CWM Complete

COMPENSATION AND WELFARE MANAGEMENT
Objective: to enlighten the students with the Concepts and Strategies of

Compensation and Welfare Management
Unit – I : Employee Compensation – Factors Influencing Compensation Plan

and Policies – Principles of Wage and Salary Administration – Wage as a
Motivator – Methods of Wage Fixation – Factors Influencing Wage and Salary
Determination.
Unit – II: Job Evaluation – Methods – Performance and Reward Systems –

Methods of Wage Payment – Incentive Plans – Wage Differentials – Minimum
Wages Act, 1948.
Unit – III : Employee Welfare – Concept, Scope and Significance – Welfare

Policy and Five Year Plans – Role of Employee Welfare Agencies – State,
Employers, Trade Unions and Voluntary Agencies.
Unit – IV: Employee Welfare Programmes – Statutory and Non-Statutory –

Intra Moral, Extra Moral – Social Security – Social Assistance and Social
Insurance.
Unit – V: Labour Welfare Administration – Plant Level, State and Central

Levels – Labour Welfare Officer – Role, Status and Functions
 Case study 1: Salary Inequities At Ganta Industries( Job Evaluation)

 Case study 2: Team-Based Incentive Rewards
 Case study 3 : Asian Polymers Ltd
 Case study4: Panda International
 Case study 5 :Wage Determination Machinery Of Tea Industry In
India: A Case Of West Bengal State
 Case study 6: Collective Bargaining By Workers Of The Indian

Unorganized Sector: Struggle, Process, Achievements, And Learning
COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

CASE STUDY: 1
SALARY INEQUITIES AT GANTA INDUSTRIES
Vikranth was trying to figure out what to do about a problem salary situation he had in his
plant. Vikranth recently took over as president of Ganta Industries Manufacturing. The
founder and former president, Ravikant, had been president for 35 years. The company was
family owned and located in a small eastern Arkansas town. It had approximately 250
employees and was the largest employer in the community. Vikranth was the member of the
family that owned Ganta Industries, but he had never worked for the company prior to
becoming the president. He had an MBA and a law degree, plus five years of management
experience with a large manufacturing organization, where he was senior vice president for
human resources before making his move to Ganta Industries.
A short time after joining Ganta Industries, Vikranth started to notice that there was
considerable inequity in the pay structure for salaried employees. A discussion with the
human resources director led him to believe that salaried employees pay was very much a
matter of individual bargaining with the past president. Hourly paid factory employees were
not part of this problem because they were unionized and their wages were set by collective
bargaining.
An examination of the salaried payroll showed that there were 25 employees, ranging in pay
from that of the president to that of the receptionist. A closer examination showed that 14 of
the salaried employees were female. Three of these were front-line factory supervisors and
one was the human resources director. The other 10 were non-management.
This examination also showed that the human resources director appeared to be underpaid,
and that the three female supervisors were paid somewhat less than any of the male
supervisors. However, there were no similar supervisory jobs in which there were both male
and female job incumbents. When asked, the Hr director said she thought the female
supervisors may have been paid at a lower rate mainly because they were women, and
perhaps Ravikant, the former president, did not think that women needed as much money
because they had working husbands. However, she added she personally thought that they
were paid less because they supervised less-skilled employees than did the male supervisors.
Vikranth was not sure that this was true.
The company from which Vikranth had moved had a good job evaluation system. Although
he was thoroughly familiar with and capable in this compensation tool, Vikranth did not have
time to make a job evaluation study at Ganta Industries. Therefore, he decided to hire a
compensation consultant from a nearby university to help him. Together, they decided that all
25 salaried jobs should be in the same job evaluation cluster, that a modified ranking method

of job evaluation should be used, and that the job descriptions recently completed by the HR
director were current, accurate, and usable in the study.
The job evaluation showed that the HR director and the three female supervisors were being
underpaid relative to comparable male salaried employees.
Vikranth was not sure what to do. He knew that if the underpaid female supervisors took the
case to the legally, the company could be found guilty of sex discrimination and then have to
pay considerable back wages. He was afraid that if he gave these women an immediate salary
increase large enough to bring them up to where they should be, the male supervisors would
be upset and the female supervisors might comprehend the total situation and want back pay.
The HR director told Vikranth that the female supervisors had never complained about pay
differences.
The HR director agreed to take a sizable salary increase with no back pay, so this part of the
problem was solved. Vikranth believed he had for choices relative to the female supervisors:
1. To do nothing.
2. To gradually increase the female supervisors salaries.
3. To increase their salaries immediately.
4. To call the three supervisors into his office, discuss the situation with them, and jointly
decide what to do.
Questions
1. What would you do if you were Vikranth?
2. How do you think the company got into a situation like this in the first place?
3. Why would you suggest Vikranth pursue the alternative you suggested?

CASE STUDY 2
Team-Based Incentive Rewards
Network Cable, Inc., operates throughout the central and southern portions of Florida’s east
coast. With approximately 43,500 subscribers, the company is a service provider for cable
TV and high-speed Internet connections.
Network Cable operates in an area described as a “high-growth market.” In January 2001,

Tara Gilbert, vice president of human resources for Network Cable, convinced company
president and CEO Jeff Lesitner that restructuring the organisation workforce into teams
would benefit both Network Cable and its employees. Cost savings, improved morale, and
team synergy were cited as inherent benefits of teams. Based on these assessments, in June
2001, a select group of three senior managers, plus Tara Gilbewrt and the company’s
financial officer, implemented teams within the company’s installation department. Here,
forty installers were formed into eight teams of five installers each.
Management set performance goals for the installation teams linked to attractive incentive
rewards (cash bonuses above base salaries) when performance goals are reached.
Performance measures included indexes for improved installation time, customer satisfaction
scores, additional sales, equipment maintenance, and repair/callback problems.
Each team could earn incentive bonuses up to a maximum of $15,000 annually with cash
bonuses shared equally by each team member – a possible cash reward of $3,000 for each
installer. Team bonuses after the first years were as follows: two teams, $15,000; one team,
$12,500; one team $7,300; one team, $3,150.
During August 2002, Tara Gilbert sent to all installers and their supervisors a survey
requesting feedback on the satisfaction with teams and, specifically, the incentive rewards
program. While survey results were generally positive, not all was rosy. Problems could be
grouped into the following categories:
1. Some installers believed that various team members did not “buy into” the team concept
and were simply “free riders” – average employees who benefited from the efforts of superior
employees.

2. There was a general feeling that several teams were routinely assigned difficult
installations that prevented them from achieving high performance goals.
3. Teams did not always display the motivation and synergy expected, since “bickering” was
prevalent between average performers and super performers. Average performers complained
that high performers made them look bad.
4. A high percentage of survey respondents (29 percent) felt the incentive rewards program
was unfair and asked for a return to fixed across-the-board salary increases.
Questions 1. Management set performance goals on what basis?

Answer Management set performance goals for the installation teams linked to attractive
incentive rewards (cash bonuses above base salaries) when performance goals are reached.
2. What was the viewpoint if survey respondents?
Answer A high percentage of survey respondents (29 percent) felt the incentive rewards
program was unfair and asked for a return to fixed across-the-board salary increases.
3. Performance measures included indexes for what?
Answers Performance measures included indexes for improved installation time, customer
satisfaction scores, additional sales, equipment maintenance, and repair/callback problems

CASE STUDY 3
Asian Polymers Ltd
Asian Polymers Ltd., reached an agreement with the Union on a production incentive
scheme to increase production. The company had an unprecedented demand for its goods and
the Union agreed for the incentive scheme. The management was pleased with the assurance
of the Union leader to personally undertake the task of implementing the scheme. The
management promised to give him a free hand if he could assist in increasing production.
The Union did increase production to almost double the original level. As a result, the Union
gained importance. Any problem could be sorted out by the Union by its direct access to the
Chief Executive. The incentive scheme benefited primarily the Union members. The scheme
was inequitable some workers got disproportionately large incentives, some low and some no
incentive at all. The second feature was that as the incentive was linked to the Consumer
Price Index (CPI), the distortion got further accentuated. However, when the Union tried to
misuse its new found powers, the management struck back one day by taking disciplinary
actions against all the leaders and the Union found all of a sudden that it was without a
leader.
Another Union arrived on the scene and the leader had established a rapport with the Chief
Executive, and this new Union faithfully followed the tenets of the management but as a price
extracted some benefits for its members exclusively. The Union saw to it that production
became its exclusive responsibility and it had a hot line with CEO for any problem solution.
As the years passed, the Union started agitating for improvement in the wage scales. Because
of the incentive scheme, the company found that any improvement in the basic wage would
pose greater problems and the primary question before the management was to delink the CPI
from the incentive scheme. The Union refused to delink the CPI from the incentive scheme as
some of its members were earning an amount equal to, if not more than the salary, as an
incentive itself. At the same time workmen with no incentive and being grade barred began to
lose. And this resulted in discontentment amongst the workmen. But the dilemma could not
be resolved and this led to an explosive situation.

A third union emerged on the scene and this led to intense inter-union rivalry resulting in
indiscipline, loss of production, and violence within the factory premises, as a result of which
the company declared a lockout.
When the plant reopened after four months, the Union in power lost its credibility and the
new Union had the complete support of the workmen. The new Union leader could develop a
rapport not only with the workmen but also with the management and expected the
management to solve the problem of not having revised the wage scales for a long period.
But this was not an easy task as there were a lot of inequalities that the management wanted
to set right.
The union, though agreeing with the management, would not agree for a cut in the wage in
any manner to set right the inequalities. The Union not only wanted to cling to the beneficial
aspects of the incentive scheme but also insisted that the management somehow give an
increase in the basic wages. The management was being drawn into a vicious circle of the
incentive scheme being inequitable but when the Union’s attention was being brought to the
high incentive categories, it reverted to the low basic wage theme. The management remained
in a quandary as regards how to convince the workmen, to win over the constituency of
workmen and make managers effective and regain supremacy in production.
Questions
1. Identify the problems and their causes in this case.
2. Under the given situation, how are the problems to be remedied?
3. Suggest various principles and strategies the management has to keep in mind while
formulating a wage incentive scheme for the employees.

CASE STUDY-4
Panda International
Mohan Panda, a bright young M.B.A., fresh from Affinity Management Institute, one of the
top management institutes, took over his father’s responsibilities as president of Panda
International, a manufacturing unit in Orissa. The company which is situated at Rourkela is a
major industrial unit which manufactures electrical equipments. The company employed
approximately one thousand people in the production division. It had never laced with a
demand for collective bargaining. So far as was known, none of its employees were union
members.
The company enjoyed wide reputation for its product quality, customer dealings, distribution
networks and above all its people friendly approach. Majority of employees were highly
satisfied with company’s HR policy as well as wages and benefits offered to them. The wages
offered by the company was so far best in the locality. The working condition was conducive
for employees which had earned laurels for the company. Recently two major players in the
electrical equipment segment started two major units at Rourkela and offered better wages to
employees including prospective employees from Panda International. Some of the existing
employees also joined in those units.
The new president, after three years of climbing the ladder to his position, had a conference
with three long-term employees, who explained that they and their associates had been
discussing the desirability of bargaining collectively. They gained through such formal
representation. The employees had not voiced any strong criticism of management, but they
had held several meetings and had invited representatives of a national union to talk with
them. They concluded that they ought to try collective bargaining and for this purpose formed
a union and enlisted a majority of workshop employees as members. The three
representatives had been elected to the bargaining committee in order to present a written
memorandum to the president with a request for collective bargaining agreement. A series of
issues carefully spelled out by the union were handed over to the president by the three
representatives.
The young executive received them cordially and listened carefully. He accepted their
memorandum and suggested that he would like to have time to study it carefully. He
proposed a meeting with them for tuesday of the following week.
When the committee members returned, the president reminded them that the company had
been careful to maintain wages and working conditions at least on a par with those in
unionised companies in the same industry and region. He expressed the opinion that the

specific proposals they had presented seemed to him quite reasonable and appropriate. The
president however expected the employees to maintain standard and raise productivity in
order to overcome competition from other industries and maintain wage parity. He had been
thinking of any of the same changes and would probably have made them without their
request. He was pleased to hand them their memorandum with a notation indicating his
acceptance. The members left, quite satisfied with the effectiveness of their negotiations and
promising to report back to him as soon as possible
One week later, the president found the same group of representatives waiting to see him.
They appeared somewhat crestfallen and embarrassed. They reported that they had gone back
to the membership, presented a full report of their discussions with him, explained. Is
favourable attitude, and recommended formal ratification of the memorandum as a new
collective bargaining agreement. After extensive discussion, when the motion for ratification
came up for a vote, a majority of the membership voted against ratification.
Questions
1. What are the problems in this case?
2. Why did the members refuse to ratify the agreement?
3. What measures do you suggest to maintain wage equilibrium and how?

CASE STUDY 5
WAGE DETERMINATION MACHINERY OF TEA INDUSTRY IN INDIA: A CASE

OF WEST BENGAL STATE
Abstract
Daily rate of wages for tea plantation workers in west Bengal is abysmally low in comparison
to agricultural minimum wages. There are a few benefits offered by the employers apart from
the statutory benefits enshrined in the Plantation Labour Act, 1951. Consequently, many tea
workers in this state are suffering from starvation, malnutrition, debt, etc. In this backdrop, in
my present study, a deliberate attempt has been made in order to highlight the actual picture
of wage and its determination process in the tea industry located in West Bengal in India.
Prelude
Tea is globally one of the most exoteric and economic beverages and major tea producing
nations are India, China, Sri Lanka, Turkey and Vietnam. The tea industry is one of the oldest
organized industries in India having a long historic evolution.

Tea is mainly cultivated in two districts of West Bengal, namely, Jalpaiguri and Darjeeling.
The two districts contribute 20% of India’s tea with Jalpaiguri producing around 15%. The
tea growing area of Jalpaiguri district is known as Dooars while Darjeeling has two areas
known as Darjeeling Hills and Terai in the plains of the district. Labour in Dooars and Terai
are mainly adivasis while Darjeeling Hills have Gorkha workers.

Statement of Problem
Prevailing daily wages in the tea plantations of West Bengal is Rs 105, whereas prescribed
minimum wages for unskilled agricultural workers is Rs 221. Tea plucking involves at least
some amount of skill and should be treated at least in the semi-skilled category. For the semi-
skilled agricultural activities, prevailing prescribed minimum wage is Rs 250. In that respect,
plantation workers in West Bengal get about one-third of prescribed minimum wages.

Literature Review
Several studies have been made of various aspects of tea industry. These are mainly on
financial and geographical aspects of tea industry. Till date, a very little effort has been made
to highlight this wage issue in the tea estates of West Bengal.

A brief review of those studies is mentioned here:

The thesis of Dr. Mita Bhadra on life and labour of plantation women workers in 1992 had
provided focus on the labourer of tea plantations. It was a sociological study on women
which dealt with the life of women workers in a tea plantation of Darjeeling district of West
Bengal. It reflected changes in the status and role of women employed in tea industry.

The thesis of Dr. Kanchan Sarkar titled “Study of Trade Union Organization among the Tea
Workers in Terai and Dooars Region” in 1998 has discussed the trade union movement in tea
industry in different periods. But the study does not provide the reaction of employers with
the development of trade union movement in tea industry.

Another study conducted by Khemraj Sharma “The Himalayan Tea Plantation Workers” in
2000.The main dimension of the study was that unlike any other areas of tea industry of the
country, the basis of trade union formation was the common ethnic bonds of the leaders
hailing from hilly region of Darjeeling.

A study conducted by Tessy Kurian “A Study of Women Workers in the Plantation Sector of
Kerala” in 2004 with the objective to find out the different roles of women workers in tea
plantation.

A study conducted by the International Labour Organization 2005, had tried to analyze the
impact of globalization on the overall tea prices in India. According to this report, the large
tea companies have been benefited to the largest extent from the fall in auction prices because
they enjoy tremendous power to push down the prices and by doing so, they take the
advantages of depressed market condition.

A study conducted by Lalit Premlal Tirkey on “Tea Plantation in the Darjeeling district of
India: Geoecological and Socio-Economic impacts in post-Independence period” published in
2005 by Natural Resource Institute, University of Manitoba which was conducted with the
objective to find out the evolution process of tea plantations in the Darjeeling area since
India’s Independence. This study concentrated mainly on geoecological impact arising from
development and evolution of tea plantations. It highlighted about the problems of
deforestation caused by initial clearing of teas. It has also concluded very categorically that
tea plantations are unable to provide sustainable livelihood to the communities related to
plantations in the same way as they once did.

So, it can be stated that there had been a very little effort to study in depth the wage issue in
the tea estates of West Bengal. The research works so far have been made by the different
scholars of sociology and social anthropology had given much emphasis on the changing
social relations of workers. But these studies have helped us to frame out objectives of the
present study. It is expected that this study will be able to throw some lights on that area
which remains either unexplored or under explored.

Objective
Therefore the main objective of this study is:

1. To critically analyze the wage rate in this state.
2. To highlight the wage determining machinery in the tea industry located in West Bengal.

Methodology
The study is mainly based on secondary data which was supplemented by data/information
gathered through focus group discussion in the tea estates located in West Bengal. The most
important source of secondary data is Tea Board of India. Records of Labour departments of
the State are another important source of secondary data.

Discussion and Analysis
Prevailing daily wages in the tea plantations of West Bengal is Rs 105. This is far below than
a need-based minimum wage. The 15th Indian Labour Conference held in 1957 had raised
the issue of need based minimum wages for all industrial workers. Subsequently, the
government appointed central wage boards for the fixation of need based minimum wages in
22 industries. These were tripartite bodies having representatives of employers’ associations,
trade unions and government. All industries had agreed that the wage would be determined
on the basis of the requirements of three consumption units. But the employers’ association
vehemently opposed to three consumption units. They argued that since there was equal
employment of male and female workers it implied that there were two earners in the family,
hence the units should be 1.5 and not three and they remained adamant to this particular
issue.

Meanwhile the union government had announced that if there was unanimity in decisions in
any wage board the recommendations would be implemented immediately. If there was no
unanimity in a wage board, the government would not implement any of the awards. This put
most workers in a vulnerable position because if they opposed unjustified suggestions of the
employers they would not get anything. Hence in most cases the wage boards tried to reach
unanimity in their decisions. This invariably put the management in a strong bargaining
position. This is exactly what happened in the wage board for the tea plantation industry.
Since the employers refused to budge from their demand of including 1.5 units it was
reluctantly accepted and the need-based minimum wage in the tea plantations was half of that
of the other industries. Low wages were built into the system and the workers were helpless
in this regard.
Wages in tea plantations in India and particularly in West Bengal

it is clearly evident that daily wages in Assam and West Bengal is significantly lower, not
even 50% of the wages that prevail in the tea plantations of Southern States in India. In three
Southern States, wages are declared through minimum wage notifications and wage
settlements fall outside the purview of collective bargaining. In Assam and West Bengal, on
the other hand, wages are determined through collective bargaining. But plantation does
figure in the minimum wage schedule as evident in the synopsis of minimum wages 2014,
Govt. of West Bengal given in Annexure 1. Corresponding to tea plantation row it is written
that wages are determined through agreement. Daily wages of plantation in West Bengal was
Rs 95 in December 2014 whereas the minimum wage for even unskilled agricultural work
was Rs 216 as given in the synopsis.
Wage Determining Machinery

In Assam and West Bengal, wage is determined through collective bargaining mechanism in
a tripartite forum. Representatives of planters, representatives of workers’ union and
government representatives sit together through a series of negotiations to determine daily
wage in an industry wise manner for a specified period. But it is pitiful that such labour
market institution leads to abysmally low wages. In this context it becomes important to
understand why wages and conditions of work are poor for the plantation workers in the Tea
sector of West Bengal and Assam. Employers but argue that plantations workers get many
benefits apart from monetary wages as the planters are expected to adhere to the Plantation
labour Act 1951. These are statutory in nature and outcome of legislation enacted in view of
special working conditions in plantations.

Moreover, even if one adds the monetary equivalent of such welfare provisions, wages as
received by plantations workers stand significantly below that of wages in similar
employment category.

West Bengal tea agreements
In West Bengal tea plantations, Planters’ Association is represented by CCPA (Constituent
Committee of Planters’ Association) and workers’ are represented by CCTWU (Coordination
Committee of Tea Workers Union). Wage agreement signed in the month of February 2014,
wages were enhanced by Rs 17.50 in the first year, Rs 10 in the next two years and the
agreement came into force with effect from 1st April 2014. Accordingly, wage would
increase to Rs 112.50 in the first year, 122.50 in the second year and 132.50 in the third year.

As per the tripartite Memorandum of Settlement dated 20 February 2015 between the tea
managements and representatives of trade unions, the nominal wage at the end of each period
along with incremental wage hike
Conclusion

Daily rate of wages for tea plantation workers in West Bengal is extremely minimum in
comparison to other tea producing states in India except Assam. In west Bengal, wage is
determined through collective bargaining. There are few non–statutory benefits apart from
the statutory benefits, still it is very hard to justify such low wages in west Bengal. One
should keep in mind, minimum wage is essentially the basic subsistence wage below it ought
not to fall. Thus prevailing tea plantation wage in this state is abysmally low.
CASE STUDY 6
Collective Bargaining by Workers of the Indian Unorganized
Sector: Struggle, Process, Achievements, and Learning
The Context This research paper attempts to review and analyze experiences of the Self
Employed Women’s Association (SEWA), a central trade union and membership-based
organization of women workers from the unorganized sector in India. The main focus of the
paper is on highlighting the SEWA strategy for using collective bargaining for decent work,
just compensation, and worker welfare. Experiences in organizing the bidi1 worker women
from the states of Gujarat, Madhya Pradesh (MP), Rajasthan, and West Bengal in India are
used to explain the SEWA intervention strategy, the process of collective bargaining, and
achievements.
In addition to SEWA documentation studies and other secondary data, focus group
discussions of bidi worker women were arranged at three locations in Ahmedabad. Forty-five
women participated and provided data on the history, status, and achievements with regard to
the unorganized sector of bidi industry in the region
. The paper begins with a brief review of the Indian unorganized sector and issues related to
women workers. This is followed by an overview of the unorganized segment of the Indian
bidi industry and an introduction to SEWA. The second part of the paper provides the
chronology of SEWA interventions in various states, mainly in Gujarat, since 1978. This
section provides an idea of the struggle of the unorganized bidi workers, the process of
collective bargaining, and achievements. The concluding part of the paper attempts to
summarize the SEWA strategy focusing on organizing and capacity building for effective
collective bargaining.
It is expected that the experiences and conclusions will be useful to readers from any region
or country who are interested in understanding how successful and effective bargaining can
be achieved by workers themselves through establishment of their own organizations and
capacity building.
Indian Unorganized Sector

The unorganized sector in India is broadly characterized as consisting of units engaged in the
production of goods and services with the primary objectives of generation of employment
and incomes to the persons producing the goods and services. Home-based workers, street
vendors, agricultural labourers, and other miscellaneous help providers constitute the
unorganized sector of the economy. These units typically operate on a small scale and at a
low level of organization with little or no division between labour and capital as factors of
production. Home-based workers are engaged in the making of products like incense sticks,
ready-made garments, artisanal items, embroidery, food item preparation, kites, home
decoration material, etc. Street vendors include vegetable sellers, fruit merchants, and
handcart pullers, who sell toys, garments, and miscellaneous household items. The labourer
category consists of farm labourers and those processing in homes, engaged in agro-product,
household aids, etc. The unorganized sector provides income-earning opportunities for a
large number of workers. In India, 93 per cent of the workforce obtains its livelihood from
the unorganized sector. Bidi making and related operations is one of the major unorganized
occupations in India.
The Bidi Industry and Unorganized Workers The bidi industry is one of the largest employers
of workers in India after agriculture, handloom and construction, yielding an average of 1.3
million persons working per days of employment per year. As per the Annual Report of
Ministry of Labour, Government of India, 2001, the bidi industry is estimated to provide
employment to 441,100 people in the country. Although the large bidi manufacturers are
large enterprises, actual production is carried out by small unorganized units. Most of the
production of bidi is undertaken either in homes or small work sheds. Ninety per cent of bidi
workers are home-based. Thus, production of bidi is widely dispersed and often shifts from
place to place. Ninety five per cent of bidi workers are women. For these women, bidi work
is an important source of income that constitutes an average of 45 to 50 per cent of the total
family income. This shows that the unorganized sector of the Indian bidi industry has a
tremendous socio-economic significance in employment generation in India. In the Indian
unorganized sector, the bidi industry is among the few trades that are regulated by law. The
Bidi and Cigar Workers Welfare Cess Act (1966) and the Bidi and Cigar Workers
(Conditions of Employment) Act (1966) are there to protect the interests of bidi workers, and
each resulted from worker action. The minimum wage for bidi workers is fixed as a piece rate
per thousand bidis. In Gujarat, the piece rate is linked to the dearness allowance (DA), which
is further linked to the price level changes in the Indian economy. The DA revisions are
announced by the Government of Gujarat every six months.
SEWA
SEWA is a central trade union of women workers in India’s informal economy. SEWA was
founded in Ahmedabad in the state of Gujarat by Ms. Elaben Bhatt in 1972. SEWA’s main
goal was to organize informal economy women workers for full employment and self-
reliance whereby they would obtain work, income, and food security at the household level.
The organization is guided and managed in accordance with Gandhian philosophy. As a

strategy, SEWA guides and assists members in creating their own organizations such as self-
help groups (SHGs), associations, unions, cooperatives, corporate entities, and other suitable
types of organizations. SEWA builds member capacities in managing these organizations and
in working towards achieving their goals through collective bargaining and associated
activities.
Activities of SEWA are broadly categorized in two streams:
(a) membership and (b) services to members.
Membership-related activities include membership campaigns, awareness creation,
perspective building (on benefits of membership and rights and duties of members), and
capacity building. Service-related activities include support and facilitation in income
generation, savings, wealth creation, and social security. Today, with a membership base of
over 1.3 million women in over 14 districts in Gujarat and in 12 other states of India, SEWA
is the largest member-based organization of women in the country. With a history of
initiating formation of international organizations of women like HomeNet, StreetNet, and
WIEGO, SEWA has carved out a well-respected niche for itself globally. In 2011, SEWA’s
membership included 56,904 bidi workers. This included 18,870 bidi workers from
Ahmedabad, the birth place of SEWA. Traditionally, most of the bidi workers make bidis at
homes and sell to factories on a piece-rate basis. A few factories provide bidi-making
facilities to workers in the factory premises.
History of Collective Bargaining at SEWA

The creation of SEWA arose out of the need for collective bargaining. Towards the end of
the 1960s, the Women’s Wing of the Ahmedabad Textile Labour Association, which was
founded by Mahatma Gandhi, felt that the Association was not seriously attending to
women’s workers needs and demands around issues related to wages, the work environment,
the particular needs of women workers, childcare facilities, and gender bias. The Women’s
Wing tried very hard but unsuccessfully to convince the senior leaders of the Association to
address these issues. As a result, women members of the Association, feeling neglected and
disheartened, formed SEWA. After its inception in 1972, SEWA also began to organize and
build collective bargaining capacity for chindi workers, who obtain cotton strips, cuttings,
and scraps from the textile mills for use in traditional weaving projects. Today, SEWA has
created member-based organizations of agricultural labourers, vegetable vendors and other
street vendors, home-based workers engaged in making of incense sticks, ready-made
garment stitchers, embroidery workers, workers preparing food items, artisans, kites, and
labour and service providers like construction workers, head loaders, waste pickers, etc. In
addition to building worker organizations, SEWA has built these organizations’ capacities in
the various stages of the collective bargaining process. This includes campaigns for
awareness creation, organizing rallies, representation before judicial and other governmental
authorities, organizing conferences and round tables, and a variety of advocacy initiatives.
SEWA accomplishes all of this through training programs, workshops, and exposure visits. In

this process, SEWA also guides the members in use of technology – computers, internet,
mobile phones, and SATCOM (satellite communication).
Building the Collective Bargaining Capacity of Bidi Workers

GUJURAT STATE
SEWA’s interventions in the bidi industry date back to 1978 when a poor bidi worker from
Patan approached SEWA for help in her struggle with her employers. She was a
representative of bidi workers who were earning four rupees per day and whose employers
did not issue proper identity cards. These workers did not have employee status and were not
entitled to welfare benefits or any other employee benefits from the Office of Bidi Welfare.
She also complained about working and living conditions of bidi workers like herself.
SEWA’s intervention on behalf of these workers became a long, drawn-out battle. To begin
with, SEWA organized a general meeting of and started to organize women bidi workers in
Patan, followed by bidi workers in Ahmedabad in 1981. Thanks to this organized, collective
effort, the times at which the raw material was delivered to women and the finished bidis
were collected changed from night to daytime hours. In Ahmedabad, a dispensary run by the
office of the Bidi Welfare was also started for the bidi workers.
SEWA also used research to help the bidi workers in advocacy initiatives and campaigned for
provident fund coverage for them. In 1982, a general meeting of 5,000 bidi workers was
organized in the presence of the then Finance Minister of Gujarat State. A report on this
meeting was submitted by SEWA to the state government in 1983. As a result, the
government increased bidis’ price of sale to factory owners. In addition, SEWA bidi workers
formed a cooperative on their own initiative. The members of the cooperative submitted a
memorandum to the Labour Commissioner of Gujarat State detailing their problems. As a
result, the State Labour Department inspected their workplaces, soon after which the
workers’ demands were accepted, and identity cards were issued. A factory owner who had
retrenched 200 bidi workers reinstated them, compensated them, and agreed to pay them
provident fund benefits. Recognition of the efforts of organized bidi workers came in 1985
when SEWA was invited to be a member of Gujarat State Advisory Committee on Bidi
Workers. Under bidi welfare legislation, an administrative office and health center were
established in Ahmedabad. From this point on, large numbers of workers and their children
enjoyed access to benefits. 1986 marked the beginning of a new era in the history of the
unorganized sector workers’ struggle. SEWA organized a national workshop on the status of
unorganized sector bidi workers and issues affecting their employment and security at the
national Ministry of Labour. Tobacco workers from Kheda, representatives of workers’
organizations from the states of Gujarat and Karnataka, leading social workers, the Labour
Minister of Gujarat State, and the Joint Secretary of the Ministry of Labour all participated.
In 1987, the Government of India approved a housing project for bidi workers in Ahmedabad.
The Housing and Urban Development Corporation (HUDCO) provided financial assistance,
the Ahmedabad Urban Development Authority (AUDA) provided land, and the Bidi

Workers’ Welfare Cooperative bridged the gap through subsidies. As a result, 110 women
bidi workers received houses in 1993. More generally, bidi workers’ issues drew the attention
of the Government of India. The Gujarat State
Legislative Assembly took up the issue, and SEWA began national level data collection on
bidi workers. In 1989, organizations of bidi workers were started in Palanpur and Vijaypur in
Gujarat with SEWA assistance. These workers were issued identity cards for the first time.
From 1991 to 1993, SEWA organized campaigns for standard wage rates for bidi making in
all the factories in Gujarat. SEWA also initiated a group insurance program for bidi workers
during this period. 1998 -1999 provided a unique experience in collective bargaining for bidi
workers. The Gujarat High Court ordered the State Provident Fund Commissioner to carry
out an assessment of the provident fund amount payable to bidi workers. The Commissioner
called a joint meeting of 37 bidi factory owners and contractors to discuss the process of
implementing the High Court order. Throughout the discussions, SEWA organizers assisted
the bidi workers (the organizers were SEWA employees, including local team leaders and
activity coordinators who provided guidance and support to the unorganized workers and
members in organizing activities, theme-based campaigns, and collective bargaining
initiatives). As a result of the joint meeting, the Commissioner ordered provident fund
payments of 497,790 rupees to 191 bidi workers. Throughout the collective bargaining
process, SEWA guided the organized workers towards ending the existing sale-purchase
system in which factory owners bought bidis from the workers and no employeremployee
relationship existed. A research-oriented approach was also adopted to understand the
mechanism of provident fund calculations, payments, and record keeping – SEWA research
teams visited Solapur and Pune in Maharashtra State and held a meeting with the Labour
Minister of Karnataka State.
In 2001, 15,000 bidi workers in Gujarat went on strike when the employers refused to settle
minimum wage, provident fund, and workers’ welfare issues. In 2002, bidi workers who
suffered during these communal disturbances were given work as quilt stitchers with SEWA
support. This provided them with an income for sustaining their livelihoods. In 2003-04,
SEWA organized a public meeting of 2,000 bidi workers from Ahmedabad and various towns
from the north of Gujarat State to discuss and prepare an action plan for issues related to
wages, new employment opportunities, bonuses, and restarting bidi work. 2007 marked a
happy ending of the 23 year struggle of bidi workers in Ahmedabad. In 1983, 174 bidi
workers of Jivraj Bidi Works (JBW) had filed a suit for a provident fund in the Office of
Provident Fund Commissioner, Gujarat State. On November 6, 2007, the employer paid each
of the 174 workers 1.5 million rupees in provident funds. This long struggle not only
demonstrated the power of collective bargaining, determination, and patience on the part of
bidi workers, but also demonstrated SEWA’s impact (see detailed case study, Appendix II).

RAJASTHAN STATE
In 2009, SEWA started organizing bidi workers in Ajmer in Rajasthan State. Out of 10,000
bidi workers in the city, 2,200 formed their organization under the guidance of SEWA. When
the workers’ organization was formed, they were paid 45 rupees per 1,000 bidis. Thanks to
effective collective bargaining with the factory owners, the rate was increased to 52 rupees
and then to 60 rupees. In December 2010, the rate was increased from 75 to 80 rupees per
1,000 bidis. Moreover, the workers are now linked by the Rajasthan State Government with
government welfare programs for bidi workers. The employers have also issued identity
cards to the workers.
MURSHIDABAD, WEST BENGAL

In 2004, SEWA initiated organizing efforts for bidi workers in the Murshidabad district of
West Bengal. SEWA undertook joint research in collaboration with the Labour Department
of the State Government of West Bengal and Indian Tobacco Corporation. Both agencies
were interested in working for the welfare and development of women bidi workers. The
study gathered data on the socio-economic conditions and work-related status of 170 women
bidi workers from 13 villages of the district. The research showed that the workers were paid
between 31 and 37 rupees for 1,000 bidis even though the minimum wage rate in West
Bengal was 41 rupees. Research also showed the contractor would usually reject around 250
bidis that were kept but not counted in the work done. Finally, provident fund payments were
being deducted, but no one knew where the payments went. To build awareness of bidi
worker rights, three women connected with bidi workers in Ahmedabad went to
Murshidabad. They explained details of the Bidi Workers’ Welfare Act and various schemes
for scholarships to children, maternity support, identity card, insurance, sickness
compensation, etc. Soon, the research-based initiative resulted in regularization of working
hours, uniform wage rates, clarity on provident fund and benefits under various welfare
programs. More importantly, a local team was formed, and the members received training on
the significance of organization, membership, understanding members’ problems and their
solutions, and planning and monitoring. Initially, 1,141 bidi workers were organized.
Subsequently, in 2005, the SEWA Murshidabad Team set a target of 5,000 members.
SEWA’s approach in the State of West Bengal provides a good example of its use of research
as a base for action in initiatives for informal sector workers.
MADHYA PRADESH (MP) STATE

Because the forests of Madhya Pradesh (MP) are a major source of Tendu Patta,2 bidi
making is an age-old occupation and an established industry in the state. In 1985, SEWA
started its activities in MP by forming SEWA-Madhya Pradesh (SEWA-MP) in Indore. As
the first step, SEWA-MP organized at community meetings to build awareness among
workers about the Bidi Act. Later, SEWA-MP conducted training camps and organized
sammellans (conferences) to build capacity among bidi workers. In 1987, SEWA-MP
mounted a campaign to demand identity cards for bidi workers. It sent a memorandum to the

then Chief Minister of MP with copies to the Central and State Labour Ministers. As a result
of this campaign, 1,300 bidi workers were given identity cards, which entitled them to all the
benefits and legal protections provided under the State laws. The government also distributed
scholarships and uniforms to the children of the bidi workers. In the same year, as a result of
an appeal filed by SEWA-MP to the then Labour Commissioner of MP, two locked-out bidi
factories were reopened and 500 women bidi workers reinstated. The workers received
logbooks to record their daily attendance and production. Additionally, the State Government
opened a hospital for bidi workers.
In 1988, state-wide measures were taken in the interests of the women bidi workers. The
State Labour Department asked employers and contractors to issue identity cards and
logbooks to all women workers. The State Welfare Department agreed to print application
forms for all the benefit programs in the local language. The trade union started a savings and
credit programme for the women bidi workers and organized eight training camps. The
government gave scholarships to 135 children of bidi workers. The following year, SEWA
initiated formation of a Bidi Workers’ Credit Cooperative Society under the State
Cooperative Law. The wage rate was increased by 3.50 rupees per 1,000 bidis. One thousand
two hundred workers received the provident fund money due to them from the office of the
Provident Fund Commissioner. Four hundred women received training in bidi making, and
200 of their children benefited from scholarships. The State Health Department arranged for
free polio vaccines for 300 children of bidi workers at six health camps. The activities and
achievements continued. In 1990, 335 bidi workers were trained, and 15 women bidi workers
received maternity benefits. Between 1991 and 2008, SEWA-MP enlarged its geographical
spread, organizing bidi workers in the districts of Ratlam, Sanawad, Chhatarpur and
Khandwa. Meetings, trainings, and representation continued. All this resulted in increases in
wage rates, reinstatement of employment, and receipt of overdue provident fund amounts.
Tendu Patta, or awareness, campaigns, were organized in the tribal areas where the tendu leaf
collectors were living. These campaigns were organized through widespread use of media
including posters, pamphlets and audio cassettes. Altogether, 48,219 tendu leaf collectors
from eight districts participated in the awareness meetings. A total of 37,487 tendu leaf
collectors participated in the campaign for collection cards that gave them registration and
identity as tendu leaf workers. A conference of women bidi workers and tendu leaf collectors
was organized at Indore on International Women’s Day in 1989. In an important
achievement, rallies were organized in Khandwa District for resolving accommodation
problems of bidi workers. As a result, the MP Government constructed a bidi worker colony,
providing accommodation to 250 families. During 2006 and 2007, SEWA-MP ran Tendu
Patta campaigns in ten different regions of MP. This resulted in substantial awareness about
the rights of tendu leaf collectors and laws affecting their interests. Three hundred and forty
collectors received their identity cards. In the Bundelkhand district, the MP Government set
up a mobile dispensary in response to the demand from tendu leaf collectors.
SEWA’s initiative in MP was not just limited to bidi workers. Contractors who worked as
intermediaries between bidi workers and bidi factory owners also benefitted from the

organizing effort. As per the prevailing practice, contractors provide raw material to bidi
workers in their areas and then collect rolled bidis from bidi workers. It is the contractor’s
role to ensure that bidis received from the workers are of acceptable quality, bundle them,
and deliver them to the bidi factory owner, who pays the contractor a fee for the service.
Since 2005, contractors have also formed their own unions. One contractor narrated his
experiences presenting the contractors’ demands to the bidi factory owners. These demands
included raising the fee and establishing a systematic annual increase in the rate.
NATIONAL In 1996, SEWA’s work with bidi workers took shape nationally when the
International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied
Workers' Associations (IUF) organized a national meeting of bidi workers and submitted a
memorandum to the then Labour Minister, Welfare Minister, and Finance Minister at the
central government level. As a result, the central government announced the establishment of
a minimum wage and several benefit programs for the benefit of bidi workers
ACHIEVEMENTS AND LEARNING
In its nearly 35 year history of organizing bidi workers, SEWA has been instrumental in
achievements that have made a lasting impact on the work and lives of workers in the
informal sector. An employeremployee relationship has been established, identity cards
issued, and service conditions formalized. Apart from increases in wage rates and
implementation of provident fund rules, undesirable practices in work measurement have
stopped. This has resulted in more just compensation to workers. More importantly, bidi
worker women have received maternity benefits, access to better healthcare facilities, and
other welfare benefits. These achievements have also provided learning opportunities that
should be of interest to other organizations of poor home-based workers and employees
particularly in developing countries.
These are summarized below.
 Collective bargaining by itself is not the goal. It is a skill-based organized effort and a
powerful tool that leads to poverty alleviation and women’s empowerment.
 Workers from successful unions have a significant role to play in enhancement of unionized
efforts. Such workers can directly contribute to improving effectiveness of collective
bargaining and capacity building.

 Effective collective bargaining is not just limited to employees’ initiatives. Employers and
government officials also have a role in the process. Therefore, their education and exposure
assume equal importance. Achieving this is a real change.
 It is necessary that organizations in the roles like SEWA provide handholding support to
workers’ organizations and then withdraw from the scene in a phased manner.  Initiating
collective action in an unknown territory should be seen as a normal feature in collective
bargaining. Winning confidence of the bidi workers and their families was a key to success
Involvement of government officials and political leaders is a complicated issue; workers
have to gain knowledge and skill to be able to involve them.
 For sustainable collective bargaining, it is necessary to sustain motivation and interest in

the process of negotiations. From this perspective, it is necessary that leaders are developed
from the grassroots level workers.
 Collective bargaining requires a lot of strategizing. This strategizing needs to be done in the
participatory process with the workers.
 SEWA’s decentralized structure of campaign teams, trade committees, and representative

meetings makes collective bargaining possible.  SEWA combined need-based and campaign
approach helps in strategizing, which further leads to collective bargaining.
 SEWA was able to apply learning from the bidi trade regarding the minimum wage to
incense stick workers, and for the first time, the minimum wage was established through a
tripartite process with the employers’ association. This led to wage standards, increased
wages for workers, and the development of trust between the employers/contractors and
SEWA.  SEWA was able to lobby with the Labour and Employment Department to
constitute a welfare board for urban informal sector and frame welfare programs based on
what it had been able to achieve with the bidi workers.
 The benefit programs developed for the bidi workers, especially related to the scholarship,
attendance and uniform benefits, led to an increased percentage of education among children
of bidi workers, thus reducing child labor.
 The protective legislation for bidi workers helped in the overall development of the
workers and their families. SEWA tries to apply this learning in other sectors.
Conclusion
Data provided by women bidi workers in focus group discussions and the situations
prevailing in states of MP, Rajasthan, and West Bengal provide ample evidence of the
struggle of poor working women from the unorganized sector. The case study of Jivraj Bidi
Works provides a good example of the struggle, the process of negotiations, and the
achievements of the organized workers.

SEWA experience has shown that the bidi workers’ struggle is not just limited to wages,
working conditions, and welfare. An effective intervention can ensure decent work, full-time
employment, and building of income and savings. Secondly, the struggle must involve more
than just the bidi workers and factory owners. Suitable government policies, their efficient
implementation and support of workers’ family members also contribute considerably to
reducing conflicts.
According to SEWA ideology, collective bargaining calls for organized effort of workers
supported by guidance from a facilitator institution. Experience has shown that creating
organizations of workers must be the first step, which must be followed by capacity building
through trainings, workshops, exposure visits, seminars, and conferences. Apart from
bargaining skills and processes, the capacity building initiatives focus on understanding of
SEWA ideology, the need to follow Gandhian values, and leadership development.
SEWA experience also shows that research helps in understanding the dynamics of a local
situation. The strategy for organizing workers and for collective bargaining must be based on
research findings. In Patan, a single bidi worker triggered the initiative. Understanding of the
situation was gained through exploratory research. In Murshidabad, a formal survey was
conducted before developing the strategy for organizing. Experience has also shown that
local leaders must be identified and involved in conducting the research and in post-research
initiatives. In this context, the practice of organizing general meetings of all workers has
helped in identification of local leaders and their involvement in planning and implementing
collective bargaining initiatives. This has also assisted in ensuring maximum participation of
the workers’ community. Focus on awareness creation campaigns has equally helped in
maximizing community participation.
SEWA has always perceived government agencies and government schemes as a base in
efficient collective bargaining. The strategy for negotiations is framed within government
rules and regulations. Similarly, projects and schemes announced by the government for
workers are used for justification of workers’ demands.
Finally and most importantly, throughout the process of intervention planning and
implementation of collective bargaining, SEWA’s direct bargaining demonstrates perfect role
clarity. Meetings are organized and negotiations are planned by workers themselves.
Representation before government officials and various agencies are also managed by
workers. SEWA organizers provide guidance and build workers’ capacity in various
dimensions of collective bargaining. This also underlines the need and relevance of worker
education, training, skill building, and exposure.
Appendix I
Details of Focus Group Discussions with Bidi Workers Focus group discussions were
organized at three locations in Ahmedabad viz. Vadaj, Noble Nagar, and Ansooya Nagar on
September 26, 2012, September 28, 2012, and October 1, 2012 respectively. The group
discussions were attended by 45 women bidi workers and contractor women from various

locations where home-based bidi making is being done. These workers and contractors have
been associated with SEWA in organizing bidi workers since 1978.
In addition to experience in collective bargaining process in Gujarat, many of them have
visited other states for the purpose of organizing bidi workers and assisting in collective
bargaining. The issues discussed mainly focused on the past scenario in Gujarat, the history
of collective bargaining, challenges faced, and achievements. Those with experience in other
states were asked to provide information on the intervention and outcome. Similarly,
contractor women provided information on their experiences as a link between bidi factory
owners and bidi workers.
Appendix II
Jivraj Bidi Works:
Bidi Workers’ Struggle of 23 Years for Recognition as Employees
Jivraj Bidi Works is a relatively large bidi manufacturing and marketing organization located
in Gomtipur area of Ahmedabad City of Gujarat. In 1983, bidi workers of Jivraj Bidi Works
(JBW) filed a suit for a provident fund in the office of the Provident Fund Commissioner.
One hundred and seventy-four bidi workers were trying to prove that there was an employer-
employee relationship. The workers did not have any evidence to prove their claim. The JBW
owner took back the logbooks he had issued to workers. But one woman was not at home and
therefore still had her logbook, which became significant evidence in the case.
The case proceedings took place in the office of the Provident Fund Commissioner. The
workers could not prove an employer-employee relationship. SEWA assisted the workers in
filing an appeal in the Gujarat High Court in 1989. During this period, a change was made in
the Provident Fund Act and the case was transferred to Appellate Tribunal in Delhi. Here the
employer-employee relationship was established and the Provident Fund Commissioner
issued an order to calculate and determine the amount owed. One thousand two hundred
workers received provident fund money due them from the office of the Provident Fund
Commissioner. In 1998, JBW filed an appeal in Gujarat High Court. The High Court set aside
the appeal and ordered provident fund calculations as per the Delhi Appellate Tribunal. An
amount of 479,960 rupees was ordered, but the concerned workers filed an appeal on March

18, 2007. SEWA and JBW jointly came to an agreement, after which JBW deposited 479,960
rupees in the provident fund office. The Bidi Trade Committee of SEWA calculated the
amount of 1,020,040 rupees on the basis of the duration of work and number of bidis made
by the concerned 174 bidi workers. This was a mammoth exercise, and interestingly, the
owner of JBW joined in the calculation process and accepted the amount determined by the
Committee. It took 23 years to prove the provident fund claim of the workers. At last, on
November 6, 2007, the 174 bidi workers received their provident fund payments of 1.5
million rupees.
The unique feature of the celebration in SEWA was that the owner of JBW himself attended
the celebrations along with his family members. During the celebrations, he announced a plan
to give one of his buildings in the Gomtipur area of Ahmedabad for bidi worker training and
declared a revised wage rate of 50 rupees per 1,000 bidis – an increase of six rupees per 1,000
bidis.
This incident shows the power of collective bargaining, determination, and patience on the
part of bidi workers as well as the power of the role played by SEWA.

Unit – I : Employee Compensation – Factors Influencing Compensation Plan
and Policies –Principles of Wage and Salary Administration – Wage as a
Motivator – Methods of Wage Fixation – Factors Influencing Wage and Salary
Determination.
Compensation describes the cash rewards paid to employees in exchange for the services
they provide. It may include base salary, wages, incentives and/or commission. Total
compensation includes cash rewards as well as any other company benefits.
Employee compensation includes all forms of pay and rewards received by employees for
the performance of their jobs. Direct compensation encompasses employee wages and
salaries, incentives, bonuses, and commissions.
Indirect compensation comprises the many benefits supplied by employers, and
nonfinancial compensation includes employee recognition programs, rewarding jobs, and
flexible work hours to accommodate personal needs
Common goals of compensation policy include:
1. To reward employees’ past performance
2. To remain competitive in the labor market
3. To maintain salary equity among employees
4. To motivate employees’ future performance
5. To maintain the budget
6. To attract new employees
7. To reduce unnecessary turnover

OBJECTIVE OF THE WAGE AND SALARY ADMINISRATION
1. To acquire qualified competent personnel: Candidates decide upon their career in a
particular organization mostly on the basis the amount of remuneration the organization
offers. Qualified and competent people join the best-paid organizations. As such, the
organizations should aim at payment of salaries at that level, where they can attract
competent and qualified people.
 To support skills needed by the organization
 To pay for contribution and not time
 To reward for behavior built on organization values and leadership attributes
 To provide flexibility for individuals
 To mix between fixed and variable pay
 To recognize individual and teams
 To attract and talent
2. To secure internal and external equity: Internal equity does mean payment of similar
wages for similar jobs within the organization. External equity implies payment of similar
wages to similar jobs in comparable organizations.
 To ensure desired behavior: Good rewards reinforce desired behavior like
performance, loyalty, accepting new responsibilities and changes etc.
 To keep labour and administrative costs in line with the ability of the organization to
pay.
 To protect in public as progressive employers and to comply with the wage
legislations
 To pay according to the content and difficulty of the job and in tune with the effort
merit of the employees.
 To facilitate pay roll administration of budgeting and wage and salary control.
 To simplify collective bargaining procedures and negations
 To promote organization feasibility

INTERNAL FACTORS: The internal factors exist within the organization and
influences the pay structure of the company. These are as follows:
Ability to Pay: The prosperous or big companies can pay higher compensation as compared
to the competing firms whereas the smaller companies can afford to maintain their pay scale
up to the level of competing firm or sometimes even below the industry standards.
Business Strategy: The organization’s strategy also influences the employee compensation.
In case the company wants, the skilled workers, to outshine the competitor, will offer more
pay as compared to the others. Whereas, if the company wants to go smooth and is managing
with the available workers, will give relatively less pay or equivalent to what others are
paying.

Job Evaluation and Performance Appraisal: The job evaluation helps to have a
satisfactory differential pays for the different jobs. The performance Appraisal helps an
employee to earn extra on the basis of his/her performance.
Employee: The employee or a worker himself influences the compensation in one of the
following ways.
1. Performance: The better performance fetches more pay to the employee, and thus
with the increased compensation, they get motivated and perform their job more
efficiently.
2. Experience: As the employee devote his years in the organization, expects to get an
increased pay for his experience.
3. Potential: The potential is worthless if it gets unnoticed. Therefore, companies do pay
extra to the employees having better potential as compared to others.
EXTERNAL FACTORS: The factors that exist out of the organization but do
affect the employee compensation in one or the other way. These factors are as follows:
Labor Market: The demand for and supply of labor also influences the employee
compensation. The low wage is given, in case, the demand is less than the supply of labor.
On the other hand, high pay is fixed, in case, the demand is more than the supply of labor.
Going Rate: The compensation is decided on the basis of the rate that is prevailing in the
industry, i.e. the amount the other firms are paying for the same kind of work.

Productivity: The compensation increases with the increase in the production. Thus, to earn
more, the workers need to work on their efficiencies, that can be improved by way of factors
which are beyond their control. The introduction of new technology, new methods, better
management techniques are some of the factors that may result in the better employee
performance, thereby resulting in the enhanced productivity.
Cost of Living: The cost of living index also influences the employee compensation, in a
way, that with the increase or fall in the general price level and the consumer price index, the
wage or salary is to be varied accordingly.
Labor Unions: The powerful labor unions influence the compensation plan of the company.
The labor unions are generally formed in the case, where the demand is more, and the labor
supply is less or are involved in the dangerous work and, therefore, demands more money for
endangering their lives.The non-unionized companies or factories enjoy more freedom with
respect to the fixation of the compensation plan.
Labor laws: There are several laws passed by the Government to safeguard the workers from
the exploitation of employers. The payment of wages Act 1936, The Minimum wages act
1948, The payment of Bonus Act 1965, Equal Remuneration Act 1976, Payment of Gratuity
Act 1972 are some of the acts passed in the welfare of the labor, and all the employers must
abide by these.
Thus, there are several internal and external factors that decide the amount of compensation
to be given to the workers for the amount of work done by them.
PRINCIPLES OF WAGE AND SALARY ADMINISTRATION

1. External Equity
2. Internal Equity
3. Individual Worth.
1. External Equity:
This principle acknowledges that factors/variables external to organization influence levels of
compensation in an organisation. These variables are such as demand and supply of labour,
the market rate, etc. If these variables are not kept into consideration while fixing wage and

salary levels, these may be insufficient to attract and retain employees in the organisation.
The principles of external equity ensure that jobs are fairly compensated in comparison to
similar jobs in the labour market.
2. Internal Equity:
Organisations have various jobs which are relative in value term. In other words, the values
of various jobs in an organisation are comparative. Within your own Department, pay levels
of the teachers (Professor, Reader, and Lecturer) are different as per the perceived or real
differences between the values of jobs they perform.
This relative worth of jobs is ascertained by job evaluation. Thus, an ideal compensation
system should establish and maintain appropriate differentials based on relative values of
jobs. In other words, the compensation system should ensure that more difficult jobs should
be paid more.
3. Individual Worth:
According to this principle, an individual should be paid as per his/her performance. Thus,
the compensation system, as far as possible, enables the individual to be rewarded according
to his contribution to organisation.
Alternatively speaking, this principle ensures that each individual’s pay is fair in comparison
to others doing the same/similar jobs, i.e., ‘equal pay for equal work’. In sum and substance,
a sound compensation system should encompass factors like adequacy of wages, social
balance, supply and demand, fair comparison, equal pay for equal work and work
measurement.
How is wage determined in India
“Wages means any economic compensation paid to the employer under some contract to his
woks for the services rendered by them.”
Unorganized Labour:
It is difficult to correctly arrive at the employment numbers, under different categories in the
unorganized sector. However, agriculture & related activities continues to be the dominating
sector accounting for 70% of unorganized sector employment. Construction will be the next
largest sector.
Organized Vs Unorganized:

The organized sector enjoys better conditions of work, protection under labour laws, is better
unionized and most enjoy collective bargaining rights when compared to their unorganized
sector counter parts. On the other hand, the degree of protection & trade union rights
available for unorganized sector is limited: however, varies depending on extend of
unionization/political climate of the state. (Kerala/West-Bengal). In such cases they enjoy
near equal protection.
Government workers, public sector and private sector:
1. Government workers enjoy high level of job protection, trade union representation
without collective bargaining rights.
2. Public Sector workers enjoy trade union and collective bargaining rights.
3. Private sector workers enjoy trade union and collective bargaining rights like public
sector. Current trend is to move to non-union workplaces.
Frame work for wage calculation:

Organized Sector:
 The `day', `week' and `month' are the basic units for wages calculation - used in
combination.
 Normal working week is five days (for government) five half days/ six days.
 `Hour' is generally not a unit for wage calculation. (In newer sectors like IT, ITES
hour is becoming a standard).
 Wage payment is made monthly.
Unorganized sector:
`Day' is the common unit of calculation. In certain cases piece rate wages is in vogue, as well
as hourly wages.
Wage categorization:
Nominal wages: It consists of wages paid in cash only. It does not include other benefits like
medical allowance, residence, transport etc.
Real wages: It consists of wages paid in cash along with other benefits like medical
allowance, residence, transport, children education etc.
Sometimes, two workers performing the similar job in same or different industry get different
wages. It is due to the difference in their qualification, skill, responsibility and experience.
This is known as wage differentials.
Based on the needs of the workers, capacity of the employer to pay and the general economic
conditions prevailing in a country, the committee on Fair Wages (1948) and the 15th session
of the Indian Labour Conference (1957) propounded certain wage concepts such as

minimum wage, fair wage, living wage and need based minimum wage. While the
Committee on Fair Wages defined the first three types (concepts) of wages, the last one was
defined by the 15th session of the Indian Labour Conference.
Types of wages:
1. Minimum Wage:
A minimum wage is a compensation to be paid by an employer to his workers irrespective of
his ability to pay. The Committee on Fair Wage’ has defined minimum wage, as “the wage
must provide not only for the bare sustenance of life, but for the preservation of the efficiency
of the workers. For this purpose, minimum wage must provide some measures of education,
medical requirements and amenities”.
2. Living Wage:
A living wage is one which should enable the earner to provide for himself and his family not
only the bare essentials of food, clothing and shelter but a measure of frugal comfort
including education for his children, protection against ill-health, requirement of essential
social’ needs and a measure of insurance against the more important misfortunes, including
old-age. Thus, a living wage represents a standard of living. A living wage is fixed
considering the general economic conditions of the country.
3. Fair Wage:
Fair wage, according to the committee on Fair Wage, is the wage which is above the
minimum wage but below the living wage. The lower limit of the fair wage is obviously the
minimum wage; the upper limit is set by the capacity of the industry to pay. The concept of
fair wage is essentially linked with the capacity of the industry to pay.
The fair wage depends on considerations of such factors as:
(i) The productivity of labour,
(ii) The prevailing rates of wages in the same or neighbouring localities,
(iii) The level of the national income and its distribution, and
(iv) The place of the industry in the economy of the country.

4. Need-Based Minimum Wage:
The Indian Labour Conference in its 15th session held in July 1957 suggested that minimum
wage should be need based and should ensure the minimum human needs of the industrial
worker, irrespective of any other consideration.
The need-based minimum wage is calculated on the following bases:

(i) The standard working class family should be taken to consist of 3 consumption units for
the earner; the earnings of women, children and adolescents should be disregarded.
(ii) The minimum food requirements should be calculated on the basis of the net intake of 2
700 calories, as recommended by Dr. Akroyd, for an average Indian adult of moderate
activity.
(iii) The clothing requirements should be estimated at a per capita consumption of 18 yards
per annum which would mean an average worker’s family of 4, a total of 72 yards.
(iv) In respect of housing, the norms should be the minimum rent charged by the Government
in any area for houses provided under the Subsidized Housing Scheme for low income
groups.
(v) Fuel, lighting and other miscellaneous items of expenditure should constitute 20 per cent
of the total minimum wage.
METHODS OF WAGE DETERMINATION IN INDIA:

Fixation of wages in India is a recent phenomenon. There was no effective machinery till 2nd
world war for settlement of disputes for fixation of wages. After independence of India,
industrial relations become a major issue and there was a massive increase in industrial
dispute mostly over wages leading to substantial loss of production. Realizing that industrial
peace is essential for progress on industrial as well as the economic front, the central
government convened in 1947 a tripartite conference consisting of representatives of
employers, labour and government.
Government of India formulated industrial policy resolution in 1948 where the government
has mentioned two items, which have bearing on wages:
1. Statutory fixation of minimum wages
2. Promotion of fair wages

To achieve the first objective, the minimum wages act of 1948 was passed to lay down
certain norms and procedures for determination and fixation of wages by central and state
government.
To achieve the second objective, GOI appointed in 1949 a tripartite committee on fair wages
to determine principles on which fair wages should be fixed.
As of now, India does not have a formal national wage policy, though the issue has been
discussed several times. The government has direct and indirect control over wage levels,
which has been exercised through different institutions. Wages and salary incomes in India
are fixed through several institutions:
1. Collective bargaining
2. Industrial wage boards
3. Government appointed pay commissions
4. Adjudication by courts and tribunals
1. COLLECTIVE BARGAINING:
Collective bargaining relates to those arrangements under which wages and conditions of
employments are generally decided by agreements negotiated between the parties. Broadly
speaking the following factors affect the wage determination by collective bargaining
process:
 Alternate choices and demands
 Institutional necessities
 The right and capacity to strike
In a modern democratic society wages are determined by collective bargaining in contrast to

individual bargaining by working. In the matter of wage bargaining, unions are primarily
concerned with:
 General level of wages
 Structure of wage rates (differential among occupations)
 Bonus, incentives and fringe benefits, administration of wages
Wage determination in the unorganized sector:

Various instruments have achieved wage determination in India. For the unorganized sector
the most useful instrument is the Minimum Wages Act 1948
This law governs the methods to fix minimum wages in scheduled industries (which may
vary from state to state) by using either a committee method or a notification method.
A tripartite Advisory Committee with an independent Chairman advises the Government on
the minimum wage. In practice unfortunately, the minimum wage is so low that in many
industries there is erosion of real wage despite revision of the minimum wage occasionally.
A feeble indexation system has now been introduced in a few states only.

Collective bargaining in the organized sector:
An important factor that is not much recognized, but which still prevails in many organized
sector units is fixing and revising wages through collective bargaining.
The course of collective bargaining was influenced in 1948 by the recommendations of the
Fair Wage Committee that reported that three levels of wages exist - minimum, fair, and
living.
These three wage levels were defined and it was pointed out that all industries must pay the
minimum wage and that the capacity to pay would apply only to the fair wage, which could
be linked to productivity.
In addition to this the fifteenth Indian Labour Conference, a tripartite body, met in 1954 and
defined precisely what the needs-based minimum wage was and how it could be quantified
using a balanced diet chart.
This gave a great boost to collective bargaining; many organized sector trade unions were
able to achieve reasonably satisfactory indexation and a system of paying an annual bonus.
It is now the law, that a thirteenth month of wage must be paid as a deferred wage to all those
covered by the Payment of Bonus Act.
2. INDUSTRIAL WAGE BOARDS:
Concept of wage board was first enunciated by committee on fair wages. It was commended
by first five year plan and second five year plan also considered wage board as an acceptable
machinery for settling wage disputes. Wage boards in India are two types:
 Statutory wage board
 Tripartite board
Statutory wage board is a body set up by law or with legal authority to establish minimum
wages and other standards of employment which are then legally enforceable in particular
trade or industry to which the board's decisions relate.
Tripartite wage board is a voluntary negotiating body set up by discussions between
organized employers, workers and government to regulate wages, working hours and related
conditions of employment.
Wage board decisions are not final and are subjected to either executive or judicious review
or reconsideration by other authority or tribunals. The powers and procedure of wage boards
are same as industrial tribunals instituted under the ID act 1947
3. PAY COMMISSIONS:

First pay commission was appointed by GOI in 1946 to enquire in to the conditions of service
of central government employees. This commission in its report said that in no case should
they pay less than a living wage.
The 2nd pay commission was appointed in August 1957; it examined the norms for fixing a
need based minimum wage setup.
GOI appointed the 3rd pay commission in the 1970's which in its report expressed support for
a system in which adjustments of pay will occur automatically with upward movement in
consumer price index.
The 4th pay commission came in 1983 to examine the structure of all central government
employees, including those of union territories, officers belonging to the armed forces and all
India service. Commission submitted a report that recommended drastic changes in pay scale.
The 5thpay commission 1996 made certain recommendation regarding restricting of pay
scales.
The 6th pay commission was established in 2006 which submitted a report suggesting
revision of Pay scales of employees of Autonomous bodies.
4. ADJUDICATION:
This instrument is used for settlement of any wage related disputes through courts and
tribunals. Supreme Court has also adjudicated upon such disputes.
 WAGE AS A MOTIVATOR
Salary Motivation Theory
There is lots of research about the significance of pay with regard to performance,
motivation and satisfaction. Some state that pay increases the employee performance others
found that pay is harming for innovation and intrinsic motivation . Taking a look at most
industries, however, pay for performance schemes and the general set up of payment plans
seem to support the assumption that money motivates people. Lots of time and money have
been spent on finding the right scheme that will make employees perform better, engage
more and be more satisfied. But what is it really about?
Pay and Job Satisfaction
Judge and colleagues (2010) conducted a meta analysis, considering the largest amount of
the research on pay and its correlation with job satisfaction. What they found is that pay
level is only slightly related to job satisfaction (.15) and a higher pay level does not
necessarily lead to greater job satisfaction. In addition, Williams, Mc Daniel and Nguyen
(2006) found that pay level satisfaction only has a little effect on performance, questioning

the relevance and effectiveness of pay for performance schemes in general. Pay for
performance’s effect on motivation of employees was researched by Marsden and
Richardson (1994) and was found to be rather demotivating than motivating. So why do
companies bother with pay schemes if it does not sufficiently increase employees’
satisfaction, motivation or performance?
Research Findings
What most researchers agree upon is that the effect of salary on motivation, satisfaction and
performance mostly depends on the individual. The perception about high and low pay
level, as well as the individual value of money is arbitrary. What was discovered by Judge
and his colleagues (2010) was that bankers earning about 150.00 USD a year were not more
satisfied than child care takers earning 20.000 USD a year. Similar examples can be found
all over scientific research on salary.
Alternatives to Salary Raise to Motivate and Increase Production
When it comes to salary and pay for performance schemes companies need to consider
careful what it is they want to reward and in how far there might be different ways to
motivate and engage employees. Most employees prefer a job in a fun environment, which
is intellectually engaging and family-friendly (Pfeffer, 1998). So instead of rising pay levels
one should consider whether to invest in flexible working hours, create pet projects or
general fun-projects.
The fresh fruit at the desk, the new coffee machine or new screens are cheaper than
rewarding all employees with money and still give them a feeling of appreciation. As
mentioned before, however, this is down to the individual. A great number of people are
motivated by money (even though a rise in salary mostly only has a short term effect (Judge
et al, 2010)), and the feeling of being underpaid is even demotivating. Yet, money is not all
and definitely not the best and easiest way to make employees happy, motivated and
satisfied.
Herzberg, Mausner, Peterson, and Capwell, 1957. Literature review of 16 studies showed
that pay ranked sixth in importance. Ranking above pay were job security, interesting work,
opportunity for advancement, appreciation, and company and management.
Lawler, 1971. Reviewed 49 studies showing that pay ranked approximately third across
studies. Did not list rankings for other motivators.
Jurgensen, 1978. Collected rankings of importance from more than 50,000 applicants to the
Minneapolis Gas Company over a 30-year period. Pay ranked fifth in importance to men,
and seventh in importance to women. For men, security, advancement, type of work, and
company ranked higher than pay. For women, type of work, company, security, supervisor,
advancement, and coworkers ranked higher.

Towers Perrin, 2003. Surveyed more than 35,000 U.S. employees. Found importance of pay
varies by objective. Competitive base pay ranked second and pay raises based on individual
performance ranked eighth for attracting employees. Competitive base pay ranked sixth in
retaining employees. Pay was not ranked in the top ten in terms of “engaging” (motivating)
employees.
Major Studies of Self-Reported Pay Importance Motivational Interventions
Locke, Feren, McCaleb, Shaw, and Denny, 1980. Metaanalysis (see Note 1 at end of article)
of productivity-enhancing interventions in actual work settings found that introduction of
individual pay incentives increased productivity by an average of 30%. In contrast, job
enrichment produced productivity increases ranging from 9–17% while employee
participation programs increased productivity by less than 1%, on average.
Guzzo, Jette, and Katzell, 1985. Meta-analysis of monetary incentives and other motivational
programs on productivity or physical output. Financial incentives had by far the largest effect
on productivity of all interventions. For example, pay was four times more effective than
interventions designed to make work more interesting.
Judiesch, 1994. Meta-analysis found that individual pay incentives increased productivity by
an average of 43.7%. Results were even larger (48.8%) when the sample was restricted to
studies in real organizations (as opposed to laboratory experiments). Other interventions were
not studied, but we know of no meta-analysis that has presented findings for other
motivational interventions that come close to approaching these effect sizes.
Stajkovic and Luthans, 1997. Meta-analysis found that incentive systems yielded productivity
1.36 standard deviations higher than in comparable groups without incentives in
manufacturing firms (comparable figure in service firms was .42). Similar effect sizes were
found for feedback and social rewards.
5. Jenkins, Mitra, Gupta, & Shaw, 1998. Meta-analysis of relationships between financial
incentives and performance quantity and quality. Found an average correlation of .32
between incentives and quantity of production, but no reliable relationship between
incentives and product quality
A creative example of this approach was implemented by Jurgensen (1978), who assessed the
relative importance of ten job characteristics (including pay) to 50,000 job applicants over a
30-year period by asking them to “decide which of the following [job attributes] is most
important to you” (p. 268). Based on these direct responses, males reported pay to be only the
fifth most important factor, while women reported it to be even lower (seventh;)

Individual Difference Contingencies
 Pay is more important to extroverts than to introverts (Lucas, Diener, Grob, Suh, &
Shao, 2000; Stewart, 1996).
 Receiving performance-based pay is more important to high academic achievers
than to others. Receiving higher pay than their co-workers is more important to
extroverts and individuals with a history of social achievements (e.g., leadership
positions; Trank, Rynes, & Bretz, 2002).
 High-performing employees appear to be particularly sensitive to whether their
higher performance is rewarded with above-average pay increases, while low
performers prefer
 low-contingency pay systems (e.g., Harrison, Virick, & Williams, 1996; Trevor,
Gerhart, & Boudreau, 1997).
 Pay appears to be more important to men than to women (e.g., Hollenbeck, Ilgen,
Ostroff, & Vancouver, 1987; Jurgensen, 1978; Mincer & Polachek, 1974).
 People with high need for achievement and higher feelings of self-efficacy prefer
pay systems that more closely link pay to performance (e.g., Bretz, Ash, & Dreher,
1989; Turban & Keon, 1993)
Implementing General Principles from Compensation Research
• Take complaints about pay seriously. Given that there is a general social norm against
revealing that one is motivated by pay (at least in nonunionized situations), when an
employee does indicate pay dissatisfaction, it is generally a cause for concern. This
assumes, of course, that you actually want to retain the individual.
• Do not fall very far below market pay levels. It is more disadvantageous to be “way
below market” than it is advantageous to be “way above” it. Being noticeably below market
will cause some applicants, often the most desirable ones, to reject your offer out of hand.
However, once you reach market levels, choices will generally be made on a
multidimensional basis, where factors other than pay can also become competitive
advantages (or disadvantages).
Realize that most of the best employees want strong pay-performance relationships.
On average, the ability to earn a lot of money for outstanding performance is a competitive
advantage for attracting, motivating, and retaining high-performing employees. This is not
to
say that organizations cannot attract good employees without high-contingency systems;
clearly, a number of well-known firms have done so (e.g., SAS software). However, in such
cases, the absence of contingent pay is compensated by a strong culture emphasizing other
values and benefits (in SAS’s case, familyfriendliness, as well as high general pay levels
and benefits). In addition, there are also a number of organizations that thrive on high
companybased (versus individually based) contingent pay, such as Southwest Airlines or
Nucor Steel. These companies are able to attract high performers who also hold relatively
strong collectivist values.

• Evaluate current pay systems with respect to the strength of pay-performance
relationships. Although most nonunionized and nongovernment employees are ostensibly
paid on the basis of merit, examination of most companies’ pay systems reveals little
differentiation in raises between average and superior performers. Pay-performance
contingencies are generally limited by such practices as setting job grade ceilings and
paying for nonmerit considerations (e.g., external equity adjustments or matching
competing offers) out of the “merit” pay budget.
Similarly, pay-performance contingencies should also be evaluated at the supra-

individual level: Are there gain-sharing or profitsharing programs? If so, are the payouts
large enough, immediate enough, or frequent enough to make a difference to how hard
people are willing to work? (For exam ple, deferred profit-sharing plans that are designed as
substitutes for defined benefit pensions are unlikely to have a motivational effect.)
Finally, examine how closely pay-increase budgets mirror changes in organizational

performance levels Many employees have become quite used to being told that the annual
increase budget will be very modest due to limited ability to pay (i.e., low corporate
profitability). However, the reverse is often not true, with raise pools remaining modest
even in years of high profitability and the remaining money being allocated elsewhere.
• Examine whether executive pay is moving in the same direction, and at roughly
proportionate rates, as employee increases. Evidence from the past 30 years reveals quite
convincingly that in the typical corporation, the ratio between executive and nonexecutive
compensation has increased to a very substantial degree. Not only has the earnings gap
between executive and nonexecutive employees exploded over the past several decades
(Bok, 1993; Crystal, 1991; Frank & Cook, 1995; Shulman, 2003), but there are also many
examples of disproportionate increases in executive pay in the face of poor organizational
performance (Samuelson, 2003; Useem, 2003).
Because how people feel about their pay is a result of comparative processes, organizations
with huge variance between executive and employee pay practices are likely to be populated
with workers eagerly awaiting opportunities to move to other organizations. (An important
side note is that workers are often accepting of very high executive pay, such as Bill Gates
at Microsoft or General Electric under Jack Welch, so long as the fruits of strong
organizational performance are also passed on to lower layers of the organization.)

FACTORS INFLUENCING THE DETERMINATION OF WAGE RATES
1. Ability to Pay
2. Demand and Supply
3. Prevailing Market Rates
4. Cost of Living
5. Bargaining of Trade Unions
6. Productivity
7. Government Regulations
8. Cost of Training.The wage payment is an important factor influencing labour and

management relations. Workers are very much concerned with the rates of wages as their
standard of living is connected with the amount of remuneration they get. Managements,
generally, do not come forward to pay higher wages because cost of production will go up
and profits will decrease to the extent.
Following factors influence the determination of wage rate:

1. Ability to Pay:
The ability of an industry to pay will influence wage rate to be paid, if the concern is running
into losses, then it may not be able to pay higher wage rates. A profitable enterprise may pay
more to attract good workers. During the period of prosperity, workers are paid higher wages
because management wants to share the profits with labour.
2. Demand and Supply:

The labour market conditions or demand and supply forces to operate at the national and
local levels and determine the wage rates. When the demand for a particular type of skilled
labour is more and supply is less than the wages will be more. One the other hand, if supply
is more demand on the other hand, is less then persons will be available at lower wage rates
also.
According to Mescon,” the supply and demand compensation criterion is very closely related
to the prevailing pay comparable wage and on-going wage concepts since, in essence to all
these remuneration standards are determined by immediate market forces and factors.

3. Prevailing Market Rates:
No enterprise can ignore prevailing wage rates. The wage rates paid in the industry or other
concerns at the same place will form a base for fixing wage rates. If a unit or concern pays
low rates then workers leave their jobs whenever they get a job somewhere else. It will not be
possible to retain good workers for long periods.
4. Cost of Living:
In many industries wages are linked to enterprise cost of living which ensures a fair wages to
workers. The wage rates are directly influenced by cost of living of a place. The workers will
accept a wage which may ensure them a minimum standard of living.
Wages will also be adjusted according to price index number. The increase in price index will
erode the purchasing power of workers and they will demand higher wages. When the prices
are stable, then frequent wage increases may not be required
5. Bargaining of Trade Unions:

The wage rates are also influenced by the bargaining power of trade unions. Stronger the
trade union, higher will be the wage rates. The strength of a trade union is judged by its
membership, financial position and type of leadership.
6. Productivity:
Productivity is the contribution of the workers in order to increase output. It also measures
the contribution of other factors of production like machines, materials, and management
.Wage increase is sometimes associated with increase in productivity. Workers may also be
offered additional bonus, etc., if productivity increases beyond a certain level. It is common
practice to issue productivity bonus in industrial units.
7. Government Regulations::
To improve the working conditions of workers, government may pass a legislation for fixing
minimum wages of workers. This may ensure them, a minimum level of living. In under
developed countries bargaining power of labour is weak and employers try to exploit workers
by paying them low wages. In India, Minimum Wages Act, 1948 was passed empower
government to fix minimum wages of workers. Similarly, many other important legislation
passed by government help to improve the wage structure.

8. Cost of Training:
In determining, the wages of the workers, in different occupations, allowances must be made
for all the exercises incurred on training and time devoted for it.

Unit – II: Job Evaluation – Methods – Performance and Reward Systems – Methods of
Wage Payment – Incentive Plans – Wage Differentials – Minimum Wages Act, 1948.
Concept of job evaluation:

In simple words, job evaluation is the rating of jobs in an organization. This is the process of
establishing the value or worth of jobs in a job hierarchy. It attempts to compare the relative
intrinsic value or worth of jobs within an organisation. Thus, job evaluation is a comparative
process.
The objectives of job evaluation, to put in a more orderly manner are to:
1. Provide a standard procedure for determining the relative worth of each job in a plant.
2. Determine equitable wage differentials between different jobs in the organisation.
3. Eliminate wage inequalities.
4. Ensure that like wages are paid to all qualified employees for like work.
5. Form a basis for fixing incentives and different bonus plans.
6. Serve as a useful reference for setting individual grievances regarding wage rates.
7. Provide information for work organisation, employees’ selection, placement, training and
numerous other similar problems.
8. Provide a benchmark for making career planning for the employees in the organisation.
Methods of Job Evaluation: Job-evaluation methods are of two categories:-
a) Analytical Methods
Point Ranking Methods
Factor Comparison Method
b) Non-analytical Methods
Ranking Method
Job-grading Method
 NON-ANALYTICAL METHODS
Ranking and job-classification methods come under this category because they make no use
of detailed job factors. Each job is treated as a whole in determining its relative ranking.
Ranking Method

This is the simplest, the most inexpensive and the most expensive method of evaluation. The
evaluation committee assesses the worth of each job on the basis of its title or on its contents,
if the latter are available. But the job is not broken down into elements or factors. Each job is
compared with others and its place is determined.
The method has several drawbacks. Job evaluation may be subjective as the jobs are not
broken into factors. It is hard to measure whole jobs.
Job-grading method
As in the ranking method, the job-grading method (or job-classification method) does not call
for a detailed or quantitative analysis of job factors. It is based on the job as a whole.The
difference between the two is that in the ranking method, there is no yardstick for evaluation,
while in the classification method, there is such an yardstick in the form of job classes or
grades.
Under the classification method, the number of grades is first decided upon, and the factors
corresponding to these grades are then determined. Facts about jobs are collected and are
matched with the grades which have been established.
The essential requirement of the job-grading method is to frame grade descriptions to cover
discernible differences in degree of skill, responsibility and other job characteristics. Job
grades are arranged in the order of their importance in the form of a schedule. The lowest
grade may cover jobs requiring greater physical work under close supervision, but carrying
little responsibility. Each succeeding grade reflects a higher level of skill and responsibility,
with less and less supervision.
The advantages of the job-classification method include its simplicity and inexpensiveness.
Secondly, in organizations where number of jobs is small, this method yields satisfactory
results.
The disadvantages of the method are:
(i) job grade descriptions are vague and are not quantified;
(ii) difficulty in convincing employees about the inclusion of a job in a particular grade
because of vagueness of grade descriptions; and
(iii) more job classification schedules need to be prepared because the same schedule cannot
be used for all types of jobs.
 ANALYTICAL METHODS
These include the point-ranking method and the factor-comparison method

Point-Ranking Method
The system starts with the selection of job factors, construction of degrees for each factor,
and assignment of points to each degree. Different factors are selected for different jobs with

accompanying differences in degrees an points. The National Electrical Manufacturer’s
Association (NEMA), USA, has given the factors, degrees and points for hourly rated.
The range of score and grades is also predetermined-for example, from 210 to 230 points, the
5th grade; 231 to 251 points, the 6th grade; and so forth. A given job is placed in a particular
grade, depending on the number of points it scores.
The advantages of point system are:
1. A job is split into a number of factors. The worth of each job is determined on the basis of
its factors and not by considering the job as a whole.
2. The procedure adopted is systematic and can easily be explained to the employees.
3. The method is simple to understand and easy to administer.
At least two defects are noticed in the point system. First, employees may disagree with the
points allotted and the factors and their degrees identified. Second, serious doubts are
expressed about the range of points allotted and matching them with the job grades. For
example, a score range of 238 to 249 is grade seven and the next range of 250 to 271 is grade
six. A variation of one point makes all the difference.
Factor-Comparison Method
The factor-comparison method is yet another approach for job evaluation in the analytical
group. Under this method, one begins with the selection of factors, usually five of them:
mental requirements, skill requirements, physical exertion, responsibility, and job conditions.
These factors are assumed to be constant for all the jobs. Each factor is ranked individually
with other jobs.
For example, all the jobs may be compared first by the factor ‘mental requirements’. Then the
skills factor, physical requirements, responsibility, and working conditions are ranked. Thus,
a job may rank near the top in skills but low in physical requirements. Then total point values
are then assigned to each factor. The worth of a job is then obtained by adding together all the
point values.
An advantage of the factor-comparison methods that jobs of unlike nature – for example,
manual, clerical and supervisory – may be evaluated with same set of factors. But the method
is complicated and expensive.
PERFORMANCE MANAGEMENT AND REWARD PRACTICES

Today organizations are showing a high degree of commitment towards reinforcement of
reward practices which are aligned with other HR practices and the goals of the organization
for attracting, retaining and motivating employees. Efficient reward practices helps in
attracting result driven professionals who can thrive and succeed in performance based
environments. Hence, it is a crucial motivator and may contribute towards the enhancement
of the productivity of the employees if implemented properly. For example, Continental
Airlines as a part of their turnaround strategy introduced on time bonus incentive package
according to which an employee will gain a bonus of $65 every month for ensuring on time
flight operations.

An effective reward system should be linked with the performance development system,
which focuses on performance based pay and offers ample learning opportunities along with
a healthy work environment. Variable pay can play a crucial role in boosting the performance
of the employees especially the star performers instead of the fixed pay packages. Few such
reward practices may take the forms of gain sharing, bonuses, team based incentives, profit
sharing, ESOP’s and equity based incentive awards.
An efficient management of reward system may have a beneficial effect upon the
performance in several ways - instilling a sense of ownership amongst the employees, may
facilitate long term focus with continuous improvement, reduces service operating costs,
promotes team work, minimizes employee dissatisfaction and enhanced employee interest in
the financial performance of the company. Few organizations like General Mills, reward their
employees for attaining new skills which may add value to the organizational performance
and thereby facilitate job rotation, cross training and self managed work teams. Few
organizations also recognize exceptional performance by providing recognition awards and
lump-sum merit awards for winning employee commitment and attaining long term
beneficial results. Example, TISCO, offers instant or on the spot rewards, monthly rewards
and annual rewards to its employees under its ‘Shabashi scheme’.
A healthy pay for performance strategy should incorporate the following components as is
provided in the table given below:
Rewards can be a vital source of motivation for the employees but only if it is administered
under right conditions. Few strategies which improve the effectiveness of rewards are given
below:
 Linking rewards with the performance
 Implement team rewards for the interdependent jobs for example Xerox.
 Ensuring that the rewards are relevant. Example Wal-Mart, rewards bonuses to the top
executives which is based on the company’s overall performance whereas the
frontline employees earn bonus on the basis of the sales figure or targets attained by
their store.

 Ensuring that the rewards are valued by the employees.
 Checking out for the undesirable consequences of administration of any reward
practice.
Besides the monetary rewards, the contemporary employees desire for non monetary rewards
which may be in the form of better career opportunities, skills development and recognition
programs. Many IT and project based organizations give much importance to non-monetary
rewards for maximizing employee satisfaction.
 WAGE PAYMENT
There are two basic methods of labor remuneration:
a) Time Rate System; and (b) Piece Rate System Time Rate System
Under the time rate system, workers are paid according to the time for which they work.
Payment may be on hourly basis, daily basis or monthly basis. In this system, no
consideration is given to the quantity or quality of work done. When payment is made on
hourly basis, total wages payable are calculated as follows:
Wages = No. of hours worked x Rate per hour Piece Rate System
Wages under this system are paid according to the quantity of work done. A rate is fixed per
unit of production and wages are calculated by the following formula:
Wages = Rate per unit x No. of units produced.
Incentive Plans Both time rate system and piece rate system have their merits and demerits.
Incentive plans attempt to combine the good points of both the systems. The primary purpose
of an incentive plan is to induce a worker to produce more to earn a higher wage. Naturally,
producing more in the same period of time should result in higher pay for the worker.
Because of greater number of units produced, it should also result in lower cost per unit for
fixed factory cost and also for labor cost.
Various Incentive Plans Following is the list of many incentive plans being practiced by
various organizations.
(i) Straight Piece Rate Method
(ii) Flat Time Rate Method
(iii) Co-partnership
(iv) Guaranteed Day Work
(v) Taylor Differential Piece Rate Method
(vi) Different Time Rates
(vii) Rowan Premium Bonus Plan
(Variable Sharing Plan)

(viii) Halsey Premium Bonus Plan (Halsey Plan and Halsey-Weir Plan)
(ix) Group Incentive Schemes
(x) Standard Hour Plan
(xi) Merrick Multiple Piece Rate
(xii) Gantt Task Bonus Wage System
(xiii) Bedaux Point System
(xiv) Emerson Plan
(xv) Barth Premium System
(xvi) Accelerating Premium Bonus
We will discuss some of the above mentioned incentive plans in detail.
1) Straight Piece Rate Method : The method rewards employees based on their output. A
fixed rate of wage is paid for each unit produced, or number of operations completed or job
completed. The wages payable is calculated by multiplying the number of pieces produced by
the wage rate. There is generally a guaranteed hourly rate for workers who are unable to
attain the standard in order to pay the minimum ‘day wages’.
2) Flat Time Rate Method: This method is used for paying remuneration to employees
based on their attendance. A fixed rate of wage is paid hourly, or daily, or weekly on the
basis of time spent on the shop floor (i.e. production department) in production. The wages
payable is calculated by multiplying the hours/days spent in production by the hourly/daily
wage rate.
3) Halsey Premium Bonus Plan (Halsey Plan and Halsey-Weir Plan): This plan was
introduced by F A Halsey in 1891. It is a simple combination of time and piece rate systems.
A worker is paid a guaranteed base rate and is rewarded when his performance exceeds
standard. A standard time is established in respect of each job or unit. Bonus is paid on the
basis of 50% of time saved.
The total wages payable is calculated as under:
= (Hourly rate X Time taken) + (50% X Time saved X Hourly rate)
As a result of increased productivity, conversion cost per unit falls. This is because fixed
overhead gets distributed over larger volume of output. Thus, the firm finds it possible to
reward workers directly in proportion to production. In the case of Halsey Weir plan, the
percentage used is 30 instead of 50.
4) Rowan Premium Bonus Plan (Variable Sharing plan): A standard time is established in
respect of each job or process. There is a guaranteed base rate. A bonus is paid on the basis of
time saved computed as a proportion of the time taken which the time saved bears to the
standard time. The total wages payable is calculated as under:
=(hourly rate x time taken) + ( time saved x time taken) x hourly rate time allowe

5) Taylor Differential Piece Rate Method: This system was introduced by F. W. Taylor, the
father of Scientific Management. The main features of this incentive plan are as follows: a.
Day wages are not guaranteed, i.e. it does not assure any minimum amount of wages to
workers. b. A standard time for each job is set very carefully after time and motion studies. c.
Two piece rates are set for each job- the lower rate and the higher rate. The lower piece rate is
payable where a worker takes a longer time than the standard time to complete the work.
Higher rate is payable when a worker completes the work within the standard time. In other
words, lower piece rate is payable to inefficient workers and higher piece rate is payable to
efficient workers. It will be seen that there is a great difference between the wages of an
efficient and an inefficient worker.
 MINIMUM WAGES ACT 1948

The Minimum Wages Act 1948 is an Act of Parliament concerning Indian labour law that
sets the minimum wages that must be paid to skilled and unskilled labours. The Indian
Constitution has defined a 'living wage' that is the level of income for a worker which will
ensure a basic standard of living including good health, dignity, comfort, education and
provide for any contingency. However, to keep in mind an industry's capacity to pay the
constitution has defined a 'fair wage'.
Fair wage is that level of wage that not just maintains a level of employment, but seeks to
increase it keeping in perspective the industry’s capacity to pay. To achieve this in its first
session during November 1948, the Central Advisory Council appointed a Tripartite
Committee of Fair Wage. This committee came up with the concept of Minimum Wages. A
minimum wage is such a wage that it not only guarantees bare subsistence and preserves
efficiency but also provides for education, medical requirements and some level of comfort.
India introduced the Minimum Wages Act in 1948, giving both the Central government and
State government jurisdiction in fixing wages. The act is legally non-binding, but statutory.
Payment of wages below the minimum wage rate amounts to forced labour.
Wage Boards are set up to review the industry’s capacity to pay and fix minimum wages such
that they at least cover a family of four’s requirements of
a. calories,
b. shelter,
c. clothing,
d. education,
e. medical assistance, and
f. entertainment.
Under the law, wage rates in scheduled employments differ across states, sectors, skills,
regions and occupations owing to difference in costs of living, regional industries' capacity to
pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across
the country and the structure has become overly complex.

The highest minimum wage rate as updated in 2012 is Rs. 322/day in Andaman and
Nicobar to Rs. 38/day in Tripura.
CONTENTS OF ACT
the Act provides for fixing wage rate (time, piece, guaranteed time, overtime) for any
industry .
1) While fixing hours for a normal working day as per the act should make sure of the
following:
The number of hours that are to be fixed for a normal working day should have one or more
intervals/breaks included.
At least one day off from an entire week should be given to the employee for rest.
Payment for the day decided to be given for rest should be paid at a rate not less than the
overtime rate.
2) If an employee is involved in work that categorises his service in two or more scheduled
employments, the employee’s wage will include respective wage rate of all work for the
number of hours dedicated at each task.
3) It is mandatory for the employer to maintain records of all employee’s work, wages and
receipts.
4) Appropriate governments will define and assign the task of inspection and appoint
inspectors for the same.
DEFINITION OF WAGE DIFFERENTIALS:
Wage differential allocates labour among different occupations, industries and regions in a
manner so as to maximise national output. Wage differential is one of the important features
of wage structure, wage and salary administration. It serves both economic and social
functions. Wage differential also serves a useful social function by determining the social
status of workers.
In analyzing wage differentials, the following aspects are generally taken into account:
(1) Degree of wage differential:
(Wage differentials between the lowest and the highest paid employees in different
organisations)
(2) Occupations/Skill wage differential: (Wage differentials on the basis of occupation/skill)
(3) Regional wage differential: (Wage differentials based on region)
2. Degree of Wage Differential:

The degree of wage differential has been measured by taking the earnings of lowest and
highest paid employees.

Wage differential has been calculated on the basis of:
(i) Basic pay
(ii) Basic pay and D.A. and
(iii) Total earnings.
On comparison of the degree of wage differentials in different undertakings in India, it
appears that the wage differential in Rourkela Steel Plant is little higher than the all India
average of 1: 9. But it is much higher than what the trade unions advocate.
The INTUC wants that the difference (based on basic pay) between the lowest and highest
paid employees in Iron & Steel Industry should not exceed 1:8, while AITUC wants it 1 : 4.
But the actual difference (on the basis of basic pay) is 1: 12.
The degree of wage differential in private sector undertakings is less than 1: 68. Risks and
uncertainties being greater and managerial talent of the requisite calibre being still relatively
scarce, the differential can be higher in the public sector.
The problem of degree of wage differentials in private sector undertakings was also examined
by the Boothalingam Committee which has suggested that under existing circumstances a
ceiling be fixed on the total earning of the highest paid employees.
3. Wage Differential Based on Occupation:
Of the various types of differences that exist in wage structure the difference on the basis of
skill is most common. An unskilled worker gets less pay than a semiskilled or skilled worker.
The skill differential serves three basic functions:
(i) It induces the worker to undertake more demanding or risky jobs.
(ii) It provided incentive to incur the cost of training and education, and encourages workers
to develop skill in anticipation of higher earnings in future, and
(iii) It performs a social function by determining the social status of workers.
Wage differential on the basis of skill can be studied in two ways:
(a) Differentials based on occupation.
(b) Differentials based on skill.
The Fair Wage Committee was of the view that the differentials should be based on
occupation and had suggested the adoption of a standard occupational nomenclature so that
the work of classification and assessment may be undertaken on a uniform basis throughout
the country.
Same wage boards, for example, wage boards for Sugar, Iron & Steel, Cement and Cotton
textiles tried to standardize occupational nomenclatures, but failed. This is why the wage
boards, instead of adopting a standard common occupational nomenclature, have divided the
various occupations in different grades depending on the degree of skill involved.

In analysing wage differentials based on occupation, various difficulties may be faced, like
standardisation of occupations, absence of job description and job specifications etc.; owing
to which it is generally decided to take a few common occupations which may be considered
as standard.
Wage Differentials Based on Region:
Wage differentials have been examined also on the basis of regions. Regional wage differen-
tial refers to differences of workers earnings doing the same job in different units of an
industry located in different regions. It is used also to denote the difference in average wages
of all workers employed in an industry in different regions.
WAGE DIFFERENTIALS AND LABOUR MARKET:
The equalizing forces act in labour market, although less quickly and easily than in the other
markets. In a given technological set up, however, while some movements are possible and
easy others are not so, at least in the short-run.
The equalizing tendency would, therefore, be found among the jobs between which
movements are possible and not among the jobs between which movements are not possible.
Therefore, the analysis of the labour market should make this distinction, arid then try to
evaluate its competitive efficacy in equalizing the wage-rates in the technologically limited
areas.
The various types of differentials, inter-industry, inter-firm, inter-occupation and inter-area
have varying implications for labour market analysis. Modern technology makes inter-
occupation movement highly difficult, and therefore, the wage-differentials among occu-
pations, at least in the short-run, do not reveal anything about the degree of competitiveness
in the market.
In the long-run, however, if competition is effective, people may be expected to be more
attracted towards, and therefore, get themselves or their children trained in, higher wage
occupations, thus bringing down the extent of occupational differentials.
Inter-industry differentials again do not reveal much on account of significantly different
skill-mix required in the workforce of different industries under modern technological
conditions. In the long-run, however, competitive forces that bring about a narrowing
tendency in occupational differentials may also effect a narrowing tendency in inter-industry
differentials.
Geographical differentials and inter-firm differentials, more particularly in the same

occupation and industry, are thus the reliable indexes of the working of competition in the
labour market. In a competitive national labour market with a high degree of inter-regional
movements of labour in response to better earnings opportunity, the inter-regional differ-
entials in wage will tend to disappear.

Unit – III : Employee Welfare – Concept, Scope and Significance – Welfare
Policy and Five Year Plans – Role of Employee Welfare Agencies – State,
Employers, Trade Unions and Voluntary Agencies.
Scope of Labour Welfare:
A persual of the definitions indicate that the term labour welfare is a very comprehensive
concept and is wide in its scope. It includes in its fold all efforts in the form of amenities and
activities which vary from place to place, industry to industry and time to time. Labour
welfare activities are broadly classified as (i) statutory, (ii) non-statutory or voluntary and (iii)
mutual.
Statutory provisions relating to welfare of workers have been promulgated by the government
of India in different enactments viz. Factories Act, 1948; Mines Act, 1952; The Motor
transport Workers Act, 1961 ; Dock Workers (Safety, Health Act, 1951 ; The Merchant Act
1961 ; Plantation Labour Act, 1951, The Merchant Shipping Act, 1958 ; Coal Mines Labour
Welfare Fund Act, 1974 and Mines Labour Welfare Fund etc. The provisions contained in
these Acts provide the minimum standards of health, safety and welfare of workers.
Employers are supposed to adhere to these provisions.
Voluntary welfare includes all those activities which employers undertake for their
employees on voluntary basis. It is a philanthropic approach on the part of the employer to
provide various welfare facilities to the workers over and above the statutory measures.
Some of the important voluntary welfare activities on the part of the employers may be
provision of housing facilities, transportation, recreational facilities, formation of cooperative
societies, children’s education, and loans for purchasing scooters, cars and grains, provision
of library, leave travel concessions, uniforms and gifts etc.
Mutual welfare is “a corporate enterprise” undertaken by the workers themselves or their
organisation called trade unions. In India, the trade unions are financially weak and are
unable to undertake such activities on the large scale. However, in advanced countries the
labour welfare activities are the important functions of trade unions.
The Committee of experts on welfare facilities for Industrial workers constituted by the
I.L.O. in 1963 had divided the welfare services into two groups.
(a) Welfare amenities within the precincts of the establishment (intra-mural):

Latrines and urinals, washing and bathing facilities, creches, rest rooms and canteens,
arrangements for drinking water, arrangements for prevention of fatigue, health services
including occupational safety, administrative arrangements within a plant to look after
welfare, uniforms and protective clothing and shift allowance.
(b) Welfare amenities outside the establishments (extra-mural):
Maternity benefit, social insurance measures including sports, cultural activities, library and
reading room, holiday homes and leave travel facilities, workers’ co-operatives including
consumers co-operative stores, fair price shops and co-operative thrift and credit societies,
vocational training for dependents of workers, other programmes for the welfare of women,
youth and children and transport to and from the place or work.
Thus, labour welfare is very comprehensive and embraces a multitude of activities of
employers, state, trade unions and other agencies to help workers and their families in the
context of their industrial life. Thus the scope of labour welfare is fairly wide.
The concept of labour welfare embraces a multitude of activities including all extra-mural,
intra-mural activities, as well as statutory and non-statutory welfare measures undertaken by
the employees, the government and the trade unions to help workers and their families in the
context of their industrial life. It is, therefore, concluded that labour welfare is a convenient
term to cover all those aspects of industrial life which contribute to the well being of a
worker.
IMPORTANCE (OR NEED OF LABOUR WELFARE):

The necessity for labour welfare is felt all the more in our country because ours is a
developing economy aiming at rapid economic and social development. The need for labour
welfare was felt by the Royal Commission on Labour in 1931.
The philosophy of labour welfare and its necessity was mentioned in a resolution passed by
the Indian National Congress on fundamental rights and economic programme in its Karachi
Session in 1931.
The resolution demanded that the organisation of economic life in the country must confirm
to the principles of justice and it might secure a decent standard of living. It also emphasized
that the state should safeguard the interest of industrial workers and should secure for them
by suitable legislation a living wage, healthy conditions of work, limited hours of work,
suitable machinery for the settlement of disputes consequences of old age sickness and
unemployment.
Following motives and considerations have promoted employers to provide welfare

measures:
(1) It is helpful in winning over their employees’ loyalty and to combat trade unionism.
(2) It builds up a stable labour force by reducing labour turnover and absenteeism.

(3) It raises the morale of workers. A feeling is developed among the workers that they are
being looked after properly.
(4) One of the reasons for provision of welfare activities in recent times by certain employers
is to save themselves from heavy taxes on surplus.
(5) The motive behind provision of welfare activities by some companies is to enhance their
image and to create an atmosphere of goodwill between the labour and management and also
between management and the public.
(6) The social evils prevalent in the labour force such as gambling, drinking etc. are reduced
to the minimum. It brings improvement in the health of the workers and keeps them cheerful.
 THE FIVE YEAR PLANS AND LABOUR WELFARE

During the First Five Year Plan (1951–1956 ) Government did considerable amount of
work for the welfare measures of the labour classes of society. During this period important
Act such as the Plantations Labour Act, 1951, the Employees Provident Fund Act, 1952
the Mines Act, 1952 were enacted. A subsidy was provided for housing scheme for worker
was documented and implemented in 1952. Various state governments also formulated and
implemented various Acts as legislation on housing for labour class, i.e., the Bombay
Housing Board act, 1948, the Madhya Pradesh Board Act, 1950, the Hyderabad Labour
Housing Act, 1952, etc.
The Second Five Year Plan (1956–1961) provided impetus for further more welfare
measures and legislation for labour. New laws were also established to ensure welfare
measure for merchant seamen and motor transport workers. The employee‟s state insurance
scheme, 1948 was implemented and to cover more employees in them factories. A
comprehensive scheme of Dock workers (safety, health and welfare) scheme was
formulated in 1961.
In 1959, the state government of Assam passed an act labour working in tea plant known as
the Assam Tea Plantation Labour Employee‟s Welfare Fund Act. In April 1956, a New
Plantation Labour Housing Scheme was enacted which has provision of a certain amount of
loan to be provided for construction of houses for labours. The second five year plan period
also witnessed quite a large number of enactments in accommodation and housing by various
state governments as labour welfare measures.

The third five year plan (1961-66) emphasized the requirement of more efficient and
effective implementation of various statutory labor welfare provisions and legislation. The
plan also talked about establishment of co-operative credit organisations and consumer‟s
stores for industrial workers, and stressed on the role of trade unions and voluntary
organizations in managing such co-operatives organisations. There has been enactment of the
legislative provisions during this plan period which include the. During this period, co-
operative housing organisation also started to make amends Apprentices Act, 1961; Iron-
Ore Mines Labour Welfare Cess Act, 1961; Maternity Benefit Act, 1961 And Payment
of Bonus Act, 1965 gradually.
The Fourth Five Year Plan (1969–1974) was more about the expansion and
implementation of the Employees State Insurance (ESI) Act to provide health related
facilities to the families of insured worker as well as labourers working in shops and
commercial establishments. To protect the contract labour from exploitation government
passed, the Contract Labour Regulation and Abolition Act of 1970. Provision of this Act
compels contractors to undertake welfare activities for of contractual workers. In 1972
Government enacted an important statute as the Payment of Gratuity Act, 1972 (bonuses)
for the welfare of retiring industrial employees.
The Fifth Five Year Plan (1974–1979) witnessed the additional provisions for labour
welfare in a number of areas. For encouraging the provision of industrial safety, safety cells
were established in various states of the country. This five year plan period also covered:
(1) new additional requirements for the most of the existing training institutions, such
as the Central Training Institutes for Instructors, the Foreman Training Institute, and Central
Staff Training and Research Institute;
(2) Strengthening and expansion of the Advanced Training Institute throughout the
country;
(3) Extension of the Apprenticeship Training Programme; (4) Development and
establishment of Vocational Training in Women‟s Occupations; and (5) all other kinds of
schemes related to research, surveys and studies to be undertaken by various organisations
and institutes.
The Sixth Five Year Plan (1980–1985) was more about effective implementation of the
welfare measures of prior legislative enactments, and extension of coverage of Act such as
the Employees Provident Fund, Employees‟ State Insurance Scheme and the Family
Pension Scheme.

Special scheme also were developed and implemented by State Governments for the welfare
of agricultural labour, artisans (skilled craftsmen), leather workers, fishermen, handloom
weavers and other unorganised sector workers.
The Seventh Five Year Plan (1985–1989) focussed on enhancement in working conditions
of informal sector worker both in the rural areas and also in the urban areas. This plan period
witnessed certain major initiative for working women. Thus during this period the stress was
on improvement in capacity development, efficiency and productivity.
The Eighth Five Year Plan (1992–1997) witnessed government stressing on the importance
of reforms in industrial and trade policies. This five year plan put great emphasis on resource
mobilisation from public enterprises. In this period, the great work had been on the aspect of
enhancement for the quality of labor work, productivity, skills development, working
conditions, provisions for welfare measures and the social security, especially to those
working in the unorganised sectors without any socio-economic security.
The Ninth Five Year Plan (1997–2002) emphasised the enhancement of labour welfare
measures, increasing productivity through skills development, and also the\ adequate
provisions were taken for social security of workers. Governmental institutions and resources
were directed towards skill development, knowledge sharing on new job opportunities,
monitoring and evaluation of working conditions for labour class, creation of industrial
harmony through development of infrastructure for better industrial relations, and insurance
policy for labour against illness, injury and unemployment and their families.
The Tenth Five Year Plan (2002–2007) given more weight on improving the working
conditions, better industrial relations, proper enforcement of Labour Legislations and welfare
measures, and also launching various schemes for the welfare activities for all industrial
workers and their families. The Labour Department (GoI) worked on implementation
mechanism of about two dozen of labour statutes.
Their goal was not only in terms of economic benefits (such as minimum wages, overtime,
bonuses, etc.) to workers, but also to provide them adequate health and safety facility at work
place.
The Eleventh Five Year Plan (2007–2012) talked about unemployment and
underemployment issue, the promotion and generation of regular wage employment
opportunities and addressing the continuing problems of workers employed in unorganised
sector all over the country.
The 12th Five Year Plan (2012–2017) is more about skill building as an instrument to
improve the effectiveness and contribution of labour to the overall production. It has also
made skill development as an important agenda for the Governments at Centre as well as
States. In this regard, various challenges on skill development identified. Enactments and
scheme such as Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA) , Swarnjayanti Gram Swarozgar Yojana (SGSY)8 and National Rural
Livelihood Mission (NRLM) to restructure and strengthened the various employment
promotion schemes for the bottom of the pyramid.

For enhancing living conditions of the workers and to accomplish higher productivity with
higher efficiency, skill development through training is most importance. Manpower
development through skill development will provide adequate manpower of appropriate skills
and quality to various sectors is fundamental for express socioeconomic development of
country and its people.
TYPES OF EMPLOYEE WELFARE

Employee welfare can be categorized as statutory or non-statutory, meaning as required by
the law or by the will of the management respectively. Welfare activities can also be
classified as either intra-mural (inside the workplace) or extra-mural (outside the workplace).
Intramural welfare facilities are those within the working environment and include
condition of the working environment (safety, cleanliness, and safety measures), employee
convenience (bathrooms, drinking water), health services (first aid and treatment center,
ambulance, counseling) and women and child welfare (family planning services, maternity
aid).
Extramural welfare activities are diverse with many of them being sponsored by
government acts. Some include comfortable residences, proper roads and infrastructure and
sanitation while constitutional acts such as the factories act of 1948 and contract labor act of
1970 are examples of governmental welfare activities.
LABOR WELFARE WORK IS GENERALLY UNDERTAKEN BY SIX MAIN

AGENCIES VIZ.,
1. Welfare work by Central Government

2. Welfare work by State Government
3. Welfare work by Employers
4. Welfare work by Trade Unions
5. Welfare work by Municipalities and
6. Welfare work by Social A g e n c i e s
(A) EMPLOYER’S ROLE IN WELFARE WORK:

Employer is in direct contact with the employees. His role is pivotal in providing welfare
facilities to the employees over and above what is laid down by law. There is no denying the
fact that some of the leading industrialists in India are pioneers in providing welfare
amenities to their employees. Some of these employers in this regard are the Mafatlals, J.K.
Group.. Godrej, Larsen and Turbo, Pfizzer, Voltas, Philips, Bajaj, Tisco & Telco etc. They
have felt the necessity of welfare work and its importance in the interest of the industry and
the workers. Various welfare amenities provided by the employers to the employees include
educational facilities, medical facilities, creches, transport facilities, recreational facilities,
gift on the marriage of children, housing facilities and consumer co-operative societies etc.
The dimensions of welfare work undertaken by the employers are diverse in nature on
account of different conditions from industry to industry and from unit to unit in the same
industry.
All welfare activities undertaken by respective employer's for the benefit of their workers
voluntarily are called voluntary welfare activities.
The International Labour Organisation (ILO) has recommended Ihe following welfare
activities under this category, i.e. Extra-mural activities like- Maternity benefits, Social
Insurance measures including gratuity, pension, provident fund, benevolent fund;
Medical facilities including programs for physical fitness and efficiency ;
Educational facilities including adult education ;
Housing facilities recreation facilities including sports and games holiday, leave travel
facilities worker’s co-operative thrift, credit societies vocational training for dependents of
workers other programs for the welfare of women and children, and transport to and from the
place of work
In Bombay the TATA group of industries started a medical unit in 1918 and now the same
unit is converted into an industrial health department.
The Calico Mills in Ahmedabad appointed a Doctor in 1915 and opened a medical unit for
the first time. The employers encouraged women workers by paying Rs.50/~ per head for
going to maternity home.
The Delhi Cloth Mills (Lala Shri Ram) started housing provisions to their workers in 1920 as
a happy beginning to welfare works .

The Tata Iron and Steel Company (TISCO) provided 12 high standard welfare facilities like
well-equipped hospitals having a large number of beds qualified medical experts nurses
primary and secondary schools gymnasium indoor and outdoor gamesf Canteens creches, co-
operative stores housing accommodations up-to 68%, maternity benefits child welfare
Employees Insurance Schemes (ESI) provident fund and pension fund. According to
Malaviya Committee 1969 report TISCO has been spending at the rate of Rs.433.32p. per
worker^ per year on non -statutory welfare activities.
(B) LABOUR WELFARE WORK BY WORKERS’ ASSOCIATIONS:

To serve the common interests of worker members the trade union organisations are formed
by workers themselves by selecting or electing few leaders from among the ms elves on term
basis e.g... for one year, two or three years, as the case may be. The security in their services,
rules and regulations, working conditions, wages- welfare works, co-operation between
workers and management are among their interested subjects. As such trade union org
anisation can play an important and vital rol e in providing welfare activities both Intra-mural
and Extramural works that is activities inside and outside the factory
This includes the welfare activities provided by the unions for the benefit of their members
out of their own funds. Various trade unions have done commendable work in the field of
labour welfare. The welfare activities undertaken by the Ahmedabad Textile Labour
Association are worth mentioning. The association has to its credit 25 cultural and social
centres spread over the labour intensive areas of the city of Ahmedabad. It provides welfare
facilities for the workers in respect of schools, libraries, dispensaries and maternity homes,
co-operative societies, training in the trade union principles, and free-legal aid etc.
The Mill Majdoor Union, Indore has set up various labour welfare centres to provide
recreational and other amenities to its members. It also provides educational facilities and
games to the children of the employees. Night classes, reading rooms, facilities of indoor and
outdoor games are also provided to the employees. For the welfare of women employees,
educational facilities and crafts, stitching etc., are also provided.

Similar other associations like, The Majdoor Sabha, Kanpur, the Rastriya Mill Majdoor
Sangh, Bombay and the Textile Labour Association etc, are also offering many facilities for
considerable improvements in the well being of the workers and their families.
The Indian Federation of Labour has organised 48 Labour welfare centres for providing
various welfare activities like social and cultural activities, indoor and outdoor games,
medical, educational and recreational activities
(C) LABOUR WELFARE WORK BY CENTRAL GOVERNMENT:

Not much contribution could be made by the Central Government in the field of labour
welfare prior to the Second World War. The Government started taking interest in the field of
labour welfare during the Second World War. It extended the schemes of labour welfare in
ordinance and ammunition factories.
A labour welfare advisor was appointed in 1942 for promoting the labour welfare work. A
labour welfare fund was constituted in the year 1946 for financing the labour welfare
measures outside the purview of statutory provisions in public sector undertakings.
The Government of India favoured the idea of ‘welfare state’. The government passed certain
Acts, viz. Factories Act, 1948, the Coal Mines Labour Welfare Fund Act, 1947, the Iron Ore
Mines Welfare Cess Act, 1961 and the Limestone and Dolomite Mines Labour Welfare Act,
1972, etc., are important Acts, covering the welfare of the workers.
Welfare funds have been created for the workers engaged in coal, iron, orelime stone and
delomit mines. These funds are created by
(a) the levy of cess in the coke and coal despatches from the colleries
(b) an ad velorem cess on the export of mica,
(c) a cess is levied on the production in iron-ore mining industries

(d) a cess is levied on lime stone and delomit consumed by iron and Steel Mills, Cement and
other factories.
(D) LABOUR WELFARE WORK BY STATE GOVERNMENTS:

Various State Governments and Union Territories have established different welfare centres
which are providing educational, health, recreational and other facilities to the workers.
Different State Governments are providing different cultural activities, games, sports, training
in handicrafts, library, gymnasium and tailoring classes for women workers.
The State Governments have passed Labour Welfare Funds Acts from time to time to
safeguard the interests of the workers and their families. Some of the important Acts passed
by the State Governments are the Bombay Labour Welfare Fund Act (1953); the Mysore
Labour Welfare Fund Act (1965) etc.
The main sources of finances for these funds are

(i) fines realised from the employees,
(ii) unpaid wages, bonus, gratuity and all unpaid arrears,
(iii) fines imposed on the employers by courts for defaults;
(iv) Voluntary donations, any fund transferred from any other labour welfare fund;
(v) all grants from the Central/State Governments;
(vi) unclaimed and forfeited sums in Provident Fund Accounts and
(vii) Any sum borrowed, etc. In addition to what has been explained above in
respect of labour in India, a large number of voluntary social organisations
have taken welfare activities in respect of night-schools, libraries, recreation
health etc.
LABOUR WELFARE WORKS BY MUNICIPALITY :

The Bombay Municipal Corporation has set up 15 welfare centres in greater Bombay city
through whichmwelfare activities like co-operative socieities educational facilities nursery
schools indoor and outdoor games filmmshows maternity benefits have been provided to
workers.
In Madras city also the Municipal corporationm29 has set up welfare centres and provided
welfare mfacilities like night schools creche, canteens co-operative credit society and served
the workers. The facilities like play-ground nurses attendants bathroom toys are provided in
creche for worker's children's .

In Calcutta city the municipal corporation has provided similar welfare activities to their
workers.
The Municipal Corporation of Delhi Ajmer Kanpur and all other municipal corporations and
municipalities of Indian cities and towns have been providing similar welfare activities to
their respective workers.
WELFARE WORKS BY SOCIAL AGENCIES :

Labour Welfare works by Voluntary organisations (Social agencies} The Voluntary
organisations like, Hindustan 30 Mazdoor Sevak Sangha and Assam Seva Samity have
rendered welfare activities to tea plantation and other industrial workers particularly social
moral and economic welfare activities for their welfare and upliftment. The Government of
Assam has encouraged such voluntary organisations .by adopting such policies to serve the
workers better.
In greater Bombay city the Bombay Social Service League a voluntary organisation has
provided welfare amenities to workers like - running night schools libraries recreational
facilities sports co-operative societies promoted public health and boy scouts movements.
The Y.M.C.A. Bombay Presidency worker's council Maternity and Infant welfare
Association and the Depressed Classes Mission Society is rendering voluntary welfare
services to the industrial workers. Thus it is observed that, such voluntary organisations in the
welfare activities for the up-liftment the down-troden classes of workers standard of living in
the society.

Unit – IV: Employee Welfare Programmes – Statutory and Non-Statutory – Intra Moral,
Extra Moral – Social Security – Social Assistance and Social Insurance.
Employee Welfare Benefits Schemes

Organizations provide welfare facilities to their employees to keep their motivation levels
high. The employee welfare schemes can be classified into two categories viz. statutory and
non-statutory welfare schemes. The statutory schemes are those schemes that are compulsory
to provide by an organization as compliance to the laws governing employee health and
safety. These include provisions provided in industrial acts like Factories Act 1948, Dock
Workers Act (safety, health and welfare) 1986, Mines Act 1962. The non-statutory schemes
differ from organization to organization and from industry to industry.
Some of employee welfare Laws in India
 Factories Act, 1948
 Maternity Benefit Act,1961 (with latest amendments)
 Employee State Insurance Act, [ESI] 1948
 Employees' Provident Fund Scheme, 1952.
 Payment of Bonus Act, 1965
STATUARY WELFARE BENEFITS
The statutory welfare benefits schemes include the following provisions:

Drinking Water: At all the working places safe hygienic drinking water should be provided.

Facilities for sitting: In every organization, especially factories, suitable seating
arrangements are to be provided.
First aid appliances: First aid appliances are to be provided and should be readily assessable
so that in case of any minor accident initial medication can be provided to the needed
employee.
Latrines and Urinals: A sufficient number of latrines and urinals are to be provided in the
office and factory premises and are also to be maintained in a neat and clean condition.
Canteen facilities: Cafeteria or canteens are to be provided by the employer so as to provide
hygienic and nutritious food to the employees.
Spittoons: In every work place, such as ware houses, store places, in the dock area and office
premises spittoons are to be provided in convenient places and same are to be maintained in a
hygienic condition.
Lighting: Proper and sufficient lights are to be provided for employees so that they can work
safely during the night shifts.
Washing places: Adequate washing places such as bathrooms, wash basins with tap and tap
on the stand pipe are provided in the port area in the vicinity of the work places.
Changing rooms: Adequate changing rooms are to be provided for workers to change their
cloth in the factory area and office premises. Adequate lockers are also provided to the
workers to keep their clothes and belongings.
Rest rooms: Adequate numbers of restrooms are provided to the workers with provisions of
water supply, wash ba sins, toilets, bathrooms, etc.
Maternity & Adoption Leave – Employees can avail maternity or adoption leaves. Paternity
leave policies have also been introduced by various companies.
Medi-claim Insurance Scheme: This insurance scheme provides adequate insurance
coverage of employees for expenses related to hospitalization due to illness, disease or injury
or pregnancy.
Sexual Harassment Policy: To protect an employee from harassments of any kind,
guidelines are provided for proper action and also for protecting the aggrieved employee.
For more information go through - Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013
NON STATUTORY BENEFITS
Many non-statutory welfare benefits may include the following schemes:

Personal Health Care (Regular medical check-ups): Some of the companies provide the
facility for extensive health check-up
Flexi-time: The main objective of the flextime policy is to provide opportunity to employees
to work with flexible working schedules. Flexible work schedules are initiated by employees

and approved by management to meet business commitments while supporting employee
personal life needs
Employee Assistance Programs: Various assistant programs are arranged like external
counseling service so that employees or members of their immediate family can get
counseling on various matters.
Employee Referral Scheme: In several companies employee referral scheme is implemented
to encourage employees to refer friends and relatives for employment in the organization
LABOUR WELFARE: INTRAMURAL

· Health and medical facilities: -
A healthy workforce is of utmost importance to industry. The ILO in its conventions and
recommendations has laid down standards, which have had a contributory effect on
legislation in India. the ILO convention 25 concern sickness insurance and medical facilities
to be provided to an insured person while convention 103 deals with maternity protection
· Canteen: -
The ILO in its recommendation 102,mentioned this facility and felt that a competent
authority in each country should guide establishments with regard to nutrition, hygiene,
finance, etc. In India the factories act places the responsibility on state governments to make
rules that in any specified factory with more than with 250 workers, a canteen or canteens
should be provide and certain standards should be maintained
· Crèches:-
The factories act lays down that in any factory with more than 50 women workers a crèche
should be provided and maintained for children less than 6 years in a clean and sanitary
condition. The act state that the crèche should be under the care of women trained in child
care and should have adequate accommodation, lighting and ventilation the state government
is empowered to make rules in respect of standards, equipment and facilities .Mothers are
also to be given time to feed their children at necessary intervals . The rules formed by sate
government lay down the qualifications necessary for the crèche staffs. The need for
kindergarten classes in crèches for children between 3 and 6 years was also felt
· Facilities for storing and drying clothing:-
It is only the Factories Act that has incorporated such a provision. Under section 43 of the
Act, a state government may make rules for the provision of suitable places for keeping
clothing not worn during working hours and for the drying of wet clothing. As per the
Maharashtra Factories Rules 1963, such facilities shall include the provision of separate
rooms, pegs, lockers or other arrangements approved by the Chief Inspector in all classes of
factories such as engineering workshops, iron and steel works, oil mills, chemical factories,
motor garages, tanneries etc.
LABOUR WELFARE: EXTRA-MURAL
· Housing Facilities: -

Some of the industrial employers both in public and private sectors have provided housing
facilities to their employees. Almost all the public sector enterprises have either provided or
are in the process of providing housing facilities to their employees. The employees who are
not provided corporation’s quarters are paid house rent allowance at some places.
· Recreational Facilities: -
Recreation is commonly taken to be the opposite of work. It has an important bearing on the
individual’s personality as well as his capacity to contribute to the social development. It
affords the worker an opportunity to develop his sense of physical and mental discipline.
Music, dance, drama, sports and games, painting, carving etc. are different forms of
recreation.
· Transport facilities:-
The growth of industrial state and workshops out side the city has made commuting a
problem for workers .in India, since the public transport system is not fully developed and
hardly efficient, the fatigue of travel to and from work has a detrimental effect on the
attendance pattern of workers. The CLW after studying the situation recommended that
transport on a large scale is best provided by the state; that the local bodies should stream line
their operations, increase their fleet and the frequency of buses especially to labour colonies ,
industrial estate and township, and for carrying workers to and from night shift .they feel that
employers could help by giving conveyance allowance
· Educational Facilities:-
The pace of economic and social progress of a particular country largely depends upon the
quality of its work force. Education plays a very important part in motivating and enabling
the working population for changes necessary for accelerated progress and for their mental
and physical development. This has been recognized in our social and economic planning and
a suitable financial outlay on education has been made in different five-year plans.
Improvement in the quality of the industrial work force demands accelerated pace of
economic development for which education of workers, their families, and their children is
very essential.
 SOCIAL SECURITY provides a self-balancing different schemes of social

Insurance or social assistance from public funds or proper combination of both. In any
contingency. Leading to physical incapacity to work during that contingency, any
effective scheme of social protections must take care of worker’s income and medical
care.
The main aim of social security that they provide some form of cash payments to individuals
to replace some part of the lost income that may take place due to any type of contingency
like work injury , sickness, maturity, unemployment, old age and death. Social security in
India is provided in broadly from two point of view:
(i) Social Insurance
(ii) Social Assistance

In social insurance is ‘giving” in return for contribution for meeting different contingencies
of life. Social insurance schemes are funded entirely by central government or from common
finance contribution made regularly by the employer as well as employee.
The fund so crated takes care of all benefits paid in cash or kind. Under this major
contributions are made by the central/ state government and employers, while the employee
pay only a nominal amount according to their capacity to pay.
Definitions of Social Insurance
(i) “Social insurance is a giving return for contribution benefits up to subsistence level as
of rights and without means and tests so that individual may build freely up to it.”
-Sir William Beveridge
(ii) “Social Insurance is a group idea of helping the needy people who are not able to work
due to certain risks.”
(iii) “Social Insurance is social co-operative derive which aims at granting adequate benefits
to the insured on the compulsory basis at times of unemployment, sickness and other
emergencies.”
(iv) “Social Insurance is derive to prevent individual from falling to the depths of poverty and
misery and help him in times of emergencies. Insurance involves the setting aside of sums of
money in order to provide compensation against loss resulting from a particular
emergencies.”
-Prof. S.C. Sexena
In fact social insurance is group idea of helping needy people who are not able to work due to
certain risks. In this workers are benefited against different contingencies of life in case of
any mishappening. Here the risk of one is distributed among many on the principles of
insurance. Its contribution is small but benefits are very high in case of happening of event.
Social Insurance system in India has spread due to obedience of worker’s due to impact of
globalization and the modern urbanized industrial system.
Features of Social Insurance

From the analysis of the above mentioned definition the following features of social
insurance are identified:
(i) Schemes of Social Insurance is financed by the small contribution made by the
employees and major portion by the employers.
(ii) In all the schemes of social insurance Participation is compulsory with only few
exceptions.
(iii) Under these schemes contributions are accumulated in special funds out of which
benefits are paid.

(iv) If there happen to be surplus funds not needed to pay current benefits are invested to earn
further future income.
(v) Under social Insurance schemes benefits are so planned to cover on a compulsory
bases all those who should be covered.
(vi) The contribution and benefit rates are often related to what the person is or has earning.
(vii) These schemes protect the employees and reduce their suffering arising out of the
contingencies which cannot be prevented.
(viii) Social insurance helps the employees to maintain their minimum living standard when
there is total or partial loss of income.
(ix) The benefits under this are provided to worker without an examination of individual
needs and without affecting one’s self- respect.
SCOPE OF SOCIAL INSURANCE
The scope of social insurance is very wide covering
(i)Worker state insurance schemes 1948.
(ii) Maternity benefits act, 1961.
(iii) Coal Mines provident fund and bonus schemes 1948.
(iv) Seamen’s provident Fund Act 1966.
(v) Medical schemes and Facilities under their central and state govt employees who
make monthly contribution to the Health schemes.
(vi) The Indian Railway too runs hospital and dispensaries for the employees and their
family.
The coverage of social security is very dynamic and wide. Scope of social security programs
vary from country to country. In some countries social security is applied to all governmental
programs planned to maintain income. In some countries it covers health and welfare services
and in some other countries it applies to all the social insurance programmes.
Indian government has adopted a dual strategy for providing social security in different
organized and unorganized sector. In India 8% of workforce engaged in the organized sector
for which government introduced variety of social security through different labour laws and
acts.
In these different schemes employers and employees contribute to provide assistance for
running the schemes. The government also makes a small contribution in different schemes
like employer’s provident pension scheme. Employee Insurance scheme. Maternity benefit.
The coal Mines provident Fund and Bonus schemes under which employees are compensated
under the concept of social insurance.

MEANING OF SOCIAL ASSISTANCE
In India 92% workforce is employed in unorganized the initiative to introduce different social
assistance schemes from different states in India like Kerala, West Bengal , Tamil Nadu and
Maharashtra where good number poor employees are working in different unorganized
sectors.
In social assistance grants are given to the needy by the state or community. It is provided a
supplement to social insurance for those needy persons who cannot get social insurance
payment. Under this the general revenue of the respective government provides finance for
the social assistance payment which is made available as a legal right to those workers who
fulfill given condition. Social insurance and assistance side by side supplement to each other.
Definition of Social Assistance
These are some of the important definitions:
(i) “Social Assistance is a service or a scheme which provides benefits to persons of
small means as of right in amount sufficient to meet minimum standards of need and
financial from taxation".---international labour officer.
(ii) “The Social Assistance schemes are designed to help people who are in financial
difficulties.”
(iii) “In social Assistance schemes conditions of entitlement are prescribed by Laws and
require that applicants have limited incomes and assets.”
(iv) “Social assistance represents the unilateral obligation of the community towards its
dependent groups. It is provided by the society or the government to the poor and needy
individuals.”
(v) “Social Assistance may be defined as a device to provide benefit for persons of small
mans granted as of right and in amounts sufficient to meet a minimum standards of need and
financed from taxation or general revenues.”
In simple words we can say that
Social assistance is kind of help which depends upon certain conditions and legalities
between the workers and the stat. social assistance is given as a voluntary help while social
insurance is granted to those persons only who pay a contribution.
In social Insurance there is no requirement for any type of financial mean or need and
benefits are granted without it, while social assistance is granted only if certain conditions
prescribed by the government are fulfilled.
Features of Social Assistance
From the analysis of these definitions the following features of social assistance are
identified.
(i) Social assistance is a kind of help which depends upon certain conditions and
legalities between workers and the state.

(ii) Social assistance is given as voluntary help while social insurance is granted only persons
who only pay a contributions.
(iii) The social assistance has an objective to cover poor sections of people in the society who
cannot effectively protects risks and contingencies to which are exposed.
(iv) Social assistance is the unilateral obligation of the community towards members who are
really in need.
(v) Social assistance is an expression of social responsibility of stat towards its needy
person.
(vi) Social assistance is financed wholly or for a very large measures from the general
revenues of the state.
(vii) Social assistance does not provide any legal obligation to its members to give monthly
contributions towards its schemes for getting the benefits.
(viii) In all schemes of social assistance like social insurance there is no relationship of any
sort in risks and premiums paid.
(ix) Social assistance schemes are more applicable where the workers are too poor to
contribute, too illiterate to follow the formalities of insurance.
(x) Social assistance requires the fulfilment of certain prescribed conditions before the
benefit can be granted under such scheme.
The two important types of social security are as follows: 1. Social Assistance 2. Social
Insurance.
1. Social Assistance:
Social assistance refers to the assistance rendered by the Government to the needy persons
without asking them to make contributions to be entitled to get such assistance. In other
words, social assistance includes those benefits which are provided by the Government
without any contribution from workers and employers. Workmen’s compensation, maternity
benefits, old age pensions, etc. are the examples of social assistance.
2. Social Insurance:
Social insurance refers to a scheme of maintaining fund from the contributions made by the
employees and employer, with or without a subsidy from the Government. In other words,
social insurance can be defined as a device to provide benefits as of right for persons of small
earnings; in amounts which combine the contributive efforts of the insured with subsidies
from the employer and the Government Examples of social insurance are provident fund and
group insurance.

Strictly speaking, these two types of social security measures may be said to be the two faces
of the same coin. As a matter of fact, both of them are integral parts of a social security
system. Here, it seems pertinent to make distinction between social insurance and commercial
insurance. Following Table bears out how social insurance differs from commercial
insurance.
Unit – V: Labour Welfare Administration – Plant Level, State and Central

Levels – Labour Welfare Officer – Role, Status and Functions
The concept of labour welfare activities, however, is flexible, elastic and differs from time to
time, region to region, industry to industry and country to country, depending upon the value
system, level of education, social customs, degree of industrialization and general standard of
the socio-economic development of people.
‘Welfare’ is a broad concept referring to the state of living of an individual or a group, in a
desirable relationship with the total environment: ecological, economical and social. The term
‘welfare’ includes both the social and economic contents of welfare.
Social welfare is primarily concerned with the solution of various problems of the weaker
sections of society like prevention of destitution and poverty; it aims at social development
by such means as social legislation, social reforms, social service, social work and social
action.

The objective of economical welfare is to promote economic development by increasing
production and productivity through equitable distribution. The economic welfare activities
are such, which can be brought directly or indirectly into relation with money
labor welfare work as, “any arrangement of working conditions, organization of social and
sports club and establishment of funds by a firm which contribute to workers’ health and
safety, comfort, efficiency, economic security, education and recreation.”
Oxford dictionary, defines “labour welfare as Effort to make life worth living for work for
men.” Chamber’s Dictionary, defines welfare as “a state of faring or doing well; freedom
from calamity, enjoyment of health, prosperity
LABOUR LAW IN INDIA
The respect's importance of human labour and the requirement for ensuring and protecting
the enthusiasm of labour as individuals has been revered in Chapter-III (Articles 16, 19, 23 &
24) and 7 Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India keeping
in accordance with Fundamental Rights and Directive Principles of State Policy. Labour is a
simultaneous subject in the Constitution of India suggesting that both the Union and the state
governments are skillful to enact on labour matters and direct the same. The greater part of
essential administrative acts has been authorized by the Parliament.
The various labour legislations enacted by the Central Government can be classified
into the following different broad categories:
A. Laws relating to Industrial Relations-
1. Industrial Disputes Act, 1947

2. Trade Unions Act, 1926
B. Laws relating to Wages
1. Minimum Wages Act, 1948

2. Payment of Wages Act, 1936
3. Payment of Bonus Act, 1965
C. Laws relating to Social Security
1. Employees' Provident Funds and Miscellaneous Provisions Act, 1952

2. Employees' State Insurance Act, 1948

3. Labour Welfare Fund Act (of respective States)
4. Payment of Gratuity Act, 1972
5. Employee's Compensation Act, 1923
D. Laws relating to Working Hours, Conditions of Services and Employment
1.
Factories Act, 1948
2.
Industrial Employment (Standing Orders) Act, 1946
3.
Shops and Commercial Establishments Act (of respective States)
4.
Contract Labour (Regulation and Abolition) Act, 1970
5.
Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979
6. Weekly Holiday Act, 1942
7. National and Festival Holidays Act (of respective States) 1963
8. The Plantation Labour Act, 1951
9. The Mines Act, 1952
10. The Dock Workers (Safety, Health & Welfare) Act, 1986
E. Laws relating to Equality and Empowerment of Women
1. Equal Remuneration Act, 1976

2. Maternity Benefits Act, 1961
F. Prohibitive Labour Laws
1.
Bonded Labour System (Abolition), Act, 1976
2.
Child Labour (Prohibition & Regulation) Act, 1986
3.
The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
4.
The Sexual Harassment at the Workplace (Prevention, Prohibition and
Redressal) Act, 2013
G. Laws relating to Employment and Training
1. Apprentices Act, 1961

2. Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
Three Main Benefits of Labour Welfare Activities

According to Labour Investigation Committee (1946), there are three main benefits of
labour welfare activities:
(a) Educational facilities, sports, entertainment, etc. make the worker feel that the employer is
interested in their day-to-day life and therefore, their tendency to grouse and grumble will
gradually disappear.
(b) Housing, canteens, sickness and maternity benefits, provident fund, gratuity, pensions,
etc. make the worker feel that they have a stake in the industry as much as anyone else has.
(c) Provisions of good and clean food in the canteens improve their health, entertainment
reduces the incidence of vices, medical and maternity benefits free the workers of worries.

LABOUR ADMINISTRATION MACHINERY OF STATE, DISTRICT
AND LOCAL GOVERNMENTS
The machineries for labour administration in the states are similar to those operating at the
center. As explained earlier in the chapter, most of the important labour subjects in the
concurrent list of the constitution. The central government is empowered to give direction to
the state government and to delegate powers and impose duties on them. Many central labour
laws are enforced both by the central and state government in industries or establishments
falling under their respective jurisdictions.
Generally speaking, labour administration of the state governments is on a pattern similar to
central labour administration with slight variations relating to implementing agencies and the
requirements of the state enactments and non-statutory labour programmes. the main
organizations for labour administration in the states comprise, department of labour and
employment (secretariat), office of labour commissioner chief inspectorate of factories, chief
inspectorate of boilers, office of chief inspector, shops and establishments, directorate,
employment and training, directorate, medical services ESI scheme), social security
directorate and adjudication authorities.
DEPARTMENT OF LABOUR AND EMPLOYEMNT (SECERTARIAT)
The responsibility for labour administration in the states generally vests in the department of
labour and employment, the secretariat of which represents the government side. It is
generally in charge of a minister, who may occasionally be assisted by a minister of state and
deputy minister. on the official side, the secretary or the principal secretary is the chief
executive. his team generally includes an additional secretary, and a few joint secretaries,
deputy secretaries and under secretaries according to requirements. it is this organization that
formulates the labour policy of the state, establishes liaison with the central ministry of
labour coordinates and guides the activities of enforcing machineries and takes decisions on
behalf of the government.
OFFICE OF THE LABOUR COMMISSIONER

Secretary (Labour), who is assisted by Commissioner, Special Labour Commissioner, Deputy
Labour Commissioners, Assistant Labour Commissioners, Chief Inspector of Factories,
Electrical Inspector, Chief Inspector of Boilers, Chief Inspector of Shops and Establishments,
Labour Officers, Welfare Officer and other supporting staff, heads the Labour Department,
Government of N.C.T. of Delhi. With a view to make the administration responsive to the
needs of the people and bring governance to their doorsteps, the department has been
organized on territorial basis into nine districts. Each district is headed by a Deputy Labour
Commissioner who is assisted by Asstt. Labour Commissioners and Labour Officers.
CHIEF INSPECTORATE OF FACTORIES

The Chief Inspector of Factories is assisted by Deputy Chief Inspectors of Factories,
Inspectors of Factories and Inspector of Factories (Medical). The Chief Inspector of
Factories, who heads this Inspectorate works under the administrative control of Labour
Commissioner cum Secretary (Labour) of Government of NCT of Delhi. The Inspectors work
under the supervisory control of Dy. Chief Inspectors of Factories. The Dy. Chief Inspectors
of Factories and Inspector of Factories (Medical) operate from Headquarters.
CHIEF INSPECTORATE OF BOILERS
The boilers are inspected by the Boiler Inspectorate as per the procedure laid under Indian
Boilers Regulations –1950, during use, and if found satisfactory are allowed to be worked for
a maximum period of 12 months as per the provisions of Indian Boiler Act - 1923. The
boilers are also casually visited to check the validity of the certificate, their safe and efficient
operation. The Inspectorate also guides the boiler owners to work the boilers more efficiently
keeping in view Basic Objective of the Act i.e. the "Protection of Human Life & Property
from the explosions of the Boilers".
OFFICE OF CHIEF INSPECTOR, SHOPS AND ESTABLISHMENTS
The object of Delhi Shops and Establishments Act, 1954, is to give some minimum benefits
and relief to the vast unorganized sector of employees, employed in Shops and
Establishments. Industrial Dispute Act 1947, and Delhi Shops & Establishments. Act, 1954
are supplemental to each other.
The Act is enforced through the Chief Inspector of Shops (CIS) and various inspectors under
the Act, who are posted in nine districts of the capital who function under the supervision and
control of Dy./ Asstt. Labour Commissioners of the concerned district. Chief Inspector
functions under the supervision of Dy. Labour Commissioners (CIS) who in turn functions
under the supervision of LC.
DIRECTORATE, EMPLOYMENT AND TRAINING
The organization primarily looks after the operation of employment exchanges, industrial
training institutes, vocational guidance programme and some other institutions. The activities
of the directorate are essentially governed by the policies, standards and procedures set by the
central directorate general, employment and training. Other activities of the organization
include employment market information, vocational rehabilitation centers, and training of
handicapped groups such as women and physically handicapped. The training wing of the
department also looks after the implementation of the apprentices act, 1961. Generally, the
directorate functions independently of the organizing of labour commissioner.
DIRECTORATE, MEDICAL SERVICES (ESI SCHEME)

The main responsibility for the operation of medical benefit under the employees’ state
insurance act, 1948 lies with the state governments which are required to make available the
services of the medical and para-medical personnel. In most the states a special wing has
been established for the purpose. As the medical benefit under the ESI scheme has been
extended also to the family members of the insured persons and superannuated employees,
the responsibility of the state governments in this regard has increases. A director,

administrative medical officer or a chief medical officer under the labour department has
been made in charge of the wing.
SOCIAL SECURITY DIRECTORATE

A few states have established social security directorates for implementing certain social
security schemes for the poor, unorganized workers, rehabilitation of bonded labourers and
implementation of the interstate migrant workmen (regulation of employment and conditions
of services) act, 1979. They also look after the implementation of national old age pension
scheme, national family benefit scheme and national maternity benefit scheme.
ADJUDICATION AUTHORITIES
The state governments have also constituted labour courts and tribunals under the industrial
disputes act, 1947, and a few of them have set up other adjudication authorities such as
industrial courts and wages boards under state laws. As on October 31,1998, as many as 214
labour courts, 97 tribunals and 22 labour courts-cum-tribunals were functioning in the states.
LABOUR WELFARE OFFICER – ROLE, STATUS AND FUNCTIONS

As early as 1931, the Royal Commission on labour recommended the appointment of a
labour officer to eliminate the position of evil practices of Jobbers who used to engage and
dismiss labour. Initially, employers did not pay heed to this recommendation. But the State
Government took the initiative in 1934, when it passed the Bombay Disputes Conciliation
Act, providing for the appointment of a government labour officer who would deal with
labour grievances.
The Same year, the Bombay Millowners’ Association was persuaded by the State
Government to appoint its own labour officer. Cotton Textile mills followed suit, and 26
labour officers were appointed in the Bombay textile mills by 1940.

However, during the War, the police function gradually changed to welfare function, and the
labour officer assisted in the setting up of food shops and the organizations of sports and
welfare activities for employees. Gradually, this position began to discharge the functions of
a labour welfare officer. In 1946, the Labour InvestigationbCommittee strengthened his
position and his importance was stressed in the Factories Act of 1948, which stated that “the
owner of every factory with 500 or more workers is obliged to employ the prescribed number
of welfare officers
Role and Status of Labour welfare Officer
Schedule 49 of the Factories Act 1948, provides that in every factory wherein 500 or more
workers are ordinarily employed, the employer shall appoint a person who can act as an
advisor, counsellor, mediator and liaisoning between the management and the labour, for
improving the efficiency, productivity and profitability of organization. Here, s/he is called
Labour Welfare officer.
Professionally he or she should be Post Graduate in Social Science, Diploma in Labour
welfare, recognised by the State Government, 3-5 years working experience in Industrial
Safety and finally having hard working ability and sound communication Skills.
Main objectives of this Position:
• To eliminate the evils of the jobber system in the recruitment of labour
• To develop and improve the labour administration in mills / factory.
• To serve as a liaison with the State Labour Commissioner.
DUTIES OF LABOUR WELFARE OFFICER:

The Malaviya Committee’s Report on Labour Welfare in 1969, following the model rules
framed under the Factories Act of 1948, has specified the following duties of welfare
officers:
1. Supervision
2. Advice
3. Liaison and
4. Counselling

1. SUPERVISION:
• Safety, health and welfare programmes like housing, recreation and sanitation services, as
provided under the law.
• Working of joint committees;
• Grant of leave with wages as provided; and
• Redress of workers’ grievances
2. ADVICING MANAGERS IN THE MATTERS OF :
• Formulating welfare policies;
• Apprenticeship training programs;
• Complying with statutory obligations to workers
• Developing fringe benefits;
• Workers’ education
3. LIAISONING:
3.1. Liaison with workers so that they may -
• Appreciate the need for harmonious industrial relations in the plant;
• Resolve disputes, if any;
• Understand the limitations under which they operate; and
• Interpret company policies correctly.
3.2. Liaison with management so that they may:
• appreciate the worker’s view point on various matters connected with the plant;
• meet their obligations under the Act;
• maintain harmonious industrial relations in the plant;
• Suggest measures for the promotion of the general well-being of workers.
3.3. Liaison with inside factory agencies such as the factory inspector, medical officers, and
other inspectors with a view to securing a proper enforcement of the various Acts as
applicable to the plant;
3.4. Liaison with other agencies in the community with a view to helping workers to make
use of community services.
3.5 Liaison with the state labour commissioner with a view to administration of welfare
involves decisions on (i) welfare policy, (ii) organization of welfare, and (iii) assessment of
effectiveness
4. COUNSELLING:

The latest trend catching up in the corporate HR across the world is 'Employee Counselling at
Workplace'.
In the world of ever increasing complexity and the stress in the lives, especially the
workplaces of the employees, employee counselling has emerged as the latest HR tool to
attract and retain its best employees and also to increase the quality of the workforce.
In today's fast-paced corporate world, there is virtually no organisation free of stress or stress-
free employees.
The employees can be stressed, depressed, suffering from too much anxiety arising out of
various workplace related issues like managing deadlines, meeting targets, lack of time to
fulfil personal and family commitments, or bereaved and disturbed due to some personal
problem
etc.
Organisations have realized the importance of having a stress-free yet motivated and capable
workforce
EXTRA INFORMATION ( doesn’t include in syllabus)

 WELFARE OFFICERS
(1) Number of Welfare Officers:- The occupier of every factory where 500 or more
workers, are employed, shall appoint at least one Welfare Officer:
Provided that where a group of factories in close proximity belong to the same management,
the Chief Inspector may exempt the said factories from this rule in so far as it requires the

appointment of a separate Welfare Officer in respect of each such factory subject to such
conditions as he may impose:
Provided further that where the number of workers exceeds, 2,000 one additional Welfare
Officer shall be appointed for every additional 2,000 workers or fraction thereof over 500;
and where there are more than one Welfare Officer, one of them shall be called the Chief
Welfare Officer and the others Assistant Welfare Officers.
(2) Qualifications..- A person shall not be eligible for appointment as Welfare Officer unless
he possesses-
(a) a Degree in Arts/Science/Commerce or in Law of any University;
(b) a Degree or Diploma in Industrial Relations and Personnel Management covering Labour
Welfare, as special subject, of not less than two years duration, conducted or recognised by a
University of the State of Andhra Pradesh, Provided that the one year Post Graduate Diploma
Course in Industrial Relations and Personnel Management awarded by the Osmania
University, Hyderabad upto the academic year 1991-92 shall be treated as recognised and
equivalent qualification to the Diploma in Industrial Relations and Personnel Management
covering Labour Welfare, and
(c) adequate knowledge of Telugu Language,
Provided that the State Government may grant exemption in suitable cases from the condition
of possessing the qualification of a Degree or a Diploma in Social Science from a recognised
Institution.
(3) Recruitment of Welfare Officers
(i) The post of Welfare Officer shall be advertised in two newspapers having a wide
circulation in the State, one of which should be an English newspaper.
(ii) Selection for appointment of the post of Welfare Officer shall be made from among the
candidates applying for the post by a committee appointed by the occupier of the factory.
(iii) The appointment when made shall be notified by the occupier to the Chief Inspector
giving the details of the qualifications, age, pay, previous experience and other relevant
particulars of the Officer appointed and the terms and conditions of his service.
(iv) The required number of Welfare Officers shall be appointed within 120 days from the
date on which such appointments are due to be made under sub-rule (1) of Rule 76-B or from
the date of resignation/ dismissal /termination of services of any Welfare Officer.
Duties of Welfare Officers:- The duties of a Welfare Officer sing be-
(i) to establish contacts and hold consultations with a view to maintaining harmonious
relations between the factory management and workers
(ii) to bring to the notice of factory management, the grievances of workers, individual as
well as collective, with a view to securing their expeditious redress and to act as a Liaison
Officer between the management and labour

(iii) to study and understand the point of view of labour in order to help the factory
management to shape and formulate labour policies and to interpret these policies to the
workers in language they can understand
(iv) to advise on the fulfilment by the concerned departments of the factory management of
obligations statutory or otherwise concerning the application of the provisions of the
Factories Act, 1948 and the rules made thereunder and to establish liaison with the Inspector
of Factories, and the medical services concerning medical examination of employees, health
records, supervision of hazardous jobs, sick visiting and convalescence, accident prevention
and supervision of safety committees, systematic plant inspection, safety education,
investigation of accidents, maternity benefits and workmen's compensation;
(v) to advise on fulfilment by the management and the concerned departments of the factory
of their obligations, statutory or otherwise, concerning regulation of working hours, maternity
benefit, compensation for injuries and sickness and other welfare and social benefit
measures ;
(vi) to advise and assist the management in the fulfilment of its obligations, statutory or
otherwise concerning prevention of personal injuries and maintaining a safe work
environment, in such factories where a Safety Officer is not required to be appointed under
the enabling provisions under Section 40-B
(vii) to encourage the fonnation of works and joint production committees, co-operative
societies, and welfare committees and to supervise their work
(viii) to encourage provision of amenities such as canteens, shelters for rest, creches,
adequate latrine facilities, ~rig water, sickness and benevolent scheme payments, pension and
superannuation funds, gratuity, payments, granting of loans and legal advice to workers
(ix) to help the factory management in regulating the grant of leave with wages and explain to
workers the provisions relating to leave with wages and other leave privileges and to guide
the workers in the matter of submission of applications for regulating authorised absence;
(x) to advise on provision of welfare facilities such as housing facilities food-stuffs, social
and recreational facilities and sanitation and on individual personal problems and on the
education of children;
(xi) to advise the factory management on questions relating to training of new starters,
apprentices, workers on transfer and promotion, instructors and supervisors; supervision and
control of notice board and information bulletins; to further the education of workers and
encourage their attendance at technical institutes;
(xii) to suggest measures which will serve to raise the standard of living of workers and in
general, promote their well being;
(xiii) Welfare Officers not to deal with disciplinary cases or appear on behalf of the
management against workers.,- No Welfare Officer shall deal with any disciplinary case
against a worker or appear before a conciliation office, or in a Court or Tribunal on behalf of
the Factory management against any worker or workers.

The various labour legislations enacted by the Central Government can be classified
into the following different broad categories:
H. Laws relating to Industrial Relations-
1. Industrial Disputes Act, 1947

2. Trade Unions Act, 1926
I. Laws relating to Wages
1. Minimum Wages Act, 1948

2. Payment of Wages Act, 1936
3. Payment of Bonus Act, 1965
J. Laws relating to Social Security
1. Employees' Provident Funds and Miscellaneous Provisions Act, 1952

2. Employees' State Insurance Act, 1948
3. Labour Welfare Fund Act (of respective States)
4. Payment of Gratuity Act, 1972
5. Employee's Compensation Act, 1923
K. Laws relating to Working Hours, Conditions of Services and Employment
1.Factories Act, 1948

2.Industrial Employment (Standing Orders) Act, 1946
3.Shops and Commercial Establishments Act (of respective States)
4.Contract Labour (Regulation and Abolition) Act, 1970
5.Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979
6. Weekly Holiday Act, 1942
7. National and Festival Holidays Act (of respective States) 1963
8. The Plantation Labour Act, 1951
9. The Mines Act, 1952
10. The Dock Workers (Safety, Health & Welfare) Act, 1986
L. Laws relating to Equality and Empowerment of Women
1. Equal Remuneration Act, 1976

2. Maternity Benefits Act, 1961
M. Prohibitive Labour Laws
1.Bonded Labour System (Abolition), Act, 1976

2.Child Labour (Prohibition & Regulation) Act, 1986
3.The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
4.The Sexual Harassment at the Workplace (Prevention, Prohibition and
Redressal) Act, 2013
N. Laws relating to Employment and Training
1. Apprentices Act, 1961

2. Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
LAWS RELATING TO INDUSTRIAL RELATIONS
Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947 (the "ID Act") has been enacted for the investigation and
settlement of industrial disputes in any industrial establishment.
The Industrial Disputes Act defines "Industrial dispute" as a dispute or difference between
workmen and employers or between workmen and workmen, which is connected with
employment or non-employment or the terms of employment or with the conditions of
labour. Dismissal of an individual workman is deemed to be an industrial dispute.
The ID Act provides for the constitution of the Works Committee, consisting of employers
and workmen, to promote measures for securing and preserving amity and good relations
between the employer and the workmen and, to that end, endeavours to resolve any material
difference of opinion in respect of such matters.
The ID Act provides for the appointment of Conciliation Officers, Board of Conciliation,
Courts of Inquiry, Labour Courts, Tribunals, and National Tribunals for settlement of
disputes. Another method recognised for settlement of disputes is through arbitration. The
Industrial disputes Act provides a legalistic way of settling disputes. The goal of preventive
machinery as provided under the Act is to create an environment where the disputes do not
arise at all. The ID Act prohibits unfair labour practices which are defined in the Fifth
Schedule—strikes and lockouts (except under certain defined conditions and with proper
notice). It also provides for penalties for illegal strikes and lockouts and unfair labour
practices and provisions regarding lay off and retrenchment as well as compensation payable
thereof.
The ID Act provides that an employer who intends to close down an industrial establishment
shall obtain prior permission at least ninety days before the date on which he intends to close
down the industrial establishment, giving the reasons thereof.
Trade Unions Act, 1926
The Trade Unions Act, 1926 (the "Trade Unions Act") seeks to provide for the registration of
Trade Unions in India and for the protection of the same. Further, the Trade Unions Act also
in certain respects defines the law relating to registered Trade Unions like mode of
registration, application for registration, provisions to be contained in the rules of a Trade
Union, minimum requirement for membership of a Trade Union, rights and liabilities of
registered Trade Unions, etc.
LAWS RELATING TO WAGES
Minimum Wages Act, 1948
The Minimum Wages Act, 1948 (the Minimum Wages Act) provides for fixing of minimum
rates of wages in certain employments. The minimum wages are prescribed by States through
notifications in the State's Gazette under the Minimum Wages Rules of the specific State.

In terms of the provisions of the Minimum Wages Act, an employee means (i) any person
who is employed for hire or reward to do any work, skilled or unskilled manual or clerical, in
a scheduled employment in respect of which minimum rates of wages have been fixed; (ii) an
outworker, to whom any articles or materials are given out by another person to be made up,
cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for
sale for the purposes of the trade or business of that other person; and (iii) an employee
declared to be an employee by the appropriate Government.
The term "wages" has been defined to mean 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 work done in
such an employment and includes house rent allowance but does not include:
i. The value of:
a. Any house accommodation or supply of light, water and 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 personal 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.
Further, the Minimum Wages Act requires the employer to pay to every employee engaged in
schedule employment wages at a rate not less than minimum rates of wages as fixed by a
notification without any deduction (other than prescribed deductions, if any).
Payment of Wages Act, 1936
The Payment of Wages Act, 1936 (the Payment of Wages Act) is an Act to regulate the
payment of wages to certain classes of employed persons. The Payment of Wages Act seeks
to ensure that the employers make a timely payment of wages to the employees working in
the establishments and to prevent unauthorized deductions from the wages.
According to the Payment of Wages Act, all wages shall be in current coin or currency notes
or in both. It is, however, provided that the employer may, after obtaining the written
authorisation of the employed person, pay him the wages either by cheque or by crediting the
wages in his bank account.
Payment of Bonus Act, 1965
The Payment of Bonus Act, 1965 (the "Bonus Act") provides for the payment of bonus to
persons employed in certain establishments in India either on the basis of profits or on the
basis of production or productivity and is applicable to every establishment in which 20 or
more persons are employed and to all employees drawing a remuneration of less than Rs
10,000. Those employees who have worked for less than thirty days are not eligible to
receive bonus under the Bonus Act. The Bonus Act provides for the payment of bonus

between 8.33% (minimum) to 20% (maximum). However, for the calculation of bonus, a
maximum salary of Rs 3,500 is considered.
LAWS RELATING TO SOCIAL SECURITY
Employees Provident Funds and Miscellaneous Provisions Act, 1952
The Employees Provident Funds and Miscellaneous Provisions Act, 1952 (the "EPF Act")
provides for the institution of provident funds, pension funds, and deposit-linked insurance
funds for employees and applies to all establishments employing 20 or more persons or class
of persons. An establishment to which the EPF Act applies shall continue to be governed by
this Act, notwithstanding that the number of persons employed therein at any time falls below
20.
On account of 2014 Amendment to the said Act, The definition of "excluded employee" has
been amended whereby the members drawing wages exceeding Rs 15,000 per month have
been excluded from the provisions of the PF Scheme. Accordingly, the wage ceiling for an
employee to be eligible for the PF Scheme has been increased from Rs 6,500 per month to Rs
15,000 per month. It further provides that every employee employed in or in connection with
the work of a factory or other establishment is required to become a member of the Provident
Fund.
The 2014 Amendment further lays down the following changes:
a. New members (joining on or after 1 September 2014) drawing wages above Rs

15,000 per month shall not be eligible to voluntarily contribute to the Pension
Scheme.
b. The pensionable salary shall be calculated on the average monthly pay for the
contribution period of the last 60 months (earlier 12 months) preceding the date of
exit from the membership.
c. The monthly pension for any existing or future member shall not be less than Rs
1,000 for the financial year 2014-2015.
d. The contribution payable under the Insurance Scheme shall also be calculated on a
monthly pay of Rs 15,000, instead of Rs 6,500.
e. In the event of death of a member (on or after 1 September 2014), the assurance
benefits available under the Insurance Scheme has been increased by twenty percent
(20%) in addition to the already admissible benefits.
Contributions to the Provident Fund are to be made at the rate of 12% of the wages by the
employers with the employee contributing an equal amount. The employee may voluntarily
contribute a higher amount but the employer is not obliged to contribute more than the
prescribed amount. Further, the EPF Act contains provisions for transfer of accumulations in
case of change of employment.
In terms of power conferred under s 143(11) of the Companies Act, 2013, the Central
Government has issued the Companies (Auditor's Report) Order, 2015 (CARO), which came
into force on 10 April, 2015. Clause (vii) (a) of Paragraph 3 provides that:
The [Statutory] Auditor has to report, inter alia, on the following:

i. Is the company regular in depositing undisputed statutory dues, eg, Provident Fund,
Investor Education and Protection Fund, Employees' State Insurance, income tax,
wealth tax, service tax, sales tax, customs duty, excise duty, cess and any other
statutory duties with the appropriate authorities?
ii. If not paid regularly, the extent of the arrears of outstanding statutory dues as on the
last day of the financial year concerned for a period of more than six months from the
date they became payable, then it shall be indicated in the report.
iii. If such non-payment of dues is on account of any dispute, then the amount involved
and for the forum where the dispute is pending should also be mentioned.
The CARO is, however, not applicable to a banking company, an insurance company, s 8
company, one person company, small companies and certain class of private companies, as
specified under the CARO.
Employees' State Insurance Act, 1948
The Employees' State Insurance Act, 1948 (the ESI Act) is a social welfare legislation
enacted with the objective of providing certain benefits to employees in case of sickness,
maternity and employment injury. In terms of the provisions of the ESI Act, the eligible
employees will receive medical relief, cash benefits, maternity benefits, pension to
dependants of deceased workers and compensation for fatal or other injuries and diseases. It
is applicable to establishments where 10 or more persons are employed. All employees,
including casual, temporary or contract employees drawing wages less than Rs 15,000 per
month, are covered under the ESI Act. This limit has been increased from Rs 10,000 to Rs
15,000 w.e.f. May 1, 2010.
The Government enacted as the Employees' State Insurance (Amendment) Act, 2010 (No.18
of 2010). All the provisions of the ESI (Amendment) Act 2010 (except s 18) have come into
effect from June 1, 2010. The salient features of the ESI (Amendment) Act are as under:
 facilitating coverage of smaller factories;

 enhancing age limit of dependent children for eligibility to dependants benefit;
 extending medical benefit to dependant minor brother/sister in case of insured persons
not having own family and whose parents are also not alive;
 streamlining the procedure for assessment of dues from defaulting employers;
 providing an Appellate Authority within the ESI Corporation against assessment to
avoid unnecessary litigation;
 continuing medical benefit to insured persons retiring under VRS scheme or taking
premature retirement;
 treating commuting accidents as employment injury;
 streamlining the procedure for grant of exemptions;
 third party participation in commissioning and running of the hospitals;
 opening of medical/ dental/ paramedical/ nursing colleges to improve quality of
medical care;
 making an enabling provision for extending medical care to other beneficiaries
against payment of user charges to facilitate providing of medical care from under
utilised ESI Hospitals to the BPL families covered under the Rashtriya Swasthaya
Bima Yojana introduced by the Ministry of Labour & Employment w.e.f. 1.4.2008;

 reducing duration of notice period for extension of the Act to new classes of
establishments from six months to one month;
 empowering State Governments to set up autonomous Corporations for administering
medical benefit in the States for bringing autonomy and efficiency in the working.
The employer should get his factory or establishment registered with the Employees' State
Insurance Corporation (ESIC) within 15 days after the Act becomes applicable to it, and
obtain the employer's code number.
The employer is required to contribute at the rate of 4.75% of the wages paid/ payable in
respect of every wage period. The employees are also required to contribute at the rate of
1.75% of their wages.
It is the responsibility of the employer to deposit such contributions (employer's and

employees') in respect of all employees (including the contract labour) into the ESI account.
Labour Welfare Fund Act (of respective States)
The [State] Labour Welfare Fund Act provides for the constitution of the Labour Welfare
Fund to promote and carry out various activities conducive to the welfare of labour in the
State so as to ensure full and appropriate utilisation of the Fund.
Payment of Gratuity Act, 1972
The Payment of Gratuity Act, 1972 (the Gratuity Act) applies to (i) every factory, mine,
oilfield, plantation, port and railway company; (ii) every shop or establishment within the
meaning of any law, for the time being in force, in relation to shops and establishments in a
State, in which 10 or more persons are employed or were employed on any day of the
preceding twelve months; and (iii) such other establishments or classes of establishments, in
which 10 or more persons are employed or were employed on any day of the preceding
twelve months, as the Central Government may, by notification, specify in this behalf.
The Gratuity Act provides for a scheme for the payment of gratuity to employees engaged in
factories, mines, oilfields, plantations, ports, railway companies, shops or other
establishments. The Gratuity Act enforces the payment of "gratuity", a reward for long
service, as a statutory retiral benefit.
Every employee, who has completed continuous service of five years or more, irrespective of
his wages, is entitled to receive gratuity upon termination of his employment, on account of
(i) superannuation; or (ii) retirement; or (iii) death or disablement due to accident or disease.
However, the completion of continuous service of five years shall not be necessary where the
termination of employment of any employee is due to death or disablement.
The gratuity is payable even to an employee who resigns after completing at least five years
of service.
The gratuity is payable at the rate of fifteen days wages for every year of completed service,
subject to an aggregate amount of Rupees ten lacs only. However, if an employee has the
right to receive higher gratuity under a contract or under an award, then the employee is
entitled to get higher gratuity.

LAWS RELATING TO WORKING HOURS, CONDITIONS OF SERVICE AND
EMPLOYMENT
Factories Act, 1948
The Factories Act, 1948 (the Factories Act) lays down provisions for the health, safety,
welfare and service conditions of workmen working in factories. It contains provisions for
working hours of adults, employment of young persons, leaves, overtime, etc. It applies to all
factories employing more than 10 people and working with the aid of power, or employing 20
people and working without the aid of power. It covers all workers employed in the factory
premises or precincts directly or through an agency including a contractor, involved in any
manufacture. Some provisions of the Act may vary according to the nature of work of the
establishment.
Some Major provisions of the Factories Act are explained below:
a. Section 11 of the Act provides that every factory shall be kept clean and free from
effluvia arising from any drain, privy or other nuisance. Section 13 of the Act focuses
on ventilation and temperature maintenance at workplace. Every factory should work
on proper arrangements for adequate ventilation and circulation of fresh air.
b. Section 18 of the Act specifies regarding arrangements for sufficient and pure
drinking water for the workers.
c. Section 19 further mentions that in every factory there should be sufficient
accommodation for urinals which should be provided at conveniently situated place. It
should be kept clean and maintained.
d. Section 21 of the Act provides from proper fencing of machinery. And that any
moving part of the machinery or machinery that is dangerous in kind should be
properly fenced
e. Further s 45 of the said Act specifies that every factory should have a properly
maintained and well equipped first aid box or cupboard with the prescribed contents.
For every 150 workers employed at one time, there shall not be less than 1 first aid
box in the factory. Also in case where there are more than 500 workers there should
be well maintained ambulance room of prescribed size and containing proper facility.
Industrial Employment (Standing Orders) Act, 1946
The Industrial Employment (Standing Orders) Act, 1946 (the IESO Act) is applicable to
every industrial establishment wherein 100 or more workmen are employed or were
employed on any day of the preceding twelve months. The IESO Act Amis to bring uniform
terms and conditions of service in various industrial establishments. The IESO Act requires
every employer in an industrial establishment to clearly define and publish standing orders
with respect to conditions of employment / service rules and to make them known to the
workmen employed by it. The Act further specifies that every employer is required to submit
to the Certifying Officer five draft copies of the standing orders which he intends to adopt for
his establishment.
Further, the IESO Act requires display of standing orders in a prominent place for the
knowledge of workers.
Shops and Commercial Establishments Act (of respective States)

The Shops and Commercial Establishments Act(s) of the respective States generally contain
provisions relating to registration of an establishment, working hours, overtime, leave,
privilege leave, notice pay, working conditions for women employees, etc. The provisions of
the Shops and Commercial Establishments Act apply to both white collar and blue-collar
employees. IT and IT-enabled services have been given relaxations by various State
Governments in respect of the observance of certain provisions of their respective Shops and
Commercial Establishments Act.
Contract Labour (Regulation & Abolition) Act, 1970
The main objectives of the Contract Labour (Regulations & Abolition) Act, 1970 (the
Contract Labour Act) are: (i) to prohibit the employment of contract labour; and (ii) to
regulate the working conditions of the contract labour, wherever such employment is not
prohibited.
The Act defines a "worker" as a workman who shall be deemed to be employed as "contract
labour" in or in connection with the work of an establishment when he is hired in or in
connection with such work by or through a contractor, with or without the knowledge of the
principal employer.
The Contract Labour Act regulates the employment of contract labour in certain
establishments and provides for its abolition in certain circumstances. It applies to every
establishment or contractor wherein/with whom 20 or more workmen are employed or were
employed on any day of the preceding twelve months as contract labour. The Government
may, however, by notification in the Official Gazette, make the provisions of the Contract
Labour Act applicable to establishments or contractor employing less than 20 workmen.
The Contract Labour Act is not applicable to establishments in which work only of an
intermittent or casual nature is performed.
The Contract Labour Act prohibits the employment of contract labour on jobs that are
perennial in nature. For such jobs, permanent employees need to be employed.
The Contract Labour Act provides that no contractor shall undertake any work through
contract labour, except under and in accordance with a licence issued in that behalf by the
licensing officer.
In terms of s 7 of the Contract Labour Act, the principal employer has to make an application
in the prescribed form accompanied by the prescribed fee payable to the registering officer
for registration.
The Employee's Compensation Act, 1923 (formally known as "The Workmen

Compensation Act, 1923")
The Employee's Compensation Act, 1923 (the EC Act) aims to provide financial protection to
workmen and their dependents in case of any accidental injury arising out of or in course of
employment and causing either death or disablement of the worker by means of
compensation.

This Act applies to factories, mines, docks, construction establishments, plantations, oilfields
and other establishments listed in Schedules II and III of the said Act, but excludes
establishments covered by the ESI Act.
The Act provides for payment of compensation by the employer to the employees covered
under this Act for injury caused by accident. Generally, companies take insurance policies to
cover their liability under the EC Act.
Inter-state Migrant Workmen (Regulation of Employment and Conditions of Service)

Act, 1979
The Inter-state Migrant Workmen (Regulation of Employment and Conditions of Service)

Act, 1979 (the ISMW Act) is an Act to regulate the employment of inter-state migrant
workmen and to provide for the conditions of service and for matters connected therewith.
The ISMW Act applies to (i) any establishment in which five or more inter-state migrant
workmen are employed or who were employed on any day of the preceding twelve months;
and (ii) every contractor who employs or who employed five or more inter-state migrant
workmen on any day of the preceding twelve months.
For the purpose of the ISMW Act, an inter-state migrant workman means any person who is
recruited by or through a contractor in one state under an agreement or other arrangement for
employment in an establishment in another state, whether with or without the knowledge of
the principal employer in relation to such an establishment.
Weekly Holiday Act, 1942
The Weekly Holiday Act, 1942 provides for the grant of weekly holidays to persons
employed in shops, restaurants and theatres. The Act provides that every shop shall remain
entirely closed on one day of the week, which day shall be specified by the shop-keeper in a
notice permanently exhibited in a conspicuous place in the shop. Further the state government
may require in respect of shops or any specified class of shops that they shall be closed at
such hour in the afternoon of one week-day in every week in addition to weekly day off.
The Plantation Labour Act, 1951
The Plantations Labour Act (PLA) seeks to provide for the welfare of labour and to regulate
the conditions of workers in plantations. This Act empowers the State Governments to take
all feasible steps to improve the lot of the plantation workers. The passing of PLA has helped
in creating conditions for organising the workers and the rise of trade unions.
The Act defines an employer as, the person who has the ultimate control over the affairs of
the plantation and where the affairs of the plantation are entrusted to any other person, such
other person shall be the employer in relation to that plantation.
Plantation: Any plantation to which this Act applies and includes offices, hospitals,
dispensaries, schools and any other premises used for any purposes connected with such
plantation.

The Act makes it mandatory for every employer to get their plantation registered within 60
days of its coming into existence.
The Mines Act, 1952
The Mines Act, 1952 (Mines Act) aims to secure safety and health and welfare of workers
working in the mines. "Mine" is defined under the Mines Act as a place where any excavation
work is carried on for the searching and obtaining of minerals.
The Mines Act provides that persons working in the mine should not be less than 18 years of
age.
The Mines Act lays down provisions for appointment of one chief inspector who would be
regulating all the territories in which mining is done and an inspector for every mine who
would be sub ordinate to the chief inspector. Moreover, the District Magistrate is also
empowered to perform the duties of an inspector subject to the orders of the Central
Government. The chief inspector or any of the inspectors may make such inquiry, at any time
whether day or night, in order to check whether the law is being abided in the mines or not.
LAWS RELATING TO EQUALITY AND EMPOWERMENT OF WOMEN
Equal Remuneration Act, 1976
The Equal Remuneration Act, 1976 provides for the payment of equal remuneration to men
and women workers for the same work and prevents discrimination, on the ground of sex,
against women in the matter of employment, recruitment and for matters connected therewith
or incidental thereto. This Act applies to virtually every kind of establishment.
Maternity Benefit Act, 1961
The Maternity Benefit Act, 1961 (Maternity Benefit Act) regulates the employment of
women in certain establishments for a certain period before and after childbirth and provides
for maternity benefits and certain other benefits including maternity leave, wages, bonus,
nursing breaks, etc, to women employees.
The Maternity Benefit Act, 1961 applies to (a) a factory, mine or plantation including any
such establishment belonging to Government and to every establishment wherein persons are
employed for the exhibition of equestrian, acrobatic and other performances; (b) every shops
or establishments within the meaning of any law for the time being in force in relation to
shops and establishments in a State, in which ten or more persons are employed, or were
employed on any day of the preceding 12 months.
Except for s 5A and 5B, the provisions of the Maternity Benefit Act shall not apply to the
employees who are covered under the Employees' State Insurance Act, 1948 for certain
periods before and after child-birth and for which the ESI Act provides for maternity and
other benefits. The coverage under the ESI Act is, however, at present restricted to factories
and certain other specified categories of establishments located in specified areas. The
Maternity Benefit Act is, therefore, still applicable to women employees employed in
establishments which are not covered by the ESI Act, as also to women employees, employed

in establishments covered by the ESI Act, but who are out of its coverage because of the
wage-limit.
Under the Maternity Benefit Act, an employer has to give paid leave to a woman worker for
six weeks immediately following the day of her delivery or miscarriage and two weeks
following a tubectomy operation. The maximum period for which a woman shall be entitled
to maternity benefit shall be 12 weeks, of which not more than six weeks shall precede the
date of her expected delivery.
A pregnant woman is also entitled to request her employer not to give her work of arduous
nature or which involves long hours of standing, etc, during the period of one month
immediately preceding the date of her expected delivery or any period during the said period
of six weeks for which the woman does not avail leave of absence. When a woman absents
herself from work in accordance with the provisions of the Maternity Benefit Act, it shall be
unlawful for her employer to discharge or dismiss her during or on account of such absence.
PROHIBITIVE LABOUR LAWS
Bonded Labour System (Abolition) Act, 1976
The Bonded Labour System (Abolition) Act, 1976 ( Bonded Labour Abolition Act) is a
prohibiting legislation which provides for the abolition of the bonded labour system with a
view to prevent the economic and physical exploitation of the weaker sections of the society,
and matters connected therewith or incidental thereto.
Under the Bonded Labour Abolition Act, the term "bonded labour" has been defined to mean
any labour or service rendered under the bonded labour system.
The term "bonded labour system" has been defined to mean the system of, forced or partly
forced, labour under which a debtor enters or has, or is presumed to have, entered into an
agreement with the creditor to the effect that:
i. In consideration of an advance obtained by him or by any of his lineal ascendants or

descendants (whether or not such advance is evidenced by the document) and in
consideration of the interest, if any, due on such advance; or
ii. In pursuance of any customary or social obligation; or
iii. In pursuance of any obligation devolving on him by succession; or
iv. For any economic consideration received by him or by any of his lineal ascendants or
descendants; or
v. By reason of his birth in any particular caste or community.
The debtor would render, by himself or through any member of his family, or any person
dependent on him, labour or service, to the creditor, or for the benefit of the creditor, for a
specific period or for an unspecified period, either without wages or for nominal wages.
Section 3 of the Bonded Labour Abolition Act provides that the provisions of this Act shall
have effect notwithstanding anything inconsistent therewith contained in any enactment other
than this Act or in any instrument having effect by virtue of any enactment other than this
Act.

Section 20 of the Bonded Labour Abolition Act provides that whoever abets any offence
punishable under this Act shall, whether or not the offence abetted is committed, be
punishable with the same punishment as is provided for the offence which has been abetted.
For the purpose of this Act, "abetment" has the meaning assigned to it in the Indian Penal
Code.
Child Labour (Prohibition & Regulation) Act, 1986
The Constitution of India incorporates provisions to secure labour protection to children. It

expressly prohibits the employment of a child below the age of 14 years in work in any
factory or mine or engagement in any other hazardous employment.
The policy of the Government is to ban the employment of children below the age of 14 years
in factories, mines and hazardous employments and to regulate the working condition of
children in other industries.
The Government enacted the Child Labour (Prohibition & Regulation) Act, 1986 (the Child
Labour Prohibition & Regulation Act), which prohibits the employment of children who have
not completed their 14th year in 16 occupations and 65 processes 1 like cinder picking,
cleaning of ash pits, building operation, manufacturing or handling of pesticides and
insecticides, and manufacturing of matches, explosives, fireworks, etc.
In addition, the Child Labour Prohibition & Regulation Act regulates the working conditions
of children in all employments, which are not prohibited under the Act. It also fixes the
number of hours and the period of work and requires the occupiers of establishments
employing children to give notice to the local inspector and maintain the prescribed register.
Apart from the Child Labour Prohibition & Regulation Act, there are other legislations which
also protect the interest of child labour. For example, the Factories Act, 1948 and the Mines
Act, 1952 prohibit the employment of children below the age of 14 years. The Children
(Pledging of Labour) Act, 1933, makes an agreement to pledge the labour of children void.
Directions of the Supreme Court on the Issue of Elimination of Child Labour
In a landmark judgment on 10 December 1996, in the case of MC Mehta v State of Tamil
Nadu (1996) 6 SCC 756 [Writ Petition (Civil) No. 465/1986], the Supreme Court of India
gave certain directions on the issue of elimination of child labour. The main features of the
judgment are as under:
i. Survey for identification of working children;

ii. Withdrawal of children working in hazardous industry and ensuring their education in
appropriate institutions;
iii. Contribution at the rate of Rs 20,000 per child to be paid by the offending employers
of children to a welfare fund to be established for this purpose;
iv. Employment to one adult member of the family of the child so withdrawn from work
and if that is not possible a contribution of Rs 5,000 to the welfare fund to be made by
the State Government;
v. Financial assistance to the families of the children so withdrawn to be paid out of the
interest earnings on the corpus of Rs 20,000/25,000 deposited in the welfare fund, as
long as the child is actually sent to a school; and

vi. Regulating hours of work for children working in non-hazardous occupations so that
their working hours do not exceed six hours per day and education for at least two
hours is ensured. The entire expenditure on education is to be borne by the concerned
employer.
The implementation of the directions of the Hon'ble Supreme Court is being monitored by the
Ministry of Labour and Employment and compliance with the directions has been reported in
the form of affidavits on 5 December 1997, 21 December 1999, 4 December 2000, 4 July
2001 and 4 December 2003, to the Hon'ble Supreme Court on the basis of the information
received from the State Governments/Union Territories.
The Government is committed to eliminate child labour in all its forms and is moving in this
direction in a targeted manner.
Sexual Harassment at Workplace (Prohibition, Prevention and Redressal) Act, 2013
The Sexual Harassment at Workplace (Prohibition, Prevention and Redressal) Act, 2013
(SHW Act) was enacted by the Parliament to provide protection against sexual harassment of
women at workplace and prevention and redressal of complaints of sexual harassment and for
matters connected therewith.
The SHW Act makes it mandatory for every organization having 10 employees and more to
constitute an Internal Complaints Committee (ICC) to entertain complaints that may be made
by an aggrieved women.
The SHW Act also incorporates provisions for formation of a Local Complaints Committee
(LCC) in every district for entertaining complaints of sexual harassment at workplace from
organisations where ICC has not been established due to having less than 10 employees.
The SHW Act provides that an aggrieved women may in writing make a compliant of sexual
harassment to the ICC or LCC as the case may be within a period of three months from the
date of occurrence of such incident. Further, in a case where the aggrieved woman is unable
to make a complaint on account of her physical incapacity or Death, a complaint may be filed
inter alia by her relative or legal heirs.
LAWS RELATING TO EMPLOYMENT AND TRAINING
Apprentices Act, 1961
The Apprentices Act, 1961 (the Apprentice Act) provides for the regulation and control of
training of apprentices to supplement the availability of trained technical employees for the
industry and matters in connection thereto. It provides for qualification for being engaged as
an apprentice, contract for apprenticeship, renewal of contract of apprenticeship, period for
apprenticeship, termination of apprenticeship contract, obligation of employers and
obligations of apprentices, payment to apprentices, health safety and welfare of
apprenticeship, hours of work, overtime, leave and holidays and other conditions of working
of apprentice.

The Apprentice Act requires employers to hire apprentices in certain designated trades, as
notified by the Government. Accordingly, appointment of apprentices, according to the
Apprentice Act, will be obligatory if the company falls under the notified industry.
The Government is considering amending the Apprentices Act, 1961, in consultation with all
concerned Ministries. One of the proposed amendments relates to reserving 50% of direct
recruitment posts for trained Trade, Graduate, Technician and Technician (Vocational)
apprentices who have been trained under the Apprentices Act, 1961 in the same
establishment.2
Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 (the

Employment Exchange Act) provides for the compulsory notification of vacancies to
employment exchanges by the employers. Section 4(1) of the Employment Exchange Act
makes it obligatory on every establishment in the public sector to notify, before filling up any
vacancy in any employment in that establishment, vacancies to such employment exchanges
as may be prescribed.
Further, s 4(2) of the Employment Exchange Act provides that the appropriate Government
may, by notification in the Official Gazette, require that from such date as may be specified
in the notification, the employer in every establishment in the private sector (ordinarily
employing more than 25 employees) or every establishment pertaining to any class or
category of establishments in the private sector shall, before filling up any vacancy in any
employment in that establishment, notify vacancies to such employment exchanges as may be
prescribed.
E-Kranti: Ministry of Labour & Employment E-governance initiative
The Ministry of Labour & Employment has come up with a unique E-governance service
called "E-kranti" which aims to make government services accessible to the common man in
his locality, through Common Service Delivery outlets and ensure efficiency, transparency
and reliability at affordable costs. For the purpose of E-governance the ministry has also
developed a unified Web Portal called "Shram Suvidha Portal". This portal integrates four
major Organizations under the Ministry of Labour, Thef Chief central Labour Commissioner.
The Directorate General of Mines Safety, Employees' Provident Fund Organization and
Employees' State Insurance Corporation. The portal facilitates the following:
1. A Unique labour identification number (LIN) for Units to facilitate online registration.
2. Filing of self-certified and simplified Single Online Return by the industry Units.
3. Provides for filing a single consolidated Return online instead of filing separate
Returns.
4. Timely redressal of grievances.
5. Transparent Labour inspection scheme through computerised system.

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COMPENSATION AND WELFARE MANAGEMENT

Objective: to enlighten the students with the Concepts and Strategies of

Unit – I : Employee Compensation – Factors Influencing Compensation Plan

Unit – II: Job Evaluation – Methods – Performance and Reward Systems –

Unit – III : Employee Welfare – Concept, Scope and Significance – Welfare

Unit – IV: Employee Welfare Programmes – Statutory and Non-Statutory –

Unit – V: Labour Welfare Administration – Plant Level, State and Central

 Case study 1: Salary Inequities At Ganta Industries( Job Evaluation)

 Case study 6: Collective Bargaining By Workers Of The Indian

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

SALARY INEQUITIES AT GANTA INDUSTRIES

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

2. To gradually increase the female supervisors salaries.

3. To increase their salaries immediately.

1. What would you do if you were Vikranth?

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

Network Cable operates in an area described as a “high-growth market.” In January 2001,

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

Questions 1. Management set performance goals on what basis?

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

1. Identify the problems and their causes in this case.

2. Under the given situation, how are the problems to be remedied?

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

WAGE DETERMINATION MACHINERY OF TEA INDUSTRY IN INDIA: A CASE

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

Wages in tea plantations in India and particularly in West Bengal

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

Wage Determining Machinery

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

History of Collective Bargaining at SEWA

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

Building the Collective Bargaining Capacity of Bidi Workers

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

MURSHIDABAD, WEST BENGAL

MADHYA PRADESH (MP) STATE

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

ACHIEVEMENTS AND LEARNING

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

 For sustainable collective bargaining, it is necessary to sustain motivation and interest in

 SEWA’s decentralized structure of campaign teams, trade committees, and representative

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

PRINCIPLES OF WAGE AND SALARY ADMINISTRATION

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

Frame work for wage calculation:

COMPENSATION & WELFARE MANAGEMENT MBA-HR-III SEMESTER

The fair wage depends on considerations of such factors as:

(i) The productivity of labour,