Professional Documents
Culture Documents
28/10/2020
Sec. 10 provides that the employer is bound to pay a minimum bonus in every AY,
irrespective of whether profits were actually earned or losses were incurred. The
minimum bonus amount is 8.33% of the salary or wage earned by the employee in that
AY or Rs. 100/- whichever is higher. This is to be read with Sec. 15 as well.
In Jalan Trading Co. v. Mill Mazdoor Sabha, the SC made an observation that the power
of the Parliament to fix the minimum bonus at 8.33% of wage/salary cannot be
questioned. This is because the purpose of giving bonus is to make equitable distribution
of the profits/surplus of the employer, after deducting prior charges. It further held that
this legislation fixing the minimum bonus is neither a fraud on the Constitution nor is it a
colourable exercise of powers.
In J.K. Chemicals v. Govt. of Maharashtra (1997) the Court adjudged a challenge to the
fixation of minimum bonus. The court held that irrespective of the financial condition of
the establishment or the losses incurred in the AY, there can be no challenge to the
fixation of minimum bonus and the employer is bound to pay so in compliance with Sec.
10.
Sec. 11 was earlier omitted in 1976 and later inserted in 1980 by amendment. It deals
with payment of maximum bonus. It states that if the employer has the capacity to pay
more than minimum bonus of 8.33% in one AY, he shall pay a maximum of 20% of the
salary/wages in that AY. He must not pay more than 20% of the salary or wages of the
employee.
Sec. 10 and Sec. 11 are subject to the principle of set-on and set-off as mentioned in Sec.
15. While Sec. 10 mandates a minimum bonus in an AY, Sec. 11 sets a maximum limit at
20% of the salary/wages of the employee. The concept of carry forward allows the
employer to carry forward any extra allocable surplus, even after paying 20%, to the next
year.
Sec. 12 provides that an employee who draws a salary/wages of upto 21,000 can claim
bonus. An employee earning below 7,500 can also get bonus. Every employee drawing
above 21,000 shall be treated as drawing only 21,000 for the purpose of computation of
bonus payable. Thus, even for a person drawing 31,000, the bonus shall be calculated on
21,000 only. Thus, 8.33% of 21,000 is calculated and not 8.33% of 31,000.
Notes 29/10/2020: -
History:
1. The industrial revolution had its impact across the world and in India through expansion
of industries across the world. The unskilled workmen operated heavy and dangerous
machinery for long hours. This Act was earlier called as Workmen’s Compensation Act,
1923.
2. The workers rendering their work in the factories, industries and other establishments
wherein, there is threat to their body and life. The injury may be permanent or temporary.
The essence lies in making the employer answerable for the injury so caused in the course
of employment. The aspect of employer’s responsibility for the workers’ injury formed
the core.
3. The second aspect is whether the workers are aware of the occupational hazards and the
risks involved in the specific employment.
4. Across the world, efforts to make the employer responsible for the injury so caused to the
workman in the course of employment gained momentum. Earlier, in England under the
common law, it was called the ‘Employer’s Liability Act’ making the employer liable by
making him responsible for all kinds of accidents in his establishment. The employer
always took the plea of contributory negligence on part of the worker to escape liability.
In Britain, the British Parliament recognized this shortcoming and passed the
‘Employee’s Compensation Act 1897’ in the UK.
5. In India, earlier it was called the Fatal Accidents Act. It had a limited scope and only
covered death. It did not cover other injuries caused in the course of employment.
6. The ILO adopted a number of conventions as early as 1921, 1925 for employees
compensation
7. India constituted a joint-select committee which took inputs from experts including
employees, employers, mining workers, hospital staff etc. The Employee Compensation
Act was made in 1923 and brought into force from 01 July 1924.
1. The preamble states that it is an Act to provide for payment by ‘certain classes of
employers’ to their employees of compensation for injury by accident. This accident must
be in the course of employment and the injury must be in the due course of the discharge
Definitions:
1. A commissioner means a commissioner appointed by the appropriate govt under Sec. 20.
2. Compensation means compensation as provided by the Act. Sec. 3 deals with when the
employer is liable or otherwise. Sec. 4 and Sec. 5 provide for the formula for the
calculation of the compensation to be paid by the employer.
3. Dependant is a very important concept. Dependant includes certain categories of relatives
of the deceased employee. Similar to Class I, Class II heirs etc. in the Hindu Law of
Succession, the categories of dependants include the following:
a) A widow, minor legitimate or adopted son, an unmarried legitimate or adopted
daughter or a widowed mother
b) A son or daughter who has attained 18 yrs. of age and who is an infirm, wholly
dependant on the earnings of the employee at the time of his death.
c) If wholly or in part dependant on the earnings of the employee at the time of his
death:
(1) A widower
(2) A parent other than a widowed mother
(3) A minor illegitimate son, an unmarried illegitimate daughter or a daughter
legitimate or illegitimate or adopted if married and a minor or it widowed and a
minor.
(4) A minor brother or an unmarried sister or a widowed sister if a minor
31/10/2020
1. Employee Compensation Act is where any employee (includes workman also, there is not
wage limit anymore) is entitled to get a compensation for an injury sustained due to an
accident which has occurred in the due course of employment.
2. The objective is to do good for the actual loss suffered by the employee. Compensation is
something like an insurance against the risk involved in doing the work in the course of
employment. Where the employee sustains any of the different kinds of injuries, or on
death of employee, the employer is liable to pay compensation.
Principles under Employee Compensation Act:
1. Accident and the injury therefrom sustained, must either be “arising out of” and “in
course of employment”.
2. There are 4 principles:
a) A casual connection between the injury and the accident; and the accident and the
work done in the course of employment.
b) All of these above four principles must be proved in order to claim compensation.
1. “Contract of Service” and “Contract for Service” are two different concepts. In both
cases, there must be an employer-employee relationship. In contract FOR service, the
03/11/2020
4/11/2020
1. Personal Injury: Injury is usually understood in the sense of bodily injury. However, it is
not sufficient to include only physical injury. Personal injury covers physical injury and
also psychological injury, nervous shock, mental strain etc.
05/11/2020
1. The third principle in the Bai Shakri case is that ‘it is not necessary that the employee
must be actually working at the time of his death or that death must occur while he is
working or had just ceased to work’. In another case where an employee had a lot of work
stress and after returning home from the establishment, after 3 hours of relaxation, the
employee had a massive heart attack and died on the spot. Here, the employer was made
liable.
2. The fourth principle in the Bai Shakri case is that ‘Where the evidence is balanced, if the
evidence shows a greater probability which satisfies a reasonable man that the work
contributed to the causing of the personal injury, it would be enough for the employee to
succeed’.
3. In the Bai Shakri case, the employer was NOT made liable since it was not arising out of
and in course of the employment.
4. The outcome of these 4 principles is that where the employee is performing his duties of
the employment, and the accident occurs at the place of work or while working outside
establishment or at home, or while travelling, the employer is held liable. Thus, the
1. The accident must be arising out of and in course of ‘employment’. The question is where
the employment begins. The employments beings from the time the worker travels from
his house to establishment, works in the establishment and then travels and returns home.
The NET concept is this extension of meaning of employment to the travel of the
employee.
2. The reason is, the worker is travelling only because of employment and so the employer
shall be liable.
3. The NET extends the scope of employment even for the travel. Situation 1: However, the
NET does not apply to a case where the worker deviates from his path, or indulges in any
personal engagement while coming back from employment, and then meets an accident,
then the NET does not apply.
4. Thus, the NET only applies where the worker strictly follows his path and does not
deviate, and it is only from and to the establishment.
5. In St. Helens Colliery Co. Ltd. v. Hewlston (HOL of UK, 1924) – Here, the employee
was travelling in a colliery was injured. The employer had an agreement with the train
company and had a special train (colliery) for the employees to travel to and from their
homes. It was a single trip for every employee i.e., to and from home. The cost of this
travel was deducted from their wages. The employee’s train met with an accident. The
HOL held that the employer was not liable to pay compensation. The reason given was
that the employee was not bound to travel by the train and he could have travelled by
some other means. The employee’s contract of service does not say that he must travel by
this train. Secondly, it was stated that the train was not the only means of reaching to and
from home. Had it been the only means of transportation, the employer would be liable.
However, since there were other means as well, the employee was not obligated to use
this mode. Thirdly, the HOL said that travel does not come in the scope of ‘arising out of
and in course of employment’ unless the contract of services says that the travel must be
by the means given by employer.
6. After 1924, this concept changed and this decision was held inappropriate later. Thus,
travel is included in employment. The current situation is as follows:
1. Sec. 5 provides for method for calculating wages. For this it is necessary to ascertain
continuous service. Continuous service means he must have worked in the establishment
for atleast 12 months. Monthly wages are 1/12th of the wage received in the year.
2. If the employee has worked for less than one month, the wages earned by other
employees employed by such employer for doing the same nature of work is considered.
If there is no such employee in that establishment, then the wages for similar work in
nearby establishments is considered.
3. Sec. 6 talks about review. Where half-monthly wages are payable, the review shall be
done by the Commissioner, on the application of the employer/employee based on
certificate of the medical practitioner. The main issue is whether there had been a change
in the condition of the workman. The Commissioner looks into the medical certificates
and other records presented.
4. The Commissioner has the power to continue the half-monthly payments, or decrease or
increase them. If the disablement has aggravated from temporary partial disablement to
permanent disablement, the commissioner can convert it from half-monthly payment to
lumpsum compensation and the amount already paid shall be deducted. This is also done
under Sec. 6 only.
5. Sec. 7 deals with commutation of half-monthly payments. The half-monthly payments
can only be converted into lump-sum payments only AFTER six months by application to
Commissioner under Sec. 6. Before 6 months, it cannot be done. The lumpsum payment
can also be decided by agreement between employee, employer and Commissioner.
6. Sec. 8 deals with distribution of compensation between dependants under the supervision
of the Commissioner for EC. Act. Whenever an accident results in death, the employer
shall not make any direct payments to the family/dependants of the workman. It shall be
deposited to the Commissioner and the Commissioner shall distribute the amount to the
rightful dependants. If the person receiving it is not mentally sound or has other mental
disability or infirmity, even the commissioner cannot directly make payments to such
person. He must open a bank account and deposit the amount there and only the interest
on that amount can be utilized. This is the case for women, children and the persons with
disability.
7. If the person is a minor, the lumpsum amount may be given to him upon attaining
majority. For a person with legal disability (unsound mind), then the interest only can be
07/11/2020
1. Sec. 15 provides special provisions relating to masters and seamen. Even in case of ships
and seamen, the Act applies. The notice of accident and claim, the notice is to the master
of the ship and served as if he is employer. If the accident occurs while the master is
inside the ship, the notice is not required. In case of death of seaman, within 1 year the
claim for compensation must be made. If the ship is entirely lost at sea, within 18 months
of news of the same the claim must be made. Even if there is a delay in this, the
Commissioner may pardon it if the reasons are sufficient.
2. Sec. 16 states that the State Govt. may notify in the official gazette to the employer
requiring him to send all details of employee, name, cadre, nature of work, date of
employment etc. in case of injuries, they must inform the state govt about the nature of
injury sustained by each and every employee, the compensation paid for the injury. This
info is also filed with the annual returns filed by employer. It is previous years’
compensation along with current compensation paid.
3. Sec. 17 is contracting out. Even if the employer & employee have an agreement which
absolves the employer of any liability of compensation or states he will pay lesser, even if
10/11/2020
24. The contribution of the employer is 4 ¾ % of the wages of the employee. The
contribution of employee is 1 ¾% of the wages of the employee.
25. Contribution period and corresponding benefit period (IMPORTANT):
a) 1 April – 30 September is one contribution period. The second contribution period is
1 October – 31 March. Thus, there are 2 contribution periods in one year
b) The corresponding benefit period for April-September is the 1 January of that year to
30 June of the year. The corresponding benefit period for October-March is 1 July to
31 December.
c) Eg: Contribution period is 1 April 2020 to 30 September 2020, the corresponding
benefit period is 1 January 2021 to 30 June 2021. The next contribution period is 1
October 2020 to 31 March 2020. The corresponding benefit period is 1 July 2021 to
31 December 2021.
d) The contribution period is important for making a claim and for a newly joined
employee. The newly joined employee does not get benefits immediately. He gets it
only in the corresponding benefit period.
11/11/2020
1. Contribution Period:
17/11/2020
Sem End Paper: Blooms Taxonomy Level 3, application-based questions, quotations from
judgments, find odd man out, based on hypothetical situations relying on some
concept/decision of court, read out all important cases discussed in class, no wage code but
there may be a comparative analysis-based question.
18/11/2020
Important Topics:
1. The weaker sections of the society became weaker and the stronger sections became
stronger with the lack of government intervention. With the increasing factories, the
number of workers increased and their problems increased. Their working conditions
were deplorable.
2. The hygiene and safety conditions in the factories were not standard. There was no
special provision for women and children working hours.
3. The inspector in chief of the Bombay, Major Moore, cotton department drew the attention
of the govt. to all this. It was his major contribution which led to the passing of factories
Act 1881. The act prohibited only children below 7 years to work more than 9 hours a
day. Beyond that, every person could work for 9 hours a day with only 4 holidays a
month.
4. The factories act 1881 is the mother of all labour legislations in India.
5. The govt of India appointed a factories commission which later brought the 1891
factories act. This included a compulsory rest of half an hour, a weekly holiday, children
below 9 years prohibited, 9-14 years got 7 working hours, for women it was 11 working
hours, and a woman should not work beyond 8 PM.
6. Then, after a number of amendments, the factories act of 1948 was brought with chapter 6
dealing with certain important aspects.
Factories Act
1. Chapter 3 (sec. 11 to sec. 20) deals with health of workman.
2. Chapter 4 (Sec. 21-Sec. 41) deals with safety
3. Chapter. 4A hazardous process s. 41A-41H
4. Chapter 5 (sec 42 to sec 50) deals with welfare
5. Chapter. 3, 4, 5 were in original act
6. Sec. 51-66 in Chapter 6 working hours of adults
7. Chapter 4A and Chapter 6 – Chapter 11 were new insertions
8. Chapter 7 (sec. 67 sec 77) deals with employment of young persons
9. Chapter 8 sec 78 – sec 84 annual leave with wages
10. Chapter 9 sec 85-sec 91A special provisions
11. Chapter 10 sec. 92 – sec. 106A penalties and procedures
12. Chapter 11 sec 107 – sec 120 supplementary provisions
FACTORIES ACT
General duties of Employer:
1. The factory has to be registered by owner, occupier, employer. The liability lies on
them. The duty is to send a notice to Chief Inspector of Factories atleast 15 days in
advance with all info necessary regarding a particular factory. This must consist of
various provisions regarding health, safety and welfare of workers they have framed
for their factory. Once approved, these must be pasted in a conspicuous place in the
local language also in the factory.
2. These provisions framed by them must be reasonable and practically applicable. He is
also required to maintain the plant and machinery to an extent that there is zero risk to
workers.
3. If necessary, he must give the workers necessary instructions, training, information
and there must be complete supervision to ensure safety of the workers. He must
maintain a healthy atmosphere where there is no risk to health of workers on a day-to-
day basis.
4. The employer also has a duty to state the various substances used in production, any
health hazards involved in such substances, nature of risk, the necessary precautions
to be taken by a workman.
1. The FR and DPSP make a reference to factories act. All workers are citizens of india
and thus it is indirectly applicable. Art. 14 gives equality, Art. 19 gives freedom of
expression, Art 23 prohibits trafficking humans for forced labour, Art 24 prohibits
employment of children in factories, Art. 32 writs, Art. 38-39 social principles
followed by State, Art. 39A equal justice and free legal aid, Art. 42 just and humane
conditions of work and maternity relief, Art. 43 living wages, Art. 43A participation
of workers in management of industries.
ILO Conventions:
1. ILO convention no. 29 dealing with forced labour, Convention no. 105 relating to
abolition of forced labour, Convention No. 3 and No. 103 deals with maternity
protection, Convention no. 183 is concerning maternity benefits, convention no. 110,
no. 4, no. 89 and no. 45 deals with conditions of work and light work of woman
employed in industry.
FACTORIES ACT
2. Convention no. 5, no. 10, no. 33, no. 59, no. 60, no. 138 deals with minimum age for
admission to employment.
3. Convention no. 6, no. 14, no. 79, no. 90 concerns night work by children and young
persons.
4. Convention no. 146 deals with minimum age, national policy, hazardous employment,
conditions of work and enforcement.
5. Convention no. 182 concerns the worst form of child labour.
6. ILO Conventions have been implemented Chapter 6 onwards
After all the amendments in factories act, right now in India, all of these conventions and
their principles have been adopted in India.
Chapter 3- Health:
1. Cleanliness-
a) Every factory shall be kept clean and free from effluvia etc. from:
(1) Accumulation of dirt etc.
(2) Floor of washrooms shall be cleaned atleast weekly
(3) Wet floors must be drained effectively.
(4) All walls etc. be painted properly
(5) All doors and window frames etc. shall be painted or varnished
(6) The dates shall be written in register
b) If for any factory, these provisions cannot be complied with, the State govt may be
notification in Gazette exempt the factory or suggest alternative method.
2. Disposal of waste and effluents
3. Ventilation and temperature
4. Dust and fume
5. Artificial humidification- required to be maintained as per prescribed guidelines for
regulating the temperature inside the premises.
6. Overcrowding
7. Lighting
8. Drinking water
9. Latrines and Urinals
10. Spittoons
Chapter 4- Safety:
FACTORIES ACT
1. Fencing of machinery
2. Work on or near machinery in motion
3. Employment of young persons on dangerous machines
4. Striking gear and devices for cutting powers
5. Self-Acting Machines
6. Casing of new machinery
7. Provision of employment of women near cotton openers
8. Hoist and lifts
9. Lifting machines, chains, ropes and lifting tackles
10. Revolving machinery
11. Pressure plant
12. Floors, stains and means of access
13. Pits, sumps openings in floor etc.
Chapter 5- Welfare
1. Washing facilities for male and female workers
2. Facilities for storing and drying of clothes
3. Facilities for sitting, so that they don’t continuously stand and work
4. First aid appliances
5. Canteens
6. Shelters, rest rooms and lunch rooms
7. Creches, if there are more than 30 women employed. They are allowed to bring their
infants or children under 6 yrs of age. State govt. shall give notification of services and
facilities in these rooms. Facility for the mother to feed the child every few hours.
8. Welfare officer appointed for every 500 workers or more and state govt prescribed his
duties and frame rules.
Chapter 6- Working hours of adults
1. No adult shall be working more than 48 hours a week.
2. No adult shall be allowed to work on first day of the week (Sunday) and if not, then he
must be given holiday in the next 3 days. It shall be a paid holiday.
3. If the employer wants to shift the paid holiday, there must be sufficient notice given of
such intention to workers and Inspector of factories. Objections and grievances must be
heard. Only then, this change can be made the rule. Once changed, it must continue for 6
months before changing again, and this notice of change must be fixed at a conspicuous
place.
FACTORIES ACT
4. In any case, there can be more than 10 continuous working days for any worker without a
paid holiday in between.
5. The employer must also calculate how many hours of work he does. If the worker is
doing overtime, he shall be paid overtime wages. If he is working on a weekly holiday, he
must be given another paid holiday in the same month. He cannot work more than 10
continuous day. Public holidays must be given.
6. No person shall be allowed to work more than 9 hours a day. Shift system must be
approved by the Inspector, a shift cannot be more than 8 hours. In a stretch, they must not
work more than 5 hours. There must be rest after 5 hours of work in a stretch.
7. If the employer wants exemption from 5 maximum working hours without rest, there
must be special permission from Inspector of factories.
8. Including the rest, the working hours must not exceed 10.5 hours a day. However, usually
it is 8-9 hours a day.
9. If the person is working beyond midnight, the next 24 hours shall be a holiday for him.
There should not be overlapping of shifts by any means. There must be another set of
relay workers ready to take up the next shift. The State Govt and chief inspector of
factories can ask for reasons for overlapping of shifts. If they request for exemption from
overlapping of shifts, they must request permission from state govt. with reasons.
10. If a worker is working more than 9 hours a day or 48 hours a wage, he will be given
overtime wages at twice rate of wages (basic pay + allowances).
11. If the employer is selling essential commodities at concessional rate to the worker. These
concessions shall NOT be treated as bonus.
12. Overtime wages shall NOT be treated as bonus.
READ KHAN AND KHAN
FACTORIES ACT