Labour Law-II Study Material

LABOUR LAW - II
4 t h SEMESTER
Harinath J, Radhakrishna ANV and Aravinda Reddy 1

LABOUR LAW-II STUDY MATERIAL
Sl IMPORTANT SHORT QUESTIONS RE
No P
1 DEFINITION OF WAGES 3
2 DISCUSS THE SET ON AND SET OFF OF ALLOCABLE SURPLUS IN THE PAYMENT OF 4
BONUS ACT, 1965
3 LABOUR WELFARE 4
4 SOCIAL SECURITY LEGISLATION 5
5 DISABLEMENT (PARTIAL AND TOTAL) 4
6 EXPLAIN SALIENT FEATURES OF THE MATERNITY BENEFIT ACT, 1961 6
IMPORTANT LONG QUESTIONS
7 DISCUSS THE CONCEPT OF WAGES AND WHAT ARE THE CONSTITUTIONAL GOALS WITH 7
REGARD TO WAGES? (LIVING & FAIR WAGES)
8 DEFINE WAGES AND WHAT ARE THE AUTHORIZED DEDUCTIONS UNDER THE PAYMENT 3
OF WAGES ACT, 1936
9 VARIOUS BENEFITS AVAILABLE UNDER THE ESI ACT, 1948 AND UNDER WHAT 4
CONDITIONS
10 EMPLOYER'S LIABILITY TO PAY THE COMPENSATION FOR THE INJURIES CAUSED IN THE 4
COURSE OF EMPLOYMENT
11 DEFINE GRATUITY. SALIENT FEATURES OF PAYMENT OF GRATUITY ACT, 1972 5
12 SALIENT FEATURES OF THE CHILD LABOUR (PROHIBITION AND REGULATION) ACT, 1986 3
IMPORTANT CASES
13 DEDUCTIONS FOR DAMAGES OR LOSS [SEC 7(2)(c) OF THE PAYMENT OF WAGES ACT, 2
1936]
14 ANY CONTRACT FOR LESS THAN MINIMUM WAGE IS NULL AND VOID - SEC 25 OF THE 4
MINIMUM WAGES ACT, 1936
15 EMPLOYEE MET WITH AN ACCIDENT WHILE GOING TO OR RETURNING FROM DUTY 4
DOCTRINE OF NOTIONAL EXTENSION - SUPERINTENDING ENGINEER, T.N.S.E.B. v.
SANKUPATHY
16 A CONTRACT (OR CASUAL) WORKER DIES WHILE DOING THE WORK 2
17 DISMISSAL DURING ABSENCE OF PREGNANCY - SEC 12 OF THE MATERNITY BENEFIT 3
ACT, 1961
18 PROHIBITION OF CHILD LABOUR - SEC 3 OF THE Child and Adolescent Labour 4
(Prohibition and Regulation) Act, 1986
19 NO WOMAN IS ALLOWED TO WORK BETWEEN 7 PM AND 6 AM - SECTION 66(b) OF 4
THE FACTORIES ACT, 1948
20 WAGES IN-KIND - SECTION 11 OF THE MINIMUM WAGES ACT, 1948 2
21 AN EMPLOYEE WHO SERVED IN AN ESTABLISHMENT FOR LESS THAN 5 YEARS CLAIMED 2
GRATUITY

LL.B. IV SEMESTER
PAPER-I: LABOUR LAW-II SYLLABUS

Unit-I: The Remunerative Aspects – Wages – Concepts of wages - Minimum, Fair, Living
Wages - Wage and Industrial Policies - Whitley Commission Recommendations - Provisions
of Payment of Wages Act 1936 – Timely payment of wages - Authorized deductions –
Claims - Minimum Wages Act 1948 - Definitions - Types of wages - Minimum rates of
wages - Procedure for fixing and revising Minimum Wages – Claims -Remedy.
Unit-II: Bonus – concept - Right to claim Bonus – Full Bench formula - Bonus Commission
- Payment of Bonus Act 1965 - Application – Computation of gross profit, available,
allocable surplus - Eligibility of Bonus - Disqualification of Bonus - set on – set-off of
allocable surplus- Minimum and Maximum Bonus-Recovery of Bonus.
Unit-III: Employees Security and Welfare aspect - Social Security - Concept and meaning -
Social Insurance - Social Assistance Schemes. Social Security Legislations - Law relating to
workmen’s compensation – The Employee’s Compensation Act 1923 – Definitions -
Employer’s liability for compensation - Nexus between injury and employment - payment
of compensation - penalty for default - Employees State Insurance Act 1948 –Application -
Benefits under the Act - Adjudication of disputes and claims – ESI Corporation.
Unit-IV: Employees Provident Fund and Miscellaneous Provisions Act 1952 –

Contributions -Schemes under the Act - Benefits. The Maternity Benefit Act 1961 –
Definitions - Application - Benefits. The Payment of Gratuity Act 1972 – Definitions –
application - Payment of gratuity - eligibility – forfeiture – Nomination – Controlling
authorities.
Unit-V: The Factories Act 1948 - Chapters dealing with Health, Safety and Welfare of
Labour. Child Labour - Rights of child and the Indian Constitution - Salient features of the
Child Labour (Prohibition and Regulation) Act 1986 – The Equal Remuneration Act, 1976.
Suggested Readings: 1. S.N.Misra, Labour and Industrial Laws, Central law publication
2. V.G. Goswami, Labour and Industrial Laws, Central Law Agency. 3. Khan & Kahan,
Labour Law-Asia Law house, Hyderabad 4. K.D. Srivastava, Payment of Bonus Act, Eastern
Book Company 5. K.D. Srivastava, Payment of Wages Act 6. K.D. Srivastava, Industrial
Employment (Standing Orders) Act 1947 7. S.C.Srivastava, Treatise on Social Security 8.
Sukumar Singh, Labour Economics, Deep& Deep, New Delhi 9. V.J.Rao, Factories Law

SHORT ANSWERS
1. Definition of Wages.
Answer: Definition:
 In economics, the price paid to labour for its contribution to the process of production is
called wages.
 “A wage may be defined as the sum of money paid under contract by an employer to the
worker for services rendered.” -Benham
 “Wages is the payment to labour for its assistance to production.” -A.H. Hansen
 ‘Wage rate is the price paid for the use of labour.” -Mc Connell.
 Cambridge dictionary ‘the money earned by an employee, esp. when paid for the hours
worked’.
Definition of Wages as per Section 2(h) of the Minimum Wages Act, 1948,
"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) any contribution paid by the employer to any Pension Fund or Provident Fund or under any
scheme of social insurance;
(iii) any travelling allowance or the value of any travelling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on him by the
nature of his employment; or
(v) any gratuity payable on discharge.
Definition of Wages as per Section 2 (vi) of the Payment of Wages Act, 1936,
“wages” means all remuneration, whether by way of salary, allowances, or otherwise, expressed
in terms of money or capable of being so expressed which would, if the terms 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—
(a) Any remuneration payable under any award or settlement between the parties or order of a
Court;
(b) Any remuneration to which the person employed is entitled in respect of overtime work or
holidays or any leave period;
(c) Any additional remuneration payable under the terms of employment (whether called a bonus
or by any other name);
(d) 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 deductions, but does not provide for the time within which the payment is to be made;
(e) Any sum to which the person employed is entitled under any scheme framed under any law for
the time being in force,
But does not include—
(1) any bonus (whether under a 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;

(2) 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 2 [appropriate Government];
(3) Any contribution paid by the employer to any pension or provident fund, and the interest
which may have accrued thereon;
(4) Any travelling allowance or the value of any travelling concession;
(5) Any sum paid to the employed person to defray special expenses entailed on him by the nature
of his employment; or
(6) Any gratuity payable on the termination of employment in cases other than those specified in
sub-clause (d).
Wages include:
• Salary,
• Allowances,
• Award or settlement,
• Any sum for termination,
• Over time,
• Leave wage.
Wages do not include:

• Bonus,
• Travelling allowance,
• Provident fund,
• Contribution,
• Gratuity,
• Value for house accommodation, or supply of light,
• Water and medical attendance of any service.
2. DISCUSS THE SET ON AND SET OFF OF ALLOCABLE SURPLUS IN THE PAYMENT OF BONUS ACT,
1965.
Answer: Bonus is a cash payment made to employees in addition to wages. It is not an ex-gratia
payment. Bonus differs from wages in that it does not rest on contract, but still payments for the
bonus are made because legally due, but which parties do not contemplate indefinitely.
As per Section 4 of the Payment of Bonus Act, 1965 “allocable surplus” means-
(a) in relation to an employer, being a company other than a banking company which has not
made the arrangements prescribed under the Income-tax Act for the declaration and payment
within India of the dividends payable out of its profits in accordance with the provisions of section
194 of that Act, sixty-seven per cent of the available surplus in an accounting; year;
(b) in any other case, sixty per cent of such available surplus.
Section10, Payment of minimum bonus. —Subject to the other provisions of this Act,
every employer shall be bound to pay to every employee in respect of the accounting year
commencing on any day in the year 1979 and in respect of every subsequent 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 or one hundred rupees, whichever is higher, whether or not the employer has
any allocable surplus in the accounting year: Provided that where an employee has not completed
fifteen years of age at the beginning of the accounting year, the provisions of this section shall
have effecting relation to such employee as if for the words “one hundred rupees”, the words
“sixty rupees” were substituted.

Section 11, Payment of maximum bonus. —(1) Where in respect of any accounting year
referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to
the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to
pay to every employee in respect of that accounting; year bonus which shall be an amount in
proportion to the salary or wage earned by the employee during the accounting year subject to a
maximum of twenty per cent, of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off
under the provisions of section 15 shall be taken into account in accordance with the provisions of
that section.
Section 15, Set on and set off of allocable surplus. — (1) 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 employed in the establishment in that 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 utilized for the purpose of payment of bonus in the manner
illustrated in the Fourth Schedule.
(2) Where for any accounting year, there is no available surplus or the 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 of sufficient amount carried forward and
set on under sub-section (1) which could be utilized for the purpose of payment of the minimum
bonus, then, 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.
(3) 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
this Act.
(4) Where in any accounting year any amount has been carried forward and set on or set off under
this section, then, in calculating 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.
3. LABOUR WELFARE.
Answer: Labour Welfare – Meaning
Labour welfare relates to taking care of the well-being of workers by employers, trade unions,
governmental and non-governmental institutions and agencies. Welfare includes anything that is
done for the comfort and improvement of employees and is provided over and above the wages.
Welfare helps in keeping the morale and motivation of the employees high to retain the
employees for a longer duration. The welfare measures need not be in monetary terms only but in
any kind/forms. Employee welfare includes monitoring of working conditions, creation of
industrial harmony through infrastructure for health, industrial relations and insurance against
disease, accident and unemployment for the workers and their families.
According to International Labour Organization, labour welfare can be defined as a term, which is
understood to include such services, facilities, and amenities as may be established in or in the
vicinity of undertakings to enable the persons employed in them to perform their work in healthy,
congenial surroundings and to provide them with amenities conducive to good health and high
morale.

Oxford dictionary- “Labour welfare is efforts to make life worth living for workmen.” The need for
providing such services and facilities arise from the social responsibility of industries, a desire for
upholding democratic values and a concern for employees. Welfare includes anything that is done
for the comfort and improvement of employees and is provided over and above the wages.
Labour welfare entails all those activities of the employer, which are directed towards providing
the employees with certain facilities and services in addition to wages or salaries. Labour welfare
implies providing better work conditions, for example, proper lighting, cleanliness, low noise, etc.
and amenities viz. recreation, housing, education, sports, gym etc. Arthur James Todd- “Labour
welfare means anything is done for the comfort and improvement, intellectual and social, of the
employees over and above the wages paid which is not a necessity of the Industry.”
Scope of the Labour Welfare:
Welfare service are divided into two groups – (a) Welfare services within the premises of the
factory (intramural) such as – drinking and washing facilities, bathing, crèche, canteen, restroom,
shelter, gym, prevention of fatigue and safety devices and
(b) Welfare amenities outside the establishment (extra-mural) include social security measures
like social insurance, social assistance, recreation, sports, workers’ education, etc.
It also includes cooperative credit societies, transportation, and housekeeping. Scope of labour
welfare takes care of workers’ life from cradle to grave as employees’ state insurance scheme
provides medicine to a worker child and provides funeral benefit to a worker after his last minutes
in this world. Scope of labour welfare includes statutory and non-statutory welfare amenities
which are also increasing day-by-day and in most of the workers’ welfare is by and large
acceptable to society.
On the whole labour, welfare aims at minimizing stress and strains of industrial workers. It
observes that workers get a clean and neat environment of work. They should get safe working
conditions with minimum hazards of work life. They should be able to live a life with dignity,
status and self-respect Scope differs from industry-to-industry and country-to-country.
As per 1981 census, women workers constitute about 19 per cent of the total workforce (i.e., 45
million out of 222 million). Out of 45 million, a small fraction of about 2 million women workers
were employed in the organized sector. They were not covered by any protective labour
legislation.
Majority of women are employed in the cotton textile, bide making, garment industries, rice
mills, tobacco cutting, Cashewnut, matches, construction work, plantations, and household and
small-scale industries. On account of scientific and technological development of the country,
there is an increase in the employment of women in electronics industries.
4. SOCIAL SECURITY LEGISLATION.

Answer:
What is Social Security?
 any of the measures established by legislation to maintain individual or family income or
to provide income when some or all sources of income are disrupted or terminated or
when exceptionally heavy expenditures have to be incurred (e.g., in bringing up children
or paying for health care)

 social security may provide cash benefits to persons faced with sickness and disability,
unemployment, crop failure, loss of the marital partner, maternity, responsibility for the
care of young children, or retirement from work
 Social security benefits may be provided in cash or kind for medical need, rehabilitation,
domestic help during an illness at home, legal aid, or funeral expenses
 It acts as a facilitator – it helps people to plan their own future through insurance and
assistance.
History of Social security
 Germany was the first country to introduce Social security scheme (1883)
 each member of a particular trade (blacksmiths, painters, weavers etc.) was required to
contribute at regular intervals;
 Money from this fund was used for food, lodging, hospital and funeral expenses of aged
and disabled members.
 In the USA, the Social Security Act came into existence in 1935.
Social Security in India
 India has always had a Joint Family system that took care of the social security needs.
 However, with rising of migration, urbanization, nuclear families and demographic
changes, Joint family system has declined. Hence we need a formal system of social
security.
SOCIAL SECURITY LAWS in India
1. Employees’ State Insurance Act, 1948 (ESI Act)

 covers factories and establishments with 10 or more employees
 Provides medical care to employees and their families.
 Provides cash benefits during sickness and maternity
 Monthly pension after death or permanent disability.
2. Employees’ Provident Fund Act, 1952
 Applies to specific scheduled factories and establishments employing 20 or more
employees and ensures terminal benefits to provident fund, superannuation pension, and
family pension in case of death during service.
3. Workmen’s Compensation Act, 1923 (WC Act)
 Requires payment of compensation to the workman or his family in cases of employment-
related injuries and occupational diseases resulting in death or disability.
4. Maternity Benefit Act, 1961 (M.B. Act)
 Provides for 12 weeks of wages, which is split up into two periods viz., pre-natal and post-
natal, during maternity as well as a paid leave in certain other related contingencies.
5. Payment of Gratuity Act, 1972 (P.G. Act)
 Provides 15 days wages for each year of service to employees who have worked for five
years or more in establishments having a minimum of 10 workers.

5. DISABLEMENT (PARTIAL AND TOTAL).
Answer: Partial Disablement – Section 2(1)(g) of the Employees Compensation Act, 1923, defines
partial disablement is of two kinds –
1. Temporary partial disablement.
2. Permanent partial disablement.
The test of such disablement is the reduction in the earning capacity of the employee. If the
earning capacity of an employee is reduced in relation to the employment he had been at the time
of the accident resulting in such disablement, it is temporary partial disablement. If the injury
caused by an accident results in the reduction of the earning capacity in respect of employment
which the employee was capable of undertaking at the time of the accident it is permanent partial
disablement.
Loss of earning capacity or the extent of it is a question of fact. It has to be determined by
taking into account the diminution or destruction of physical capacity as disclosed by the medical
evidence and then it is to be seen to what extent such diminution or destruction would reasonably
be taken to have disabled the affected employee from performing the duties which an employee
of his class ordinarily performs.
In Sukhai vs. Hukum Chand Jute Mills Ltd., Sukhai was employed as a cop winder in the jute mill
of the respondent. On 16.12.1951 while he was at work his left eye was injured by some flying
Chinese clays balls. He was given first aid by the Chief Medical Officer and then sent to the
Chinsurah Hospital where his eyeball was removed. He resumed his duty on 5.2.1952. He had
been in the employment of the respondent company and was earning his usual wages and could
do his usual work. On 4.6.1952, he made an application for compensation for injury to his eye. He
described the injury as loss of vision of the left eye because eyeball was removed. It was held that
the Court could make a “suspensory award.” A suspensory award could be made when the
present earning capacity of an employee was not affected but was likely to affect the capacity in
future.
Total Disablement : “Total disablement” is defined in Section 2(1)(1) of the Act. When an
employee is incapacitated of doing any work which he was capable of performing at the time of
accident resulting in such disablement, it is total disablement. Incapacity for all work is different
from the incapacity for the work which an employee was doing at the time of accident. It is
further provided in the Act that permanent total disablement shall be deemed to result from
every injury specified in Part I of Schedule I. It may also result from any combination of injuries in
Part II of Schedule I, where the aggregate percentage of the loss of earning capacity, as specified
against those injuries amounts to one hundred per cent or more.
SCHEDULE I
[See sections 2(1) and (4)]
PART I
LIST OF INJURIES DEEMED TO RESULT IN PERMANENT TOTAL

DISABLEMENT
Serial Description of Injury Percentage of

No. loss of earning
capacity
1. Loss of both hands or amputation at 100

higher sites.
2. Loss of a hand and a foot. 100
3. Double amputation through leg or 100

thigh, or amputation through leg or
thigh on one side and loss of other
foot
4. Loss of sight to such an extent as to 100

render the claimant unable to
perform any work for which eyesight
is essential
5. Very severe facial disfigurement..... 100
6. Absolute deafness...... 100

In Pratap Narain Singh Deo vs. Srinivasa, a carpenter suffered an injury in the course of his
employment which resulted in the amputation of the left hand above elbow. Since a carpenter
cannot work with one hand, disablement was held to be total and not partial.
LONG ANSWERS
6. EXPLAIN SALIENT FEATURES OF THE MATERNITY BENEFIT ACT, 1961.

Answer:
What is the Maternity Leave?
Maternity leave in India” is a paid leave of absence from work that allows women employees the
benefit of taking care of their newly born, and at the same time retain their jobs.
India is a developing country, and our first Maternity leave Act was established back in 1961
called, The Maternity leave Benefit Act 1961. This Act ensured women employees get a paid leave
of 12 weeks post-delivery for taking care of the new-born. This Act applied to establishments with
ten plus employees. The Act applies to women employees on a contract, permanent basis, or
engaged with agencies.
The current employment scenario has changed, and we have a significant chunk of female
employees taking jobs. The maternity act was subject to change due to social & economic changes.
In 2017, The Maternity leave Act was revised as The Maternity Benefit (Amendment) Bill 2017.
The Act extends to the whole of India to all mines, plantations, shops, establishments and
factories either in organized or unorganized sector in which 10 or more persons employed on any
day of the preceding twelve months. Any woman who has worked in the establishment for more
than 80 days is entitled to the maternity benefit.
1. Who can avail? All women who are employed in any capacity directly or through any agency
i.e. either on contractual or as consultant.

2. Eligibility: For a woman employee to be eligible under this Act, she should have completed
working for 80 days in the current establishment in the last 12 months.
3. Duration of maternity leave - The Maternity (Amendment) Bill 2017 has extended the earlier 12
weeks’ leave to 26 weeks. The pregnant employee can bifurcate the leave as post and pre-
delivery. 8 weeks of leave can opt before the delivery and remaining post-childbirth. For women
expecting the third child, the maternity leave allotted is 12 weeks.
4. Maternity benefit before expected delivery- This maternity benefit should not be availed before
weeks from the date of the expected delivery
5. Critical illness post-maternity: Pregnancy is a complicated process and could be life-threatening
too. The Maternity leave Amendment Bill 2017 allows a benefit of one month for women who are
suffering from critical circumstances like – Pre-mature delivery, miscarriage & medical termination
of pregnancy.
6. Maternity benefit for a woman having two or more children- If a woman has two or more
children, the maternity benefit will continue to be 12 weeks, which cannot be availed before 6
weeks from the date of the expected delivery.
7. Maternity benefit to adopting mother and commissioning mother- A woman who legally adopts
a child below the age of three months or a commissioning mother (the woman who has donated
her egg to another woman) shall be entitled to maternity benefit for a period of 12 weeks from
the date the child is handed over to the adopting mother or the commissioning mother.
8. Right to Payment of maternity benefit- Every woman shall be entitled to, and her employer
shall be liable for, the payment of maternity benefit at the rate of the average daily wage for the
period of her actual absence, that is to say, the period immediately preceding the day of her
delivery, the actual day of her delivery and any period immediately following that day.
9. Provision for Crèche facility- Every establishment with 50 or more employees to provide crèche
facilities within a prescribed distance. The woman will be allowed four visits to the crèche in a day.
This will include the interval of rest allowed to her.
10. Option to Work from Home- An employer may permit a woman to work from home. This
would apply if the nature of work assigned to the woman permits her to work from home. This
option can be availed of, after the period of maternity leave, for a duration that is mutually
decided by the employer and the woman.
11. Informing women employees of the right to maternity leave- Every establishment t should
intimate a woman at the time of her appointment of the maternity benefits available to her. Such
communication must be in writing and electronically.
12. Penalty for Contravention of the Act by the employer- If any employer fails to pay any amount
of maternity benefit to a woman entitled under this Act or discharges or dismisses such woman
during or on account of her absence from work or her pregnancy, shall be punishable with
imprisonment which is not less than 3 months but which may extend to one year and with a fine
of not less than Rs. 2000/- which may exceed to Rs. 6000/-.
Norms under the Maternity Leave:
The Act states, the employer should not give a pregnant employee difficult tasks, including long-
standing working hours, ten weeks before the delivery, such that it might affect both Mother and
child.
The employer should ensure the health and safety of the female employer and mandates that she
should not be involved in any work six weeks following the delivery as well as miscarriage.
The law also states that the employer cannot dismiss or discharge a female employer during the
maternity leave period.
In an establishment of 50 plus employees, a Crèche facility is to be provided by the employer.
When the female employee comes back to work after maternity leave, she can avail of the crèche

facilities. The Act also permits the female employee to visit the crèche four times during the
regular working hours, including her regular rest intervals.
If an employer does not adhere to the Maternity Act, there are severe repercussions. The penalty
to an employer for non-acceptance of the Act is a fine of Rs. 5000/- or imprisonment which can
extend to a year or with both.
7. DISCUSS THE CONCEPT OF WAGES AND WHAT ARE THE CONSTITUTIONAL GOALS WITH
REGARD TO WAGES? (LIVING & FAIR WAGES).
Answer:
Introduction -
Wage is the remuneration to labour for the work done for the service rendered by it to the
employer. There are different theories on the concept of wages as enunciated by economists and
sociologists, which explain various aspects of wage problems. However, these theories are not
applicable in all circumstances.
Meaning and Definition of Wage
According to Section 2(h) of the Minimum wages Act, 1948 the term "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) any contribution paid by the employer to any person fund or provident fund or under any
scheme of social insurance;
(iii) any travelling allowance or the value of any travelling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on him by the
nature of his employment; or
(v) any gratuity payable on discharge;
Concepts of Wages
Broadly speaking, wages can be classified into the following categories:
1. Living Wage
2. Fair Wage
3. Minimum Wage
1. Living Wage -
The concept of "Living wage" is the wage rate which prevails in most of the economically
advanced countries. The term Living Wage has not been defined under the Minimum wages Act,
1948. South Australian Act of 1912 defines it as 'Living Wage means a sum sufficient for the normal
and reasonable needs of the average employee living in a locality, where the work under
consideration is done or is to be done.

Justice Higgins of the Australian Commonwealth Court of Conciliation defined the living wage
as one appropriate for the normal needs of the average employee, regarded as a human being
living in a civilized society. The living wage must provide not merely for absolute essentials such
as food, shelter, and clothing but for the condition of frugal comfort, estimated by current human
standard.
Living wages are wages without which working people cannot live and perform their duties as
a citizen. It varies from country to country depending upon the price level of necessaries of life,
and it is determined by the socio-economic conditions of a particular country.
The living wage should enable the wage earner to provide for himself and his family not
merely the bare essentials of food, clothing and shelter but the measure of frugal comfort
including education for the children protection against ill health, requirements for essential social
needs and a measure of insurance against the more important misfortune including old age.
In India, there is no statutory definition for the term 'living wage'. According to Article 43
(DPSP) of the Indian Constitution, the State shall endeavour to secure to all workers living wages,
conditions of ensuring a decent standard of life and full enjoyment of leisure and social and
cultural opportunities.
2. Fair Wage -
A fair wage is a mean between the living wage and the minimum wage. A fair wage is related
to fair work-load and the earning capacity. It can say that it is more than minimum wage but less
than the living wage. It may roughly be said to approximate to the need-based minimum, in the
sense of the wage which is adequate to cover the normal needs of the average employee regarded
as a human being in a civilized society. A fair wage is fixed, taking into consideration, the present
economic position and further prospects of the Industry.
Between these two limits (Living Wage and the Minimum Wage) fair wage would depend upon
a consideration of certain factors namely -
A. The productivity of Labour.

B. The prevailing rates of wages in the same industry for similar occupations in the same or
similar occupations in the same or neighbouring localities;
C. The level of national income and its distribution; and
D. The place of the industry in the economy of the country.
The Concept of fair wages, therefore, involves a rate sufficiently high to enable the worker to
provide a standard family with food, shelter, clothing, medical care and education for children
appropriate to his status in life but not at a rate exceeding the wage-earning capacity of the class
of establishment concerned. As time passed and prices raise even the fair wage fixed for the time
being tends to sag downwards and then revision becomes necessary.
3. Minimum Wage -
The term 'Minimum Wage' has not been defined in the said Act ( Minimum Wages Act,
1948) The minimum wage is the lowest wage in the scale below which the efficiency of a worker is
likely to be inspired. The minimum wage includes not only the bare physical necessities but also a
modicum of comfort otherwise known as conventional necessities. The Minimum wages must,
therefore, provide not merely for the bare subsistence of life but also the preservation of the
efficiency of the worker. For this purpose, the minimum wage must also provide for the same
measure of education, medical requirements, and amenities. Therefore any employer who is

unable to pay this minimum wage to workers has no right to exist. Where a person provides
labour or service to another for remuneration which is less than the minimum wages, such labour
is 'forced labour within the meaning of Article 23 of the Indian Constitution and thereby entitles
the person to invoke Article 32 or Article 226 of the Constitution of India.
The Concept of fair wages was to be dynamic. There is no reason to assume that fair wages fixed
years ago should continue to be fair wages for all time, and any fixation of minimum wages,
should be taken not as minimum wages but as fair wages because it is above the fair wages once
fixed.
Constituents or Components of Minimum Wage -

According to Section 4 of the said Act, (Minimum Wages Act, 1948) consists of the following:
(1) Any 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;
(ii) a basic rate of wages with or without the cost of living allowance and the cash value of the
concessions in respect of suppliers of essential commodities at concession rates where so
authorized; or
(iii) an all-inclusive rate allowing for the basic rate the cost of living allowance and the cash
value of the concessions if any.
(2) The cost of living allowance and the cash value of the concessions in respect of supplies of
essential commodities at concession rate 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.
8. DEFINE WAGES AND WHAT ARE THE AUTHORIZED DEDUCTIONS UNDER THE PAYMENT OF
WAGES ACT, 1936
Answer:
The Payment of Wages Act 1936 is one of the most important labour welfare legislation which
helps to prevent exploitation of the labours. The Act allows deductions which can be made from
the wages payable to a worker. Section 7(3) of the Act lays down that the total amount of
deduction which may be made under subsection (2) in any wage period from the wages of any
employed person shall not exceed - (1) In case where such deductions are wholly or partly made
for payment to the co-operative societies, 75% of such a wages, and (2) In other cases, 50% of such
wages. But any loss of wages the resulting from the following imposition shall not be deemed to
be deductions, namely -
(i) the withholding of increment or promotion (including stoppage of increment at efficiency bar);
(ii) the reduction to lower post or time scale or a lower stage in scale; or
(iii) suspension,
But these penalties shall not be deemed to be deductions provided by the rules framed by the
employer for the imposition of such penalty are in conformity with the rules framed by the State
Government in this behalf.

Authorized deductions:
The list is exhaustive and no other deduction from wages is permissible. The act allows the
following deductions –
1. Fines Section 8-
Section 7(2)(a) of the said Act authorizes deduction by way of fines. Section 8 lays down the
rules for the imposition of such fines. Section 8 says that "fine shall be imposed on any employed
person in respect of such acts and omissions on his part, as the employer with the previous
approval of the State Government or the prescribed by notice under Section 8(2).
The total amount of fine which may be imposed in any 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 the
wage period.
2. Deductions for absence from duty Section 9 -

Section 7(2)(b) of the Act permits deductions for absence from duty. Authorizes the
employer to make a deduction for absence from duty. Such a deduction can be made only on
account of the absence of an employed person from the place or places, where according to the
terms of employment he is required to work, if he, though present in person refused to carry out
his work in pursuance of a stay in strike or any other cause which is not reasonable in the
circumstances. Similarly, tool down strike without any Just Cause amounts to absence from duty.
3. Deductions for damage to or loss of goods Section 10-

The act also authorizes the employer to affect deductions for damage to or loss of goods.
According to Section 7(2)(c) If any money or goods entrusted to the employee is lost by his
negligence or default, the employer is entitled to deduct such loss.
4. Deductions for services rendered Section 11-

Section 7(2)(d) of the Act authorizes the employer to make deductions for house
accommodation supplied by the government or any housing board set up under any law for the
time being in force (whether the government or the board is the employer or not) or any other
authority engaged in the business of subsidizing house-accommodation which may be specified in
this behalf by the State Government by notification in the Official Gazette.
5. Deductions for amenities services Section 11-

As per Section 7(2)(e), the deductions may also be made for such amenities and services supplied
by the employer as the State Government or the authorized person in this behalf authorities the
employer to provide amenities or services. The word services for the above purpose do not
include the supply of tools and raw material required for the purpose of employment.
6. Deductions for recovery of advances Section 12-

As per Section 7(2)(f) of the Act authorizes the employer to make deductions for the advances
made by him. (Including advances for travelling allowance or conveyance allowance)
7. Deductions for recovery of loans Section 12-A-

Section 7(2)(ff) The employer may make deduction for the recovery of loans together with
interest made from any fund constituted for the welfare of labour in accordance with the rules
approved by the State Government in this regard.

8. Deductions for recovery of loans granted for house-building -
Section 7(2)(fff) the deductions are also permitted to be made for the recovery of loans and
interest granted for house-building or other purposes in accordance with the rules approved by
the State Government.
9. Deductions of income-tax payable by the employed person -

Section 7(2)(g) of the said Act permits an employer to make this deduction subject to the
provisions of the Income Tax Act.
10. Deductions by the order of a court -

Section 7(2)(h) of the Act permits an employer to effect any deduction by the order of a
Court.
11. Deductions for provident fund -

Section 7(2)(i) The employer should deduct provident fund contributions from his
employee's salary and shall also make contributions from his share, which is mandatory.
12. Deductions for payments to co-operative societies Section 13-

Section 7(2)(j) authorizes the deductions for payments to co-operative societies.
13. Deductions with the consent of the employed Person -

As per Section 7(2)(k) of the Act authorizes such deductions may be made with the written
authorization of the person employed for payment of any premium on his life insurance policy to
the Life Insurance Corporation Act of India or the purchase of securities of the Government of
India or of any State Government or for being deposited in any Post Office Saving Bank in
furtherance of any savings scheme of any such government.
14. Deduction for the Welfare Fund -

Section 7 (2) (kk) Deductions made with the written authorization of the employed person
for the payment of his contribution to any fund constituted by the employer or a trade union
registered under the Trade Union act 1926 (16 of 1926) for the welfare of the employed persons or
the members of their families or both and approved by the State Government or any officer
specified by it in this behalf during the continuance of such approval.
15. Trade Union Membership Fees:

Section 7(2) (kkk) Deductions made with the written authorization of the employed person
for payment of the fees payable by him for the membership of any trade union registered under
the Trade Union Act 1926 (16 of 1926).
16. Deductions for Fidelity Guarantee Bonds :

Section 7(2)(l) permits a deduction for payment of insurance premium on Fidelity
Guarantee Bonds.
17. Deductions for recovery of losses sustained by a railway administration -

Section 7(2)(m) permits this deduction on account of acceptance by the employed person of
counterfeit or base coins or mutilated or forged currency notes.
18. Deduction for Prime Minister's National Relief Fund -

The employee by written undertaking may authorize the employer to deduct some
amount from his wages towards the contribution to the Prime Minister's National Relief Fund or
such other Fund as the Central Government may by notification in the Official Gazette specify.
9. VARIOUS BENEFITS AVAILABLE UNDER THE ESI ACT, 1948 AND UNDER WHAT CONDITIONS.
Answer: Many important Social Security Schemes had been introduced in our country before and
after independence. ESI is one of the Social Security Schemes introduced by the Government. The
Employees’ State Insurance Act is legislation which aims at bringing about social and economic
justice to the poor labour class of the land. It aims at the labour welfare.
Benefits under Section 46 of the ESI Act: The purpose of the ESI Act is to provide
benefits as detailed in the Act particularly in Section 46, to the insured persons or their
dependants. The Employees’ State Insurance Act, 1948 is one of the most important laws that
provide social security. It contains six kinds of ESI benefits that injured employees can avail. The
following benefits are provided under Section 46.
1. Sickness benefit Section 49: It is in the form of periodical payment to any insured person,
provided his sickness is certified by a duly appointed medical practitioner, or any person
having such qualifications and experience as may be specified by regulations of the
Corporation. Where provision is made for sick leave by standing order, the employer cannot
require the employee to seek sickness benefit provided under this sub-section.
2. Maternity Benefit (Section 50): This benefit in the form of periodical payment available to an
insured woman. It is payable in case of –
 Confinement, or
 Miscarriage, or
 Sickness arising out of pregnancy, or
 Premature birth of a child.
3. Disablement Benefit (Section 51): Any insured person shall be entitled to periodical
payments if:
 He suffers from disablement,
 The disablement results from an employment injury, and
 He sustained the employment injury as an employee under the condition
mentioned in the Act.
4. Dependants Benefit: This benefit is available to such dependants, of an insured person who
dies as a result of an employment injury sustained as an employee, as are entitled to
compensation under this Act.
5. Medical Benefit (Section 57): Medical benefit is available to an injured person or to a
member of his family, where such benefit is extended to the members of his family. This
benefit is in the following forms:
 Out-patient treatment and attachment in the hospital or dispensary,
 By visits to the home of the insured, or
 As an in-patient in a hospital or other institution.
6. Funeral expenses: Funeral expenses are payable to the eldest surviving member of the
family or to such person who incurs funeral expenses. The amount of such payment shall not
exceed such amounts as may be prescribed by the Central Government.
10. EMPLOYER'S LIABILITY TO PAY COMPENSATION FOR THE INJURIES CAUSED IN THE COURSE OF
EMPLOYMENT.
Answer: Introduction
An employer, in simple terms, is a person or legal entity that controls or directs a servant or
worker under an expressive or implied contract of employment and pays him/her salary or wages

as consideration. Employers include everything from individuals hiring a babysitter to
governments and business which may hire thousands of employees. In most of the western
countries, Governments are the single largest employers, but most of the workforce is employed
in small and medium businesses in the private sectors.
Nature of Liability . — The Employees' Compensation Act, 1923 creates a new type of liability.
It is not strictly a liability arising out of tort but is a sort of liability arising out of the relationship of
the employer and the employee. An employer under this Act is liable to pay compensation at a
rate fixed in the Act itself to any employee incapacitated by an accident arising out of and in the
course of his employment. The main principle governing the compensation is not dependent on
the suffering caused to the employee or expenses incurred by him in his treatment but on the
difference between his wage-earning capacity before and after the accident. The liability for the
payment of compensation is not dependent upon the neglect or wrongful act on the part of the
employer.
The doctrine of added peril .— The principle of added peril means that if an employee while
doing his employer's work, trade or business engages himself in some other work which he is not
ordinarily required to do under the contract of his employment and which act involves extra
danger, he cannot hold his master liable for the risk arising therefrom. The doctrine of added peril,
therefore, comes into play only when the employee is at the time of meeting the accident
performing his duty.
Employer's liability for compensation. — The liability of an employer to pay

compensation is limited and is subject to the provisions of the Employees’ Compensation Act,
1923, under Section 3(1) the liability of the employer to pay compensation is dependent upon the
following four conditions:
(1) The personal injury must have been caused to an employee;
(2) Such injury must have been caused by an accident;
(3) The accident must have arisen out of and in the course of employment; and
(4) The injury must have resulted either in death of the employee or in his total or partial
disablement for a period exceeding three days.
The employer shall not be liable to pay compensation in the following cases :
1. in respect of any injury which does not result in the total or partial disablement of the
employee for a period exceeding three days;
2. The injury is self-inflicted.
3. The injury was caused due to the consumption of alcohol or drugs by the employee during
the time of his work.
4. The wilful disobedience of the employee to an order expressly given, or to a rule expressly
framed, for the purpose of securing the safety of employees.
5. That the employee having known that certain safety-guards or safety devices are
specifically provided for the purpose of securing the safety of the employee, wilfully
disregarded or removed the same
There are notable cases which dealt with the matter of liability of the employer in providing
compensation to his/her employee. One among them is Dhropadabai and Ors v. M/s Technocraft
Toolings, in which the Court stated that the claimant is entitled to compensation as the employee
took his last breath during the time of his employment as well as at the place of his work. Even
though the cause of death has no connection with his employment, the respondent is liable to pay
compensation to the claimant as the death occurred during the employment of the deceased.
The Doctrine of Notional Extension: Ordinarily, a man’s employment does not begin until
he has reached the place where he has to work and does not continue after he has left the place of
his employment. The period of going to or returning from employment are generally excluded and

are not within the course of employment. Travelling to and from is prima facie not in the course
of employment. But there may be a reasonable extension in both the time and place and an
employee may be regarded as in the course of his employment even though he had not reached or
had left his employer’s premises. It has been recognized time and again that the sphere of an
employee’s employment is not necessarily limited to the actual place where he does his work. If
in going to or coming from his work he has to use an access which is part of his employer’s
premises, or which he is entitled to traverse because he is going to or coming from his work, he is
held to be on his master’s business while he is using that access.
Conclusion: It is common that whenever there arises an employer-employee relationship, there

arise certain disputes among them as well. In such situations, the above-stated enactments
provide certain guidelines to both of them so that they can arrive at a conclusion as well as in a
settlement too. While looking into the liability of the employer for providing compensation to the
employee, it will be clear that in one way or the other, the employee has undergone certain
injuries or damages. There are many companies which look after their employees properly with
adequate facilities as well as compensations and rewards whenever necessary. But there are
certainly other areas wherein employees are treated in a much disappointing way. All such
statutes stand for the good running of a business organization as well as for building up healthy
relation among the employer and employee as well. Hence, both of them must be aware of their
rights and responsibilities and not to violate the said statutes for their personal gains.
11. DEFINE GRATUITY. SALIENT FEATURES OF PAYMENT OF GRATUITY ACT, 1972.

Answer:
WHAT IS GRATUITY?
Gratuity is one of the most misunderstood and misconstrued components of a person’s salary. In
simple terms, it is a retirement benefit paid as gratitude to the employees who have rendered
continuous service for at least five years to incentivize them so that they continue working
efficiently. It is an amount paid to an employee based on the duration of his total service but an
employee becomes eligible only after he has completed 5 years of his service. Gratuity is paid to
an employee when he either retires or his employment is terminated or he resigns or upon his
death. Gratuity is given the force of law by the Payment of Gratuity Act 1972, which is further
administered and enforced by the Central Government and the designated establishments under
its control.
Salient features of the Payment of Gratuity Act, 1972
 The Act is a self-contained and an exhaustive Act and the provisions of this Act and rules
made under it have an overriding effect on all other Acts or instruments or contracts so far
as they are inconsistent with this Act.
 The Act is fairly sweeping in coverage, as it applies to all factories, mines, oil fields,
plantations, ports and railways irrespective of the number of workmen employed by them.
It also covers shops and establishments employing 10 or more persons.
 The Act gives a statutory right of gratuity to all the employees, who have rendered five
years’ continuous service and whose services stand terminated after coming into force of
the Act on account of superannuation, or retirement, or resignation, or death or
disablement.
 The Act provides both executive and quasi-judicial machinery for matters pertaining to the
nomination, determination and recovery of gratuity.
 The executive machinery pertains to maintenance of records regarding opening, change or
closure of establishments, display of notices and maintenance of records by the controlling
authority. The quasi-judicial functions have been divided between the employers and the
Controlling Authority in as much as for payment of gratuity, the first forum provided is an

application to the employer. When the employer has declined or avoided payment of
gratuity, then an application is required to be made to the Controlling Authority.
 The machinery provided for recovery rests with the Controlling Authority.
 The orders of the Controlling Authority for payment or determination of gratuity are
applicable before the appropriate government or the appellate authority.
12. SALIENT FEATURES OF THE CHILD LABOUR (PROHIBITION AND REGULATION) ACT, 1986.
Answer:
Child Labour
Children need to grow in an environment that enables them to lead a life of freedom and dignity.
Opportunities in education and training are to be provided for them to grow into worthy citizens.
Unfortunately, a large proportion of children are deprived of their basic rights. They are found
working in various sectors of the economy particularly in the unorganized sector. Some of them
are confined and beaten, reduced to slavery or denied freedom of movement thus making child
labour a human rights issue and a developmental Issue.
Definition of a Child: Article 1 of The United Nations Convention on the Rights of the Child
defines a child as anyone below the age of eighteen years. The Child Labour (Prohibition and
Regulation) Act, 1986 defines a child as, a person who has not completed his fourteenth year of
age."
Meaning of Child Labour: 'Child labour is defined as any work within or outside the family
that involves time, energy and commitment, which affects the ability of a child to participate in
leisure, play and educational activities. Such work impairs the health and development of a child.
According to the International Labour Organization, "child labour includes children pre-maturely
leading adult lives, working long hours for low wages under conditions damaging to their health
and their physical and mental development." They are often separated from their families and
deprived of meaningful education and training opportunities that would offer them a better
future.
All children in the age-group of 6-14 years, who should be in school but are out of school, are
deemed to be actual or potential child labourers. India is much of a rural phenomenon than
urban. 90.87 per cent of the working children were found to be in the rural areas and 9.13 per cent
were in the urban areas.
Adverse Effects of Child Labour on the Health of Children
Children working for long hours often in dangerous and unhealthy conditions and are exposed to
lasting physical and psychological harm. They tend to develop
 Respiratory problems such as asthma, tuberculosis
 General weakness, stunted growth, body ache
 joint pains Poor eyesight and other eye problems such as watering, irritation and
reddening of eyes
 Loss of appetite
 Tumours and burns
 Disability by working on looms
 Susceptibility to arthritis as they grow older
 Mental disabilities
Salient Features of the Child Labour (Prohibition and Regulation) Act, 1986:

 Prohibits/bans the employment of any person who has not completed his fourteenth year
of age in occupations and processes enlisted in Part A and B of the Schedule of the Act.
 Lays down a procedure to decide modifications to the Schedule of banned occupations or
processes
 Regulates conditions of work where children are not prohibited from working.
 Lays down enhanced penalties for the employment of children in violation of the
provisions of the Act and other Acts Section 14 of the Act provides for punishment up to 1
year (minimum being three months) or with fine up to Rs. 20,000/- (minimum being ten
thousand) or with both, to one who employs or permits any child to work in contravention
of provisions in Section 3 Children employed in occupations and processes, not banned by
the Act are regulated by the following provisions:
 A child shall not be required to work for more than six hours a day which shall be inclusive
of his/her one hour break.
 The period of work of a child shall be so arranged that inclusive of his interval for rest,
under sub-section (2), it shall not be spread over more than six hours, including the time
spent in waiting for work on any day.
 No child shall be permitted or required to work between 7 p.m. and 8 a.m.
 No child shall be required or permitted to work over-time.
 Every child shall get a weekly off.
 There is an obligation on the part of the employer to furnish information to the inspector
regarding the employment of children. The employer must maintain a register on this
matter.
Object and scope of the Child Labour (Prohibition and Regulation) Act, 1986:
There are a number of enactments which prohibit the employment of children below 14 years and
15 years of age in certain specified employments. However, there is no procedure laid down in any
law for deciding in which employments, occupations or processes the employment of children
should be banned. There is also no law to regulate the working conditions of children in most of
the employments where they are not prohibited from working and are working under exploitative
conditions. Therefore the Child Labour (Prohibitions and Regulation) Act, 1986 has been enacted
to prohibit the engagement of children in certain employments and to regulate the conditions of
work of children in certain other employments. This Act seeks to achieve the following objects:
(i) To ban the employment of children, i.e., those who have not completed their fourteenth
year, in specified occupations and processes;
(ii) To lay down a procedure to decide modifications to the Schedule of banned occupations
or processes;
(iii) To regulate the conditions of work of children in employments where they are not
prohibited from working;
(iv) To lay down enhanced penalties for the employment of children in violation of provisions
of this Act, and other Acts which forbid the employment of children;
(v) To obtain uniformity in the definition of "child" in the related laws.
In view of sub-section (2) of Section 1, this Act extends to the whole of India. Section 1(3) provides
that the provisions of this Act other than Part 111, shall, into force at once, and Part III 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 States and different classes of
establishments.

CASES
13. DEDUCTIONS FOR DAMAGES OR LOSS [SEC 7(2)(c) OF THE PAYMENT OF WAGES ACT, 1936].
While working on a machine, a worker accidentally drops a valuable testing appliance which is
broken. The employer deducts the value of the appliance from the wages of the worker. Is the
deduction justified? (July-2019 & May-2017).
ISSUE:
Can the employer deduct for an accidental loss of an object, where the employee has not done
negligently? No.
RULE:
As per Section 7(2)(c) of the Payment of Wages Act, 1936, “deduction for damage to or loss of
goods expressly entrusted to the 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.
APPLICATION:
When an employee working with care and still some damage has happened due to accident or any
other reason other than where the employee is negligent and careless the damage or loss cannot
be deductible from the salary of that employee, as per the above Section 7(2)(c) of the Act,
because in this Act there is clear mention of the word neglect and in the given case this is missing.
CONCLUSION:
After analyzing Section 7(2)(c) with the given case, we can conclude that the employee is not
negligent and the damage happened due to accident while working the employee was not careless
in his duties, hence he is not liable for the damages, the deduction is not justified.
14. ANY CONTRACT FOR LESS THAN THE MINIMUM WAGE IS NULL AND VOID - SEC 25 OF THE
MINIMUM WAGES ACT, 1936.
A. A worker agreed to work for less than the statutory minimum wage with his employer.
But, after some time the worker claimed for minimum wages payable to him. Decide
(Aug-2018, May-2015).
B. There is an agreement between the workers and their employer by which the workers
work for, below the minimum wage and they do not claim for statutory minimum wage.
Whether the agreement is valid? (May-2016).
C. A worker while joining the service agreed for not claiming the statutory minimum wages.
Employer offers him far below than the minimum wages specified by the minimum wages
law. Discuss (July-2012).
ISSUE:
 Is an agreement between employee and employer for taking less than minimum wage
valid? No, not valid.
 Can the employee claim minimum wages according to the law, even though an agreement
for less than minimum wages is there? Yes, he can claim.
RULE:
As per Section 25 of the Minimum Wages Act, 1948 “any contract or agreement, whether made
before or after the commencement of this Act, shall be null and void in so far as it purports to

reduce the minimum rates of wages fixed under this Act if by such contract an employee
relinquishes or reduces his –
 Right to a minimum rate of wages; or
 Any privilege or concession accruing to him under this Act.
Section 20 of the Minimum Wages Act, 1948 cuts across the contract between the employer and
the employee for fewer wages than the minimum wages. Any employee who feels aggrieved by
the refusal of the employer to pay the minimum wages fixed under the Act has the right to make a
complaint either by himself or through the prescribed agents to the Authority mentioned in the
Act.
APPLICATION:
Section 25 is a provision of absolute prohibition against contracting out of the benefit and
privileges under the Minimum Wages Act. Even if the employee relinquishes or reduces his right
to minimum rate of wages or any privileges or concessions accruing to him under the Act, it shall
be null and void in so far as it purports to reduce the minimum rates of wages fixed under the Act.
Any agreement reducing the minimum rates of wages is null and void as it violates Section 25.
In Somiben Mathurbai Vasava vs Lalji Hakku Parmar Leather Works, 1983, In this case, there was
an agreement between the Plaintiff (employee) and the defendant (employer) for fixation of piece
rate. But the piece rate was below the minimum wages prescribed by the Act, and the plaintiff
contention was held justified and the Court has awarded the minimum wages as per the Act.
CONCLUSION:
In the given case the agreement for fewer wages is null and void as per Section 25 of the Act, and
the employer has to pay according to the minimum wages fixed by the Government and the
employee is entitled to claim the minimum wages.
15. DOCTRINE OF NOTIONAL EXTENSION OF EMPLOYER’S PREMISES - SUPERINTENDING

ENGINEER, T.N.S.E.B. v. SANKUPATHY.
A. An employee goes to attend his work riding on a bicycle and is involved in an accident in
the course of the journey and lost his right leg. Discuss whether employer is liable for
compensation (July-2019 & May-2017).
B. A workman while coming to workplace met with an accident and died. Whether employer
is liable for compensation? (May-2016).
C. A workman, while coming to attend the work, met with an accident and died. Whether
the widow of the deceased workman is entitled for compensation from the employer.
Discuss (May-2015).
ISSUE:
 Is coming to and going from home also comes under employment? Yes.
 Under which rule it comes under employment? Under the Notional Extension of
Employer’s Premises.
RULE:
Ordinarily, a man’s employment does not begin until he has reached the place where he has to
work and does not continue after he has left the place of his employment. The period of going to
or returning from employment are generally excluded and are not within the course of
employment. Travelling to and from is prima facie not in the course of employment. But there
may be a reasonable extension in both the time and place and an employee may be regarded as in
the course of his employment even though he had not reached or had left his employer’s
premises. It has been recognized time and again that the sphere of an employee’s employment is

not necessarily limited to the actual place where he does his work. If in going to or coming from
his work he has to use an access which is part of his employer’s premises, or which he is entitled to
traverse because he is going to or coming from his work, he is held to be on his master’s business
while he is using that access.
APPLICATION:
In Superintending Engineer, T.N.S.E.B. v. Sankupathy, one Ardhanari working under appellant died
when he was proceeding to work. A claim for compensation was allowed by the Commissioner for
employees’ compensation. The employer preferred an appeal before the High Court which
dismissed the appeal of the Electricity Board against the award of the Commissioner in favour of
claimant-respondent. Referring to Section 3 of the Employees’ Compensation Act, 1923 and the
notional extension of employer’s premises principle it was observed that the employee suffered
death while he was proceeding to work. In such circumstances, it should be construed that the
accident resulting in his death occurred during the course of his employment and hence the award
of compensation was correct.
CONCLUSION:
The given case is similar to the above-discussed case, and the employee is eligible for
compensation even though he was not in the premises when the accident was taken place but
under the principle of the Notional Extension of employer’s premises, the employer is liable for
the compensation.
16. A CONTRACT (OR CASUAL) WORKER DIES WHILE DOING THE WORK.
A. A casual worker dies while doing the work. Widow of the deceased worker claimed for
compensation. The employer refused to pay compensation. Advise her. (Aug-2013).
B. X, a contract labourer dies, while working in a factory. The widow of the deceased worker
claimed for compensation. Advise her. (July-2012).
Issue:
 Is a casual worker also considered as a worker under the Employees’ Compensation Act,
1923? Yes.
 For the death of a contract worker who is liable to pay compensation? The Employer is
liable for a contract worker.
Rule:
WORKMEN'S COMPENSATION (AMENDMENT) ACT, 2000, based on the recommendations of the
Standing Committee of Parliament on Labour and Welfare, the Act is being made applicable to all
casual workers by deleting the brackets and words "(other than a person whose employment is of
casual nature and who is employed otherwise than for the purposes of the employer's trade or
business)" from Section 2(1)(n) of the Act.
Persons employed by day or week or on piece rate basis: It does not matter that a man is
employed by the day, week, month, or year; the employer is liable for the compensation.
As per Section 12 of the Employees’ Compensation Act, 1923, a new liability is created whereby
the employer, even though he may not be in the least, culpable, is made liable to pay his
contractor’s employees where he employs a contractor for his trade or business. The employer is
held vicariously liable. He can be, by sub-section (2), indemnified by his contractor.
Application:

In Assistant Director of Fisheries v. Mathumeentchyia, the services of divers were utilized by the
Fisheries Department of the Madras Government for diving and fishing chanks in the Gulf of
Mannar. They were held to be employees.
Conclusion:
In the given case the casual employee also considered as an employee to be eligible for
compensation.
17. DISMISSAL DURING ABSENCE OF PREGNANCY - SEC 12 OF THE MATERNITY BENEFIT ACT, 1961.
A. A woman worker is terminated from services when she applied for maternity leave under
the Maternity Benefit Act. Advise her. (Aug-2018).
B. A woman worker is terminated from services when she applied for maternity leave. She
wants to challenge the termination. Advise her. (May-2014).
C. A pregnant woman worker working in an establishment wanted to avail her maternity
benefit and applied for the same. Employer terminated her from the service. Advise her.
(July-2012).
D. A woman worker who is under maternity leave is transferred to a far off place which
causes her most inconvenience. Advice. (May-2016).
Issue:
 Can an employer terminate a woman employee during her pregnancy? No, he can’t.
 Can the pregnant woman be given maternity leave? Yes, it is mandatory to give maternity
leave.
Rule:
Section 12 in the Maternity Benefit Act, 1961: Dismissal during absence of pregnancy.—
(1) When a 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
to give notice of discharge or dismissal on such a day that the notice will expire during such
absence, or to vary to her disadvantage any of the conditions of her service.
(2) (a) The discharge or dismissal of a woman at any time during her pregnancy, if the woman but
for such discharge or dismissal would have been entitled to maternity benefit or medical bonus
referred to in section 8, shall not have the effect of depriving her of the maternity benefit or
medical bonus: Provided that where the dismissal is for any prescribed gross misconduct, the
employer may, by order in writing communicated to the woman, deprive her of the maternity
benefit or medical bonus or both.
Application:
The main object behind providing maternity benefits : The fundamental purpose of
providing maternity benefits is to preserve the self-respect for motherliness, protect the health of
women, complete safety of the child etc. The objective of maternity benefits is to protect the
dignity of “Motherhood” by providing the complete & health care to the women & her child when
she is not able to perform her duty due to her health condition. There is need for maternity
benefits so that a woman is to be able to give quality time to her child without having to worry
about whether she will lose her job and her source of income.
Duration of Maternity Leave in India: The Act has increased the duration of paid
maternity leaves to 26 weeks from the present 12 weeks. The extended period is applicable to
women in case of the first and second child. Women who are expecting after having 2 children, the
duration of paid maternity leave shall be 12 weeks i.e. 6 weeks pre-delivery and 6 weeks post-
delivery.

Conclusion:
As per Section 12 of the Act, the sentence “vary to her disadvantage any of the conditions of her
service” is suitable to our given case, termination of the employee at the time of her pregnancy
comes under this Section and against the provisions of this Section, the employee is eligible for
maternity leave of 26 weeks and the termination is unlawful.
18. PROHIBITION OF CHILD LABOUR - SEC 3 OF THE Child and Adolescent Labour (Prohibition and
Regulation) Act, 1986.
A. A child below 14 years working as a domestic help without any weekly holiday or rest is it
valid employment. Decide (Aug-2018).
B. A child below 14 years of age is employed in a workshop run by the employer with the aid
of his family. Discuss the legality of the employment of the child.
C. A child below 14 years is engaged as a domestic servant in a household for a meagre salary
without any holiday. Discuss (May-2015).
D. A child below 14 years was engaged in a factory. When the employer is questioned by the
inspector, the employer shows the written consent letter from the parents of the child.
Decide (May-2014).
Issue:
Is employing a child below 14 years legal? Employment in Schedule A and B of the Child Labour
(Prohibition and Regulation) Act, 1966 is prohibited, in remaining industries some rules should be
followed.
Rule:
The Child Labour (Prohibition and Regulation) Act, 1966 defines
Section 2(ii) ‘child’ means a person who has not completed his fourteenth year of age.
Section 7. Hours and period of work.
(1) No child shall be required or permitted to work in any establishment in excess of such number
of hours as may be prescribed for such establishment or class of establishments.
(2) The period of work on each day shall be so fixed that no period shall exceed three hours and
that no child shall work for more than three hours before he has had an interval for rest for at
least one hour.
(3) The period of work of a child shall be so arranged that inclusive of his interval for rest, under
sub-section (2), it shall not be spread over more than six hours, including the time spent in waiting
for work on any day.
(4) No child shall be permitted or required to work between 7 p.m. and 8 a.m.
(5) No child shall be required or permitted to work overtime.
(6) No child shall be required or permitted to work in any establishment on any day on which he
has already been working in another establishment.
Section 8, Weekly holidays. —Every child employed in an establishment shall be allowed in each
week, a holiday of one whole day, which day shall be specified by the occupier in a notice
permanently exhibited in a conspicuous place in the establishment and the day so specified shall
not be altered by the occupier more than once in three months.
Application:
The Child Labour (Prohibitions and Regulation) Act, 1986 has been enacted to prohibit the
engagement of children in certain employments and to regulate the conditions of work of children
in certain other employments. This Act seeks to achieve the following objects:

1. To ban the employment of children, i.e., those who have not completed their fourteenth
year, in specified occupations and processes;
2. To lay down a procedure to decide modifications to the Schedule of banned occupations or
processes;
3. To regulate the conditions of work of children in employments where they are not
prohibited from working;
4. To lay down enhanced penalties for the employment of children in violation of provisions
of this Act, and other Acts which forbid the employment of children;
5. To obtain uniformity in the definition of ‘child’ in the related laws.
Conclusion:
 Employing children below 14 years is completely banned in establishments listed under
Schedule A and B of the Act. In remaining establishments rules should be followed like
working hours, rest etc.
 In the given case weekly holiday is not allowed, as per Section 8 of the Act one weekly
holiday should be given to the child employee.
 In the given case the child labour was not allowed to take rest, it against the provision of
the Act, as per Section 7 of the Act, the child employee should be given 1-hour rest after 3
hours of work, apart from this the child worker should not work more than 6 hours in a
day, including rest of 1 hour after 3 hours of work.
 In the given case even though the employment is not banned by the Act, but the working
hours and lack of weekly holiday are in contravention of the Act and the employer is liable
under the following Section.
 Section 14 Penalties. —
(1) Whoever employs any child or permits any child to work in contravention of the
provisions of section 3 shall be punishable with imprisonment for a term which shall
not be less than three months but which may extend to one year or with fine which
shall not be less than ten thousand rupees but which may extend to twenty thousand
rupees or with both.
19. NO WOMAN IS ALLOWED TO WORK BETWEEN 7 PM AND 6 AM - SECTION 66(b) OF THE

FACTORIES ACT, 1948.
A. Wives of 3 workmen employed in a textile factory work in place of their husbands for
about half an hour every day after 7 pm while the later take meals brought by them.
Discuss if there is a violation of any provision of the Factories Act, 1948. (July-19, May-17).
B. A woman worker is terminated from services for refusal to do the night shift work in a
factory. Advise her. (May-2015).
C. A woman worker is asked to attend the duty in night shift of a factory. She met an
accident while working with a machine during night shift. Discuss. (Aug-2013).
Issue:
Can a woman employee work in a night shift between 7 pm and 6 am? No, not allowed.
Rule:
The Factories Act, 1948, Section 66(1)(b) no woman shall be required or allowed to work in any
factory except between the hours of 6 A.M. and 7 P.M. Provided that the State Government may,
by notification in the Official Gazette, in respect of any factory or group or class or description of
factories, vary the limits laid down in clause (b), but so that no such variation shall authorize the
employment of any woman between the hours of 10 P.M. and 5 A.M.

Application:
In Triveni K.S. and Others v. Union of India and others, the constitutionality of Section 66(1), clause
(b) was challenged being discriminatory on the basis of sex. Section 66(1), clause (b) provides that
no woman shall be required or allowed to work in any factory except between the hours of 6 am
and 7 pm. The High Court held that the women should not be employed during the night for their
own safety and welfare was a philosophy of a bygone age out of tune with modern claims of
equality, especially between sexes.
Conclusion:
In the given case wives of the 3 workmen cannot work between 7 pm and 6 am as per Section
66(1)(b) of the Act. Employing those women during the prohibited hours is in contravention of the
said Section and attracts punishment.
20. WAGES IN-KIND - SECTION 11 OF THE MINIMUM WAGES ACT, 1948.

A. In an establishment, the workers are paid in terms of food grains instead of payment of
wages in cash. The workers are not willing to receive the food grains offered by the
employer. They claim for wages in cash. Decide (May-2014).
B. Workers in an establishment are provided with some goods in lieu of their wages in cash
by the employer. The workers protested this and claimed wages only in cash. Decide
(Aug-2013).
ISSUE:
Can an employer pay the wages in kind? Yes, he can pay but only with the permission of the
appropriate government.
RULE:
Section 11 of the Minimum Wages Act, 1948, 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 authorize the payment of minimum wages either wholly or
partly in kind.
(3) If 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 authorize the provision of such supplies at concessional rates.
(4) The cash value of wages in kind and of concessions in respect of supplies of essential
commodities at concession rates authorized under sub-sections (2) and (3) shall be estimated in
the prescribed manner.
APPLICATION:
If an employer wants to pay wages in kind wholly or partly has to follow the following rules:
1. There should be a custom in that area or in the industry to pay in kind.
2. The appropriate government should by notification in the Official Gazette authorize that
establishment.
3. The goods supplied by the employer should be at concessional rates.
4. The employer should maintain and submit the record pertaining to the concession in
respect of supplies of essential commodities and its value in money terms to the
appropriate government.
CONCLUSION:

The employer in the given case can give wages in kind to his employees provided that the above-
stated rules are followed.
21. AN EMPLOYEE WHO SERVED IN AN ESTABLISHMENT FOR A PERIOD OF LESS THAN 5 YEARS
CLAIMED GRATUITY.
An employee who served in an establishment for a period of less than 5 years claimed for the
payment of gratuity. Employer refused to pay. Decide (Aug-2013 & July-2013).
ISSUE:
Can an employee who has worked for less than 5 years claim gratuity?
RULE:
As per Section 4 of the Payment of Gratuity Act, 1972: Payment of gratuity.
(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, -
(a) On his superannuation, or
(b) On his retirement or resignation, or
(c) On his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the
termination of the employment of any employee is due to death or disablement.
APPLICATION:
It was held in Bakshish Singh vs. M/s. Darshan Engineering Works and others, that the provision
for payment of gratuity contained in Section 4(1)(b) of the Act Is one of the minimum service
conditions which must be made available to the employees notwithstanding the financial capacity
of the employer to bear its burden and the said provisions is a reasonable restriction on the right
of the employer to carry on his business within the meaning of Article 19(6) of the Constitution.
Hence Section 4(1)(b) of the Act is valid and legal.
CONCLUSION:
In the given case the employee has worked for less than 5 years and as per Section 4 of the
Payment of Gratuity Act, 1972 he is not eligible for gratuity, for eligibility of gratuity he should
render continuous service for not less than five years.
*****

Labour Law-II Study Material

Uploaded by

Document Information

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

Labour Law-II Study Material

Uploaded by

Copyright:

Available Formats

LABOUR LAW - II

Harinath J, Radhakrishna ANV and Aravinda Reddy 1

IMPORTANT LONG QUESTIONS

Harinath J, Radhakrishna ANV and Aravinda Reddy 2

PAPER-I: LABOUR LAW-II SYLLABUS

Unit-IV: Employees Provident Fund and Miscellaneous Provisions Act 1952 –

Harinath J, Radhakrishna ANV and Aravinda Reddy 3

Harinath J, Radhakrishna ANV and Aravinda Reddy 4

Wages do not include:

Harinath J, Radhakrishna ANV and Aravinda Reddy 5

Harinath J, Radhakrishna ANV and Aravinda Reddy 6

4. SOCIAL SECURITY LEGISLATION.

Harinath J, Radhakrishna ANV and Aravinda Reddy 7

1. Employees’ State Insurance Act, 1948 (ESI Act)

Harinath J, Radhakrishna ANV and Aravinda Reddy 8

[See sections 2(1) and (4)]

LIST OF INJURIES DEEMED TO RESULT IN PERMANENT TOTAL

Serial Description of Injury Percentage of

Harinath J, Radhakrishna ANV and Aravinda Reddy 9

1. Loss of both hands or amputation at 100

2. Loss of a hand and a foot. 100

3. Double amputation through leg or 100

4. Loss of sight to such an extent as to 100

5. Very severe facial disfigurement..... 100

6. Absolute deafness...... 100

6. EXPLAIN SALIENT FEATURES OF THE MATERNITY BENEFIT ACT, 1961.

Harinath J, Radhakrishna ANV and Aravinda Reddy 10

Harinath J, Radhakrishna ANV and Aravinda Reddy 11

Meaning and Definition of Wage

Broadly speaking, wages can be classified into the following categories:

Harinath J, Radhakrishna ANV and Aravinda Reddy 12

A. The productivity of Labour.

Harinath J, Radhakrishna ANV and Aravinda Reddy 13

Constituents or Components of Minimum Wage -

Harinath J, Radhakrishna ANV and Aravinda Reddy 14

2. Deductions for absence from duty Section 9 -

3. Deductions for damage to or loss of goods Section 10-

4. Deductions for services rendered Section 11-

5. Deductions for amenities services Section 11-

6. Deductions for recovery of advances Section 12-

7. Deductions for recovery of loans Section 12-A-

Harinath J, Radhakrishna ANV and Aravinda Reddy 15

9. Deductions of income-tax payable by the employed person -

10. Deductions by the order of a court -

11. Deductions for provident fund -

12. Deductions for payments to co-operative societies Section 13-

13. Deductions with the consent of the employed Person -

14. Deduction for the Welfare Fund -

15. Trade Union Membership Fees:

16. Deductions for Fidelity Guarantee Bonds :

17. Deductions for recovery of losses sustained by a railway administration -

18. Deduction for Prime Minister's National Relief Fund -

Harinath J, Radhakrishna ANV and Aravinda Reddy 16

Harinath J, Radhakrishna ANV and Aravinda Reddy 17

Employer's liability for compensation. — The liability of an employer to pay

Harinath J, Radhakrishna ANV and Aravinda Reddy 18

Conclusion: It is common that whenever there arises an employer-employee relationship, there

11. DEFINE GRATUITY. SALIENT FEATURES OF PAYMENT OF GRATUITY ACT, 1972.

Harinath J, Radhakrishna ANV and Aravinda Reddy 19

Adverse Effects of Child Labour on the Health of Children

Harinath J, Radhakrishna ANV and Aravinda Reddy 20

Harinath J, Radhakrishna ANV and Aravinda Reddy 21

Harinath J, Radhakrishna ANV and Aravinda Reddy 22

15. DOCTRINE OF NOTIONAL EXTENSION OF EMPLOYER’S PREMISES - SUPERINTENDING