----------------------
Section 59: Extra wages for overtime
----------------------
Where a worker works is a factory for more than nine hours in any day or
---------------------- for more than forty-eight hours in any week, he shall, in respect of overtime
work be entitled to wages at the rate of twice his ordinary rate of wages.
----------------------
Sections 79: Annual leave with wages
----------------------
1. Every worker who has worked for a period of two hundred and forty days
---------------------- or more in a factory during a calendar year shall be allowed during the
subsequent calendar year, leave with wages for a number of days calculated
---------------------- at the rate of :
---------------------- a) If an adult, one day for every twenty days of work performed by
him during the previous calendar year.
----------------------
b) I f a child, one day for every fifteen days of work performed by
---------------------- him during the previous calendar year.
---------------------- (i) In the case of a female worker, maternity leave for any number
of days not exceeding twelve weeks; and
---------------------- c) The leave earned in the year prior to that in which the leave is
---------------------- enjoyed shall be deemed to be days on which the worker has
worked in a factory for the purpose of computation of the period of
---------------------- two hundred and forty days or more, but he shall not earn leave for
these days.
----------------------
Explanation: The leave admissible under this sub-section shall be exclusive of
---------------------- all holidays whether occurring during or at either end of the period of leave.
----------------------
11.8 INTRODUCTION TO CONTRACT LABOUR
---------------------- (REGULATION AND ABOLITION) ACT, 1970
---------------------- The Government of India has been deeply concerned about the exploitation
of workers under the contract labour system. With a view to removing the
----------------------
difficulties of contract labour and bearing in mind the recommendations of
---------------------- various commissions and committees and the decisions of the Supreme Court,
particularly in the case of Standard Vacuum Refining Company in 1960, the
---------------------- Contract Labour (Regulation and Abolition) Act was enacted in 1970. This Act
seeks to regulate the employment of contract labour in certain establishments
----------------------
and to provide for its abolition under certain circumstances. Contract labourers
also suffer from inferior labour status, casual nature of employment, lack of Notes
job security and poor economic conditions. Contract labourers did the same
work as the workers directly employed but were not paid the same wages and ----------------------
the same working conditions as the directly employed workers. This practice
of exploitation was and still is very much prevalent in India. Therefore, to ----------------------
encounter such problem and also to regulate the conditions of these labourers, ----------------------
the Government passed an Act called the Contract Labour (Regulation and
Abolition) Act, 1970. The Act was also passed to provide legislative protection ----------------------
to these workers who had no rights to claim what they deserved like basic
amenities, urinals, drinking water facility. ----------------------
Contract Labour, by and large, is neither borne on pay roll or muster roll nor ----------------------
is paid wages directly. The establishments, which farm out work to contractors,
----------------------
do not own any direct responsibility in regard to their labourers. Generally, the
wage rates to be paid and observance of working conditions are stipulated in ----------------------
agreements but in practice they are not strictly adhered to.
----------------------
Short title, extent, commencement and application (Section 1)
1. This Act may be called the Contract Labour (Regulation and Abolition) ----------------------
Act, 1970.
----------------------
2. It extends to the whole of India.
----------------------
3. It shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint and different dates may be ----------------------
appointed for different provisions of this Act.
----------------------
The Act applies to every establishment in which 20 or more workmen are
employed or were employed on any day on the preceding 12 months as contract ----------------------
labour and to every contractor who employs or who employed on any day of the
preceding 12 months, twenty or more workmen. ----------------------
It does not apply to establishments where the work performed is of intermittent ----------------------
or casual nature. The Act also applies to establishments of the Government and
----------------------
local authorities as well.
If a question arises whether work performed in an establishment, is of ----------------------
an intermittent or casual nature, the appropriate government shall decide that
----------------------
question after consultation with the Central Board or, as the case may be, a State
Board, and its decision shall be final. ----------------------
Explanation. For the purpose of this sub-section, work performed in an ----------------------
establishment shall not be deemed to be of an intermittent nature -
(i) If it was performed for more than one hundred and twenty days in the ----------------------
preceding twelve months, or ----------------------
(ii) If it is of a seasonal character and is performed for more than sixty days
in a year. ----------------------
----------------------
----------------------

Notes 11.9 DEFINITIONS OF THE CONTRACT LABOUR (R&A)
ACT, 1970
----------------------
a) “Government” means the Central Government or the State Government;
----------------------
b) A workman shall be deemed to be employed as “contract labour” in or in
---------------------- connection with the work-of-an establishment when he is hired in or in
connection with such work by or through a contractor, with or without the
----------------------
knowledge of the principal employer;
---------------------- c)
“Contractor”, in relation to an establishment, means a person who
undertakes to produce a given result for the establishment, through contract
----------------------
labour or who supplies contract labour for any work of the establishment
---------------------- and includes a sub-contractor;
---------------------- d) “Controlled industry” means any industry the control of which by the
Union has been declared by any Central Act to be expedient client in the
---------------------- public interest;
---------------------- e) “ Establishment” means any office or department of the Government

or a local authority, or any place where any industries, trade, business,
---------------------- manufacture or occupation is carried on;
---------------------- f) “Prescribed” means prescribed by rules made under this Act;

g) “ Principal employer” means in the Government office the Head of the
----------------------
Department, in a factory, the owner, manager or occupier of the factory or
---------------------- in case of mine, the person who has been named as manager, “owner” and
“agent” and person responsible for the supervision;
----------------------
h) “Wages” shall have the meaning returns for the work;
---------------------- i) “Workman” means any person employed in or in connection with the work
of any establishment to do any skilled, semi-skilled or unskilled manual,
----------------------
supervisory, technical or clerical work for hire or reward, whether the
---------------------- terms of employment be express or implied.
---------------------- But does not include any such person who is employed mainly in a
managerial or administrative capacity; or in a supervisory capacity draws wages
---------------------- exceeding five hundred rupees per mensem or work is of managerial nature OR
who is an out- worker, that is, a person to whom any articles and materials are
---------------------- given out and the work is not being carried out within the premises under the
---------------------- control and management of the principal employer.
Example to Clear the Concept:
----------------------
In the present day world, globalisation is increasing at a very high pace
---------------------- and it is resulting in profit-oriented economies which in turn are leading to the
promotion of contract labour. Concept of contract labour can be understood
---------------------- from the following example:
---------------------- Suppose A is an industrialist and wants to build a factory and for this A
hires a person B to get the job done. B hires other people X, Y and Z to build
----------------------
the factory. Now it is not necessary that X, Y and Z should be hired by B with

the permission of A. A may not even know about this contract but B acting as Notes
a mediator has got into a contract with other people to get A’s work done. These
people X, Y and Z who have no direct contact or relationship with A are the ----------------------
“contract labourers”.
----------------------
----------------------
----------------------
1. Contract labourers suffer from:
i. Inferior labour status ----------------------
ii. Casual nature of employment ----------------------
iii. Lack of job security and poor economic conditions
iv. Discrimination by the principle employer ----------------------
v. Threats from trade unions ----------------------
2. The Contract Labour (Regulation and Abolition) Act applies to:
----------------------
i. Establishment which has hired 20 or more contract labours during
last 12 months ----------------------
ii. Contractors who employed contract labours during last 12 months
----------------------
iii. Seasonal establishments
iv. Government establishments ----------------------
----------------------
Activity 5
----------------------
Visit an organisation which hires contract labours. Observe and make a note of ----------------------
the conditions in which they work.
----------------------
----------------------
11.10 THE ADVISORY BOARDS (SECTION 3−5)
----------------------
The Central Government and the State Governments are required to set
up Central Advisory Board and State Advisory Boards, which are authorised ----------------------
to constitute Committees as deemed proper. The functions of the Boards are ----------------------
advisory, on matters arising out of the administration of the Act as are referred
to them. The Boards carry out the functions assigned to them under the Act. ----------------------
The Central Government constitutes a board to be called: ----------------------
1. The Central Advisory Contract Labour Board (hereinafter referred to as the
Central Board) to advise the Central Government on such matters arising ----------------------
out of the administration of this Act. ----------------------
2. The State Government may constitute a board to be called the State
----------------------
Advisory Contract-Labour Board (hereinafter referred to as the State
Board) to advise the State Government on such matters arising out of the ----------------------
administration of this Act.
Notes The Central Board and State Board shall consist of:
a) A Chairman to be appointed by the Central Government/State Government;
----------------------
b) The Chief Labour Commissioner (Central)/Labour Commissioner, ex
---------------------- officio;
---------------------- c) Such number of members, not exceeding seventeen/eleven but not less
than eleven/nine, as the Central Government may nominate to represent
---------------------- that Government.
---------------------- Provided that the number of members nominated to represent the
workmen shall not be less than the number of members nominated to represent
---------------------- the principal employers and the contractors.
---------------------- The Central Board or the State Board, as the case may be, may constitute
such committees and for such purpose shall meet at such time and places and
---------------------- shall observe such rules of procedure in regard to the transaction of business at
---------------------- its meetings as may be prescribed.
The members of a committee shall be paid such fees and allowances
---------------------- for attending its meetings as may be prescribed and no fees shall be payable to
---------------------- a member who is an officer of Government or of any corporation established
by any law for the time being in force.
----------------------
----------------------
11.11 REGISTRATION OF ESTABLISHMENTS
EMPLOYING CONTRACT LABOUR (SECTION 6–10)
----------------------
A) Appointment of registering officers
----------------------
he appropriate Government may, by an order notified in the Official
T
---------------------- Gazette appoint such persons, being Gazetted Officers of Government,
as it thinks fit to be registering officers for the purposes of this Chapter;
---------------------- and define the limits, within which a registering officer shall exercise the
powers conferred on him by or under this Act.
----------------------
B) Registration of certain establishment
----------------------
1. Every principal employer of an establishment to which this Act
---------------------- applies shall make an application to the registering office in the
prescribed manner for registration of the establishment.
----------------------
2. ertificate of registration is issued to the principal employer
C
---------------------- after receiving the application in the prescribed format if the
registering officer is satisfied. If there is any misrepresentation
---------------------- or suppression of any material fact, or that for any other reason
---------------------- registering officer may, after verification have authority to revoke
the registration. No principal employer employs contract labour in
---------------------- the establishment without authentic registration.
---------------------- C) Prohibition of employment of contract labour
To stop the practice of the employment of contract labour in any process,
----------------------

operation or other work in any establishment, Government‘s decision shall Notes
be final whether any process or operation or other work is of perennial
nature. ----------------------
D) Criteria and circumstances for abolition of contract labour ----------------------
If the work for which contract labour is employed is incidental to and
----------------------
closely connected with the main activity of the industry and -
1. Is of a perennial and permanent nature, ----------------------
2. Whether it is done ordinarily through regular workers, ----------------------
3. hether it is sufficient to employ considerable number of whole-
W ----------------------
time worker, the abolition of contract labour is justified.
----------------------
1. To prohibit the contract labour in any process or establishment, ----------------------

Government’s decision shall be final.
----------------------
2. Principal employer can employ contract labour in the establishment
without registration. ----------------------
3. The Contract Labour Act is also applicable to establishment in which ----------------------
work of casual nature is performed.
----------------------
----------------------
Activity 6
----------------------
Make a list of establishment which you consider requires the services of
----------------------
contract labours.
----------------------
11.12 LICENSING OF CONTRACTORS (SECTION 11−15) ----------------------
The appropriate Government may, by an order notified in the Official ----------------------

Gazette, appoint such persons, being Gazetted Officers of Government, as it
----------------------
thinks fit to be licensing officers for the purposes of this Chapter and define the
limits, within which a licensing officer shall exercise the powers conferred on ----------------------
licensing officers by or under this Act.
----------------------
a) Licensing of contractors: No contractor to whom this Act applies shall
undertake or execute any work through contract labour except under ----------------------
and accordance with a licence. A licence contain conditions including,
in particular, conditions as to hours of work, fixation of wages and other ----------------------
essential amenities in respect of contract labour. Sub-contractors or ‘piece ----------------------
wagers’are equally responsible for obtaining licence and implementing the
provisions of the Act and the Rules. Failure to obtain licence will amount ----------------------

Notes to criminal offence and is punishable. This Section imposed a liability
not to undertake or execute any work through contract labour without
---------------------- licence, a liability which continued until the licence was obtained and its
requirement was complied with.
----------------------
b) Grant of licences: Every application for the grant of a licence shall be
---------------------- made in the prescribed form and shall contain the particulars regarding the
location of the establishment, the nature of process, operation or work for
----------------------
which contract labour is to be employed and such other particulars as may
---------------------- be prescribed. After investigation of the application received, a licence is
granted for the specified period that may be renewed from time to time.
----------------------
c) Revocation, suspension and amendment of licences: If the licensing
---------------------- officer is satisfied that a licence is obtained by misrepresentation or
suppression of any material fact, or the holder of a licence has, without
---------------------- reasonable cause, failed to comply with the conditions subject to which
the licence has been granted or has contravened any of the provisions of
----------------------
this Act or the rules made thereunder, then the licensing officer may after
---------------------- giving the holder of the licence an opportunity of showing cause, revoke
or suspend the licence or forfeit the sum deposited as security for the
---------------------- due performance of the conditions subject to which the licence has been
granted.
----------------------
d) Appeal: Any person aggrieved by an order may, within thirty days from
---------------------- the date on which the order is communicated to him, prefer an appeal to
an appellate officer who shall be a person nominated in this behalf by the
----------------------
appropriate Government.
----------------------
11.13 WELFARE AND HEALTH OF CONTRACT LABOUR
----------------------
(SECTION 16–21)
----------------------
a) Canteens: The Act states wherein work requiring employment of contract
---------------------- labour is likely to continue for such period as may be prescribed, and
contract labour numbering one hundred or more is ordinarily employed
---------------------- by a contractor, the appropriate Government may make rules requiring
---------------------- that in every establishment one or more canteens shall be provided and
maintained by the contractor for the use of such contract labour such rules
---------------------- are provided for: (a) the date by which the canteens shall be provided,
(b) the number of canteens that shall be provided, and the standards in
---------------------- respect of construction, accommodation, furniture and other equipment
---------------------- of the canteens, and (c) the foodstuffs which may be served therein and
the charges which may be made therefore.
---------------------- b) Rest rooms: In every place wherein contract labour is required to halt
---------------------- at night in connection with the work of an establishment in which work
requiring employment of contract labour is likely to continue for such
---------------------- period as may be prescribed, there shall be provided and maintained by
the contractor for the use of the contract labour such number of rest rooms
----------------------

or such other suitable alternative accommodation within such time as may Notes
be prescribed. The rest rooms or the alternative accommodation to be
provided under sub-section (1) shall be sufficiently lighted and ventilated ----------------------
and shall be maintained in a clean and comfortable condition.
----------------------
Other facilities: It shall be the duty of every contractor employing contract
c)
labour in connection with the work of an establishment to which this Act ----------------------
applies, to provide and maintain a sufficient supply of wholesome drinking
----------------------
water for the contract labour at convenient places, a sufficient number of
latrines and urinals of the prescribed types so situated as to be convenient ----------------------
and accessible to the contract labour in the establishment; and washing
facilities. ----------------------
d) First-aid facilities: There shall be provided and maintained by the ----------------------
contractor so as to be readily accessible during all working hours a first-aid
box equipped with the prescribed contents at every place where contract ----------------------
labour is employed by him.
----------------------
e) Liability of principal employer in certain cases: Obligation to provide
amenities conferred under the Act to the workers is on the principal ----------------------
employer. All expenses incurred by the principal employer in providing the
----------------------
amenity may be recovered by the principal employer from the contractor
either by deduction from any amount payable to the contractor under any ----------------------
contract or as a debt payable by the contractor, but if any amenity required
to be provided for the benefit of the contract labour employed in an ----------------------
establishment is not provided by the contractor within the time prescribed
----------------------
then such amenity shall be provided by the principal employer within such
time as may be prescribed. On the government projects, the Government ----------------------
is the Principal Employer, and it also can’t escape from this liability of
providing amenities to the contract labours. It amounts to violation of Art. ----------------------
21 (fundamental rights) and workers can enforce their right by writ petition
----------------------
under Art.32 (the right to constitutional remedies).
f) Responsibility for payment of wages: Payment of wages including ----------------------
overtime wages, etc. must be made directly to the workers in full except ----------------------
with authorised statutory deductions, if any.
1. A contractor shall be responsible for payment of wages to each ----------------------
worker employed by him as contract labour and such wages shall ----------------------
be paid before the expiry of such period as may be prescribed. It
shall be the duty of the contractor to ensure the disbursement ----------------------
of wages in the presence of the authorised representative of the
principal employer. ----------------------
2. Every principal employer shall nominate a representative duly ----------------------

authorised by him to be present at the time of disbursement of wages
by the contractor and it shall be the duty of such representative ----------------------
to certify the amounts paid as wages in such manner as may be ----------------------
prescribed.
----------------------

Notes 3. 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, as the case
may be, to the contract labour employed by the contractor and 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.
----------------------

----------------------
Fill in the blanks.
---------------------- 1. Establishments wherein contract workers are required to halt at night
in connection with the work of an establishment,__________shall
----------------------
be provided.
---------------------- 2.
In case the contractor fails to make payment of wages, then
the_________shall be liable to make payment of wages to the contract
----------------------
labours.
----------------------
---------------------- 11.14 PENALTIES AND PROCEDURES (SECTION 22−35)

---------------------- A) Obstructions
---------------------- Whoever obstructs an inspector in the discharge of his duties or refuses or

willfully neglects to afford the inspector any reasonable facility for making
---------------------- any inspection, examination, inquiry or investigation and also refuses to
produce on the demand of an inspector any register or other document
---------------------- kept in pursuance of this Act or prevents or attempts to prevent or does
---------------------- anything which he has reason to believe is likely to prevent any person from
appearing before or being examined by an inspector acting in pursuance of
---------------------- his duties under the Act, shall be punishable with imprisonment for a term
which may extend to three months, or with fine which may extend to five
---------------------- hundred rupees, or with both.
---------------------- Whoever contravenes any provision of this Act or of any rules or any
condition of a licence granted shall be punishable with imprisonment
----------------------
for a term which may extend to three months, or with fine which may/
---------------------- extend to one thousand rupees, or with both, and in the case of a continuing
contravention with an additional fine which may extend to one hundred
---------------------- rupees for every day during which such contravention continues after
conviction for the first such contravention.
----------------------
B) Offences by Companies
----------------------
1. An offence under this Act has been committed by a company and
---------------------- it is proved that the offence has been committed with the consent or
connivance of, or that the commission of the offence is attributable
---------------------- to any neglect on the part of any director, manager, managing

agent or any other officer of the company, such director, manager, Notes
managing agent or such other officer shall also be deemed to
be guilty of that offence and shall be liable to be proceeded ----------------------
against and punished accordingly and 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. ----------------------
2. Without complaint in writing within three months from the date of
----------------------
offence, no court shall take cognizance of any offence.
3. If offence consists of disobeying a written order made by an inspector ----------------------
then complaint within six months will be entertained by the court.
----------------------
C) Appointment of Inspectors
----------------------
The Government may appoint inspectors for the purposes of this Act, and
define the local limits within which they shall exercise their powers under ----------------------
this Act.
----------------------
Subject to any rules made in this behalf, an inspector may -
a) Enter, at all reasonable hours any premises or place where contract ----------------------
labour is employed, for the purpose of examining any register ----------------------
or record or notices required to be kept or exhibited by or under
this Act or rules made thereunder, and require the production thereof ----------------------
for inspection;
----------------------
b) xamine any person whom he finds in any such premises or
E
place and who, he has reasonable cause to believe, is a workman ----------------------
employed therein;
----------------------
c) Require any person giving out work and any workman, to give
any information, which is in his power to give with respect to the ----------------------
names and addresses of the persons to, for and from whom the
----------------------
work is given out or received, and with respect to the payments to
be made for the work; ----------------------
d) Seize to take copies of such register, record of wages or notices or ----------------------
portions, thereof as he may consider relevant in respect of an
offence under this Act which he has reason to believe has been ----------------------
committed by the principal employer or contractor; and
----------------------
e) Exercise such other powers as may be prescribed.
There is a legal binding of producing any document or thing or to ----------------------
give any information required by an inspector by a required person. ----------------------
The Criminal Procedure provisions may be, applied to any search
or seizure. Frequent, detailed and thorough inspection should be ----------------------
undertaken by senior officers for ensuring compliance.
----------------------
D) Maintenance of Records
----------------------
Principal employer and every contractor has to maintain registers and
records giving the particulars of: (a) contract labour employed, (b) the ----------------------

Notes nature of work performed by the contract labour, (c) the rates of wages paid
to the contract labour and any other details in a prescribed form. Notices in
---------------------- the prescribed form containing particulars about the hours of work, nature
of duty and such other information should be exhibited within the premises
---------------------- of the establishment where the contract labour is employed.
---------------------- The contract labour employed in the establishment is entitled to benefits
E)
in respect of any matter which are more favourable to them than those
----------------------
to which they would be entitled under this Act. The contract labour shall
---------------------- continue to be entitled to the more favourable benefits in respect of that
matter, notwithstanding that they received benefits in respect of other
---------------------- matters under this Act. Nothing contained in this Act shall be construed as
precluding any such contract labour from entering into an agreement with
----------------------
the principal employer or the contractor, as the case may be, for granting
---------------------- them rights or privileges in respect of any matter which are more favourable
to them than those to which they would be entitled under this Act.
----------------------
No suit, prosecution or other legal proceedings shall lie against any
F)
---------------------- registering officer, licensing officer or any other Government servant or
against any member of the Central Board or the State Board as the case
---------------------- may be, for anything which is in good faith done or intended to be done
in pursuance of this Act or any rule or order made thereunder and no suit
----------------------
or other legal proceeding shall lie against the Government for any damage
---------------------- caused or likely to be caused by anything which is in good faith done or
intended to be done in pursuance of this Act or any rule or order made
---------------------- thereunder.
---------------------- The Central Government may give directions to the Government of any
G)
state as to the execution in the State of the following provisions contained in
---------------------- this Act and also to help to remove any difficulty in execution. Government
has power to make rules for carrying out the purposes of this Act.
----------------------
a) The form of application for the grant or renewal of a licence;
----------------------
b) The manner in which an investigation is to be made in respect of
---------------------- an application for the grant of a licence and the matters to be taken
into account in granting or refusing a licence;
----------------------
c) The form of a licence which may be granted or renewed, the fees
---------------------- to be levelled for the grant or renewal of a licence and the deposit of
any sum as security for the performance of such conditions;
----------------------
d) The circumstances under which licences may be varied or amended;
----------------------
e) The form and manner in which appeals may be filed and the procedure
---------------------- to be followed by appellate officers in disposing of the appeals;
---------------------- f) The time within which facilities required by this Act to be provided
and maintained may be so provided by the contractor and in case of
---------------------- default on the part of the contractor, by the principal employer;
---------------------- g) The number and types of canteens, rest rooms, latrines and urinals
that should be provided and maintained;
h) The type of equipment that should be provided in the first-aid boxes; Notes
i) The period within which wages payable to contract labour should
----------------------
be paid by the contractor;
j) The form of registers and records to be maintained by principal ----------------------
employers and contractors;
----------------------
k) The submission of returns, forms in which, and the authorities to
which, such returns may be submitted; ----------------------
l) The collection of any information or statistics in relation to contract ----------------------
labour; and
----------------------
m) Any other matter which has to be, or may be, prescribed under this
Act. ----------------------
Every rule made by the Central Government under this Act shall be laid
H) ----------------------
as soon as may be after it is made, however, that any such modification or
annulment shall be without prejudice to the validity of anything previously ----------------------
done under that rule.
----------------------
Employers argue that these provisions of this law are to be amended for
the speedy development of all sectors of Indian economy. But trade unions feel ----------------------
giving freedom to employers’ means removing sheltered or secure environment
----------------------
of the labour and allowing employer to hire when they need and fire when the
work is completed. ----------------------
Summary ----------------------
●● Due to the Factories Act, 1948, the safety, security, welfare and minimum ----------------------
working hours are assured to the workers. ----------------------
●● The Factories Act, 1948 has been constituted for the benefit of the
----------------------
employees regarding their safety and security.
●● It is mandatory on the part of the employer to provide all the required ----------------------
and prescribed facilities to worker community without fail. Hence, the
----------------------
employees are assured about conducive working atmosphere.
●● Labour management is one of the most crucial tasks of an entrepreneur. ----------------------
In order to surpass the stringent labour regulations, the industry sector in ----------------------
India is largely resorting to contract labourers, who are governed by the
Contract Labour Regulation and Abolition Act, 1970. ----------------------
●● If the Government at any point of time is dissatisfied with the practices ----------------------
followed, it can revoke the registration of an establishment.
●● Contract workers need to be paid as per the Minimum Wages Act. ----------------------
●● The principal employer should ensure the presence of his authorised ----------------------
representative at the place and time of disbursement of wages by the
----------------------
contractor to the workmen.
----------------------

Notes ●● For the health and welfare of contract labourers certain provisions have
been made mandatory by the Contract Labour Act such as safe drinking
---------------------- water, canteen facilities, first-aid facilities, etc.
---------------------- ●● Social security covers in terms of provident fund benefits and medical
facilities need to be also given to the contract employees. It is the primary
---------------------- responsibility of the contractors to provide all facilities to the workers as
delineated in the Act.
----------------------
---------------------- Keywords
---------------------- ●● Assure: To tell someone confidently that something is true, especially so
that they do not worry.
----------------------
●● Accumulation: To gradually increase in number or amount.
----------------------
●● Factory: A building or set of buildings where large amounts of goods are
---------------------- made using machines.
---------------------- ●● Minimum: The smallest amount or number allowed or possible.
●● Manufacturing: To produce goods in large numbers, usually in a factory
----------------------
using machines.
---------------------- ●● Process: A series of actions that you take in order to achieve a result.
---------------------- ●● Safe: Not dangerous or likely to cause harm.
---------------------- ●● Secure: To make certain something is protected from danger or risk.

●● Welfare: Physical and mental health and happiness, especially of a worker.
----------------------
●● Working class: A social group that consists of people who earn little
---------------------- money, often being paid only for the hours or days that they work, and
who usually do physical work.
----------------------
●● Contractor: A person who undertakes to produce a given result for the
---------------------- establishment.
---------------------- ●● Contract labour: A workman hired in or in connection with the work of
an establishment through a contractor or work.
----------------------
●● Appropriate government: State/Central Government.
---------------------- ●● License: Official permission with all terms and conditions.
---------------------- ●● Records: All the necessary documents and records required by the Act.
---------------------- ●● Principal employer: The owner or for whom the actual work has to
be done, person ultimately responsible for all the liabilities of the worker.
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
1. Examine the provisions relating to health under the Factories Act, 1948.
2. Examine the provisions regarding safety under the Factories Act, 1948. ----------------------
3. Examine the provisions relating to welfare under the Factories Act, 1948. ----------------------
4. Examine the provisions regarding leave with wages under the Factories ----------------------
Act.
5. Define Occupier, Factory and Manufacturing Process. ----------------------
6. What is the objective for Contract Labour (Regulation and Abolition Act), ----------------------
1970?
----------------------
7. What are the matters decided by the government through this Act for
contract labours? ----------------------
8. What are the powers of Government to make rules for carrying out the ----------------------
purposes of this Act?
----------------------
9. Explain the authorities of the Inspector under this Act.
10. Write in brief the role of advisory board. ----------------------
11. What are the provisions made under this Act for the welfare and health of ----------------------
contract labour?
----------------------
Check your progress 1 ----------------------

Match the following. ----------------------
i. – a. ii. –c. iii. -b.
----------------------
----------------------
1. False
2. False ----------------------

1. What are the duties of a certifying surgeon?
----------------------
i. The examination and certification of young persons
----------------------
ii. The examination of persons engaged in factories in dangerous
occupations or processes ----------------------
Fill in the blanks.
----------------------
1. Provision shall be made for cool drinking water during the hot weather
where in more than 250 workers are ordinarily employed. ----------------------

Notes 2. All the side walls, partitions, ceiling, staircase, etc. of the factory has to be
repainted at least once in every five years.
----------------------
---------------------- i. – a. ii. – c. iii. – d. iv. – b. v. – e.

----------------------
1. Contract labourers suffer from:
----------------------
i. Inferior labour status
---------------------- ii. Casual nature of employment
iii. Lack of job security and poor economic conditions
---------------------- 2. The Contract Labour (Regulation and Abolition) Act applies to:
i. Establishment which has hired 20 or more contract labours during
---------------------- last 12 months
---------------------- ii. Contractors who employed contract labours during last 12 months
iv. Government establishments
---------------------- State True or False.
---------------------- 1. True
2. False
----------------------
3. False
----------------------
---------------------- 1. Establishments wherein contract workers are required to halt at night in
connection with the work of an establishment, rest rooms shall be provided.
----------------------
2. In case the contractor fails to make payment of wages, then the principal
---------------------- employer shall be liable to make payment of wages to the contract labours.
----------------------
Suggested Reading
----------------------
1. Bare Act: Factories Act, 1948
----------------------
2. Taxmann’s Labour Laws. 2012. Taxman.
----------------------
3.
Contract Labour (Regulation and Abolition) Act. 1970. New Delhi:
---------------------- Universal Law Publishing.
4.
Kumar, H. L. Practical Guide to Contract Labour Regulation and Abolition
----------------------
Act and Rules. New Delhi: Universal Law Publishing.
----------------------
----------------------

Wage-Related Labour Legislations
UNIT
12
Structure:
12.1 Introduction to Payment of Wages Act, 1936

12.2 Application and Definition of the Payment of Wages Act
12.3 Responsibility for Payment of Wages
12.4 Deductions which may be made from Wages
12.5 Maintenance of Registers and Records
12.6 Appeal
12.7 Penalty for Offence under the Act
12.8 Introduction to Minimum Wages Act, 1948
12.10 Applicability of the Act
12.11 Fixing of Minimum Rates of Wages
12.12 Fixation of Revising Minimum Rates
12.13 Minimum Rate of Wages
12.14 Advisory/Central Board for Wages
12.15 Introduction to Payment of Bonus Act, 1965
12.16 Definitions of the Payment of Bonus Act, 1965
12.17 Eligibility for Bonus
12.18 Payment of Maximum Bonus
12.19 Adjustment of Customary or Interim Bonus
12.20 Gazetted Bonus Inspector
12.21 Productivity Linked Bonus
Summary
Key Words
Suggested Reading
Wage-Related Labour Legislations 223

Notes
Objectives
----------------------
----------------------
• Recognise the need for minimum wages
----------------------
• Appraise fixing and revision of minimum rates of wages
---------------------- • Analyse the roles of Central Advisory Board and committees
---------------------- • Examine the penalties for offences by the companies
---------------------- • Describe the need and purpose of payment of bonus

• Compare between set-on and set-off of allocable surplus
----------------------
• Identify the requirements under the Payment of Bonus Act
----------------------
12.1 INTRODUCTION
----------------------
Payment of Wages Act is an Act to regulate the payment of wages to
----------------------
certain classes of employed persons whereas it is expedient to regulate the
---------------------- payment of wages to certain classes of employed persons.
Background
----------------------
It is said that the Payment of Wages Act, 1936 is a gift of the Royal
---------------------- Commission of Labour to the Indian workers. The Royal Commission of
Labour which was appointed by the Government to investigate the conditions
----------------------
of labour found that the employers in India were not paying wages in time and
---------------------- making indiscriminate deductions from the wages payable to the labour. The
Royal Commission of Labour, therefore, recommended that a law should be
---------------------- enacted in India which will fix the date of payment of wages to the workmen
and lay down the authorised deductions which can be made from the wages
----------------------
payable to the workmen.
---------------------- This Act contained the following points:
---------------------- ●● Short title, Extent, Commencement and Application.
●● This Act may be called the Payment of Wages Act, 1936.
----------------------
●● It extends to the whole of India.
---------------------- ●● It shall come onto force on such date as the Central Government may, by
Notification in the Official Gazette, appoint it.
----------------------
---------------------- 12.2 APPLICATION AND DEFINITION OF THE PAYMENT

OF WAGES ACT
----------------------
Application
----------------------
The Act is applicable to persons employed in any factory, railway and
---------------------- to such other establishments to which the Appropriate Government may by
notification extend the provisions of the Act, after giving three months’ notice
----------------------
to that effect.
The term establishment includes tramway service, motor transport service Notes
engaged in carrying passengers or goods, or transport service in dock, wharf or
jetty, mine, quarry, oil field, plantation, workshop, construction development or ----------------------
maintenance of buildings, roads, bridges, canals etc.
----------------------
Presently, the employee drawing wages up to Rs.24,000 is covered under
this Act (vide notification dated August 28, 2017). On the basis of figures of the ----------------------
Consumer Expenditure Survey published by the National Sample Survey
----------------------
Organisation, the Central Government may revise the wage ceiling, after every
five years. ----------------------
Definition
----------------------
●● Employed person includes the legal representative of the deceased
employed person. ----------------------
●● Employer includes the legal representative of the deceased employer. ----------------------
●● The term Wages means all remuneration (whether by way of salary, ----------------------
allowances or otherwise) expressed in terms of money or capable of
being so expressed which if the terms of employment, express or implied, ----------------------
were fulfilled, would be payable to a person employed in respect of his
employment or of work done in such employment. It includes: ----------------------
i) Any remuneration payable under any award or settlement between ----------------------

the parties or order of a court.
----------------------
ii) Any remuneration to which the person employed is entitled in
respect of overtime work or holidays or any leave period. ----------------------
iii) Any sum which by reason of the termination of employment of the ----------------------
person employed is payable under any law, contract or instrument
which provides for the payment of such sum, whether with or ----------------------
without deduction, but does not provide for the time within which
----------------------
the payment is to be made.
iv) Any sum to which the person employed is entitled under any scheme ----------------------
framed under any law which for the time being is in force. ----------------------
However, it does not include
----------------------
●● Any bonus (whether under the scheme of profit-sharing or otherwise)
which does not form part of the remuneration payable under the terms ----------------------
of employment or which is not payable under any award or settlement
between the parties or order of a court. ----------------------
●● The value of any house accommodation or of the supply of light, water, ----------------------
medical attendance or other amenity or of any service excluded from the
----------------------
computation of wages by a general or special order of the appropriate
Government. ----------------------
●● Any contribution paid by the employer to any pension or provident fund
----------------------
and the interest which may have accrued thereon.
●● Any travelling concession. ----------------------

Notes ●● Any sum paid to the employed person to defray special expenses entailed
on him by the nature of his employment; or
----------------------
●● Any gratuity payable on the termination of employment.
----------------------
----------------------

---------------------- 1. Appropriate Government may, by notification in the official gazette,
may extend the provisions of the Act to any class of establishments,
---------------------- after giving______________months’ notice.
---------------------- 2.
Employees whose wages are less than________ per month are
covered under this Act.
----------------------
----------------------
Activity 1
----------------------
Visit any company to find out how the wages/remunerations/salary and
----------------------
allowances are paid therein.
----------------------
---------------------- 12.3 RESPONSIBILITY FOR PAYMENT OF WAGES
---------------------- Every employer shall be responsible for the payment to persons employed by
him of all wages required to be paid under this Act;
----------------------
Provided that in the case of persons employed (otherwise than by a contractor)
---------------------- a) In factories, if a person has been named as the manager of the factory.
---------------------- b) In industrial or other establishments, if there is a person responsible to
the employer, for the supervision and control of the industrial or other
---------------------- establishments.
---------------------- c Upon railways (otherwise than in factories), if the employer is in the
railway administration and the railway administration has nominated a
---------------------- person on this behalf for the local area concerned, the person so named,
---------------------- the person responsible to the employer, or the person so nominated as the
case may be, shall also be responsible for such payment.
---------------------- Fixation of wages period
---------------------- ●● Every person responsible for the payment of wages under Section 3 shall
fix periods in respect of which such wages shall be payable in wages may,
----------------------
therefore, be payable daily, weekly, fortnightly and monthly.
---------------------- ●● No wage period shall exceed one month.
----------------------
----------------------

Time of Payment of Wages Notes
The wages of every person employed upon or in
----------------------
a) Any railway, factory or (industrial or other establishment) upon or in
which less than one thousand persons are employed, shall be paid before ----------------------
the expiry of the seventh day.
----------------------
b) Any other railway, factory or industrial or other establishment shall be
paid before the expiry of the tenth day. ----------------------
Where the employment of any person is terminated by or on behalf of ----------------------
the employer, the wages earned by him shall be paid before the expiry
of the second working day from the day on which his employment is ----------------------
terminated. ----------------------
c) The Payment of Wages (Amendment) Act, 2017
----------------------
The Payment of Wages (Amendment) Act, 2017 changes the method of
payment of wages to the employees. Now the employer can pay wages ----------------------
to its employees by the following modes without obtaining written
authorisation (as required earlier): ----------------------
• in coin or currency notes; or ----------------------

• by cheque; or ----------------------
• by crediting them into his bank account.
----------------------
The relevant government may notify establishments, whereby the
employer should pay the wages only by cheque or crediting the wages in ----------------------
employees’ bank account (and not through cash) ----------------------
12.4 DEDUCTIONS WHICH MAY BE MADE FROM WAGES ----------------------
(Authorised/permissible/valid deduction). The wages of an employed ----------------------

person shall be paid to him without deductions of any kind except those
----------------------
authorised by or under this Act.
The imposition of any of the following penalties, namely ----------------------
i) The withholding of increment or promotions (including the stoppage of ----------------------

increment at an efficiency bar);
----------------------
ii) The reduction to a lower post or time scale or to a lower scale in a time
scale; or ----------------------
iii) Suspension, shall not be deemed to be deductions from the wages where ----------------------
the rules framed by the employer for the imposition of such penalty are
in conformity with the requirements if any which may be specified in ----------------------
this behalf by the Appropriate Government by notification in the Official
----------------------
Gazette.
Deductions from the wages of an employed person shall be made only in ----------------------
----------------------

Notes accordance with the provisions of this Act and may be of the following kinds
only:
----------------------
a) Fine
---------------------- b) Deductions for absence from duty
---------------------- c) Deductions for damage to or loss of goods expressly entrusted to employed
person for custody, or for loss of money, for which he is required to
---------------------- account, where such damage or loss is directly attributable to his neglect
or default.
----------------------
d) Deduction for such amenities and services supplied by the employer or by
---------------------- Government or any Housing board.
---------------------- e) Deduction for such amenities and services supplied by the employer.
The word service does not include the supply of tools and raw materials
---------------------- required for the purposes of employment.
---------------------- Deduction for recovery of advances, i.e., travelling allowance or
convenience allowance. Deduction for recovery of loans granted for
---------------------- house building or other purposes approved by the State government and
---------------------- the interest due in respect thereof.
f) Deductions of income tax payable by the employed person.
----------------------
g) Deductions required to be made by the order of court or other authority
---------------------- competent to make such an order.
---------------------- h) Deductions for subscription to and for repayment of advances from any
provident fund to which the Provident Fund Act applies.
----------------------
i) Deduction for payment to co-operative societies approved by the State
---------------------- Government or to a scheme of insurance maintained by the Indian Post
office.
----------------------
j) Deduction for payment of premium on his life insurance policy to the Life
---------------------- Insurance Corporation of India.
---------------------- ●● Deduction made with the written authorisation of the employed
person, for the payment of contribution to any fund constituted by
---------------------- the employer or a trade union registered under the Trade Union Act,
1926, or the members or their families or both approved by the
----------------------
Government.
---------------------- ●● Deduction made for payment of the fees payable of him for the
membership of any Trade Union with the written authorisation
----------------------
registered under the Trade Union Act, 1926.
---------------------- k) Deduction for payment of insurance premium of Fidelity Guarantee
Bonds.
----------------------
l) Deduction for recovery of loss sustained by the railway administration
---------------------- on account of acceptance by the employed person of counter faith or base
---------------------- coins or forged currency notes.

m) Deduction for recovery of losses sustained by railway administration Notes
on account or to collect for the appropriate charges whether his respect
of fares, freight, demurrage, or in case of sale of food in catering ----------------------
establishment.
----------------------
n) Deductions for recovery of losses sustained by a railway administration
on account of any rebates or refunds. ----------------------
o) Deductions, made with the written authorisation of the employed person, ----------------------
for contribution of the employed person, for contribution to the Prime
Minister’s National Relief Fund. ----------------------
p) Deduction for contribution to any insurance scheme framed by the Central ----------------------
Government for the benefit of its employees.
----------------------
The total amount of deductions which may be made in any wage period
from the wages of any employed person shall not exceed ----------------------
i) I n case of payments to co-operative societies, seventy-five per cent of ----------------------
such wages, and
ii) In any other case fifty per cent of such wages. ----------------------
Fines ----------------------
●● No fine shall be imposed on any employee in respect of such acts and ----------------------
omissions on his part by the employer without previous approval of the
appropriate authority. ----------------------
●● The list of the acts and commissions shall be exhibited in the prescribed ----------------------
manner on the premises at the prescribed places by the employer.
----------------------
●● No fine shall be imposed on any employed person until and unless he has
been given an opportunity of showing cause against the fine. ----------------------
●● The total amount of fine which may be imposed in any one wage period ----------------------
on any employed person shall not exceed an amount equal to three per
cent of the wages payable to him in respect of that wage period. ----------------------
●● The fine shall not exceed an amount equal to three per cent of the wages ----------------------
payable to him in respect of that wage period.
----------------------
●● No fine shall be imposed on any employed person who is under the age
of fifteen years. ----------------------
●● Every fine shall be deemed to have been imposed on the day of the act or
----------------------
omission in respect of which it was imposed.
●● All fines and all realisations thereof shall be recorded in the prescribed ----------------------
register by the employer and all realisations shall be applied only to the ----------------------
beneficial purposes to the persons employed in the factory or establishment
as are approved by the prescribed authority. ----------------------
●● No fine imposed on any employed person shall be recovered from him by ----------------------
installments or after the expiry of ninety days from the day on which it
was imposed. ----------------------

Notes Deduction for absence from duty
This Section provides that the deduction may be made on account of
----------------------
absence of an employed person from the place or places where, by the terms
---------------------- of his employment, he was required to work, such absence being for the whole
or any part for the period during which he is so required to work. However, the
---------------------- amount so deducted should be in proportion to the period for which he remains
absent from the place of work.
----------------------
Provision of this Section tells us that, if 10 or more employed persons
---------------------- acting in concert absent themselves without due notice and without reasonable
cause, the employer can deduct wages up to 8 days from the wages payable to
----------------------
such workmen.
----------------------
12.5 MAINTENANCE OF REGISTERS AND RECORDS
----------------------
Every employer shall maintain the register and records in the prescribed form,
----------------------
giving such particulars of persons employed by him, such as name, nature
---------------------- of work done, address, wages paid to him, deductions made from his pay,
attendance, etc. and the same registers and records shall be preserved by the
---------------------- employer for the period of three years after the date of the last entry made
therein.
----------------------
Inspectors
----------------------
i) Appointment
---------------------- The State Government may appoint inspectors for the purpose of this Act.
---------------------- ii) Powers
a) An Inspector may enter in the premises.
----------------------
b) May examine the register and records.
---------------------- c) May visit the work spot and interrogate the persons for the
---------------------- purpose.
d) May seize the registers and records.
---------------------- e) May prosecute the employer who is the defaulter under the
---------------------- provision.
iii) Duty
----------------------
Implementation of the provision of this Act by undertaking inspection
---------------------- frequently and regularly.
---------------------- Facilities to be afforded to Inspectors

Every employer shall afford an Inspector all reasonable facilities for making
---------------------- any entry, inspection, supervision, examination or inquiry under this Act.
---------------------- Claim
---------------------- 1. Nature of claim:
i) Claim arising out of delayed payment ii) Claim arising out of
----------------------
illegal deductions
2. Who can file the claim: Notes
i) Aggrieved person himself ii) Any legal practitioner
----------------------
i) Any official of the Registered Union
----------------------
iv) Any inspector under this Act
v)
Any other person acting with the permission of the authority ----------------------
appointed under the provision may apply to such authority for ----------------------
direction.
Competent Authority: For settling a claim ----------------------
Appointment ----------------------
Appointed by the State Government by Notification in the Government ----------------------
Gazette.
----------------------
Authority: Any Commissioner for workmen’s compensation.
1. r other officer with experience as a judge of civil court or as a stipendiary
O ----------------------
magistrate. ----------------------
2. residing officer of any Labour Court or Industrial Trubunal - The
P
Authority has Civil Court power and any inquiry under this Section shall ----------------------
be deemed to be a judicial proceeding. ----------------------
Function
----------------------
To hear and decide all the claims arising out of deductions from the wages
or delay in payment of the wages and including all matter incidental to such ----------------------
claim.
----------------------
Time Limitation
----------------------
Every such application shall be presented within twelve months from the
date on which the deductions from the wages was made or from the date on ----------------------
which the payment of wages was due to be made, as the case may be. Delay in
submission of claim application shall be condoned by the authority on bonafide/ ----------------------
sufficient ground.
----------------------
The authority shall hear that applicant and the employer or other
person responsible for the payment of wages under Section 3 or give them ----------------------
an opportunity of being heard and stage the further inquiry in the matter if ----------------------
necessary and examine all the registers/records for the purpose, and issue the
order for the refund of the amount of wages to the claimant, together with the ----------------------
payment of compensation as the authority may think fit. If the authority bearing
an application under this Section is satisfied that the application was malicious ----------------------
or vexatious, the authority may direct that a penalty not exceeding three hundred ----------------------
and seventy five rupees be paid to the employer or other person responsible for
the payment of wages by the person presenting the application. ----------------------
Single application in respect of claims from unpaid group ----------------------
A single application may be presented under Section15 on behalf or in
----------------------

Notes respect of any number of employed persons belonging to the same unpaid
profession, if they are and deductions have been made from their wages in
---------------------- contravention of this Act for the same cause and during the same wage period.
----------------------
----------------------

1. The term wages does not include any contribution paid by the
----------------------
employer towards pension/provident fund.
---------------------- 2. Establishment having employee strength of less than one thousand
shall make the wage payment before the expiry of 17th day.
----------------------
3. o fine imposed on any person shall be recovered after the expiry of
N
---------------------- 90 days from the day on which it was imposed.
---------------------- 4. o fine shall be imposed on any employed person who is below 18
N
years of age.
----------------------
---------------------- Activity 2
----------------------
Based on the visit to an establishment, explain how the registers and records
---------------------- are required to be kept in the prescribed form as per this Act.
----------------------
12.6 APPEAL
----------------------
---------------------- An appeal against an order dismissing either wholly or in part may be

preferred within thirty days of the date on which the order or direction was
---------------------- made before the court of small causes and elsewhere before the district court.
---------------------- No appeal shall be made unless the memorandum of appeal is accompanied

by certificate by the authority that the appellant has deposited the amount
---------------------- payable under the direction.
---------------------- Conditional attachment of property of employer or other person

responsible for the payment of wages
----------------------
If the court is satisfied that the employer or other person responsible
---------------------- for the payment of wages under Section 3 is likely to evade payment of any
amount that may be directed to be paid, the authority or court, as the case may
---------------------- be, is of opinion that the ends of justice would be defeated by the delay after
giving the employer or other person an opportunity of being heard, may direct
----------------------
the attachment of so much of the property of the employer or their person
---------------------- responsible for the payment of wages as in the opinion of the authority or court
be sufficient to satisfy the amount which may be payable under the direction.
----------------------
----------------------

Powers of authorities appointed under Section 15 Notes
Every authority appointed under Section 15 shall have all the powers of a civil
----------------------
court under the Code of Civil Procedure, 1908.
----------------------
Activity 3
----------------------
Give two examples of the procedure to make an appeal in case of non- ----------------------
payment of wages.
----------------------
12.7 PENALTY FOR OFFENCE UNDER THE ACT ----------------------
●● Whoever being responsible for the payment of wages to an employed ----------------------

person contravenes any of the provisions of any of the following Sections, ----------------------
namely Section 5 except sub-section 4 thereof Section 7, Section 8 except
sub-section (8) thereof Section 9, Section 10 except sub-section (2) ----------------------
thereof, and Section 12 to 13 shall be punishable with fine which shall not
be less than one thousand five hundred rupees but which may extend to ----------------------
seven thousand five hundred rupees. ----------------------
●● Whoever contravenes the provision of Section 4 (sub-section (4) of
Section 5, Section 6, sub-section (8) of sub-section (20) of Section 10 ----------------------
or Section 25 shall be punishable with fine which may extend to three ----------------------
thousand seven hundred and fifty rupees.
●● Whoever being required under the Act to maintain any records or registers ----------------------
or to furnish any information or return (i) fails to maintain such registers ----------------------
or records, (ii) willfully refuses or neglects to furnish any information (ii)
refuses to answer or willfully gives a false answer shall for each offence ----------------------
be punishable with a fine which shall not be less than one thousand five
hundred rupees but which may extend to seven thousand five hundred ----------------------
rupees. ----------------------
●● Whoever willfully obstructs an inspector in discharging his duties under
----------------------
this Act or refuses to afford an inspector any reasonable facility for making
any entry, inspection, examination, supervision or enquiry or willfully ----------------------
refuses to produce on the demand of an inspector any register/ documents
or prevents this, shall be punishable with a fine, which shall not be less ----------------------
than one thousand five hundred rupees but which may extend to seven
----------------------
thousand five hundred rupees
●● If any person who has been convicted of any offence punishable under ----------------------
this Act is again guilty of an offence involving contravention of the same
----------------------
provision, he shall be punishable for the same with imprisonment which
shall not be less than one month but which may extend to six months and ----------------------
with a fine which shall not be less than three thousand seven hundred and
fifty rupees but which may extend to twenty-two thousand five hundred ----------------------
rupees.
----------------------

Notes Bar of Suits
No court shall entertain any suit for the recovery of wages or of any
----------------------
deduction from wages in so far as the sum so claimed
---------------------- a) Forms the subject of an application under Section 15 which has been
presented by the plaintiff and which is pending before the authority
----------------------
appointed under that Section or of any appeal under Section 17, or
---------------------- b) Has formed the subject of a direction under Section 15 in favour of the
plaintiff, or
----------------------
c) Has been adjudged in any proceeding under Section 15 (not to be owned
---------------------- to the plaintiff), or
---------------------- d) Could have been recovered by an application under Section 15.
---------------------- Contracting out : Any contract or agreement, whether made before or after the
commencement of this Act, whereby an employed person relinquishes any right
---------------------- conferred by this Act shall be null and void in so far as it purports to deprive
him of such a right.
----------------------

----------------------
----------------------
i. Failure or refusal to maintain records/ a. Maximum fine of
---------------------- registers attracts Rs. 7,500/-
ii. Willful obstructing an Inspector on duty b. Fine of Rs.1,500/-
---------------------- attracts
iii. Offence involving contravention of the c. Penalty of Rs. 3,750/-
----------------------
same provision repeatedly attracts
---------------------- iv. Malicious or vexatious applications by d. Imprisonment between
employee attract 1 to 6 months
----------------------
---------------------- 12.8 INTRODUCTION TO MINIMUM WAGES ACT, 1948

---------------------- The Minimum Wages Act, 1948 was enacted to provide for fixing the
minimum rates of wages in certain employments. Whereas it is expedient to
----------------------
provide for fixing the minimum rates of wages in certain employments; it is
---------------------- hereby enacted as follows:
---------------------- Short title and extent:

This Act may be called as the Minimum Wages Act, 1948. It extends to
---------------------- the whole of India.
----------------------
----------------------
----------------------

12.9 IMPORTANT DEFINITIONS Notes
(a) ‘Wages’ means all remuneration, capable of being expressed in terms of ----------------------
money, which would, if the terms of the contract of employment, express
or implied, were fulfilled, be payable to a person employed in respect ----------------------
of his employment or of work done in such employment, [and includes
----------------------
house rent allowance], but does not include
(i) The value of ----------------------
(a) Any house-accommodation, supply of light, water, medical ----------------------

attendance, or
----------------------
(b) Any other amenity or any service excluded by general or
special order of the appropriate Government; ----------------------
(ii) ‘Employee’ means any person who is employed for hire or reward ----------------------
to do any work, skilled or unskilled, manual or clerical, in a
scheduled employment in respect of which the minimum rates of ----------------------
wages have been fixed; and includes an out-worker to whom any
----------------------
articles or materials are given out by another person to be made up,
cleaned, washed, altered, ornamented, finished, repaired, adapted ----------------------
or otherwise processed for sale for the purposes of the trade or
business of that other person where the process is to be carried out ----------------------
either in the home of the out-worker or in some other premises not
----------------------
being the premises under the control and management of that other
person; and also includes an employee declared to be an employee ----------------------
by the appropriate Government; but does not include any member
of the Armed Forces of the Union. ----------------------
----------------------
12.10 APPLICABILITY OF THE ACT
----------------------
The Minimum Wages Act, 1948 applies to:
----------------------
(a) Any scheduled employment in respect of which the minimum rates of
wages have been fixed under this Act; ----------------------
(b) Any scheduled employment under the control of any Government in India
----------------------
in respect of which minimum rates of wages have been fixed under this
Act; ----------------------
(c) Any scheduled employment under any local authority in respect of which ----------------------
the minimum rates of wages have been fixed under this Act.
Person responsible for ensuring the payment of minimum wages ----------------------
For any scheduled employment in respect of which the minimum rates of ----------------------
wages have been fixed under this Act, any person responsible to the owner for
the supervision and control of the employees or for the payment of wages; ----------------------
‘Scheduled employment’ means an employment specified in the Schedule, ----------------------

or any process or branch of work forming part of such employment (refer the
scheduled at the end of this unit). ----------------------

Notes
----------------------
---------------------- 1. Minimum Wages Act, 1948 extends to the whole of India including
the state of Jammu and Kashmir.
---------------------- 2. Minimum Wages Act applies only to the government organisations in
---------------------- India.
3. The term ‘wages’ include house rent allowance.
----------------------
4. Member of the Armed Forces of the union do not fall under the
---------------------- purview of the definition of ‘employee’ under the Minimum Wages
Act, 1948
----------------------
----------------------
Activity 4
----------------------
Write down two example each of the manufacturing and service organisations
----------------------
where the Minimum Wages Act is applicable.
----------------------
---------------------- 12.11 FIXING OF MINIMUM RATES OF WAGES
---------------------- Fixing of minimum rates of wages: (1) The appropriate Government shall,
in the manner hereinafter provided.
----------------------
(a) Fix the minimum rates of wages payable to employees employed in
---------------------- an employment specified in Part I or Part II of the Schedule and in an
employment added to either Part by notification under Section 27:
----------------------
Provided that the appropriate Government may, in respect of employees
---------------------- employed in an employment specified in Part II of the Schedule, instead
of fixing the minimum rates of wages under this clause for the whole
---------------------- State, fix such rates for a part of the State or for any specified class or
---------------------- classes of such employment in the whole State or part thereof;
(b) R
eview at such intervals as it may think fit, such intervals not exceeding
---------------------- five years, the minimum rates of wages so fixed and revise the minimum
---------------------- rates, if necessary:
Provided that where for any reason the appropriate Government has not
---------------------- reviewed the minimum rates of wages fixed by it in respect of any scheduled
---------------------- employment within any interval of five years, nothing contained in this clause
shall be deemed to prevent it from reviewing the minimum rates after the expiry
---------------------- of the said period of five years and revising them, if necessary, and until they
are so revised, the minimum rates in force immediately before the expiry of the
---------------------- said period of five years shall continue in force.
----------------------

The appropriate Government may refrain from fixing the minimum rates Notes
of wages in respect of any scheduled employment in which there are in the
whole State less than one thousand employees engaged in such employment, ----------------------
but if at any time, the appropriate Government comes to a finding after such
inquiry as it may make or cause to be made in this behalf that the number of ----------------------
employees in any scheduled employment in respect of which it has refrained ----------------------
from fixing the minimum rates of wages has risen to one thousand or more, it
shall fix the minimum rates of wages payable to employees in such employment ----------------------
[as soon as may be after such a finding].
----------------------
(2) The appropriate Government may fix
----------------------
(a) A minimum rate of wages for time work (a minimum time rate);
(b) A minimum rate of wages for piece work (a minimum piece rate); ----------------------
(c) A minimum rate of remuneration to apply in the case of employees ----------------------
employed on piece work for the purpose of securing to such
employees a minimum rate of wages on a time-work basis (a ----------------------
guaranteed time rate); ----------------------
(d) A 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 employees ----------------------
(overtime rate).
----------------------
12.12 FIXATION OF REVISING MINIMUM RATES
----------------------
In fixing or revising minimum rates of wages, different minimum rates of ----------------------
wages may be fixed for:
(i) Different scheduled employments; ----------------------
(ii) Different classes of work in the same scheduled employment; ----------------------

(iii) Adults, adolescents, children and apprentices; ----------------------
(iv) Different localities
----------------------
Minimum rate of wages may be fixed by any one or more of the following
wage periods, namely: ----------------------
a. By the hour ----------------------
b. By the day ----------------------
c. By the month
----------------------
d. By such other larger wage period as may be prescribed
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
---------------------- 1. The appropriate government may fix:

i. A minimum rate of wages for time work and piece work
----------------------
ii. A guaranteed time rate
---------------------- iii. A minimum rate in respect of overtime work done by employees
---------------------- iv. A minimum rate in respect of seasonal work
2. Different minimum rates of wages may be fixed for:
----------------------
i. Adult and adolescent, children and apprentices
---------------------- ii. Different scheduled employment
---------------------- iii. Separately for men and woman
iv. Handicapped/physically challenged persons
----------------------
----------------------
Activity 5
----------------------
---------------------- Try to gather information on the wage policy for different classes of work in
the same scheduled employment with few examples.
----------------------
---------------------- 12.13 MINIMUM RATE OF WAGES

---------------------- (1) A
ny minimum rate of wages fixed or revised by the appropriate
Government in respect of scheduled employments under Section 3 may
----------------------
consist of:
---------------------- (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 index number applicable to such workers
(hereinafter referred to as the “cost of living allowance”); or
----------------------
(ii) A basic rate of wages with or without the cost of living allowance, and
---------------------- the cash value of the concessions in respect of supplies of essential
commodities at the concession rates, where so authorised; 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.
---------------------- (2) The cost of living allowance and the cash value of the concessions in
respect of supplies of essential commodities at concession rates shall be
---------------------- computed by the competent authority at such intervals and in accordance
with such directions as may be specified or given by the appropriate
----------------------
Government.

Procedure for fixing and revising minimum wages Notes
(1) I n fixing the minimum rates of wages in respect of any scheduled
----------------------
employment for the first time under this Act or in revising the minimum
rates of wages so fixed, the appropriate Government shall either : ----------------------
(a) Appoint as many committees 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, or ----------------------
(b) B
y 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 two months from the date of the notification, on ----------------------
which the proposals will be taken into consideration.
----------------------
(c)
After considering the advice of the committee or committees
appointed under clause of sub-section (1), or as the case may be, ----------------------
all representations received by it before the date specified in the
notification under clause (b) of that sub-section, the appropriate ----------------------
Government shall, by notification in the Official Gazette, fix, or, as ----------------------
the case may be, revise the minimum rates of wages in respect of
each scheduled employment, and unless such notification otherwise ----------------------
provides, it shall come into force on the expiry of three months
from the date of its issue: ----------------------
Provided that where the appropriate Government proposes to revise the ----------------------
minimum rates of wages by the mode specified in clause (b) of sub-Section (1),
the appropriate Government shall consult the Advisory Board also. ----------------------
----------------------
12.14 ADVISORY/CENTRAL BOARD FOR WAGES
----------------------
Advisory Board
----------------------
For the purpose of coordinating the work of committees and sub-
committees and advising the appropriate Government generally in the matter of ----------------------
fixing and revising minimum rates of wages, the appropriate Government shall
appoint an Advisory Board. ----------------------
Central Advisory Board ----------------------

(1) For the purpose of advising the Central and State Governments in the ----------------------
matters of the fixation and revision of minimum rates of wages and other
matters under this Act and for coordinating the work of the Advisory ----------------------
Boards, the Central Government shall appoint a Central Advisory Board.
----------------------
(2) The Central Advisory Board shall consist of persons to be nominated by
the Central Government representing employers and employees in the ----------------------
scheduled employments, who shall be equal in number, and independent
----------------------
persons not exceeding one-third of its total number of members; one of
such independent persons shall be appointed the Chairman of the Board ----------------------
by the Central Government.
----------------------

Notes Composition of committees
Each of the committees, sub-committees and the Advisory Board shall
----------------------
consist of persons to be nominated by the appropriate Government representing
---------------------- employers and employees in the scheduled employments, who shall be equal in
number, and independent persons not exceeding one-third of its total number of
---------------------- members; one of such independent persons shall be appointed the Chairman by
the appropriate Government.
----------------------
Wages in kind
----------------------
(1) Minimum wages payable under this Act shall be paid in cash.
---------------------- (2) Where it has been the custom to pay wages wholly or partly in kind, the
---------------------- appropriate Government being of the opinion that it is necessary in the
circumstances of the case may, by notification in the Official Gazette,
---------------------- authorise the payment of minimum wages either wholly or partly in kind.
---------------------- If the appropriate Government is of the opinion that provision should
be made for the supply of essential commodities at concession rates, the
---------------------- appropriate Government may, by notification in the Official Gazette,
authorise the provision of such supplies at concession rates.
----------------------
(3) The cash value of wages in kind and of concessions in respect of supplies
---------------------- of essential commodities at concession rates authorised under sub-sections
(2) and (3) shall be estimated in the prescribed manner.
----------------------
Payment of minimum rates of wages
----------------------
Where in respect of any scheduled employment a notification under
---------------------- Section 5 (1) is in force, the employer shall pay to every employee engaged in
a scheduled employment under him, wages at a rate not less than the minimum
---------------------- rate of wages fixed by such notification for that class of employees in that
employment without any deductions except as may be authorised within such
----------------------
time and subject to such conditions as may be prescribed.
---------------------- Fixing hours for a normal working day
---------------------- In regard to any scheduled employment minimum rates of wages in
respect of which have been fixed under this Act, the appropriate Government
---------------------- may -
---------------------- (a) Fix the number of hours of work which shall constitute a normal working
day, inclusive of one or more specified intervals;
----------------------
(b) Provide for a day of rest in every period of seven days which shall be
---------------------- allowed to all employees or to any specified class of employees and for
the payment of remuneration in respect of such days of rest;
----------------------
(c) Provide for payment for work on a day of rest at a rate not less than the
---------------------- overtime rate.
---------------------- The provisions of sub-section (1) shall, in relation to the following classes
of employees, apply only to such extent and subject to such conditions as may
---------------------- be prescribed:

(i) Employees engaged on urgent work, or in any emergency which could Notes
not have been foreseen or prevented;
----------------------
(ii) Employees engaged in work in the nature of preparatory or complementary
work which must necessarily be carried on outside the limits laid down ----------------------
for the general working in the employment concerned;
----------------------
(iii) Employees whose employment is essentially intermittent;
(iv) Employees engaged in any work which for technical reasons has to be ----------------------
completed before their duty is over;
----------------------
(v) Employees engaged in a work which could not be carried on except at
times dependent on the irregular action of natural forces. ----------------------
Overtime ----------------------
Where an employee, whose minimum rate of wages is fixed under ----------------------
this Act by the hour, by the day or by such a longer wage period as may be
prescribed, works on any day in excess of the number of hours constituting a ----------------------
normal working day, the employer shall pay him for every hour or for part of
an hour so worked in excess at the overtime rate fixed under this Act or under ----------------------
any law of the appropriate Government for the time being in force, whichever ----------------------
is higher.
----------------------
Wages of a worker who works for less than a normal working day
If an employee whose minimum rate of wages has been fixed under this ----------------------
Act by the day, works on any day on which he was employed for a period less
----------------------
than the requisite number of hours constituting a normal working day, he shall,
save as otherwise hereinafter provided, be entitled to receive wages in respect ----------------------
of work done by him on that day as if he had worked for a full normal working
day: ----------------------
Provided, however, that he shall not be entitled to receive wages for a full ----------------------
normal working day:
----------------------
(i) In any case where his failure to work is caused by his unwillingness to
work and not by the omission of the employer to provide him with work, ----------------------
and
----------------------
(ii) In such other cases and circumstances as may be prescribed.
----------------------
Wages for two or more classes of work
Where an employee does two or more classes of work to each of which a ----------------------
different minimum rate of wages is applicable, the employer shall pay to such
----------------------
employee in respect of the time respectively occupied in each such class of
work, wages at not less than the minimum rate in force in respect of each such ----------------------
class.
----------------------
Penalties for certain offences
Any employer who: ----------------------
(a) Pays to any employee less than the minimum rates of wages fixed for that ----------------------

Notes employee’s class of work, or less than the amount due to him under the
provisions of this Act, or
----------------------
(b) Contravenes any rule or order made under Section 13 shall be punishable
---------------------- with imprisonment for a term which may extend to three years, or with
a fine which may extend to fifty thousand rupees, or with both, provided
---------------------- that in imposing any fine for an offence under this Section, the Court shall
take into consideration the amount of any compensation already awarded
----------------------
against the accused in any proceedings taken under Section 22.
---------------------- Section 22C. Offences by companies
---------------------- (1) If the person committing any offence under this Act is a company,
every person who at the time the offence was committed was in charge
---------------------- of and was responsible to the company for the conduct of the business
of the company as well as the company shall be deemed to be guilty
----------------------
of the offence and shall be liable to be proceeded against and punished
---------------------- accordingly:
---------------------- Provided that nothing contained in this sub-section shall render any such
person liable to any punishment provided in this Act 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.
----------------------
(2) Notwithstanding anything contained in sub-section (1) where any offence
---------------------- under this Act has been committed by a company and it is proved that
the offence has been committed with the consent or connivance of or is
---------------------- attributable to any neglect on the part of any director, manager, secretary
---------------------- or other officer of the company such director, manager, secretary or other
officer of the company shall also be deemed to be guilty of that offence
---------------------- and shall be liable to be proceeded against and punished accordingly.
---------------------- Explanation: For the purposes of this Section -
(a) “ Company” means anybody corporate and includes a firm or other
----------------------
association of individuals, and
---------------------- (b) “Director” in relation to a firm means a partner in the firm.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
1. If an employer pays less than the prescribed minimum wages, he / ----------------------
she may be punished with Imprisonment of three years or with a fine
of_______. ----------------------
2. Minimum wages are generally paid in ______________. ----------------------
3. ___________ is constituted for the purpose of advising the Central
----------------------
and State Governments in the matters of the fixation and revision of
minimum rates of wages. ----------------------
4. In the Central Advisory Board, there shall be_________ number of
----------------------
the representatives of employers and employees.
----------------------
Activity 6 ----------------------
----------------------
How would you determine wages of an employee who does two or more
classes of work? Try to identify such employments where this kind of ----------------------
opportunities exists.
----------------------
SCHEDULE PART 1 ----------------------
Employment in any woollen 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 any lac
manufactory. ----------------------
Employment in any mica works. Employment in public motor transport. ----------------------

Employment in tanneries and leather manufactory. Employment in gypsum
mines. ----------------------
Employment in barytes mines. Employment in bauxite mines. Employment in ----------------------

manganese mines.
----------------------
Employment in the maintenance of buildings and employment in the construction
and maintenance of runways. ----------------------
----------------------

Notes Employment in china clay mines. Employment in kyantite mines. Employment
in copper mines.
----------------------
Employment in clay mines covered under the Mines Act, 1952 (35 of 1952).
---------------------- Employment in magnesite mines covered under the Mines Act, 1952 (35 of
1952).
----------------------
Employment in white clay mines. Employment in stone mines.
----------------------
SCHEDULE PART II
---------------------- Employment in agriculture, that is to say, in any form of farming including the
---------------------- cultivation and tillage of the soil, dairy, farming, the production cultivation,
growing and harvesting of any agricultural or horticultural commodity, the
---------------------- raising of livestock bees or poultry and any practice performed by a farmer or
on a farm as incidental to or in conjunction with farm operation (including any
---------------------- forestry or timbering operations and the preparation for market and delivery to
---------------------- storage or to market or to carriage for transportation to market of farm produce).
---------------------- 12.15 INTRODUCTION TO PAYMENT OF BONOUS ACT, 1965

---------------------- Payment of Bonus Act is an Act to provide for the payment of bonus to
---------------------- persons employed in certain establishments on the basis of profits or on the
basis of production or productivity and for the matters connected therewith.
---------------------- The Payment of Bonus Act, 1965 was constituted by the Indian
---------------------- Government and it is applicable to the whole of India. It shall apply to (a) every
factory and (b) every other establishment in which twenty or more persons are
---------------------- employed on any day during an accounting year, provided that the Appropriate
Government may after giving not less than two months’ notice of its intention
---------------------- so to do by notification in the official gazette, apply the provisions of this Act
---------------------- with effect from such accounting year as may be specified in the notification
to any establishment employing less than twenty persons, but the number of
---------------------- persons so specified shall in no case be less than ten.
----------------------
12.16 DEFINITIONS OF THE PAYMENT OF BONUS ACT, 1965
----------------------
The payment of bonus has become an important point of interest of the
---------------------- employees. It is to be noted that the bonus is over and above the annual salary
(wages) pre-declared to the employee concerned. The applicable accounting
---------------------- year for calculation of the bonus would be as under:
---------------------- (1) Accounting year means -
---------------------- i) In relation to a Corporation, the year ending on the day on which
the books of accounts of the Corporation are closed and balanced;
----------------------
ii) I n relation to a Company, the period in respect of which any profits
---------------------- and loss accounts of the Company are laid before the annual general
meeting whether the period is a year or not;
----------------------

iii) In any other case Notes
(a) The year commencing on the 1st day of April; or
----------------------
(b) The year ending on which its accounts are so closed and
balanced; ----------------------
(2) Allocable surplus means ----------------------
(a) In relation to an employer, being a Company (other than a banking ----------------------
Company) sixty-seven per cent of the available surplus in an
accounting year; ----------------------
(b) In any other case, sixty per cent of such available surplus. ----------------------
(3) ‘Employee’ means any person (other than an apprentice) employed on
a salary or wage not exceeding twenty one thousand rupees per menses ----------------------
in any Industry to do any skilled or unskilled, manual, supervisory, ----------------------
managerial, administrative, technical or clerical work for hire or reward,
or reward, if the terms and conditions of employment express or implied ----------------------
were fulfilled.
----------------------
(4) ‘Employer’ includes
----------------------
(i) In relation to an establishment which is a factory, the owner or
occupier of the factory, including the agent, the legal representative ----------------------
of a deceased owner or occupier of a factory or the manager.
----------------------
(ii) In relation to any other establishment, the person who or the authority
which has the ultimate control over the affairs of the establishment ----------------------
and where the said affairs are entrusted to a manager, managing
director or managing agent. ----------------------
The following sums shall be deducted from gross profits as prior charges to ----------------------
arrive at the available surplus.
----------------------
(a) Any amount by way of depreciation admissible in accordance with the
provisions of sub-section ----------------------
(1) of Section 32 of the Income Tax Act, 1961 ----------------------
(b) Any amount by way of development rebate or development allowance or
----------------------
investment allowance which the employer is entitled to deduct from his
income under the Income Tax Act, 1961. ----------------------
(c) Subject to the provisions of Section 7, any direct tax which the employer
----------------------
is liable to pay for the accounting year in respect of his income, and the
profits and gains during the year. ----------------------
(d) Any other amount specified in the Third Schedule of the Act. ----------------------
----------------------
----------------------
----------------------

Notes
----------------------
---------------------- Multiple Choice Single Response.
---------------------- 1. What does an accounting year mean in relation to a Corporation?

i. It means the year ending on the day on which the books of
---------------------- accounts of the corporation are closed and balanced.
---------------------- ii. It means the beginning of the year.
---------------------- iii. It means when new investments are done.
---------------------- iv. It means when the structure of finance department is changed.

2.
Under the Payment of Bonus Act, ‘employee’ means a person
---------------------- employed on a salary or wages not exceeding:
---------------------- i. Rs. 3,500
---------------------- ii. Rs. 6,500
iii. Rs.10,000
----------------------
iv. Rs. 21,000
----------------------
---------------------- Activity 7
----------------------
Undertake an exercise to study how the calculation for allocable surplus
---------------------- is done by today’s organisation. Explain with two examples what will be
deducted from gross profits as prior charges to arrive at the available surplus.
----------------------
(Refer secondary sources also).
----------------------
---------------------- 12.17 ELIGIBILITY FOR BONUS

---------------------- Every employee shall be entitled to be paid by his employer in an
accounting year, bonus in accordance with the provisions of this Act, provided
---------------------- he has worked in the establishment for not less than thirty days in that year.
---------------------- Section 9: Disqualification for bonus
---------------------- An employee shall be disqualified from receiving bonus under this Act, if
he is dismissed from service for:
---------------------- (a) Fraud, or
---------------------- (b) Riotous or violent behaviour while on the premises of the establishment or
theft, misappropriation or sabotage of any property of the establishment.
----------------------
Section 10: Payment of minimum bonus
----------------------
Every employer shall be bound to pay to every employee in respect of the
---------------------- accounting year, a minimum bonus which shall be 8.33 per cent of the salary or
wage earned by the employee during the accounting year.
12.18 PAYMENT OF MAXIMUM BONUS Notes
Where in respect of any accounting year referred to in Section 10, ----------------------
the allocable surplus exceeds the amount of minimum bonus payable to the
employee under that Section, the employer shall pay for that accounting year ----------------------
subject to a maximum of twenty per cent of salary or wage as bonus.
----------------------
Section 14: Computation of number of working days
----------------------
For the purpose of Section 13, an employee shall be deemed to have
worked in an establishment in any accounting year also on the days on which ----------------------
(a) He has been laid off under an agreement or as permitted by the Standing ----------------------
Orders under the Industrial Employment (Standing Orders) Act, 1946 or
under the Industrial Act, 1947 or under any other law applicable to the ----------------------
establishment.
----------------------
(b) He has been on leave with salary or wages.
(c) He has been absent due to temporary disablement caused by an accident ----------------------
arising out of and in the course of his employment. ----------------------
(d) The employee has been on maternity leave with salary or wage, during
the accounting year. ----------------------
Section 15: Set-on and Set-off of allocable surplus ----------------------

●● Where for any accounting year , the allocable surplus exceeds the amount ----------------------
of maximum bonus payable to the employees in the establishment under
Section 11, then the excess shall, subject to a limit of twenty per cent ----------------------
of the total salary or wage of the employees in the establishment in the
accounting year, be carried forward for being set on in the succeeding ----------------------
accounting year and so on up to and inclusive of the fourth accounting ----------------------
year to be utilised for the purpose of payment of bonus in the manner
illustrated in the Fourth Schedule. (for schedule, please refer the Bare Act ----------------------
of the Payment of Bonus Act, 1965)
----------------------
●● Where for any accounting year, there is no available or allocable surplus
in respect of that year falls short of the amount of minimum bonus payable ----------------------
to the employees in the establishment under Section 10, and there is no
----------------------
amount or sufficient amount carried forward and set-on under sub-section
(1) which could be utilised for the purpose of payment of minimum ----------------------
bonus, such minimum amount or the deficiency, as the case may be, shall
be carried forward for being set-off in the succeeding accounting year ----------------------
and so on up to and inclusive of the fourth accounting year in the manner
----------------------
illustrated in the Fourth Schedule.
●● The Principle of set-on and set-off as illustrated in the Fourth Schedule ----------------------
shall apply to all other cases not covered by sub-section (1) or sub section
----------------------
(2) for the purpose of payment of bonus under the Act;
----------------------
----------------------

Notes ●● Where in any accounting year any amount has been carried forward and
set-on or set-off under this Section, then in calculating the bonus for
---------------------- the succeeding accounting year, the amount of set-on or set-off carried
forward from the earliest accounting year shall first be taken into account.
----------------------

----------------------
----------------------
1. An employee becomes entitled for the payment of bonus if has worked
---------------------- in the establishment for not less than hundred days in that year.
2. n employee shall be disqualified from receiving bonus if he is
A
----------------------
dismissed from service for riotous behaviour or fraud.
---------------------- 3. A minimum of 8.5 per cent of the salary or wages earned by the
---------------------- employee during the accounting year is paid as bonus.
4. The maximum limit for payment of bonus is 20 per cent.
----------------------
---------------------- Activity 8
----------------------
Visit any two companies to find out their method of payment of minimum
---------------------- bonus.
----------------------
12.19 ADJUSTMENT OF CUSTOMARY OR INTERIM BONUS
----------------------
---------------------- Where in any accounting year

(a) An employer has paid any puja bonus or their customary bonus to an
---------------------- employee; or
---------------------- (b) An employer has paid a part of the bonus payable under this Act to an
employee before the date on which such bonus becomes payable.
----------------------
If that employee has been working before the date on which such bonus
---------------------- becomes payable, then the employer shall be entitled to deduct the amount
of bonus payable by him to the employee under this Act in respect of that
----------------------
accounting year and the employee shall be entitled to receive only the balance.
---------------------- Section 18: Deduction of certain amount from bonus payable under the Act
---------------------- Where in any accounting year, an employee is found guilty of misconduct
causing financial loss to the employer, then, it shall be lawful for the employer
---------------------- to deduct the amount of loss from the amount of bonus payable by him to
---------------------- the employee under this Act in respect of that accounting year only and the
employee shall be entitled to receive the balance, if any.
----------------------
----------------------

Section 19: Time limit for payment of bonus Notes
[All amounts] payable to an employee by way of bonus under this Act
----------------------
shall be paid in cash by his employer.
(a) Where there is a dispute regarding payment of bonus pending before any ----------------------
authority under Section 22, within a month from the date on which the
----------------------
award becomes enforceable or the settlement comes into operation in
respect of such disputes; ----------------------
(b) In any other case, within a period of eight months from the date of the
----------------------
accounting year.
Section 26: Maintenance of register, records etc. ----------------------
Every employer shall prepare and maintain such registers, records and ----------------------
other documents in such form and in such manner as may be prescribed.
----------------------
12.20 GAZETTED BONUS INSPECTOR ----------------------
a) Appointment ----------------------
he appropriate government may by notification in the official gazette
T ----------------------
appoint such persons as it thinks fit to be inspectors for the purposes of
this Act and may define jurisdiction within which they shall exercise ----------------------
jurisdiction.
----------------------
b) Power
----------------------
a) Require an employer to furnish such information from the employer
as he may consider necessary. ----------------------
b)
Enter in the establishment on any premises connected to the
----------------------
establishment.
c) Production of registers/records and other documents for examination. ----------------------
d) Examine any person for the purpose of this Act.
----------------------
e) Make copies of or take extracts from any book, registers or other
documents. ----------------------
f) Every inspector shall be deemed to be a public servant within the ----------------------

meaning of the IPC (45 of 1860).
----------------------
Section 28: Penalty
----------------------
If any person
a) Contravenes any of the provisions of this Act or any rule made thereunder, ----------------------
or
----------------------
b) Fails to comply with the provision or direction shall be punishable with
imprisonment for a term which may extend to six months or with fine ----------------------
which may extend to one thousand rupees, or with both. ----------------------
----------------------

Notes Section 29: Offences by companies
If the person committing an offence under this Act is a company, every
----------------------
person who, at the time the offence was committed, was in charge of, and was
---------------------- responsible to the company for the conduct of business of the company, as well
as the company, shall be deemed to be guilty of the offence and shall be liable
---------------------- to be proceeded against and punished accordingly:
---------------------- Provided that nothing contained in sub-section (1), where an offence
under this Act has been committed by a company and it is proved that the
---------------------- offence has been committed with the consent or connivance of, or is attributable
to any neglect on the part of, any director, manager, secretary or other officer
----------------------
of the company, such director, manager, secretary or other officer shall also be
---------------------- proceeded against and punished accordingly.
Explanation: For the purposes of this Section –
----------------------
(a) “ Company” means anybody corporate and includes a firm or other
---------------------- association of individuals; and
---------------------- (b) “Director”, in relation to a firm, means a partner in the firm.
----------------------
12.21 PRODUCTIVITY LINKED BONUS
----------------------
This Section was introduced in 1976. Under this section a bonus can be a
---------------------- paid link to productivity in lieu of profit sharing. For this purpose, the employer
and the union need to enter into a productivity-linked bonus agreement. Under
---------------------- the productivity-linked bonus agreement, the minimum and maximum bonus
---------------------- has to be within the framework of the Payment of Bonus Act, 1965, i.e., a
minimum of 8.33% and a maximum 20%.
---------------------- Section 32: Act not to apply to certain establishments
---------------------- The Payment of Bonus Act shall not be applicable to the following establishments:
---------------------- a) Life Insurance Corporation of India
b) Nationalised banks
----------------------
c) Dock workers
----------------------
d) Universities and other educational institutions
---------------------- e) Institutions (including hospitals, chambers of commerce and society
---------------------- welfare institutions) established not for purposes of profit
f) Public Sector Undertakings. However, when a Public Sector undertaking
----------------------
competes with the Private Sector Undertaking, the Payment of Bonus Act
---------------------- applies to such an undertaking.
----------------------
----------------------
----------------------

Notes
----------------------
1. For the purpose of computation of total number of working days, ----------------------
an employee shall be deemed to have worked in an establishment in
which: ----------------------
i. He has been laid off ----------------------
ii. He has been on permissible leave with salary
----------------------
ii. He has been on strike
iv. He has worked overtime ----------------------
2. The provisions of Payment of Bonus Act, 1965 are not applicable to:
----------------------
i. LIC
ii. Nationalised banks ----------------------
iii. Educational institutions ----------------------
iv. Factories
----------------------
----------------------
Activity 9
----------------------
Visit a nearby organisation where the Payment of Bonus Act is applicable ----------------------
and find out the list of registers and documents maintained by them for
calculating bonus. ----------------------
----------------------
Summary
----------------------
●● The main purpose of the Payment of Wages Act is to ensure a regular and
prompt payment of wages and to prevent the exploitation of wage earners ----------------------
by prohibiting arbitrary fines and deduction from wages. ----------------------
●● I t has become mandatory on the part of every employer to maintain the
register and records in the prescribed form, giving the particulars of ----------------------
persons employed by him to regulate the proper payment of the wages to ----------------------
workers.
----------------------
●● eductions from the wages of an employed person shall be made only in
D
accordance with the provision of this Act. ----------------------
●● he Minimum Wages Act was enacted in essence to achieve the expected
T
----------------------
demands of the workers’ community from the management.
●● It has a legal sanction, in the sense that it is legally allowed to have ----------------------
collective bargaining and agreement to that particular effect. ----------------------
----------------------

Notes ●● I f the proper use of Minimum Wages Act is made, then the problems could
be solved without any litigation and the smooth conduct of the industrial
---------------------- workforce can be achieved.
---------------------- ●● ewly setup establishments are exempted from the provisions of the
N
Payment of Bonus Act, 1965 for a period of 5 years during the infancy
---------------------- period. However, from the year they start making profits, the Act becomes
applicable even before the completion of 5 years.
----------------------
●● he Act applies to all factories and every other establishments, which
T
---------------------- employs twenty or more workmen.
---------------------- ●● he Payment of Bonus Act, 1965 provides for a minimum bonus of 8.33
T
per cent of wages.
----------------------
●● he maximum bonus can be paid to the extent of 20 per cent of the
T
---------------------- employee annual wages.
----------------------
Keywords
----------------------
●● Absence: When you are not in a particular place.
----------------------
●● eductions: When an amount or a part of something is taken away from
D
---------------------- a total, or the amount that is taken towards statutory returns.
●● Employer: A person or company that pays people to work for them.
----------------------
●● Mandatory: If something is mandatory, it must be done by law.
----------------------
●● aintain: Not change, to make a situation or activity continue in the
M
---------------------- same way.
---------------------- ●● rescribed: To say officially what people must do, rules prescribed by
P
law.
----------------------
●● Particulars: Formal details about something or someone.
---------------------- ●● ecords: Information that is written on paper or stored on computer so
R
----------------------
●● egulate: To control an activity or process, especially by using rules,
R
---------------------- laws regulating advertising.
---------------------- ●● Wages: The amount of money a person regularly receives for their job.
---------------------- ●● mendment: A change to a law that is not yet in operation and is still
A
being discussed and can be enforced by Government.
----------------------
●● Applicable: Affecting or relating to a person or thing.
---------------------- ●● Achieve: To succeed in finishing something or reaching an aim, especially
after a lot of work or effort.
----------------------
●● riterion: A standard by which you judge, decide about or deal with
C
---------------------- something.
---------------------- ●● Essence: The basic or most important idea or quality of something.

●● xpected: To think that someone should behave in a particular way or do
E Notes
a particular thing accordingly.
----------------------
●● inimum wage: The smallest amount of money that an employer is
M
legally allowed to pay someone who works for them. ----------------------
●● ppointment: A time you have arranged to meet someone or go
A
----------------------
somewhere.
●● Appropriate: Suitable or right for a particular situation or person. ----------------------
●● onus: An extra amount of money that you are given, especially because
B ----------------------
you have worked hard.
----------------------
●● Government: The group of people who officially control a country.
●● Jurisdiction: The legal power to make decisions and judgments. ----------------------
●● Notify: To officially tell someone about something. ----------------------

●● ay: To give money to someone because you are buying something from
P ----------------------
them, or because you owe them money.
----------------------
●● Purpose: Why you do something or why something exists.
●● alary: A fixed amount of money that you receive from your employer,
S ----------------------
usually every month. ----------------------
●● age: The amount of money a person regularly receives for their job
W
weekly wages. ----------------------
----------------------
----------------------
1. Define term ‘Wages’ under the Payment of Wages Act, 1936. ----------------------
2.
Examine the various authorised/permissible deductions under the
Payment of Wages Act, 1936. ----------------------
3. Write short notes on: ----------------------

i. Fines ----------------------
ii. Deductions for absence
----------------------
4. Explain the powers and duties of the authority constituted under the
Payment of Wages Act, 1936. ----------------------
5. Write in details how the Payment of Wages Act is constituted for the ----------------------
betterment of the workers.
----------------------
6. xplain the concept of the fixation of minimum wages under the Minimum
E
Wages Act, 1948. ----------------------
7. When can an employee claim minimum wages? How? ----------------------
8. What is the role of the Advisory Board in the fixation of minimum wages?
----------------------
9. Write about the application of the Payment of Bonus Act, 1965.
----------------------

Notes 10. Explain the concept of set-on and set-off as laid down under the Payment
of Bonus Act, 1965.
----------------------
11. What is the criterion for arriving at the available surplus under the Act?
---------------------- 12. When can an employee be deprived for claiming bonus under the Payment
of Bonus Act, 1965?
----------------------
13. Which are the establishments to which the Payment of Bonus Act, 1965
---------------------- is not applicable?
----------------------
----------------------
----------------------
Fill in the blanks.
---------------------- 1. ppropriate Government may, by notification in the official gazette, may
A
---------------------- extend the provisions of the Act to any class of establishments, after
giving three months’ notice.
---------------------- 2. Employees whose wages are less than Rs. 24,000 per month are covered
---------------------- under this Act.
----------------------
----------------------
1. True
---------------------- 2. False
---------------------- 3. True
---------------------- 4. False
----------------------
----------------------
i. − b. ii. − a. iii. − d. iv. − c.
---------------------- Answers to Check your Progress
i. True ii. False iii. True iv. True
----------------------
----------------------
---------------------- 1. The appropriate government may fix:
---------------------- i. A minimum rate of wages for time work and piece work
---------------------- ii. A guaranteed time rate

iii. A minimum rate in respect of overtime work done by employees
----------------------

2. Different minimum rates of wages may be fixed for: Notes
i. Adult and adolescent, children and apprentices
----------------------
ii. Different scheduled employment
----------------------
1. If an employer pays less than the prescribed minimum wages, he/she ----------------------
may be punished with imprisonment of three years or with a fine of
Rs. 50,000/-. ----------------------
2. Minimum wages are generally paid in cash. ----------------------

Central Advisory Board is constituted for the purpose of advising the
3. ----------------------
Central and State Governments in the matters of the fixation and revision
of minimum rates of wages. ----------------------
In the Central Advisory Board, there shall be equal number of the
4. ----------------------
representatives of employers and employees.
----------------------
1. What does an accounting year mean in relation to a Corporation? ----------------------

i. It means the year ending on the day on which the books of accounts ----------------------
of the corporation are closed and balanced.
----------------------
2. Under the Payment of Bonus Act, ‘employee’ means a person employed
on a salary or wages not exceeding: ----------------------
iv. Rs. 21,000
----------------------
----------------------
1. False ----------------------
2. True ----------------------
3. False ----------------------
4. True
----------------------
----------------------
1. For the purpose of computation of total number of working days, an ----------------------
employee shall be deemed to have worked in an establishment in which: ----------------------
i. He has been laid off
----------------------
ii. He has been on permissible leave with salary
----------------------
----------------------

Notes 2. The provisions of Payment of Bonus Act, 1965 are not applicable to:
i. LIC
----------------------
ii. Nationalised banks
----------------------
iii. Educational institutions
----------------------
---------------------- 1. Kumar, H. L. 2013. Practical Guide to payment of wages Act & Rules.
New Delhi: Universal Law Publishing Company.
----------------------
2. Payment of Wages Act, 1936. Lucknow: Eastern Book Company.
---------------------- 3. Sinha, P.R.N, Indu Bala Sinha and Seema Priyadarshini Shekhar. 2013.
Industrial Relations, Trade unions and Labour Legislations. New Delhi:
----------------------
Pearson Education.
---------------------- 4. http://labourbureau.nic.in/Min_Wages_Report_2011.pdf
---------------------- 5. Rao, S. B. 1962. The Concept of Bonus. Law Publishing House.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Social Security Labour Legislations
UNIT
13
Structure:
13.1 Introduction to Employees’ Compensation Act, 1923

13.3 Employees’ Compensation
13.4 Notice and Claim for Compensation
13.5 Penalties
13.6 Appointment of Commissioner
13.7 Power to Submit Cases
13.8 Introduction to Employees’ State Insurance Act, 1948
13.9 Definitions of the State Insurance Act
13.10 Establishment of Employee’s State Insurance Corporation
13.11 Constitution of Standing Committee
13.12 Medical Benefit Council
13.13 Powers of the Standing Committee
13.14 Constitution of Employees’ Insurance Court
13.15 Introduction to Employees’Provident Funds and Miscellaneous
Provisions Act, 1952
13.16 Coverage of the Provident Fund Act
13.17 Contributions of Provident Fund Act
13.18 Family Pension Scheme
13.19 New Pension Scheme
13.20 Option for Return of Capital
13.21 Introduction to Maternity Benefit Act, 1961
13.22 Application and Definition of the Maternity Benefit Act
13.23 Responsibility of the Employer
13.24 Payment of the Maternity Benefits
13.25 Appointment/Functions and Powers of the Inspector (Section 14−17)
13.26 Others
13.27 Introduction to Payment of Gratuity Act, 1972
13.28 Definitions of Gratuity
13.29 Payments of Gratuity
13.30 Amount of Gratuity Payable
13.31 Power to Exempt
13.32 Appointment of the Inspector
13.33 Powers of Inspectors
Summary
Key Words
Suggested Reading
Social Security Labour Legislations 257

Notes
Objectives
----------------------
----------------------
• Analyse the concept of compensation
---------------------- • Estimate compensation for different categories of disablement
---------------------- • Evaluate the significance of Employees’ Compensation Act
---------------------- • State the significance of employees’ insurance
• Describe the constitution of ESI, Standing committee and Medical
----------------------
benefit council
---------------------- • Discuss various benefits provided under Employees’ State Insurance Act
---------------------- • Define the nature of employees’ provident fund
---------------------- • Calculate the contribution of Provident Fund

• Analyse the role of the Pension Schemes
----------------------
• Describe the need for maternity benefit
----------------------
• Explain the pre-requisites for the payment of maternity benefits
---------------------- • Analyse the Act and its effective administration
---------------------- • Explain the significance of gratuity
---------------------- • Specify the applications of payment of Gratuity Act, 1972

• Calculate the payment of gratuity
----------------------
---------------------- 13.1 INTRODUCTION TO EMPLOYEES’ COMPENSATION

---------------------- (AMENDMENT) ACT, 1923
---------------------- Workmen’s compensation Act has been amended on 9th January 2010.
THE WORKMEN’S COMPENSATION (AMENDMENT) ACT, 2009
----------------------
is now renamed as THE EMPLOYEE’S COMPENSATION (AMENDMENT)
---------------------- ACT, 2009 and wherever “workman” or “workmen” is mentioned in the entire
Act the same needs to be read as “Employee”
----------------------
Section 1: Short title, extent and commencement
---------------------- 1) This Act may be called the The Employee’s Compensation (Amendment)
Act, 2009.
----------------------
2) It extends to the whole of India.
----------------------
13.2 IMPORTANT DEFINITIONS
----------------------
1. ‘Commissioner’ means a commissioner for employees’ compensation
----------------------
appointed under Section 20.
----------------------

2. ‘Dependent’ means any of the following relatives of a deceased employee Notes
namely -
----------------------
a)
A widow, a minor (legitimate or adopted) son, an unmarried
(legitimate or adopted) daughter or a widowed mother, and ----------------------
b) If wholly or in part dependent on the earnings of the employee at
----------------------
the time to his death
i) A widower ----------------------
ii) A parent other than a widowed mother ----------------------
iii) A minor illegitimate son, an unmarried illegitimate daughter ----------------------
or a daughter (legitimate or illegitimate or adopted, if married,
and a minor or if widowed and a minor) ----------------------
iv) A minor brother or an unmarried sister or a widowed sister of ----------------------
a minor
----------------------
v) A widowed daughter-in-law
vi) A minor child of a pre-deceased son ----------------------
vii) A minor child of a pre-deceased daughter where no parent of ----------------------
the child is alive, or
----------------------
viii) A paternal grandparent if no parent of the employee is alive
1) ‘Employer’ includes anybody of persons whether incorporated or not ----------------------
and any managing agent of an employer and the legal representative of a ----------------------
deceased employer and when the services of the employee is temporarily
lent or let on hire to another person by the person with whom the employee ----------------------
has entered into a contract of service or apprenticeship, means such other
person while the employee is working for him. ----------------------
2) ‘Minor’ means a person who has not attended the age of 18 years. ----------------------
3) ‘Partial disablement’ means, where the disablement is of a temporary ----------------------
nature, such disablement reduces the earning capacity of an employee
in any employment in which he was engaged at the time of the ----------------------
accident resulting in the disablement, and where the disablement is of a
----------------------
permanent nature, such disablement reduces his earning capacity in every
employment which he was capable of undertaking at that time provided ----------------------
that every injury specified in Part-II of schedule shall be deemed to result
in permanent partial disablement. ----------------------
4) ‘Total disablement’ means such disablement whether of a temporary or ----------------------
permanent nature, naturally as it incapacitates an employee for all work
which he was capable of doing at the time of the accident resulting in such ----------------------
disablement.
----------------------
5) ‘Employee’ means any person other than a person whose employment is
of a casual nature and who is employed otherwise than for the purpose of ----------------------
the employers’ trade or business who is a railway servant ----------------------

Notes a) A master seaman or other member of the crew of a ship
b) A captain or other member of the crew of an aircraft
----------------------
c) A person recruited as driver, helper, mechanic, cleaner or in any
---------------------- other capacity in connection with a mother vehicle
---------------------- d) A person recruited for work abroad by a company
----------------------
----------------------

1. he Employees’ Compensation Act (Amendment), 1923 is the first
T
---------------------- social security legislation in India.
---------------------- 2. Employer is liable to pay compensation for personal injury caused by
any accident.
----------------------
3. The disablement which is of a temporary nature and reduces the
---------------------- earning capacity of an employee in any employment is called partial
disablement.
----------------------
----------------------
Activity 1
----------------------
If employer is paying regular wages/salaries then why is there a need for
----------------------
enactment of social security legislations? Try to list down few of the ‘social
---------------------- security’ legislations in India.
----------------------
13.3 EMPLOYEES’ COMPENSATION
----------------------
Section 3
----------------------
If personal injury is caused to an employee by accident arising out and in
---------------------- the course of employment, his employer shall be liable to pay compensation in
accordance with the provisions under the Act provided that the employer shall
---------------------- not be so liable
---------------------- a) In respect of an injury which does not result in the total or partial
disablement of the employee for a period exceeding three days
----------------------
b)
In respect of any injury not resulting in death or permanent total
---------------------- disablement, caused by an accident which is directly attributed to
---------------------- i) he employee having been at the time therefore under the influence
T
of drink of drugs, or
----------------------
ii) The willful disobedience of the employee to an order expressly
---------------------- given or to a rule expressly framed for the purpose of security,
safety of employee, or
----------------------

iii) The willful removal or disregard by the workman of any safety Notes
guard or other device which he knows to have been provided for
the purpose of securing the safety of employee. ----------------------
Section 4: Amount of compensation ----------------------
Subject to the provisions of this Act, the amount of compensation shall be
----------------------
as follows namely:
a) here the death results from the injury (i) an amount equal to fifty per
W ----------------------
cent of the monthly wages of the diseased employee multiplied by the
----------------------
relevant factors an amount of one lakh twenty thousand rupees which-
ever is more. ----------------------
b) Where permanent total disablement results from the injury (ii) an amount ----------------------
equal to sixty per cent of the monthly wages of the injured employee
multiplied by the relevant factor, or an amount of one lakh forty thousand ----------------------
rupees whichever in more.
----------------------
c) Where temporary disablement whether total or partial results from the
injury - a half-monthly payment of the sum equivalent to twenty-five per ----------------------
cent of the monthly wages of the employee to be paid in accordance with
the provision of sub-section (2). ----------------------
The employee shall be reimbursed the actual medical expenditure incurred ----------------------
by him for treatment of injuries caused during the course of employment.
----------------------
Section 4-A: Compensation to be paid when due and penalty for default
----------------------
1) Compensation to be paid as soon as it falls due.
2) In cases where the employer does not accept the liability for compensation ----------------------
to the extent claimed, he shall be bound to make provisional payment ----------------------
based on the extent of liability which he accepts, and such payment shall
be deposited with the commissioner or made to the employee, as the case ----------------------
may be without prejudice to the right of the employee to make any further
claim. ----------------------
Where any employer is in default in paying the compensation due under ----------------------
this Act within one month from the date it fell due, the commissioner shall (a)
direct that employer in addition to the amount of the arrears, pay simple interest ----------------------
thereon at the rate of twelve per cent per annum or at such higher lending rates ----------------------
of any scheduled bank as may be specified by the Central Government, by
notification in the official gazette, on the amount due. If, in the opinion of the ----------------------
commissioner there is no justification for the delay, direct that the employer
shall, in addition to the amount of arrears and interest thereon, pay a further sum ----------------------
not exceeding 50 per cent of such amount by way of a penalty. ----------------------
Method of calculating wages
----------------------
In this Act and for the purposes thereof the expression “monthly wages”
means the amount of wages deemed to be payable for a month’s service (whether ----------------------
the wages are payable by the month or by whatever other period or at piece
----------------------
rates), and calculated as follows:

Notes (a) Where the employee has, during a continuous period of not less than
twelve months immediately preceding the accident, been in the service
---------------------- of the employer who is liable to pay compensation, the monthly wages
of the employee shall be one-twelfth of the total wages which have fallen
---------------------- due for payment to him by the employer in the last twelve months of that
---------------------- period;
(b)
Where the whole of the continuous period of service immediately
----------------------
preceding the accident during which the employee was in the service of
---------------------- the employer who is liable to pay the compensation was less than one
month, the monthly wages of the employee shall be the average monthly
---------------------- amount which, during the twelve months immediately preceding the
accident, was being earned by an employee employed on the same work
----------------------
by the same employer, or, if there was no employee so employed, by an
---------------------- employee employed on similar work in the same locality;
(c) In other cases including cases in which it is not possible, for want of
----------------------
necessary information, to calculate the monthly wages under clause
---------------------- (b), the monthly wages shall be thirty times 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.
----------------------
Explanation: A period of service shall, for the purposes of this Section be
---------------------- deemed to be continuous which has not been interrupted by a period of absence
from work exceeding fourteen days.
----------------------
Section 9: Compensation not to be assigned, attached or charged
----------------------
No lump sum or half-monthly compensation is capable of being assigned
---------------------- or charged or be liable to attachment or passed to any person other than employee
by operation of law, nor shall any claim be set off against the same.
----------------------

----------------------
----------------------
1. In which of the following cases, the employer is not liable to pay
---------------------- compensation to an employee?
i. The employee at the time of accident was under the influence of
----------------------
drug or liquor
---------------------- ii. Willful disobedience of the safety rules
---------------------- iii. The employee at the time of accident was away from the place
of work/employment
----------------------
iv. Willful removal of any safety guard/device provided to him
----------------------
----------------------

Notes
Activity 2
----------------------
What benefits are available after accident to the employee? Give two ----------------------
examples.
----------------------
13.4 NOTICE AND CLAIM FOR COMPENSATION ----------------------
No claim for compensation shall be entertained by a commissioner unless ----------------------

notice of the accident has been given in the manner hereinafter provided as ----------------------
soon as practicable after the happening thereof and unless the claim is preferred
before him within two years of the occurrence of the accident or in case of ----------------------
death, within two years from the date of death.
----------------------
Provided that, where the accident is the contracting of a disease in respect of
which the provisions of sub-section (2) of Section 3 are applicable, the accident ----------------------
shall be deemed to have occurred on the first of the days during which the
employee was continuously absent from work in consequence of the disablement ----------------------
caused by the disease. ----------------------
Section 11: Medical examination
----------------------
Where a workman has given notice of an accident, he shall, if the employer
before the expiry of three days from the time at which service of the notice ----------------------
has been affected, offers to have him examined free of charge by a qualified
----------------------
medical practitioner submit himself for such examination.
----------------------
13.5 PENALTIES
----------------------
Section 18 A
----------------------
(1) Whoever
----------------------
a) Fails to maintain a notice book which he is required to maintain
under sub-section (3) of Section 10, or ----------------------
b) Fails to send commissioner a statement which he is required to send ----------------------
under sub-section (1) of Section 10-A, or
c) Fails to send a report which he is required to send under Section ----------------------
10-B, or ----------------------
d) Fails to make a return which he is required to make under Section
----------------------
16 shall be punishable with fine which may extend to five thousand
rupees. ----------------------
(2) No prosecution under this Section shall be instituted except by or with
----------------------
previous sanction of a commissioner.
----------------------
----------------------

Notes 13.6 APPOINTMENT OF COMMISSIONER
---------------------- The appointment of the commissioner is as follows:
---------------------- ●● The state government may by notification in the Official Gazette appoint
a person to be commissioner for employees’ compensation for such area
---------------------- as may be specified in the notification.
---------------------- ●● Every commissioner shall be deemed to be a public servant within the

meaning of the Indian Penal Code (45 of 1860).
----------------------
Section 23: Powers of commissioners
---------------------- The commissioner shall have all powers of a civil court under the Code
of Civil Procedure, 1908 (5 of 1908) for the purpose of taking evidence on
----------------------
oath, and enforce the attendance of witnesses and compelling the production of
---------------------- documents and material objects.
---------------------- Activity 3
----------------------
List some of the powers of Commissioners for compensation.
----------------------
---------------------- 13.7 POWER TO SUBMIT CASES

----------------------
A commissioner may, if he thinks fit submit any question of law for
---------------------- the decision of the high court and if he does so, shall decide the question in
conformity with such decision.
----------------------
Section 30: Appeals
---------------------- An appeal shall lie to the high court provided that no appeal shall lie
---------------------- against any order unless a substantial question of law is involved in the appeal
and unless the amount in dispute in the appeal is not less than three hundred
---------------------- rupees.
----------------------
----------------------

1. If death results from an injury, an amount equal to___________per
---------------------- cent of the monthly wages of the diseased employee multiplied by the
---------------------- relevant factors is paid as compensation.
2. If permanent total disablement results from the injury, an amount
----------------------
equal to___________ per cent of the monthly wages of the injured
---------------------- employee multiplied by the relevant factor is paid as compensation.
----------------------
----------------------

Notes
Activity 4
----------------------
Can you write down some conditions where the employer is not liable to pay ----------------------
compensation? Give two examples.
----------------------
13.8 INTRODUCTION TO EMPLOYEES’ STATE ----------------------

INSURANCE ACT, 1948 ----------------------
The Employee’s State Insurance Act, 1948 was enacted with the main ----------------------
object of providing to the workers medical relief, sickness, cash benefits,
maternity benefits for woman workers and compensation for fatal and other ----------------------
employment injuries including occupational diseases in an integrated form on a ----------------------
contributory basis.
Section 1: Short title, extent, commencement and application ----------------------
i. This Act may be called the Employee’s State Insurance Act, 1948. ----------------------
ii . It extends to the whole of India. ----------------------
iii. It shall come into force on such date or dates as the Central Government
----------------------
may by Notification in the official gazette, appoint.
iv. I t shall apply in the first instance, to all factories (including factories - - - - - - - - - - - - - - - - - - - - - -
belonging to the Government) other than seasonal factories.
----------------------
Coverage and Contribution:
----------------------
For all employees earning ` 21000 (Wage limit for coverage of an employee
has been enhanced from INR 15,000 to 21,000 from December 22 2016) or less - - - - - - - - - - - - - - - - - - - - - -
per month as wages, the employer contributes 4.75 percentage and employee
contributes 1.75 percentage, total share 6.5 percentage. This fund is managed - - - - - - - - - - - - - - - - - - - - - -
by the ESI Corporation (ESIC) according to rules and regulations stipulated in - - - - - - - - - - - - - - - - - - - - - -
the ESI Act 1948, which oversees the provision of medical and cash benefits
to the employees and their family through its large network of branch offices, - - - - - - - - - - - - - - - - - - - - - -
dispensaries and hospitals throughout India. ESIC is an autonomous corporation
under Ministry of Labour and Employment, Government of India. But most of - - - - - - - - - - - - - - - - - - - - - -
the dispensaries and hospitals are run by the state governments concerned. ----------------------
13.9 DEFINITIONS OF THE STATE INSURANCE ACT ----------------------
1. ‘ Confinement’ means labour resulting in the issue of a living child, or ----------------------

labour after twenty-six weeks of pregnancy resulting in the issue of a ----------------------
child whether alive or dead.
2. ‘Contribution’ means the sum of money payable to the corporation by the ----------------------
principle employer in respect of an employee and includes any amount ----------------------
payable by or on behalf of the employee in accordance with the provisions
of this Act. ----------------------

Notes 3. ‘Corporation’ means the Employees’ State Insurance corporation set up
under this Act.
----------------------
4. ‘Dependent’ means any of the following relatives of a deceased insured
---------------------- person namely:
●● a widow, a legitimate or adopted son who has not attained the age
----------------------
of twenty five, an unmarried legitimate or adopted (daughter), a
---------------------- widowed mother.
●● if wholly dependent on the earning of the insured person at the
----------------------
time of this death, a legitimate or adopted son or daughter who has
---------------------- attained the age of twenty five years and is in firm.
●● if wholly or in part dependent on the earnings of the insured person
----------------------
at the time of his death.;
---------------------- ●● a parent other than a widowed mother,
---------------------- ●● a minor illegitimate son , an unmarried illegitimate daughter or
daughter legitimate or adopted or illegitimate if married and a
---------------------- minor or if widowed and a minor.
---------------------- ●● a minor brother or an unmarried sister or a widowed sister of 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 maternal grand-parent if no parent of the insured person is alive.
----------------------
5. ‘Employee’ means any person employed for wages in or in connection
---------------------- with the work of a factory or establishment to which this Act applies but
does not include.
----------------------
(a) any members of the [the Indian] Naval, Military or Air Force.
---------------------- 6. ‘Family’ means all or any of the following relatives of an insured person,
---------------------- namely,
i. a spouse
----------------------
ii. a minor legitimate or adopted child dependent upon the insured person;
----------------------
iii. a child who is wholly dependent on the earnings of the insured
---------------------- person and who is
a) receiving education, till he or she attains the age of twenty
----------------------
one years.
---------------------- b) an unmarried daughter
---------------------- iv. a child who is in firm
---------------------- v. dependent parents
7. ‘Sickness’ means a condition, which requires medical treatment and
----------------------
attendance and necessitates abstention from work on medical ground

13.10 ESTABLISHMENT OF EMPLOYEE’S STATE Notes
INSURANCE CORPORATION
----------------------
Insurance Corporation shall consist of the following members, namely
----------------------
a) A chairman to be appointed by the Central Government.
----------------------
b) A vice-chairman to be appointed by the Central Government.
c) Not more than five persons to be appointed by the Central Government. ----------------------
d) One person each, representing each of the states in which this Act is in ----------------------
force to be appointed by the state government concerned.
----------------------
e) One person to be appointed by the Central Government to represent the
Union territories. ----------------------
f) Ten persons representing employers to be appointed by the Central ----------------------
Government in consultation with employer’s organisations recognised by
the Central Government. ----------------------
g) Ten persons representing employees’ to be appointed by the Central ----------------------
Government in consultation with the employees organisation as may be
recognised for the purpose by the Central Government. ----------------------
h) Two persons representing the Medical profession to be appointed by the ----------------------
Central Government in consultation with Medical practitioners organisation
as may be recognised for the purpose by the Central Government. ----------------------
i) Three members of Parliament of whom two shall be members of the ----------------------
House of the people (Lok Sabha) and one shall be member of the council
of States (Rajya Sabha) and ----------------------
j) The Director General of the corporation, ex-officio. ----------------------

Function: Administration of the scheme of Employees’ state Insurance in ----------------------
accordance with the provisions of this Act.
----------------------
----------------------
1. ESI Act is applicable to ----------------------
i. Factories belonging to the government ----------------------
ii. Seasonal factories iii. Religious trusts
----------------------
iv. Software Industries
2. Benefits available under the ESI act are: ----------------------
i. Sickness benefit
----------------------
ii. Maternity benefit
iii. Dependents benefit ----------------------
iv. Family pension benefit ----------------------

Notes
Activity 5
----------------------
---------------------- Visit the website of Employees State Insurance corporation to find out more
about various benefits available to the employees.
----------------------
---------------------- 13.11 CONSTITUTION OF STANDING COMMITTEE

----------------------
A standing committee of the corporation shall be constituted from among its
---------------------- members, consisting of
a) A chairman (appointed) by the Central Government.
----------------------
b) Three members of corporation (appointed) by the Central Government.
----------------------
Three members of the corporation representing such three state
---------------------- Governments there on as the Central Government may by notification in
the official Gazettee, specify from time to time.
----------------------
c) [eight] members elected by the Corporation as follows :
---------------------- 1.
Three members from among the members of the Corporation
---------------------- representing employers.
2.
Three members from among the members of the corporation
----------------------
representing employees.
---------------------- 3. One member from among the member of corporation representing
the medical profession and
----------------------
4. One member from among the members or the corporation elected
---------------------- by [parliament].
---------------------- d) Th e Director General of the Corporation ex-official
----------------------
Activity 6
----------------------
List how the constitution of Committee is made under the above said Act.
----------------------
----------------------
13.12 MEDICAL BENEFIT COUNCIL
----------------------
The Central Government shall constitute a Medical Benefit Council consisting
----------------------
of
---------------------- a. The Director General, ESI Corporation, ex-official, as a Chairman
---------------------- b. A Director General, Health Services
---------------------- c. The Medical Commissioner of the corporation ex-official

d. One member each representing each of the state in which this Act is in
---------------------- force to be appointed by the State Government concerned.

e. Three members representing employers to be appointed by the Central Notes
Government in consultation with Employees’ orgainsation as may be
recognised for the purpose by the Central Government. ----------------------
f. Three members representing employees to be appointed by the Central ----------------------
Government in consultation with employees’ organisation as may be
recognised for the purpose by the Central Government and ----------------------
g. Three members of whom not less than one shall be a woman, representing ----------------------
the medical profession, to be appointed by the Central Government in
consultation with the Medical Practitioners organisations as may be ----------------------
recognised for the purpose by the Central Government.
----------------------
----------------------
Fill in the blanks.
----------------------
1. Condition, which requires medical treatment and attendance and
necessitates abstention from work, is called ____________. ----------------------
2. ________ number of representatives from recognised employers’ ----------------------
organisation are required to constitute ESI corporation.
3. _________ number of representatives from recognised employees’ ----------------------
organisation are required to constitute ESI corporation. ----------------------
----------------------
Activity 7
----------------------
Study the constitution of ESI corporation, Standing Committee and ----------------------
Medical Benefit Council and find out whether all the interested parties get
representation in these statutory bodies. ----------------------
----------------------
13.13 POWERS OF THE STANDING COMMITTEE ----------------------
The powers of the standing committee are as follows : ----------------------
Section 18
----------------------
1) The standing committee shall administer the affairs of the corporation
and may exercise any of the powers and perform any of the functions of ----------------------
the corporation subject to the general superintendence and control of the
----------------------
corporation.
2) The Standing Committee may, in its discretion submit any other case or ----------------------
matter for the decision of the Corporation all such cases and matters as
----------------------
may be specified in the regulations made in this behalf.
3) The standing committee may, in its discretion submit any other case or ----------------------
matter for the decision of the corporation.
----------------------

Notes Section 19
Corporation’s power to promote measures for health etc. of insured
----------------------
persons: The Corporation may in addition to the scheme of benefits specified
---------------------- in thisAct promote measures for the improvement of the health and welfare
of insured person and for the rehabilitation and (re employment) of insured
---------------------- persons who have been disabled or injured.
---------------------- Section 22: Duties of Medical Benefit Council
The Medical Benefit Council shall
----------------------
a) advice the corporation and the standing committee on matters relating
---------------------- to administration of medical benefit, the certification for purposes of the
---------------------- grant of benefits and other connected matters.
b) have such powers and duties of investigation as may be prescribed in
---------------------- relations to complaints against medical practitioners in connection with
---------------------- medical treatment and attendance and
c) perform such other duties in connection with medical treatment and
---------------------- attendance as may be specified in the regulations.
---------------------- Employees’ State Insurance Fund
---------------------- 1) All contributions paid under this Act, all other money received on behalf
of the corporation shall be paid in to a fund called the Employees’ State
---------------------- Insurance Fund which shall be held and administered by the corporation
for the purpose of this Act.
----------------------
2) The corporation may accept grants, donations and gifts from the Central
---------------------- or any State Government, Local authority, or any individual or body
whether incorporated or not, for all or any of the purpose of this Act.
----------------------
Section 28: Purposes for which the Fund may be expended
----------------------
The Employees’ State Insurance Fund shall be expended only for the following
---------------------- purposes namely :
---------------------- i) ayment of benefits, provision of medical treatment and attendance to
P
insured persons and their families in accordance with the provisions of
---------------------- this Act.
---------------------- ii) Payment of fees and allowances to the members of the corporation, the
standing committee and the Medical Benefit Council.
----------------------
iii) Payment of salaries, leave and joining time allowance, travelling and
---------------------- compensatory allowance, gratuities and compassionate allowances,
pensions, contribution to provident or other fund of officers and servants
---------------------- of the corporation.
---------------------- iv)
Establishment and maintenance of hospitals, dispensaries and other
institutions and the provisions of Medical and other ancillary services for
---------------------- the benefit of insured persons and to their families.
----------------------

v) Payment of contribution to any State Government, local authority towards Notes
the cost of medical treatment and attendance provided to insured persons
and to their families. ----------------------
vi) Payment of contribution to any State Government, local authority towards ----------------------
the cost of medical treatment and attendance provided to insured persons
to and to their families. ----------------------
vii) Expenses of auditing the accounts of the corporation and valuation of its ----------------------
assets and liabilities.
----------------------
vi) Defraying the cost of the Employee’s Insurance court set up under this
Act. ----------------------
ix) Payment of any sums under any contract entered into for the purposes of ----------------------
this Act.
x) Payment of sums under any decree, order or award of any court or Tribunal ----------------------
against the corporation. ----------------------
xi) The cost and other charges of institutions or defending any civil or
criminal proceeding arising out of any action taken under this Act. ----------------------
xii) Expenditure on measures for the improvement of the health and welfare ----------------------
of insured persons who have been disabled or injured.
----------------------
xiii) Such other purposes as may be authorised by the corporation with the
previous approval of the Central Government. ----------------------
34. Audit ----------------------
(1)
The accounts of the Corporation shall be audited annually by the ----------------------
Comptroller and Auditor-General of India and any expenditure incurred
by him in connection with such audit shall be payable by the Corporation ----------------------
to the Comptroller and Auditor-General of India.
----------------------
40. Principal Employer to Pay Contributions in the First Instance. -
----------------------
(1) The principal employer shall pay in respect of every employee, whether
directly employed by him or by or thrugh an immediate employer, both ----------------------
the employer’s contribution and the employee’s contribution.
----------------------
Section 45: Inspectors their functions and duties
The corporation may appoint such person as Inspector as it thinks fit for the ----------------------
purpose of the Act.
----------------------
A - Powers
----------------------
1) Employer to furnish information to him which is necessary for the purpose
of this Act or ----------------------
2) Enter in establishment, factory ----------------------
3) Production of Register Records
----------------------
4) Examination of the same
----------------------
5) To seize the Register / Records

Notes Function - Implementation of the provision of this Act, by undertaking
inspections.
----------------------
Contribution & Benefit periods
---------------------- There are two contribution periods of six months duration each in a year, in
respect of an insured employee, with corresponding benefit period of six months
----------------------
each as under:-
---------------------- Contribution period Corresponding benefit period
---------------------- 1st April to 30 September 1st January to 30th June of the
year following
---------------------- 1st October to 31st March of the 1st July to 31st December of the
year following calendar year
----------------------
In case a person becomes an employee within the meaning of the Act for the
---------------------- first time, the first contribution period will commence from the date he enters
into insurable employment for the first time in the contribution period current
---------------------- on that day and his corresponding benefit period will commence on the expiry
of nine months from the date of such employment.
----------------------
Section 46: BENEFITS
----------------------
In ESI scheme, a worker in insurable employment is called insured person
---------------------- (IP). Insured persons and their family are entitled to different types of benefits.
The benefits are broadly classified into two: (1) Medical benefits and (2) cash
---------------------- benefits.
---------------------- (a) edical Benefit : Full medical care is provided to an Insured person and
M
his family members from the day he enters insurable employment. There
---------------------- is no ceiling on expenditure on the treatment of an Insured Person or his
---------------------- family member. Medical care is also provided to retired and permanently
disabled insured persons and their spouses on payment of a token annual
---------------------- premium of Rs.120/- .
---------------------- 1. System of Treatment

2. Scale of Medical Benefit
----------------------
3. Benefits to Retired IPs
----------------------
4. Administration of Medical Benefit in a State
---------------------- 5. Domiciliary treatment
---------------------- 6. Specialist consultation
---------------------- 7. In-Patient treatment

8. Imaging Services
----------------------
9. Artificial Limbs & Aids
----------------------
10. Special Provisions
---------------------- 11. Reimbursement
----------------------

(b) S
ickness Benefit(SB) : Sickness Benefit in the form of cash compensation Notes
at the rate of 70 per cent of wages is payable to insured workers during the
periods of certified 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. ----------------------
1. xtended Sickness Benefit(ESB) : SB extendable upto two years in

E ----------------------
the case of 34 malignant and long-term diseases at an enhanced rate
of 80 per cent of wages. ----------------------
2. nhanced Sickness Benefit : Enhanced Sickness Benefit equal to
E ----------------------
full wage is payable to insured persons undergoing sterilization for
7 days/14 days for male and female workers respectively. ----------------------
(c) aternity Benefit (MB) : Maternity Benefit for confinement/pregnancy

M ----------------------
is payable for 26 weeks which can be availed prior to 8 weeks from the
date of expected delivery which is extendable by further one month on ----------------------
medical advice at the rate of full wage subject to contribution for 70 days ----------------------
in the preceding year.
----------------------
(d) Disablement Benefit
1. emporary disablement benefit (TDB) : From day one of entering
T ----------------------
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. ----------------------
2. ermanent disablement benefit (PDB) : The benefit is paid at the rate
P
of 90% of wage in the form of monthly payment depending upon the ----------------------
extent of loss of earning capacity as certified by a Medical Board ----------------------
(e) ependants’ Benefit(DB) : DB paid at the rate of 90% of wage in the
D
form of monthly payment to the dependants of a deceased Insured person ----------------------
in cases where death occurs due to employment injury or occupational ----------------------
hazards.
(f) ther Benefits : Funeral Expenses : An amount of Rs.20,000/- is payable
O ----------------------
to the dependents or to 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. ----------------------
In addition, the scheme also provides some other need based benefits ----------------------
to insured workers.
----------------------
Vocational Rehabilitation :To permanently disabled Insured Person for
undergoing VR Training at VRS. Physical Rehabilitation : In case of ----------------------
physical disablement due to employment injury. Old Age Medical Care:
For Insured Person retiring on attaining the age of superannuation or ----------------------
under VRS/ERS and person having to leave service due to permanent ----------------------
disability insured person & spouse on payment of Rs. 120/- per annum.
Rajiv Gandhi Shramik Kalyan Yojana : This scheme of Unemployment ----------------------

Notes allowance was introduced w.e.f. 01-04-2005. An Insured Person who
become unemployed after being insured three or more years, due to
---------------------- closure of factory/establishment, retrenchment or permanent invalidity
are entitled to :-
----------------------
●● Unemployment Allowance equal to 50% of wage for a maximum
----------------------
●● period of upto one year.
---------------------- ●● Medical care for self and family from ESI Hospitals/Dispensaries
during the period IP receives unemployment allowance.
----------------------
●● Vocational Training provided for upgrading skills - Expenditure on
---------------------- fee/travelling allowance borne by ESIC.
---------------------- ●● Incentive to employers in the Private Sector for providing regular
employment to the persons with disability :
----------------------
●● Minimum wage limit for Physically Disabled Persons for availing
---------------------- ESIC Benefits is 25,000/-.
---------------------- ●● Employerss’ contribution is paid by the Central Government for 3
years.
----------------------
Benefits & Contributory Conditions :
---------------------- An interesting feature of the ESI Scheme is that the contributions are related
---------------------- to the paying capacity as a fixed percentage of the workers wages, whereas,
they are provided social security benefits according to individual needs without
---------------------- distinction. Cash Benefits are disbursed by the Corporation through its Branch
Offices (BOs) / Pay Offices (POs), subject to certain contributory conditions.
----------------------
Case: In the case of Francis D’costa Vs. Regional Director ESI Corporation,
---------------------- Kerala -1996 the Supreme Court has held that a person who on his way to work
on a bicycle meets with an accident at a distance which is far away from the
---------------------- company is not entitled to claim the disablement benefit under the Act. However,
---------------------- if the bicycle is provided to the insured person by the employer for travelling
to and fro and such an insured person meets with an accident then the accident
---------------------- would be treated as if it has occurred in the courts and out of employment.
----------------------
----------------------

1. For the contribution period 1st October to 31st march, the corresponding
----------------------
benefit period is 1st January to 30th june of the year following.
---------------------- 2. Maternity benefit period could be further extended by a month on
medical advice.
----------------------
3. Temperory disablement benefit is paid irrespective of contribution in
---------------------- insurable employment.
4. In case of employees untimely death, funeral expenses are limited to
---------------------- Rs. 5,000/-.

Notes
Activity 8
----------------------
What is the criterion to get entitled for sickness benefit? Write any two ----------------------
conditions
----------------------
13.14 CONSTITUTION OF EMPLOYEES’INSURANCE COURT ----------------------
1) he State Government shall by notification in the official Gazette
T ----------------------
constitute an Employees’ Insurance Court for such local area as may be
specified in the Notification. ----------------------
2) The court shall consist of such number of judges as the State Government ----------------------
may think fit.
----------------------
3) ny person who is or has been a judicial officer or is a Legal Practitioner
A
of five years standing shall be qualified to be a judge of the Employees’ ----------------------
Insurance Court.
----------------------
4) The State Government may appoint the same court for two or more local
areas or two or more courts for the same local area. ----------------------
Section 75 ----------------------
Matters to be decided by Employees’ Insurance Court If any question or dispute ----------------------
arises as to
a. whether any person is an employee within the meaning of this Act or ----------------------
whether he is liable to pay the employees’ contribution or ----------------------
b. the rate of wages or average daily wages of an employee for the purposes
of this Act, or ----------------------
c. the rate of contribution payable by a Principal employer in respect of any ----------------------

employee or
----------------------
d. the person who is or was the Principal employer in respect of any employee
or ----------------------
e. the right of any person to any benefit and as to the amount and duration ----------------------
there of or any direction issued by the corporation under Section 55A on
a review of any payment of dependants’ benefits or ----------------------
f. any other matter which is in dispute between a Principal employer and the ----------------------
Corporation, or between a Principal employer and an immediate employer
or between a person and the Corporation or between an employee and a ----------------------
principal or immediate employer in respect of any contribution or benefit ----------------------
or other dues payable or recoverable under this Act.
The following claims shall be decided by the Employee’s Insurance Court ----------------------
namely ----------------------
a) claim for recovery of contribution from the principal employer.
----------------------

Notes b) claim by a principal employer to recover contributions from any immediate
employer.
----------------------
c) claim against a principal employer under Section 68.
---------------------- d) any claim for the recovery of any benefit admissible under this Act.
---------------------- Section 84: Penalties
---------------------- In avoiding any payment knowingly:

Makes false statement or false representation shall be punishable with
---------------------- imprisonment for a term which may extend to six months or with fine not
---------------------- exceeding two thousand rupees or with both.
Section 85
----------------------
Punishment for failure to pay contribution etc. If any person
----------------------
a) fails to pay any contribution under this Act or fails or refuses to submit
---------------------- any return required or makes false statement of return
---------------------- b) obstructs any Inspector

c) contravention of any requirement under this Act, he shall be punishable
---------------------- with imprisonment to the extent of three years but shall not less than ten
---------------------- years in case of failure to pay the employees’ contribution, which has
been deducted by him from the employees’ wages of up to ten thousand
---------------------- rupees.
----------------------
13.15 INTRODUCTION TO EMPLOYEES’PROVIDENT
---------------------- FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952
---------------------- The intention behind the Employees’ Provident Funds Act was to make
provisions for the future so that
----------------------
1. In case of retirement, the employee gets some substantial amount.
----------------------
2. In case of the premature death of the employee, the family members
---------------------- would get some substantial amount.
---------------------- Application of the Act

1. All establishments in any industry specified in Schedule 1 of the Act.
---------------------- (Refer Bare Act).
---------------------- 2. At least twenty people must have been employed in it.
---------------------- 3. In September 1997 by means of an ordinance, the infancy period has been
totally removed as a result of which all establishments employing 20 or
---------------------- more employees are to be covered under the Act.
---------------------- The Act and Schemes framed are administered by a tri-partite Board
known as the Central Board of Trustees, Employees’ Provident Fund, consisting
---------------------- of representatives of Government (both Central and State), Employers and
Employees. The Board administers a contributory provident fund, pension
----------------------
scheme and an insurance scheme for the workforce engaged in the organized
sector in India. The Board is assisted by the Employees’ PF Organization Notes
(EPFO), consisting of offices at 120 locations across India. The EPFO is under
the administrative control of Ministry of Labour and Employment, Government ----------------------
of India. The Board operates three schemes viz.
----------------------
a. The Employees’ Provident Funds Scheme 1952 (EPF)
----------------------
b. The Employees’ Pension Scheme 1995 (EPS)
c. The Employees’ Deposit Linked Insurance Scheme 1976 (EDLI) ----------------------
----------------------
13.16 COVERAGE OF THE PROVIDENT FUND ACT
----------------------
1. When the Act was enacted in 1952, all employees who had worked for
240 days in the preceding 12 months were to be covered under this Act. ----------------------
2. Subsequently, this period was reduced to 120 days. ----------------------
3. Further, by an amendment, this period was reduced to 3 months or the ----------------------
employee should have to work for 60 days during the period of 3 months.
4. From 1st November 1990, paragraph 26 of the Employees’ Provident ----------------------
Fund Scheme has been amended and every employee employed in an ----------------------
establishment to which this Act applies was to be covered from day one.
----------------------
13.17 CONTRIBUTIONS OF PROVIDENT FUND ACT
----------------------
1. For those who have a basic salary of up to Rs. 15000, contributing to ----------------------
the EPF is mandatory. Contributions are voluntary for those whose basic
salary exceeds Rs. 15000. However, it is strongly recommended to make ----------------------
such contributions to avail of the various benefits an EPF account has in
store ----------------------
2. As per the new 2012 rules issued recently, the EPFO has made amendments ----------------------
to the way in which employee and employer contribution would be
calculated hereon. For employees, this amendment is particularly ----------------------
important as it affects his/her take home salary and income tax liability ----------------------
as well. Change in salary definition - Previously, the term ‘salary’ for
computing EPF contribution included basic DA (dearness allowance). ----------------------
As per the new rules, ‘salary’ will include basic DA allowances that are
ordinarily, necessarily and uniformly paid to employees. For example, ----------------------
suppose your monthly salary particulars are as follows - basic: Rs. 30,000 ----------------------
p.m., conveyance allowance: Rs. 5,000 p.m., medical allowance: Rs.
5,000 p.m. As per previous EPF rules, an amount of 12 per cent on basic ----------------------
(Rs. 30,000), i.e., Rs. 3,600 was the employee’s contribution. As per the
new rules, an amount of 12 per cent on basic allowances (Rs. 40,000), i.e., ----------------------
Rs. 4,800 would form the employee’s contribution ----------------------
Breakup of the contribution: An employee’s monthly contribution
would go into the following three schemes as per EPF Act, 1952: EPF, ----------------------
1952; EDLIS (Employees’ Deposit Linked Insurance Scheme), 1976; ----------------------

Notes EPS (Employees’ Pension Scheme), 1995. Employers and Employee
Contribution is equal in P.F which 12%. This means 12% Contribution
---------------------- from Employee and 12% Contribution from Employer. Company
contribution is split into two parts. 8.33 % on Family pension Fund and
---------------------- 3.67 % on Employee Provident Fund.
---------------------- Employer also needs to pay additional charges on every month over and
above PF Company Contribution. The break up is
----------------------
●● 1.1% P.F Administration Charges
----------------------
●● 0.5 % on Employee Deposit Linked Insurance (E.D.L.I.)
---------------------- ●● 0.01% E.D.L.I. Administration Charges
---------------------- CONTRIBUTION ADMINISTRATION TOTAL
ACCOUNTS ACCOUNTS
----------------------
EPF EPS EDLI EDLI
---------------------- EMPLOYEE 12 0 12
---------------------- EMPLOYER 3.67 0.01 13.61
Employee can contribute more than 12 %. The additional contribution is known
----------------------
as voluntary contribution. But such additional contribution will not be matched
---------------------- by the employer. Same rules and interest rate will apply to the employee
voluntary contribution regarding withdrawal, transfer, interest rate etc.
----------------------
Withdrawal of EPF: Employee can withdraw from their EPF account on the
---------------------- account their children’s education, marriage of self, children and siblings,
purchase/construction of a house, or any medical emergencies. However,
---------------------- withdrawal is subject to certain conditions, non-compliance of which would
result in penal interest: Employee should have completed minimum seven years
----------------------
of service; withdrawal can be made only three times in the period during which
---------------------- the employee hold the EPF account, and the maximum aggregate withdrawal
would be 50 per cent of the total contributions made by the employee.
----------------------
For medical emergencies, there is no minimum service period. However, the
---------------------- maximum amount an employee can withdraw is six times the basic salary and
proof of hospitalization is required.
----------------------
Withdrawal from EPF account for purchase/construction of a house is available
---------------------- only once in an individual’s entire working life. The minimum service period
is five years and the maximum withdrawal amount is 36 times your total salary
---------------------- (for construction of property) and 24 times (for purchase of property).
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
1. The EPF Act and Schemes framed are administered by a tri-partite ----------------------
Board known as the Central Board of Trustees, EPF, consisting the
representatives of ----------------------
i. Employees ----------------------
ii. Chamber of Commerce
----------------------
iii. Employers
----------------------
iv. Government
2. The central board of trustees (EPF) operates which of the schemes? ----------------------
i. EPS ----------------------
ii. EDLI ----------------------
iii. EPF
----------------------
iv. CPF
----------------------
1. The EPF scheme is applicable to every employee of the establishment ----------------------
to which the EPF Act applies right from the day one. ----------------------
2. For those who have a basic salary of up to Rs. 15000, contributing to
the EPF is mandatory. ----------------------
3. Employee can contribute more than 12 % in EPF. ----------------------

4. The maximum withdrawal limit is 60%. ----------------------
----------------------
Activity 9
----------------------
Visit nearby organisations to find out what kind of social security legislations ----------------------
are applicable to them.
----------------------
13.18 FAMILY PENSION SCHEME ----------------------
Application ----------------------
●● The Family Pension Scheme was introduced from 1st March, 1971. ----------------------
●● It was optional for those persons who were members of the Employees
----------------------
●● Provident Fund prior to November 1971.
----------------------
●● Coverage for those who joined after 1st November, 1971 was compulsory
under the scheme. ----------------------

Notes Contributions
●● 1.1/6 % of Basic + Dearness Allowance + Retaining Allowance.
----------------------
●● Equal contributions from the Employers and the Central Government.
----------------------
Benefits
---------------------- ●● Pension to spouse and minor children up to the age of 21 years.
---------------------- ●● If an employee retires or leaves service, then he would be paid a lump
sum.
----------------------
Employees’ Deposit Linked Insurance Scheme
----------------------
●● This scheme was introduced by an amendment in the year 1976.
---------------------- ●● It provides for relief to the nominee of the Provident Fund subscriber in
---------------------- ●● case of premature death of the subscriber.
---------------------- ●● No contribution is payable by the employee under the scheme, but the
employer has to make contributions @ 0.5 % of basic wage, dearness
---------------------- allowance and retaining allowance.
----------------------
13.19 NEW PENSION SCHEME
----------------------
Introduction
---------------------- ●● The New Pension Scheme was formulated by Mr. Ram Vilas Paswan
---------------------- when he was the Labour Minister.
●● Same scheme of the Congress Govt. was opposed by the CPI and CPM,
---------------------- because they wanted it to be a Third Terminal Benefit after Provident
---------------------- Fund and Gratuity.
Contributions
----------------------
●● Earlier Contribution of 1.1/6% towards the Family Pension Scheme.
----------------------
●● Out of 12% of the employer’s contribution 8.33% is to be paid in the New
---------------------- Pension Scheme and remaining 3.67% to be paid in the Provident Fund.
---------------------- ●● The entire contribution of 12% of employee’s contribution is to be credited

in the Provident Fund Account.
---------------------- ●● The existing members as on the 1st day of September, 2014, who at the
---------------------- option of the employer and employee, had been contributing on salary
exceeding six thousand and five hundred rupees per month, may on a fresh
---------------------- option to be exercised jointly by the employer and employee continue to
contribute on salary exceeding fifteen thousand rupees per month:
----------------------
●● The aforesaid members have to contribute at the rate of 1.16 per cent
---------------------- on salary exceeding fifteen thousand rupees as an additional contribution
from and out of the contributions payable by the employees for each
---------------------- month under the provisions of the Act or the rules made thereunder:
----------------------

●● The fresh option shall be exercised by the member within a period of six Notes
months from the 1st day of September, 2014.
----------------------
●● The period specified above may, on sufficient cause being shown by the
member, be extended by the Regional Provident Fund Commissioner for ----------------------
a further period not exceeding six months.
----------------------
●● If no option is exercised by the member within a period of six months
from the 1st day of September, 2014 (including the extended period), it ----------------------
shall be deemed that the member has not opted for contribution over wage
ceiling and the contributions to the ----------------------
●● Pension Fund made over the wage ceiling in respect of the member shall ----------------------
be diverted to the Provident Fund account of the member along with
interest as declared under the ----------------------
●● Employees’ Provident Fund Scheme from time to time. ----------------------
Benefits ----------------------
Monthly - Member’s Pension
----------------------
●● Superannuation pension - which the member gets after attaining the age
of 58 or rendered service of 20 years or more of eligible service. ----------------------
●● Retirement pension: If the member renders eligible service of 20 years or ----------------------
more and retires or ceases to be in employment before attaining the age
of 58 years. ----------------------
●● Short service pension - if he has rendered a service of 10 years or more ----------------------
but less than 20 years.
----------------------
●● In case of new entrants, the amount of monthly superannuation of retiring
pension is calculated as follows: ----------------------
Monthly Member’s Pension = Pensionable Salary x Pensionable Service ----------------------

70
Pension Scheme Certificate ----------------------
Documents showing pensionable service and the amount of pension on
----------------------
the date of exit from employment are issued to the member who has not attained
the age of superannuation. Service mentioned in the certificate shall be counted ----------------------
for the determination of the pension along with fresh service rendered by way
of subsequent employment, if any, with the establishment covered under the ----------------------
Employees’ Pension Scheme 1995.
----------------------
●● Invalidity Pension
----------------------
The member is entitled for disablement pension in case of permanent
and total disablement during the course of employment. Such a member ----------------------
shall be entitled for pension as per the normal rule. Members with a
contribution for even one month are entitled for benefits under this ----------------------
category. The member shall be required to produce invalidity / disability ----------------------
certificate issued by the medical Board set up under Employees’ State
Insurance Scheme. ----------------------

Notes ●● Widow Pension
The widow of the member shall be entitled for a pension from the date
----------------------
following the date of death of the member whether the death has occurred
---------------------- while in service or after exit from the employment or after retirement /
commencement of pension.
----------------------
“ For the purpose of this benefit, ‘widow’ incorporates ‘widower’ also,
---------------------- wherever applicable.”
●● Children Pension
----------------------
Two children of the deceased member shall be entitled to the children
---------------------- pension up to the age of twenty-five years, in addition to the pension to
---------------------- the widow. The amount of pension for each child shall be equal to twenty
five per cent of the amount admissible to the widow.
---------------------- ●● Orphan Pension
---------------------- Orphan children shall be entitled to a monthly orphan pension equal to
75 % of the amount of widow pension where the member is survived by
---------------------- children only. Pension under this category shall be payable to a maximum
---------------------- of two orphan children up to the age of 25 years.
●● Nominee Pension
----------------------
embers can nominate a person to receive benefits under the Employees’
M
---------------------- Pension Scheme 1995, where a member is unmarried or does not have
any family. Such a nominee shall be paid a pension equal to the widow
----------------------
pension in case of the death of the member.
---------------------- Determination of Pensionable Service and Salary
---------------------- ●● By the contribution received on his behalf in the Employees’ Pension Fund.
---------------------- ●● If he superannuates at the age of 58 years or completes 20 years of service

or more, his pensionable service is increased by adding the weightage of
---------------------- 2 years.
---------------------- ●● New members (joining on or after 1 September 2014) drawing wages
exceeding INR 15,000 per month shall not be eligible to voluntarily
---------------------- contribute to the Pension Scheme.
---------------------- ●● The pensionable salary shall be calculated on the average monthly pay
for the contribution period of the last 60 months (earlier 12 months)
---------------------- preceding the date of exit from the membership.
---------------------- ●● The pensionable salary shall be the average monthly pay drawn in any
manner including piece rate basis during contributory period of service in
---------------------- the span of sixty months preceding the date of exit from the membership
of the Pension Fund and the pensionable salary shall be determined on
----------------------
pro-rata basis for the pensionable service up to the 1st day of September,
---------------------- 2014, subject to a maximum of six thousand and five hundred rupees per
month and for the period thereafter at the maximum of fifteen thousand
---------------------- rupees per month.

●● If a member was not in receipt of full pay during the period of sixty Notes
months preceding the day he ceased to be the member of the Pension
Fund, the average of previous sixty months full pay drawn by him during ----------------------
the period for which contribution to the pension fund was recovered, shall
be taken into account as pensionable salary, for calculating pension. ----------------------
●● I f during the said span of sixty months there are non-contributory periods ----------------------
of service including cases where the member has drawn salary for a
----------------------
part of the month, the total wages during the sixty months span shall be
divided by the actual number of days for which salary has been drawn and ----------------------
the amount so derived shall be multiplied by 30 to work out the average
monthly pay. ----------------------
----------------------
----------------------
1. The Family pension scheme was introduced in the year _________ .
----------------------
2. In family pension scheme, pension is provided to spouse and minor
child up to the age of_________year. ----------------------
3. In Employee’s Deposit Linked Insurance Scheme, the employer’s ----------------------

contribution is @____________ % of basic Wages, dearness
allowance and retaining allowance. ----------------------
4. A member gets superannuation pension after attaining the age of ----------------------

_______or rendered service of minimum_______years.
----------------------
----------------------
Activity 10
----------------------
Interview few retired employees and try to find out what benefits they get ----------------------
from EPF Organisation.
----------------------
13.20 OPTION FOR RETURN OF CAPITAL ----------------------
A member eligible to pension may, in lieu of pension normally admissible under ----------------------
Paragraph 12 (subject to commutation of pension, if any, under Paragraph 12-
A) opt to draw for reduced pension and avail of return of capital under any one ----------------------
of the three alternatives given below: ----------------------
Alternative Revised Pension Amount Payable as
Payable return of capital ----------------------
Revised pension during 90% of original 100 times the original ----------------------
the lifetime of member monthly pension. monthly pension on
with return of capital on Death of member to the ----------------------
his death. nominee.
----------------------

Notes Alternative Revised Pension Amount Payable as
Payable return of capital
---------------------- Revised pension during the 90% of original monthly 90 times the original
lifetime of member, further pension to the member. monthly pension on death
---------------------- reduced pension during On his death, 80 % of of widow / remarriage to
lifetime of the widow or the original monthly the nominee.
---------------------- her remarriage, whichever pension to the widow.
is earlier and return of
---------------------- capital on widow’s death /
remarriage.
----------------------
Pension for a fixed 87.5 % of the original 100 times the original
---------------------- period of 20 years not- monthly pension for monthly pension at the
withstanding whether the a fixed period of 20 end of 20 years from the
---------------------- member lives for that years. The pension will date of commencement
period or not cease thereafter. of pension to the member
---------------------- if he is alive; otherwise
to his nominee.
---------------------- Explanation 1: In alternative 2, if the spouse dies or remarries before the
---------------------- death of the member, capital equal to 90 times the original monthly pension
shall be paid to the nominee on the member’s death.
---------------------- Explanation 2: In alternative 3, if the member dies before the end of the
---------------------- 20-year period, the pension shall be paid to his nominee for the balance period.
Explanation 3: In the case of a member who is eligible for Permanent Total
----------------------
Disablement Pension and where the payment of such pension is to commence
---------------------- before his attaining the age of 50 years, the options shall also be admissible but
in such cases the actual pension payable shall be reduced by 1 % and the return
---------------------- of capital shall be further reduced by Rs. 1,000 /- for every year by which the
age at the commencement of pension falls short of 50 years.
----------------------
Explanation 4: In cases of exercise of option for commutation under
---------------------- Paragraph 12 - A, balance monthly pension payable after commutation shall be
deemed to be the original monthly pension for the purpose of this paragraph.
----------------------
The option under sub-paragraph (I) shall be exercised by the member at
---------------------- the time of submission of the application form for pension in accordance with
---------------------- the provisions of this Scheme. The option once exercised shall be final. If no
option is exercised, the member shall be deemed not to have exercised any
---------------------- option under this paragraph and his / her pension shall be determined under the
provisions of Paragraph 12.
----------------------
Notwithstanding that the capital is returned under this paragraph, the
---------------------- widow / children shall continue to be eligible for normal widow pension /
children pension / orphan pension under Paragraph 16 of this Scheme from the
---------------------- date immediately following the date of death of the member.
---------------------- Withdrawal Benefits
---------------------- A member is entitled for withdrawal benefit under the Employees’ Pension
Scheme 1995 only where the minimum pensionable service of ten years has not
---------------------- been rendered on attaining age of 58 years.

Guarantee of Pensionary Benefits Notes
Members will be entitled for the benefits under Employees’ Pension
----------------------
Scheme 1995 even if the employer has not deposited the dues. Amounts due
from employer under the Employees’ Pension Scheme 1995, however, shall be ----------------------
recovered by due process separately.
----------------------
Payment of Pension through Banks
Nationalised Banks having largest network in a particular state have been ----------------------
identified for disbursement of monthly pension to the pensioners. Members
----------------------
are required to open an account in the bank where the pension is desired and
indicate the option in the application in Form 10D. The following banks have ----------------------
been identified for disbursement of pension under Employees’ Pension Scheme
1995 namely: ----------------------
i) State Bank of India ----------------------
ii) Bank of India ----------------------
Valuation
----------------------
Employees’ Pension Scheme 1995 has provided for valuation every year
by Actuary appointed by the Central Government. First valuation of pension ----------------------
fund by the Actuary has resulted into increase in pension by 4 %.
----------------------
Duties of Employers
----------------------
●● Every employer is required to furnish to the Commissioner within three
months of the commencement of this Scheme, a consolidated return of ----------------------
the employees entitled to become members of the Employees’ Pension
Fund showing their basic wage, retaining allowance including the cash ----------------------
value of any food concession paid to each of such employees, and other
----------------------
relevant details.
Provided that if there is no employee who is entitled to become a member ----------------------
of the Employees’ Pension Fund, the employer needs to send a ‘NIL’ ----------------------
return.
●● very employer shall send to the Commissioner within fifteen days of the
E ----------------------
close of each month, a return in respect of the employees leaving service ----------------------
of the employer during the preceding month, and the new employees
joining the service during the said period. ----------------------
If there is no employee leaving / joining the service of the employer ----------------------
during the preceding month, the employer need not send a ‘NIL’ return.
----------------------
●● Every employer shall maintain such accounts in relation to the amounts
contributed by him to the Employees’ Pension Fund as the Central Board ----------------------
of Trustees, Employees’ Provident Fund may, from time to time, direct
and it shall be the duty of every employer to assist the Central Board of ----------------------
Trustees Employees Provident Fund in making such payments from the
----------------------
Employees’ Pension Fund to his employees as are sanctioned by or under
the authority of the Central Board. ----------------------

Notes ●● Central Board of Trustees Employees Provident Fund may issue such
directions to the employers generally, as it may consider necessary or
---------------------- expedient, for the purpose of implementing the Scheme and it shall be the
duty of every employer to comply with such directions.
----------------------
Duties of Contractors
---------------------- Every contractor shall, within seven days of the close of every month,
---------------------- submit to the principal employer a statement showing the particulars in respect
of employees employed by or through him in connection with the work of the
---------------------- establishment and in respect of whom contributions to the employees’ Pension
Fund are payable. The Contractor need also furnish such information, as the
---------------------- principal employer is required to furnish under the provisions of this Scheme to
---------------------- the Commissioner.
Exemption from the Scheme
----------------------
Any establishment or class of establishments can seek exemption under
---------------------- paragraph 39 from the operation of the Employees’ Pension Scheme 1995,
provided the employees of such establishments are either members of any
---------------------- other pension scheme or propose to be members of a pension scheme wherein
the pensionary benefits are at par or more favourable than the benefits under
----------------------
this scheme. An application for exemption under this paragraph shall be
---------------------- presented to the Regional Provident Fund Commissioner having jurisdiction
by the establishment or class of establishments together with a copy of the
---------------------- pension scheme of the establishment(s) and other relevant documents as may
be called for by him. On receipt of such an application, the Regional Provident
----------------------
Fund Commissioner shall scrutinise it, obtain the recommendations of the
---------------------- Central Provident Fund Commissioner and submit the same to the appropriate
Government for decision.
----------------------
---------------------- 13.21 INTRODUCTION TO MATERNITY BENEFIT ACT, 1961

Maternity benefits were first recognised when the Maternity Protection
----------------------
Conference was held by the International Labour Organisation in 1919.
---------------------- A maternity benefit is one that every woman shall be entitled to, and her
employer shall be liable for, the payment of maternity benefit, which is the
---------------------- amount payable to her at the rate of the average daily wage for the period of her
actual absence. The Maternity Benefit Act aims to regulate of employment of
----------------------
women employees in certain establishments for certain periods before and after
---------------------- childbirth and provides for maternity and certain other benefits. This Act is to
regulate the employment of women in certain establishments for certain periods
---------------------- before and after childbirth and to provide for maternity benefit and certain other
benefits.
----------------------
Short title, extent and commencement and Application of Act (Section1)
----------------------
This Act may be called the Maternity Benefit Act, 1961. It shall come into
---------------------- force on such date as may be notified in this behalf in the Official Gazette.
----------------------

13.22 APPLICATION AND DEFINITION OF THE Notes
MATERNITY BENEFIT ACT
----------------------
The Maternity Benefit Act is applicable all across the Union of India and
is pertinent to every factory, mine or plantation including those belonging to ----------------------
Government, irrespective of the number of employees, and to every shop or ----------------------
establishment wherein 10 or more persons are employed or were employed on
any day of the preceding 12 months. Women can claim benefits under the Act ----------------------
everywhere except in factories and other establishments where the Employee’s
State Insurance Act is applicable. ----------------------
Definitions ----------------------
In this Act, (Section 3) ----------------------
(a) “Appropriate Government” means, in relation to an establishment being a
----------------------
mine, the Central Government and in relation to any other establishment,
the State Government; ----------------------
(b) “Child” includes a stillborn child;
----------------------
(c) “Selivery” means the birth of a child;
(d) “Employer” means the authority which has the ultimate control over the ----------------------
affairs of the establishment;
----------------------
(e) “Establishment” means a factory, mine or plantation, or an establishment
for work, ----------------------
(f) “Inspector” means an Inspector appointed by government authority; ----------------------
(g) “Maternity benefit” means the payment referred in the Act;
----------------------
(h) “Miscarriage” means expulsion of the contents of a pregnant uterus at any
period prior to or during the twenty-sixth week of pregnancy; ----------------------
(i) “State Government” in relation to a Union territory, means the
Administrator thereof; ----------------------
(j) “Wages” means all remuneration paid or payable in cash to a woman, if ----------------------
the terms of the contract of employment, express or implied, were fulfilled
and includes - ----------------------
1. Such cash allowances (including dearness allowance and house rent ----------------------
allowance) as a woman is for the time being entitled to;
----------------------
2. Incentive bonus; and
3. The money value of the confessional supply of food grains and ----------------------
other articles, but does not include –
----------------------
(i) Any bonus other than incentive bonus;
(ii) Overtime earnings in any deduction or payment made on ----------------------
account of fines;
----------------------
(iii) Any contribution paid or payable by the employer to any
pension fund or provident fund or for the benefit of the woman ----------------------
under any law for the time being in force; and
----------------------
(iv) Any gratuity payable on the termination of service;

Notes (k) “Woman” means a woman employed, whether directly or through any
agency, for wages in any establishment.
----------------------
13.22.1 New provisions in the Maternity Benefit Act
---------------------- The following new provisions have added by the amendment:
---------------------- ●● Maternity leave for adoptive and commissioning mothers:
●● Maternity leave of 12 weeks to:
----------------------
●● Adoptive mothers (adopts a child below 3 months of age);
---------------------- ●● Commissioning mother .
---------------------- ●● his period to be calculated from the date the child is handed over to the
T
said mothers.
---------------------- ●● rèche facilities:To be provided by an establishment with 50 or more
C
---------------------- employees within a prescribed distance. visits in a day to crèche should
be allowed.
---------------------- ●● ption to work from Home: Employer to permit a woman to work from
O
---------------------- home, if the nature of work permits her to do so and the same can be availed
after the completion of her maternity leave for a duration mutually decided.
---------------------- ●● mployer to inform the woman of maternity benefits: Woman to be
E
informed at the time of appointment, of the maternity benefits available,
----------------------
either in writing or electronically
----------------------
13.23 RESPONSIBILITY OF THE EMPLOYER
----------------------
The Maternity Benefit (Amendment) Act, 2017 has come into force on
----------------------
March 28, 2017 after receiving the assent from the President on March 27,
---------------------- 2017. The major changes brought by the amended Act, compared with the
provisions of the earlier Act, are given hereunder:
----------------------
Duration of Maternity Leave: Increases the duration of the maternity
---------------------- leave from 12 to 26 weeks which can be availed prior to 8 weeks from the date
of expected delivery (earlier it was 6 weeks prior).
----------------------
From third child onwards, maternity leave to be for 12 weeks which can be
---------------------- availed 6 weeks prior
---------------------- A) Employment of, or work by, women prohibited during certain periods
(Section 4)
---------------------- The employer cannot knowingly employ a woman in any establishment
---------------------- during the six weeks immediately following the day of her delivery or
her miscarriage. A woman is not allowed to work in any establishment
---------------------- during the six weeks immediately following the day of her delivery or her
miscarriage or termination of pregnancy.
----------------------
----------------------
----------------------

The pregnant woman got a right to request for not doing any work Notes
which is of an arduous nature or which involves long hours of standing,
or which in any way is likely to interfere with her pregnancy or the ----------------------
normal development of the foetus, or is likely to cause her miscarriage or
otherwise to adversely affect her health. ----------------------
B) Right to payment of maternity benefit ----------------------

1. Every woman is entitled to, and her employer will be liable for, ----------------------
the payment of maternity benefit at the rate of the average daily
wage for the period of her actual absence immediately preceding ----------------------
and including the day of her delivery.
----------------------
Explanation: For the purpose the average daily wage means the

average of the woman’s 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. ----------------------
2. o claim the maternity benefit she has to actually work in an
T ----------------------
establishment of the employer minimum for a period of not less
than eight days in the twelve months immediately preceding the ----------------------
date of her expected delivery.
----------------------
3. It is anticipated that as now the employer will have to pay full wages
for 26 weeks. The aforesaid amendments may have an adverse ----------------------
impact on job opportunities for women. The amendment is silent on
paternity leave. The women who work in the unorganised sectors ----------------------
are not covered due to their unstructured employment conditions.. ----------------------
----------------------
----------------------
1. woman employee cannot claim maternity benefit under the
A
Maternity Benefit Act, 1961 if she is availing maternity benefits under ----------------------
Employees State Insurance Act.
----------------------
2. The maximum period of maternity benefit is 18 weeks.
----------------------
3. mployer is liable to pay maternity benefit if a woman dies during her
E
delivery leaving behind the child. ----------------------
----------------------
Activity 11
----------------------
Visit any organisation where the Maternity Benefits Act is applicable and ----------------------
talk to the HR Department Head about the various benefits provided to
----------------------
woman employees.
----------------------

Notes 13.24 PAYMENT OF THE MATERNITY BENEFITS
---------------------- A) Notice of claim for maternity benefit and payment thereof (Section 6)
---------------------- 1. Any employed woman who is pregnant is entitled for maternity

benefit when she will give notice in writing in a prescribed form, to
---------------------- her employer, stating that
---------------------- a) er maternity benefit and any other amount to which she may
H
be entitled should be paid to her or nominee nominated in the
---------------------- notice, and
---------------------- b) She will not work in any establishment during the period for
which she receives maternity benefit.
----------------------
c) She has to the date from which she will be absent from work,
---------------------- not being a date earlier than six weeks from the date of her
expected delivery.
----------------------
2. Any woman who has not given the notice when she was pregnant
---------------------- may give such notice as soon as possible after the delivery.
---------------------- 3. On receipt of the notice, the employer has to permit such woman to
absent herself from the establishment until the expiry of six weeks
---------------------- after the day of her delivery.
---------------------- 4. he amount of maternity benefit has to be paid by the employer to

T
the woman on production of such proof as may be prescribed that
---------------------- the woman is pregnant.
---------------------- 5. The failure to give notice, however, does not disentitle the woman
to the benefit of the Act.
----------------------
B) Payment of maternity benefit in case of death of a woman (Sections
---------------------- 7-11)
I f a woman entitled to maternity benefit dies before receiving such
----------------------
maternity benefit or amount, the employer shall pay such benefit or
---------------------- amount to the person nominated by the woman in the notice or to her
legal representative.
----------------------
very woman entitled to maternity benefit under this Act shall also be
E
---------------------- entitled to receive from her employer a medical bonus of one thousand
rupees, if no pre-natal confinement and post-natal care is provided for by
---------------------- the employer free of charge. (Medical bonus – maximum up to Rs. 20,000/-)
---------------------- A woman suffering from illness arising out of pregnancy, delivery,
premature birth of child or miscarriage or medical termination of
---------------------- pregnancy or tubectomy operation or shall, on production of such proof
---------------------- as may be prescribed, be entitled, in addition to the period of absence
allowed to her to leave with wages at the rate of maternity benefit for a
---------------------- maximum period of one month.
----------------------

Nursing Breaks Notes
ill the child attains the age of fifteen months, a delivered woman who
T
----------------------
returns to duty after such delivery shall, in addition to the interval for rest
allowed to her, get two breaks of the prescribed duration for nursing the ----------------------
child in the course of her daily work.
----------------------
C) Dismissal during absence of pregnancy (Section12)
Discharge or dismissal during maternity leave is considered to be void. ----------------------
When a pregnant woman absents herself from work in accordance with the
----------------------
provisions of this Act, it shall be unlawful for her employer to discharge
or dismiss her during, or on account of, such absence, or give notice of ----------------------
discharge or dismissal in such a day that the notice will expire during
such absence or to vary to her disadvantage any of the conditions of her ----------------------
services. Dismissal or discharge of a pregnant woman shall not disentitle
----------------------
her to the maternity benefit or medical bonus allowable under the Act
except if it was on some other ground. ----------------------
Section 13 ----------------------
No deduction from the normal and usual daily wages of a woman entitled to
maternity benefit under the provisions of this Act. ----------------------
----------------------
----------------------

1. Under Maternity Benefits Act ‘wages’ does not include: ----------------------
i. Incentive bonus
----------------------
ii. Cash allowances
----------------------
iii. Gratuity payable on termination of service
iv. Employer’s contribution in employee provident fund ----------------------
2. A woman is not allowed to work in any establishment during the 6 ----------------------

weeks immediately following the day of:
----------------------
i. Her wedding
----------------------
ii. Her delivery
iii. Her miscarriage ----------------------
iv. Termination of pregnancy ----------------------
----------------------
Activity 12
----------------------
List down the similarities between the maternity benefit provisions in the ----------------------
Employees’ State Insurance Act, 1948 and the Maternity Benefits Act, 1961.
----------------------

Notes 13.25 APPOINTMENT/FUNCTIONS AND POWERS OF THE
INSPECTOR (SECTION 14−17)
----------------------
A) Functions and duties
----------------------
he Government may, by notification in the Official Gazette, appoint
T
---------------------- such officers as it thinks fit to be Inspectors for the purposes of this Act
and may define the local limits of the jurisdiction within which they shall
----------------------
exercise their function as Inspector.
---------------------- B) Powers and duties
---------------------- 1. Employer to furnish information to him which is necessary for the
purpose of this Act.
----------------------
2. Enter at all reasonable times in any premises.
---------------------- 3. Examination of the records as well as employed person.
---------------------- 4. Take copies of any registers and records or notices or any portions
thereof to seize the Register/Records.
----------------------
5. Inspector has power to direct payments to be made to the claimer.
----------------------
---------------------- 13.26 OTHERS
---------------------- A) Any woman can surrender her claim of maternity benefit even though
her employer has allowed her the claim. (Section 18)
----------------------
B)
It is compulsory to exhibit the Abstract of the Act and rules
---------------------- thereunder in the local language or languages in a conspicuous place
by the employer in every part of the establishment in which women are
---------------------- employed. (Section 19)
---------------------- C) Registers, etc.: Every employer shall prepare and maintain such registers,
records and muster rolls and in such manner as may be prescribed. (Section
---------------------- 20)
---------------------- D) Penalty (Section 21−26): There is a provision in the Act employer has
to pay penalty for contravention of Act and also for obstructing Inspector
---------------------- when he is on duty. Time limit for an offence punishable under this Act is
---------------------- one year. No court inferior to that of a Presidency Magistrate or a Magistrate
of the First Class shall try any such offence. No suit, prosecution or other
---------------------- legal proceeding shall lie against any person for anything which is in
good faith done or intended to be done in pursuance of this Act or of any
---------------------- rule or order made there under.
---------------------- The provisions of this Act are supportive to the working woman and not obstacle
to get more benefits from the employer. The minimum benefits are listed in this
---------------------- Act as a right of the working woman. (Section 27).
----------------------
----------------------

Notes
----------------------
1. Discharge or dismissal during maternity leave is considered to be___. ----------------------
2. In addition to the interval of rest, ________nursing breaks are allowed
till the child attains the age of__________. ----------------------
3. o claim the maternity benefit a woman employee has to actually

T ----------------------
work in the establishment of employer minimum for a period of at
----------------------
least _______.
----------------------
Activity 13 ----------------------
----------------------
Talk to few woman employees and find out whether the provisions in
Maternity Benefit Act is sufficient and if there is any requirement for further ----------------------
improvement or changes.
----------------------
----------------------
13.27 INTRODUCTION TO PAYMENT OF GRATUITY
ACT, 1972 ----------------------
The Payment of Gratuity Act, 1972 is an Act to provide for a scheme ----------------------
for the payment of gratuity to employees engaged in factories, mines, oil ----------------------
fields, plantations, ports, railway, ships or other establishments and for matters
connected therewith or incidental thereto ----------------------
1) Short title, extend, application and commencement (I). This Act may be
----------------------
called the payment of Gratuity Act, 1972.
2) It extends to the whole of India; provided that in so far as it relates to ----------------------
plantations or ports, it shall not extend to the state of Jammu and Kashmir.
----------------------
It shall apply to
----------------------
a. Every factory, mine, oil field, plantations or ports and railways.
b. Every shop or establishment within the meaning of any law for ----------------------
the time being in force in relation to shops and establishment
in a state, in which ten or more persons are employed or were ----------------------
employed on any day of the preceding twelve months.
c. Such other establishments or class of establishing in which ten ----------------------
or more employees are employed or were employed on any day
of the preceding twelve months, as the central government may by ----------------------
notifications, specify on this behalf.
3) A shop or establishment, to which this Act has become applicable, ----------------------
shall continue to be governed by this Act, notwithstanding that the ----------------------
number of persons employed therein at any time after it has become so
applicable falls below ten. ----------------------

Notes 4) It shall come into effect on such date as the Central Government may, by
notification, appoint.
----------------------
----------------------
13.28 DEFINITIONS OF GRATUITY
---------------------- Section 2 states

1) ‘Completed year of service’ means continues for one year
----------------------
2) ‘Continuous Service’ means continuous service as defined in Section 2-A
----------------------
3) ‘Controlling Authority’ means authority appointed by the appropriate
---------------------- government under Section 3.
4) ‘Employee’ means any person (other than an apprentice) employed on
----------------------
wages in any establishment, factory, mine, oil field, plantation. Port,
---------------------- railway or shop to do any skilled, semi skilled or unskilled manual,
supervisory, technical or clerical work, for hire or reward if the terms
---------------------- and conditions of employment were fulfilled but does not include any
such person who holds a civil post under the Central Government or State
----------------------
Government and is governed by any other act by any rules providing for
---------------------- payment of gratuity.
---------------------- 5) ‘Employer’ means in relation to any establishment, factory, mine, oil

fields, plantations, port, railway or shop.
---------------------- a. Belonging to or under the control of the Central Government or a
---------------------- State Government, a person or authority appointed by the appropriate
Government for the supervision and control of employees, or where
---------------------- no person or authority has been so appointed , the head of the
Military or the Department concerned.
----------------------
b. Belonging to or under the control of any local authority, the person
---------------------- appointed by such authority for the supervision and control of
employees or where no person has been so appointed, the chief
---------------------- executive officer of the local authority.
---------------------- c. In any other case, the person, who or the authority which has the
ultimate control over the affairs of the establishment, factory, mine,
----------------------
oil fields, plantation, port, railway or shop and where said affairs
---------------------- are entrusted to any other person, whether called a manager or
managing director or by any other cause such person.
----------------------
6) Family in relation to an employee, shall be deemed to consist of :
---------------------- a. In the case of a male employer himself, his wife, his children,
---------------------- whether married or unmarried, his dependent parents (and the
dependent parents of his wife and the widows) and children of his
---------------------- predeceased son if any.
----------------------
----------------------

b. In the case of a female employee herself, her husband, her children, Notes
whether married or unmarried, her dependent parents and the
dependent parents of her husband and the widow and children of ----------------------
her predeceased son, if any.
----------------------
7) “Superannuation” in relation to an employee, means the attainments by
the employee of such age is fixed in the contract or conditions of service ----------------------
as the age on the attainment of which the employee shall vacate the
----------------------
employment.
Section 2-A: Continuous Service ----------------------
For the purpose of this Act, ----------------------
An employee shall be said to be in continuous service for a period if ----------------------
he has for that period, been in uninterrupted service, including service which
may be interrupted on account of sickness, accident, leave, absence from duty ----------------------
without leave - not being absence in respect of which break in service is given
by an order, lay-off, strike or lock-out not due to any fault of the employee. ----------------------
Section 3: Controlling Authority ----------------------

The Appropriate Government may by notification appoint any officer to be ----------------------
the controlling authority, who shall be responsible for the administration of this
act and different controlling authorities may be appointed for different areas. ----------------------
----------------------
----------------------
1. The provisions of Payment of Gratuity Act are not applicable to
----------------------
plantations in Jammu & Kashmir.
2. A shop or establishment shall not continue to be governed by this Act ----------------------
if the number of employees falls below ten.
----------------------
3. Continuous service may get interrupted on account of accidents,
layoff or lockout. ----------------------
----------------------
Activity 14 ----------------------
----------------------
‘Payment of Gratuity is one most important tool in increasing employees’
motivation and commitment towards an organisation’. Justify this statement ----------------------
by interviewing few senior employees who had served for more than 5 years
in the same organisation. ----------------------
----------------------
----------------------
----------------------

Notes 13.29 PAYMENTS OF GRATUITY
---------------------- Section 4 states
---------------------- 1) Gratuity shall be payable to an employee on the termination of his

employment after he has rendered continuous service for not less than
---------------------- five years. The gratuity is given
---------------------- a) on his superannuation or

b) on his retirements or resignations
----------------------
c) on his death or disablement due to accident or disease
----------------------
rovided that the completion of continuous service of five years shall not
P
---------------------- be necessary where the termination of the employment of any employee
is due to death or disablement.
----------------------
Provided further that in case of death of the employee, gratuity payable
---------------------- to him shall be paid to his nominee, or, if no nomination has been made
to his heirs, and where any such nominees or heirs is a minor, the share
---------------------- of such minor shall be deposited with the controlling authority who
---------------------- shall invest the same for the benefit of such minor in such bank or other
financial institution, as may be prescribed, until such, unit such minor
---------------------- attains majority.
---------------------- 2) For every completed year of service or part thereof in excess of six months,
the employer shall pay gratuity to an employee at the rate of fifteen days
---------------------- wages based on the rate of wages last drawn by the employee concerned.
---------------------- Provided that in case of a piece rated employee, daily wages shall be
computed on the average of the total wages received by him for a period of
---------------------- three months immediately preceding the terminations of his employment,
and for this purpose, the wages paid for any overtime work shall not be
---------------------- taken into account.
---------------------- Provided further that in the case of an employee who is employed in a
seasonal establishment, and who is not so employed throughout the year
----------------------
the employer shall pay the gratuity at the rate of seven days wage for each
---------------------- season. [Explanation in the case of a monthly rate, employees’ fifteen
days wages shall be calculated by dividing the monthly rate of wages last
---------------------- drawn by him by twenty-six and multiplying the quotient by fifteen.]
----------------------
13.30 AMOUNT OF GRATUITY PAYABLE
----------------------
The amount of Gratuity payable to all employees shall not exceed Rs. 20,00,000/-.
---------------------- The gratuity withdrawal limits for staff in private companies and public-sector units
have been doubled to Rs20 lakh. At present, even if a worker accumulates more
---------------------- than Rs10 lakh as gratuity contribution, the withdrawal is capped at Rs10 lakh and
---------------------- the rest is paid out after deduction of taxes.
----------------------

1) For the purpose of computing the gratuity payable to an employee who Notes
is employed, after his disablement, on reduced wages, his wages for the
period preceding his disablement shall be taken to be the wages received ----------------------
by him during that period, and his wages for the period subsequent to his
disablement shall be taken to be the wages as so reduced. ----------------------
2) Nothing in this section shall affect the right of an employee to receive better ----------------------
terms of gratuity under any award or agreement or contract with the employer.
----------------------
3) Notwithstanding anything contained in Sub-section (1),
----------------------
a. the gratuity of an employee, whose services have been terminated
for any act, willful omission or negligence causing any damage or ----------------------
loss to, or destruction of property belonging to the employer, shall
be forfeited to the extent of the damage or loss so caused ; ----------------------
b. the gratuity payable to an employee may be wholly or partially ----------------------
forfeited to
----------------------
i. if the services of such employee have been terminated for his
riotous or disorderly conduct or any other act of violence on ----------------------
his part, or
----------------------
ii. If the services of such employee have been terminated for any
act, which constitutes an offence involving moral turpitude, ----------------------
provided that such offence is committed by him in the course
of his employment. ----------------------
----------------------
----------------------
1. Attainment by the employee of such age as fixed in the contract or
----------------------
the attainment of an age on which the employee shall vacate the
employment compulsorily is called____________ . ----------------------
2. Maximum amount of Gratuity payable to an employee shall not ----------------------
exceed______.
3. Gratuity is payable to the employee on the termination of his / her ----------------------
employment after he / she has rendered continuous service for not ----------------------
less than _______ years.
4. If the amount of gratuity payable is not paid within ________ days, ----------------------
employer is liable to pay interest. ----------------------
----------------------
Activity 15
----------------------
Study industries around you to find out the how industrial unrest is an ----------------------
impediment in the determination of continuous service and how it affects
employees’ right to payment of gratuity. ----------------------

Notes 13.31 POWER TO EXEMPT
---------------------- The appropriate Government may, by notification exempt any
establishment, factory, mine, oil fields, plantation, port, railway or shop to which
---------------------- this Act applies from the operation of the provision of this Act if in the opinion
of the appropriate Government, the employees in such establishment, are in
----------------------
receipt of gratuity or pensioner benefits not less favourable than the benefits
---------------------- conferred under this Act.
---------------------- Section 7: Determination of the amount of Gratuity

1. A person who is eligible for payment of gratuity under this Act or any
---------------------- person authorised in writing to act on his behalf shall send a written
---------------------- application to the employer, within such time and in such form as may be
prescribed, for payment of such gratuity.
----------------------
2. As soon as gratuity becomes payable, the employer shall, whether an
---------------------- application regarded so in Sub section (1) has been made or not determine
the amount of gratuity and give notice in writing to the party on whom
---------------------- the gratuity is payable and also to the controlling authority specifying the
amount of gratuity so determined.
----------------------
3. The employer shall arrange to pay the amount of gratuity within thirty
---------------------- days from the date it becomes payable to the person to whom the gratuity
is payable.
----------------------
3A) If the amount of gratuity payable by the employer within the period
---------------------- specifies, the employer has to pay with simple interest.
----------------------
13.32 APPOINTMENT OF THE INSPECTOR
----------------------
Section 7 A: Inspector
----------------------
Appointment: The appropriate government may, by notification, appoint
---------------------- as many inspectors as it deems fit for the purposes of this Act.
---------------------- Every inspector shall be deemed to be a public servant within the meaning
of Section 21 of the Indian Penal Code (Act 45 of 1860).
----------------------
13.33 POWERS OF INSPECTORS
----------------------
Section 7 B
----------------------
1. Manually require an employer to furnish such information as he may
---------------------- consider necessary.
---------------------- 2. Enter and inspect.
---------------------- 3. Examine the employer or any person in premises of the establishment.

4. Seize the registers, records or take copies or extracts. Duty - Implementation
----------------------
of the provisions of this Act.
----------------------

Section 8: Recovery of Gratuity Notes
If the amount of gratuity payable under this Act is not paid by the employer
----------------------
within the prescribed time, to the person entitled thereto. The controlling
authority shall on an application made to by the aggrieved person, issue a ----------------------
certificate for that amount to the collector, who shall recover the same, to gather
with compound interest there on as arrears of land revenue and pay the same to ----------------------
the person entitled there to.
----------------------
Section 13: Protection of Gratuity
----------------------
No gratuity payable under this Act to an employee employed in any
establishment shall be liable to attachment in execution of any decree or order ----------------------
of any civil, revenue or criminal court.
----------------------
----------------------
1. Which of the following can be considered as ‘Continuous service’? ----------------------
i. successful completion of 365 working days ----------------------

ii. completion of probation period ----------------------
iii. No gap between two employment
----------------------
iv. 5 years of colorful service with the same employer
----------------------
2. Gratuity is not payable on
i. Termination ----------------------
ii. Superannuation ----------------------

iii. Retirement or resignation ----------------------
iv. Death
----------------------
3. The maximum amount of gratuity payable to an employee is
----------------------
i. Rs. 3,50,000/-
ii. Rs. 5,00,000/- ----------------------
iii. Rs. 20,00,000/- ----------------------

iv. Rs. 15,00,000/- ----------------------
----------------------
Activity 16
----------------------
List down some events when the gratuity can be claimed by the employee. ----------------------
----------------------
----------------------

Notes Summary
---------------------- ●● The Employees’ Compensation Act has assured the proper compensation
to the employee community.
----------------------
●● Employees are rest assured about their compensation of the duty hours
---------------------- what they are putting in as an effort to their contribution for earning at
---------------------- large for the organisaion.
●● More number of compensation related issues and disputes have been
---------------------- resolved before going for seeking legal justice for the matter. In all, The
---------------------- Employees’ Compensation Act has become instrumental in helping in the
upliftment of the employees.
---------------------- ●● The Employees’ State Insurance Act has been constituted for the benefit
---------------------- of the Employee regarding the health check up facilities and other health
related treatments.
----------------------
●● Even the salary for non attendance during the period of illness is also
---------------------- being paid by the help of this particular act. Hence, the employees are
assured about the continuity of their income during the tenure of their
---------------------- illness.
---------------------- ●● Even if the accidental death occurs during working hours, the nominee
of that particular employee is benefited by the sumptuous amount for the
---------------------- same.
---------------------- ●● Employee Provident Fund Act has been constituted for the benefit of the
employees regarding their provision for post retirement benefits such as
---------------------- the Pension Fund, Family Pension Fund etc.
---------------------- ●● The employees are assured about the continuity of their income after their
retirement by the way of pension.
----------------------
●● Even if accidental death occurs during working hours, the nominee of
---------------------- that particular employee is benefited by the sumptuous amount from the
Provident Fund payable or the Gratuity payable to him.
----------------------
●● The Act regulates employment of women in certain establishments for a
---------------------- certain period before and after childbirth and provides for maternity and
other benefits.
----------------------
●● The Act applies to mines, factories, circus, industry, plantation and shops
---------------------- and establishments employing ten or more persons, except employees
covered under the Employees State Insurance act, 1948.
----------------------
●● It can be extended to other establishments by the state governments. There
---------------------- is no wage limit for coverage under the Act.
---------------------- ●● The Central Government is the Appropriate Government in respect of the
Circus Industry and Mines.
----------------------
----------------------

●● The Act is applicable to factories, mines, oil fields, plantations, ports, Notes
railways, motor transport undertakings, companies and to shops and other
establishments, Employing 10 or more workmen. ----------------------
●● The Act provides for payment of gratuity at the rate of 15 days wages for ----------------------
each completed year of service subject to a maximum of Rs. Twenty lakh.
----------------------
●● In the case of seasonal establishment, gratuity is payable at the rate of
seven days wages for each season. ----------------------
●● The Act does not affect the right of an employee to receive better terms
----------------------
of gratuity under any award or agreement or contract with the employer.
----------------------
Keywords ----------------------
●● Achieve: To succeed in finishing something or reaching an aim, especially ----------------------
after a lot of work or effort.
----------------------
●● Compensation: An amount equal for the loss accrued during and in due
course of employment. ----------------------
●● Essence: The basic or most important idea or quality of something.
----------------------
●● Expected: To think that someone should behave in a particular way or do
a particular thing accordingly. ----------------------
●● Regulate: To control something, especially by making it work in a ----------------------
particular way.
----------------------
●● Benefits: The money given by the employer to people who need financial
help, for example because they cannot find a job ----------------------
●● Corporation: A large company or group of companies that is controlled ----------------------
together as a single organisation
----------------------
●● Employees: Someone who is paid to work for someone else
●● Health Insurance: When you make regular payments to an insurance ----------------------
company in exchange for that company pay most or all of your medical
----------------------
expenses
●● Benefits: The money given by the employer to people who need financial ----------------------
help, for example because they cannot find a job
----------------------
●● Corporation: A large company or group of companies that is controlled
together as a single organisation ----------------------
●● Employees: Someone who is paid to work for someone else ----------------------

●● Health Insurance: When you make regular payments to an insurance ----------------------
company in exchange for that company pay most or all of your medical
expenses ----------------------
●● Establishment: Where the people are working. ----------------------
●● Child: Newborn and includes a stillborn child.
----------------------

Notes ●● Employer: The person who is the authority and who has the ultimate
control over the affairs of the establishment.
----------------------
●● Wages: All remuneration paid or payable in any form.
---------------------- ●● Claim: Dues payable as a right applying for that.
---------------------- ●● Dismissal: Removal from the present job.
---------------------- ●● Jurisdiction: The particular area allotted to the inspector.

●● Employer: A person or company that pays people to work for them.
----------------------
●● Maintain: No change to make a situation or activity continue in the same
---------------------- way.
---------------------- ●● Records: Information that is written on paper or stored on computer so
----------------------
●● Prescribed: To say officially what people must do.
---------------------- ●● Particulars : Formal details about something or someone.
----------------------
----------------------
1. Who are the dependents of a deceased workman under the Employees’
----------------------
Compensation Act, 1923?
---------------------- 2. When is the employer not liable to pay compensation to injured employee
under the Employees’ Compensation Act, 1923?
----------------------
3.
How is compensation calculated in case of temporary disablement,
---------------------- permanent partial disablement?
---------------------- 4.
Examine the powers of the commissioner under the Employees’
Compensation Act, 1923.
----------------------
5. ow is the employee community benefited by the Employees’Compensation
H
---------------------- Act?
---------------------- 6. How is the Employees’ State Insurance Corporation constituted?
7. What are the purposes for which the Employees’ State Insurance Fund
----------------------
can be spent?
---------------------- 8. What are the matters that can be decided by the Employee Insurance
Court?
----------------------
9. ritically examine the various benefits that are available to the insured
C
---------------------- person and the dependants under the ESI Act and the scheme made there
---------------------- under.
10. E
xplain the various types of the benefits which can be drawn by the help
---------------------- of Employees’ State Insurance Act.
---------------------- 11. W
hat are the objects of the Provident Fund Act, 1952? Which
establishments are covered under this Act?
----------------------

12. Which are the establishments that can continue to contribute @ 8.33 % of Notes
the basic wage, dearness allowance and retaining allowance?
----------------------
13. Explain the salient features of the Employees Deposit Linked Insurance
Scheme. ----------------------
14. Explain the salient features of the Pension Scheme of 1995.
----------------------
15. W
hat are the different kinds of benefits, which can be received by the
family members of the worker after his retirement under this Act? ----------------------
16. W
hat is the objective behind introducing the Maternity Benefit Act? State ----------------------
the details of the Act.
----------------------
17. Who can present an application for claim? What is the procedure?
18. Discuss the functions and powers of Inspector? ----------------------
19. W
hat is your opinion about this Act? Can you suggest any further ----------------------
improvements for the betterment of the women workers?
----------------------
20. To whom is the Payment of Gratuity Act, 1972 applicable?
----------------------
21. What is the rate at which gratuity is payable?
22. “Gratuity is paid not only for long service but long and meritorious ----------------------
service”. Explain with two examples. ----------------------
23. What are the facilities that can be availed under the Payment of Gratuity
Act, 1972? Explain with three examples. ----------------------
----------------------
----------------------
----------------------
----------------------
1. True
2. False ----------------------
3. True ----------------------
----------------------
1. In which of the following cases, the employer is not liable to pay
compensation to an employee? ----------------------
i. he employee at the time of accident was under the influence of
T ----------------------
drug or liquor
----------------------
ii. Willful disobedience of the safety rules
iv. Willful removal of any safety guard/device provided to him ----------------------
----------------------
----------------------

Fill in the blanks.
----------------------
1. If death results from an injury, an amount equal to fifty per cent of the
---------------------- monthly wages of the diseased employee multiplied by the relevant
factors is paid as compensation.
----------------------
2. If permanent total disablement results from the injury, an amount equal to
---------------------- sixty per cent of the monthly wages of the injured employee multiplied by
the relevant factor is paid as compensation.
----------------------
----------------------
---------------------- 1. ESI Act is applicable to
---------------------- i. Factories belonging to the government
---------------------- ii. Seasonal factories
2. Benefits available under the ESI act are:
----------------------
i. Sickness benefit
----------------------
ii. Maternity benefit
----------------------
iii. Dependents benefit
---------------------- 1.
Condition, which requires medical treatment and attendance and
necessitates abstention from work, is called sickness.
---------------------- 2.
Te n number of representatives from recognised employers’ organisation
---------------------- are required to constitute ESI corporation.
3.
Te n number of representatives from recognised employees’ organisation
---------------------- are required to constitute ESI corporation.
1. False
----------------------
2. True
----------------------
3. True
----------------------
4. False
----------------------
----------------------
----------------------
----------------------

----------------------
3. The EPF Act and Schemes framed are administered by a tri-partite Board
known as the Central Board of Trustees, EPF, consisting the representatives ----------------------
of
----------------------
i. Employees
----------------------
ii. Chamber of Commerce
iv. Government ----------------------
4. The central board of trustees (EPF) operates which of the schemes? ----------------------
i. EPS ----------------------
ii. EDLI
----------------------
iii. EPF
----------------------
1. True ----------------------
2. True ----------------------
3. True ----------------------
4. False
----------------------
----------------------
Fill in the blanks.
1. The Family pension scheme was introduced in the year 1971. ----------------------
2. In family pension scheme, pension is provided to spouse and minor child ----------------------
up to the age of 21 year.
----------------------
3.
In Employee’s Deposit Linked Insurance Scheme, the employer’s
contribution is @ 0.5 % of basic Wages, dearness allowance and retaining ----------------------
allowance.
----------------------
4. A member gets superannuation pension after attaining the age of 58 or
rendered service of minimum 20 years. ----------------------
1. True
----------------------
2. False
----------------------
3. True
----------------------
----------------------
----------------------

----------------------
1. Under Maternity Benefits Act ‘wages’ does not include:
----------------------
iii. Gratuity payable on termination of service
---------------------- iv. Employer’s contribution in employee provident fund
---------------------- 2. A woman is not allowed to work in any establishment during the 6 weeks
immediately following the day of:
----------------------
ii. Her delivery
----------------------
iii. Her miscarriage
---------------------- iv. Termination of pregnancy

1. Discharge or dismissal during maternity leave is considered to be void.
----------------------
2. In addition to the interval of rest, two nursing breaks are allowed till the
---------------------- child attains the age of 15 months.
---------------------- 3. o claim the maternity benefit a woman employee has to actually work
T
in the establishment of employer minimum for a period of at least eight
---------------------- days.

1. True
----------------------
2. False
----------------------
3. False
---------------------- 1. ttainment by the employee of such age as fixed in the contract or the
A
attainment of an age on which the employee shall vacate the employment
---------------------- compulsorily is called superannuation.
---------------------- 2. Maximum amount of Gratuity payable to an employee shall not exceed

Rs.20,000,00/-.
----------------------
3. Gratuity is payable to the employee on the termination of his / her
---------------------- employment after he / she has rendered continuous service for not less
than 5 years.
----------------------
4. If the amount of gratuity payable is not paid within 30 days, employer is
---------------------- liable to pay interest.
----------------------

----------------------
1. Which of the following can be considered as ‘Continuous service’?
----------------------
iv. 5 years of colorful service with the same employer
2. Gratuity is not payable on; ----------------------
i. Termination ----------------------
3. The maximum amount of gratuity payable to an employee is; ----------------------
iii. Rs. 20,00,000/-
----------------------
1. Employees Compensation Act, 1923. Eastern Book Company. ----------------------
2. Saharay, Dr. H.K. Textbook on Labour & Industrial Law. New Delhi: ----------------------
Universal Law Publishing.
----------------------
3. Bare Act of the Employees State Insurance Act, 1948
----------------------
4. www.esic.nic.in/index.php
5. www.epfindia.gov.in ----------------------
6. The Bare Act of Employees Provident Fund and Miscellaneous Provisions ----------------------
Act, 1952
----------------------
7. Bare Act of Maternity Benefit Act, 1961.
----------------------
8.
Sharma, Usha. 2006. Female Labour in India. New Delhi: Mittal
Publications. ----------------------
9. Bare Act of Payment of Gratuity Act, 1972.
----------------------
10. Kumar, Arun. Industrial Law. New Delhi: Atlantic Publishers and
Distributors. ----------------------
11. Kumar, H. L. Practical Guide to Payment of Gratuity Act & Rules. ----------------------
Universal Law Publishing Company.
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

Notes
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------
----------------------

SC Irll

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

SC Irll

Uploaded by

Copyright:

Available Formats

INDUSTRIAL RELATIONS

(FOR PRIVATE CIRCULATION ONLY)

COURSE DESIGN AND REVIEW COMMITTEE

Published by Symbiosis Centre for Distance Learning (SCDL), Pune

Copyright © 2018 Symbiosis Open Education Society

Unit No. TITLE Page No.

Industrial Relations – Evolution, Concept and Approach 1

---------------------- 1.1 INTRODUCTION

---------------------- Economists have traditionally identified three factors of production:

2 Industrial Relation and Labour Law

Industrial Relations – Evolution, Concept and Approach 3

4 Industrial Relation and Labour Law

With the invention and manufacturing of power-driven machinery in the ----------------------

Industrial Relations – Evolution, Concept and Approach 5

---------------------- 1.3 FEATURES OF MODERN INDUSTRIAL SYSTEM

6 Industrial Relation and Labour Law

Industrial Relations – Evolution, Concept and Approach 7

i. Elaborate control mechanism ----------------------

1.5 EVOLUTION OF INDUSTRIAL RELATIONS IN INDIA ----------------------

Industrial Relations – Evolution, Concept and Approach 9

10 Industrial Relation and Labour Law

Industrial Relations – Evolution, Concept and Approach 11

12 Industrial Relation and Labour Law

State True or False. ----------------------

Industrial Relations – Evolution, Concept and Approach 13

---------------------- DaleYoder has defined Personnel Management as “that phase of management

These different interpretations show that while it is difficult to draw a ----------------------

Industrial Relations – Evolution, Concept and Approach 15

---------------------- • Regulate: To control something, especially by making it work in a

---------------------- Self-Assessment Questions

---------------------- 2. Explain the evolution of Industrial Relations in India.

16 Industrial Relation and Labour Law

2. Some of the features which emerged as a result of industrial development ----------------------

Industrial Relations – Evolution, Concept and Approach 17

18 Industrial Relation and Labour Law

Evolution of Industrial Relations Policies 19

---------------------- 2.1 INTRODUCTION

---------------------- 2.2 PRE- AND POST-INDEPENDENCE INDUSTRIAL

---------------------- Pre-Independence India

20 Industrial Relation and Labour Law

Evolution of Industrial Relations Policies 21

---------------------- Check your Progress 1

---------------------- 2.3 INDUSTRIAL RELATIONS POLICY DURING THE

22 Industrial Relation and Labour Law

d) Appeals to these courts should be reduced. ----------------------

Evolution of Industrial Relations Policies 23

24 Industrial Relation and Labour Law

Evolution of Industrial Relations Policies 25

---------------------- (i) Industrial harmony is indispensable for a country if it is to make economic

26 Industrial Relation and Labour Law

2.4 NATIONAL COMMISSION ON LABOUR AND ----------------------

Evolution of Industrial Relations Policies 27

Evolution of Industrial Relations Policies 29

30 Industrial Relation and Labour Law

Evolution of Industrial Relations Policies 31

---------------------- Give a recent example of militancy in an industrial relations situation.

---------------------- 2.6 CONDITIONS OF GOOD INDUSTRIAL RELATIONS

32 Industrial Relation and Labour Law

Evolution of Industrial Relations Policies 33

34 Industrial Relation and Labour Law

Evolution of Industrial Relations Policies 35

---------------------- Self-Assessment Questions

---------------------- 2. What are the objectives of industrial relations?

2. Some of the features which emerged as a result of industrial development ----------------------

---------------------- 2.3 INDUSTRIAL RELATIONS POLICY DURING THE

---------------------- (i) Industrial harmony is indispensable for a country if it is to make economic