EMPLOYEES COMPENSATION ACT

 Mathew Joseph
 Baby Mathew – attacked and killed while leaving work – heirs filed for workman’s
compensation [as the Act was called earlier]
 He was a salesman, held to be a workman by giving an expansive definition to – “a
person employed for the purpose of making, altering, repairing, ornamenting,
finishing or otherwise adapting for use, transport or sale of any article or part of an
article in any premises where in or within the precincts where of twenty or more
persons are so employed.”
 When there is a lack of design on the part of a person who suffered that injury then
the act which caused that injury on that person is certainly an accident. Here Baby
Mathew did not certainly have any design to suffer a homicidal attack though it can
be said that there was design on the part of the attackers to cause injuries on Baby
Mathew.
 G Amsaveni
 Whether murder amounts to accident? Whether it is in the “course of employment”?
 Employee was on watchman’s duty when he was murdered.
 Four conditions for compensation - (i) there must be personal injury to the workman;
(ii) personal injury must have been occasioned by an accident; (iii) accident must
have arisen out of and in course of employment; and (iv) injury must have resulted
either in the death of the workman, or his total or partial disablement for a period
exceeding three days.
 When the incident of murder had taken place, in the work place, then the presumption
would be that the murder would have been on account of the employment, in the
absence of any other evidence pointing out that it could not have been on account of
employment. No evidence to show otherwise.
 General Manager BEST v. Mrs Agnes
 Bus driver – left for home in another bus – bus met with and accident and he died.
Whether in the course of employment?
 Implied obligation on his part to travel on the buses. Doctrine of notional extension to
be widened – in case of bus service, the entire fleet of buses to be construed as
premises.
 His efficiency as a bus driver demands him to travel in the bus.
 Helens Colliery case – employee given train service, but not obligated. Held not in the
course of employment, as obligation has to be there, not mere expectation to take a
particular mode of transport.
 This case, therefore, applies the principle that if the employee at the time of the
accident occupies the same position as an ordinary member of the public, it cannot be
said that the accident occurred in the course of his employment.
 Bus driver travelling in capacity of BEST employee as he wore uniform, travelled for
free, and has to stand.
 Saurashtra Salt Manufacturing v. Bai Valu Raja
 Two ways to reach place of employment – boat and road. Boat much more efficient
and easier, so employees mostly used that.
 Boat capsized – whether in course of employment?
  Theory of notional extension not applied – they were travelling on the boat as
members of the general public – the boat also carried other people. Plus, there was an
alternate route to reach the workplace. They were also paying for the ferry service.
 Regional Director v. KP Gopi
 Workman in coir factory – suffered a fall – couldn’t do earlier work, asked for lighter
work but denied.
 Total disablement – when employee cannot do the work he was doing earlier, no
necessary that he cannot do any work. Court doesn’t have to find out if he can be
trained to do other work.
 Mckinnon Mackenzie
 Discusses the concept of “arising out of employment”.
 Causal relationship – proximate, not very remote – between employment and injury.
 Seaman advised to rest – went to the deck still – and presumably fell off and died.
 Lancashire case – was it a part of the injured person’s employment to suffer injury?
 When no concrete evidence – presumptions have to be drawn – whether a reasonable
person would reach the same conclusion.
 In this case – seaman had no business being there – so cannot be said that the accident
arose out of his employment – he was not required to be doing any work – was
specifically asked to stay downstairs.
 Mst Param Pal Singh
 Truck driver – felt uncomfortable – parked the truck at the side and shortly died.
Death was natural. Whether in the course of employment?
 Accident can be internal as well – in such cases, injury and accident coincide. Clover
Clayton case – bursting of aorta – doing some work which increases the risk of
internal accidents.
 Three factors – stress and strain, nature employment, and injury aggravated because
of stress and strain.
 Work has to contribute to the aggravation – reasonable man test – depends on facts.
 Here, entitled to compensation – as driving long hours contributed to his death – led
to stress and strain.
In general, course of employment – when workman reaches his place and employment till he
leaves. Time and place matters – has been extended to mean wherever the employee goes not
as member of the general public.
Out of employment – causal relationship, but has often been relaxed. Bombay HC – whether
the accident would have happened had the employee not been working in the particular case
under particular conditions? Generally, if added risk taken, not out of employment, but even
this has been relaxed (tank case).
 Janki Ammal
 Employee travelling in lorry – thrown out and died – employer contended he was
negligent – was making funny signs etc.
 When accident results in death or total disablement, doesn’t matter if the employee
was under influence, wilfully disobeyed safety instructions, or removed any safety
guard provided specifically.
  Even when wilfully disobeyed, not enough, some additional principles to be seen –
order or rule has to be framed, substantial purpose that of safety, must be known to
the employee, must be disobeyed deliberately (mental act), accident directly
attributable to disobedience. Disobedience of a quasi criminal nature, reckless
disregard of probable consequences.
Diseases also included within the ambit of the Act – deemed to be an injury arising out of and
in the course of employment. No compensation if disease not listed in schedule. Section 4
gives amount of compensation. Look at definitions of total and partial disablement.
 Pratap Narain Singh Deo
 Carpenter fell – left arm amputated – employer claimed permanent partial
disablement.
 Commission – carpentry cannot be done with one hand – 100 % loss of earning
capacity – full compensation to be given.
 Court refused to interfere with finding of fact – also said, nature of work needs to be
looked into – it is a clear case of permanent disablement.
Section 12 imp. – discusses contracting. Principal has deep pockets, liable to pay instead of
shifting responsibility to the contractor.
 K Koodalingam
 Two workmen died under a landslide – was engaged by a contractor under the
Superintendent Engineer, PWD.
 Clause in agreement – contractor alone liable.
 4 conditions for Section 12 – contractor engaged, work is ordinarily a part of trade or
business, accident must have occurred on premises on which the principal has
undertaken to execute the work or is under his control and management, accident
while in course of employment.
 All conditions satisfied, hence principal liable to compensate. Clause cannot override
the object of Section 12. Section doesn’t mention contract to the contrary. Only
principal and contractor inter se rights can be regulated by contract, it cannot override
the Act [beneficial legislation].
 Chandramma v. Manager
 Cement worker – suffered a fall.
 Ascertainment of the effect of the permanent disability on the actual earning capacity
involves three steps. The Tribunal has to first ascertain what activities the claimant
could carry on in spite of the permanent disability and what he could not do as a result
of the permanent ability (this is also relevant for awarding compensation under the
head of loss of amenities of life). The second step is to ascertain his avocation,
profession and nature of work before the accident, as also his age. The third step is to
find out whether (i) the claimant is totally disabled from earning any kind of
livelihood, or (ii) whether in spite of the permanent disability, the claimant could still
effectively carry on the activities and functions, which he was earlier carrying on, or
(iii) whether he was prevented or restricted from discharging his previous activities
and functions, but could carry on some other or lesser scale of activities and functions
so that he continues to earn or can continue to earn his livelihood.
  There is no dispute that the appellant suffered from disablement of permanent nature.
The disablement has incapacitated her from doing the work which she was capable of
doing. The said work was of that of a laborer. Therefore, the Commissioner for
Workmen’s Compensation was wrong in holding that the disability of the appellant
will have to be treated as 20% disability as the work of an appellant involves lifting
heavy weights and the appellant has been rendered incapable from doing such work
due to her disability. Hence, the case of the appellant will be covered by the definition
of ‘total disablement’, therefore, being 100% disabled.
 Jitu Yadav v. ESIC
 Employee working in a milling machine – hand became practically unusable.
  If the injury he has sustained precludes an employee from performing the work which
he was capable of performing at the time of accident, meaning thereby, of the nature
that he was performing at the time of the accident, the disablement constitutes a
permanent total disablement.
 Held to be permanent total disablement.
 S Nambi v. AG Francis
 Rs. 8,000 wage limit under ECA for calculation. Not removed after 2010
Amendment.
 Earlier 4,000 cap provided – it was amendment to say that the Central Government
can fix the cap. Notification was issued to that effect.
EMPLOYEES STATE INSURANCE ACT, 1948
The employer, employee and the State contributes to a fund which benefits the employees.
For sickness, maternity and employment injuries. Applies to factories or establishments.
Wage limit also there. For employees below a certain wage, exempted from contribution.
Factory – manufacturing process has to be carried out. Wage limit = 21,000 (25,000 for
PwD) = above that, Act doesn’t apply. Liability of employer – he has to deduct and make
payment for employee also.
 R Ramkrishnan v. Regional Deirector, ESI
 Court held that, unless the disablement is of such a nature as reduces the earning
capacity, the insured person is not entitled to the disablement benefit. So, the benefit
contemplated under Clause (b) of Section 51 is available only to an insured person
who sustains a permanent total or partial disablement which affects the earning
capacity prejudicially. In other words, it will have the effect of reducing the earning
capacity. (IMP) Disablement benefit will be awarded under ESI only if actual loss in
earnings is shown. Under the ECA, it is not the actual loss of earnings that is to be
taken into account. It is the potential loss of earnings that have to be taken into
account. Compensation will be calculated on the basis of potential loss of earnings in
ECA. ESI does not do so. In a Madras HC case, in an ESI matter, the Court
interpreted S. 63 of the ESI Act to hold that actual loss has to be shown.
 Royal Talkies Hyderabad v. ESIC
 Who is an employee under ESIC? Theatre had a cycle stand and canteen. Leased out
to contractors – whether theatre owner can be considered employers?
 Owner asked for contribution – he said, theatre is not under the Act, and he is not an
employer since he has no connection with people employed by the contractors.
 No supervision or control was found, the contract was not a sham contract.
 Court held them as principal employers [Section 2 (9) (ii) imp].
 Canteen and cycle stand incidental to the theatre’s purpose – the connection may be
remote, and owner may not even be under an obligation to maintain the same, but still
he will be the principal employer.
 No direct relationship between employer and immediate employer required – just that
the workmen working on the employer’s premises, or under his supervision. Very less
connection required – work must not be totally irrelevant to the factory.
 MD Hassan Coop Milk
 Delivery service contractors engaged by cooperatives – they engage employees to
deliver milk. Whether coop responsible for ESIC contributions?
 Again 2 (9) discussed – clause ii imp again – must be in the premises of or under the
supervision of the principal employer, and work should be preliminary, ancillary or
incidental to the employment.
 No employment relationship found – control rested with contractors mainly.
Consistency of vigil should be there.
 Supervision in case of delivery of milk which is a simple task shouldn’t ideally be a
high degree. The control found is this case was inevitable, not essential.
 Consistency of vigil – really required in a beneficial legislation?
 ESIC v. Venus Alloys
 Whether directors of a company who receive remuneration and carry out activities
come within the definition of “employees” under ESI Act?
 Director can have dual capacity – if some additional work performed – he would
come within “employees” – since he is a different person, although he may be an
employer to some of the other employees.
 Company is a juristic person, so director may be an employee.
 ESI v. Peter Sewing Machine
 Control of principal employer over contractor is must; if no control, then contractor is
not immediate employer.
 Peter sewing – making and assembling sewing machine parts. Alone, it employed less
than 20 workers. On premises – 2 contractors could carry out their business. They also
manufactured the same thing, but no agreement between contractors and company
about management and affairs of manufactured items.
 Court said it was not a factory within the Act because three things were missing
despite physical unity – unity of occupation/ownership, unity of employment and
unity of work.
 20 or more persons requirement not fulfilled, as the contractors were not immediate
employers – again 2 (9) discussed. Immediate employer when – he has undertaken
execution of whole or part of the work, which is ordinarily a part of the work of the
factory, on the premises of the factory.
 Here work being undertaken separately – no contract between the company and the
contractor. Occupying the space independently - no unity of ownership or occupation.
 Hyderabad Asbestos
 Company manufacturing asbestos sheets. Persons gave a factory in Sanatnagar,
Andhra Pradesh where asbestos sheets are manufactured. In zonal office, persons
engaged in canvassing of sales.
 Whether zonal office is factory and employees can be considered for ESI Act?
 Company – difference between factory and establishment – for establishment,
separate notification is there. Employees should be working in or in connection with a
factory.
 Persons engaged in establishments and not factories could also be said to be
employees.
 The definition of employees was amended after a few decisions which said that only
persons engaged in the manufacturing process were employees.
 Court – not necessary that connected with manufacturing process, any work in
connection with the factory will be seen.
 Connection of work rather than geographical proximity is imp.
 Kirloskar Bros
 Had three factories, and two officers in Secundarabad and Bangalore from where sale
of products was done. Whether these offices liable to make ESI contributions?
 Imp – when principal employer has control over the employee in a regional office or
establishment. Employee should be engaged in connection with the work of the
factory. Percentage of products sold is immaterial.
 Transport Corporation of India v. ESIC
 Whether Bombay office covered by AP notification on the head office in
Secundarabad?
 Yes, again control needs to be seen by the head office – Bombay office under
direction and control – separate establishments but all connected.
 ESIC v. RK Swamy
 ESIC can be made applicable to shops and establishments by the states. Shops and
Establishments Act imp here. Does advertising agency come under the definition of
shops?
 Clients visited him – he gave advertising services and charged accordingly.
 Division Bench – not a shop because sold items were not tangible, and not at fixed
prices.
 SC – even if variable pricing and giving services, it can be a shop. Also, ESI Act
beneficial, for this purpose the agency will be considered a “shop”.
 Agents & Manufacturers
 Company manufacturing wooden products. 2 of them are factories and the other place
where polishing and cleaning takes place. ESI has clubbed all 3 premises and are
saying that if we combine the 3, then it is essentially a factory, and has asked for
compensation on this basis.
 Employer is arguing that they cannot be totalled up together. Secondly, he argues that
the office is to be considered as a taken unit, and it cannot be called a “manufacturing
process”. He says don’t add it up and if it doesn’t add up to 20, then ESI provisions
can’t be invoked.
 The Court held that it does not matter if the premises are geographically separate. As
long as the premises are carrying out work which is intrinsically related, it is a
 factory. Further, the Court looks at the definition given in Halsbury laws of England
which provides that 2 buildings even if geographically apart by considerable distances
will be considered to be a factory if the work is intrinsically related.
 With respect to the second argument regarding “manufacturing process”, the Court
held that it must be read to include even polishing and sale of goods to be an integral
part of the manufacturing process. Manufacturing process is a continuous thing. Need
to give a very broad interpretation to the term “manufacturing process”.
 Delhi Gymkhana Club v. ESIC
 Club – has a kitchen – Delhi Govt. made ESI Act applicable to establishments –
sought to bring club within the ambit.
 Club – kitchen run only for members, not like a hotel. Also, it already provided
benefits, so ESI Act not applicable.
 Cooking done using cylinders – so power used.
 Court – look at employees’ perspective. Doesn’t matter whether for profit or nfp.
 Beneficial legislation – wider meaning.
 Club falls under factory, as kitchen is an integral part. Cooking is “manufacturing
process”.
4 factors for factory – geographical or physical unity, unity of occupation or ownership, unity
of employment, and unity of work.
 Bangalore Turf Club Limited
 Whether race club is a “shop”?
 Race club open area – not a building where goods are sold at retail prices, so not
shops.
 ESI – don’t look at Shops Act – not pari materia as intention different. Race Club –
money being paid for availing services.
 Dictionary meanings cannot be given in a beneficial legislation.
 Court applies the BWS tests – whether activity systematically undertaken for
production of goods and services with the help of employees.
 With regard to establishments and notifications – most give a list in the Schedule – so
can interpret on the basis of activities carried out by establishments mentioned in the
list.
 Shop – establishment where a systematic or organised commercial activities take
place, includes an establishments that facilitates the transactions.
 Even if club solely conducts races, it is a shop – provides entertainment. [Imp. Shop is
a sub-set of establishment].
 Royal Western Indian Turf
 Casual workers employed perennially – covered under employees?
 Yes, because it is intended by Section 39 (4) and Section 42 (3) – it talks about
contribution when employee is employed for less than a week. Casual employee not
entitled to sickness benefit as held in an earlier case. But they are under the Act.
 Hyderabad Race Club
 Question arose as to whether the Hyderabad Race Club was an establishment under
the ESI Act. The government, through notification in 1975, made the Act applicable
to establishments. HC held it was an establishment. However, the HC reduced the
 liability of the Club for ESI contribution for period between 1975-86 on the ground
that the position of law during that time was uncertain. Therefore, ESIC appealed to
SC.
 Was held to be an establishment.
 Another question was regarding from when did the liability of Club started. The Court
observed that although the notification came in 1975, the law in regard to Clubs
falling within the ambit of establishment was clarified in Hindu Jea Band, Jaipur v.
Regional Director, ESIC in 1987. Therefore, the Club cannot be asked to make ESI
contributions for 1975-86 when the law regarding whether clubs fall within the ambit
of establishments for the purpose of the ESI Act, was unclear prior to Hindu Jea
Band. Therefore, appeals failed.
 Francis De Costa
 Periodical payments provided to employee for disablement as a result of employment
injury sustained.
 Person was on his way to employment, shift started at 4:30 AM and he was hit by
employer’s lorry at 4:15 AM.
 Here SC said – not in the course of employment – going to and coming back from
employment cannot be said to be in the course of employment.
 Deeming provision would be required – cannot be construed to be incidental to
employment.
 Section 51C imp. – accident’s while travelling in employer’s vehicle.
 After this 51E introduced – now commuting to and fro included within the scope if
nexus between time, circumstances and place between accident and employment is
established.
 Arising out of – broader in ESI Act – as these deeming provisions are only implicitly
recognised in ECA [Saurashtra and BEST case].
 ESIC v. Smt Poonam Sharma
 Whether Section 51E has prospective or retrospective application?
 Court said retrospective because beneficial legislation. 51E amendment is declaratory
and clarificatory.
 In any case, no extra burden on employers since contribution already made.
 ESI – employees much better protected due to presumptions and definition of
employee [mere connection with work is enough].
 Bhavnaben D. Joshi
 Crossing railway line – with family [detour while going to work] – hit by train and
died.
 Employer – not an employment injury – nexus between time, place and circumstances
need to be shown – negated by court – detour was only short – he was coming to the
factory.
 Here, wide interpretation to Section 51E.
 Tata AIG v. Ram Avtar
 Person hit on bicycle while going back home – insurance company says – go to ESI.
Court said not an employment injury.
 Discussion around 51E was ignored.
 Compensation claimed under MV Act, and ESI Act.
 It is argued by insurance company that ESI Court has already given some
compensation, therefore a bar is created by section 53. The section requires that a
person should be insured, and he cannot claim compensation from any other law
 Why compensation can be given? One can be that this was not arising out of the
course of employment. Second was that compensation was claimed from the
insurance company, hence it is not an employer employee relationship. Third was that
the benefits under ESI and MVA are entirely different. Compensation under MVA is
much wider than ESI Act.
 MV Act doesn’t allow both ECA and MV remedy, but ESI Act not mentioned, so
both Acts can be proceeded with.
 Benefits for Section 53 and 61 to apply have to be similar – MV Act is wide in scope,
doesn’t govern employer employee relationship.
 At the end, Court allows compensation under MVA and reduces the compensation
under ESI Act. If not employment injury, should have asked to return.
 National Insurance Company v. Saroj
 Person met with accident while travelling to work – workman not in course of
employment moment he leaves home and is on way to work. Has to reach a place
which comes within the theory of notional extension.
 Here ESI benefit given – but wrongfully as it was not employment injury – so he can
refund if he wants, but no estoppel to claim under MV Act – Section 53 cannot be
invoked. It doesn’t exclude jurisdiction of the Tribunal to grant compensation if
injured happens to be covered under the ESI Act.
 Western India Plywood
 Already received benefits under ESI Act, can he go under other laws?
 Section 53 invoked by employer as employee wanted tort compensation as well.
 Kerala HC – only bar against other legislation, not tort.
 Referred to A Trehan case – bar under Section 53 is absolute – cannot be bypassed to
defeat the intention of law.
 Even tort law excluded per the court.
 Dhropadbhai v. Technocraft
 Once an employee is an “insured person” under Section 2 (14) of the ESI Act, he
cannot get benefits under the ECA.
 Difference between both – in ESI periodic payments, in ECA lump sum. ESI – more
coverage and wider remedies.
 Section 46 provides benefits – ESI Act is much wider.
 Kishore Lal v. Chairman
 ESI hospital wrong diagnosis, worsened condition – filed before consumer court.
Preliminary argument – cannot be done since service was gratuitous and complaint
cannot lie as a consumer.
 Court – service not free – because paid out of contributions made by both employer
and employee. Thus, it is a service under the CP Act.
 Section 75 (1) of the ESI Act – doesn’t concern damages for medical negligence. ESI
Court cannot determine damages for medical negligence – not within the powers
conferred to it – beyond its jurisdiction. But jurisdiction of consumer court is not
ousted.
  United India Insurance Company v. Vaneeta
 Truck came into the factory and hit the person. Person was granted compensation
under the ESI Act. Question is whether the person can claim compensation against the
stranger as well. For a claim to be initiated under MV Act as well as the ESI Act,
three conditions must be satisfied (primarily on the basis of interpretation of Tata
AIG) 1. Accident must have taken place in a public place. 2. It must not be an
employment injury though in the workplace. 3. It must be against a third party.
 Problem – court did not go into the question of whether compensation should have
been granted, as it was not an employment injury.
 Allowed to proceed under MV Act, as claim was against a third-party.
 United India Insurance Co. v Vipin Kumar
 TATA AIG quoted with approval [almost entire case copied].
 ESIC v. Santhakumar
 Whether there is any connecting link between Chapter IV and Chapter VI?
 Does the proviso to Clause (b) of Section 77(1A) fix the limit of time, in which the
Corporation can make a claim from the employer, on the basis of the orders passed
under Section 45?
 Section 45A deals with contributions to be made by the employer if they don’t furnish
returns – how it can be determined, mode of recovery etc.
 The limitation period in 77 (1A) has no relevance to the orders passed by the
corporation u/s 45A.
 Earlier, recovery had to be made by the court, but a special process incorporated to
avoid delays – does not prescribe any limitation.
 Consumer Education & Research Centre v. UOI
 Medical facilities to protect the health of the workers are, therefore, the fundamental
and human rights to the workmen.
 State and employers under a moral and constitutional duty to provide medical
facilities, during and after retirement/termination of service.
 Occupational Health and Safety Association v UOI
 Writ under 32 to issue guidelines for health and safety of workers in thermal plants
across India, ordered for High Courts to examine the issues in their respective states.
 Praveen Rashtrapal v Chief Oddicer, Kadi Municipality
 Sewage workers – petition filed – inhumane conditions, dying etc.
 Court notes the extension of Article 21 to include right to health, right to safe
environment, right to live with human dignity, and right to have adequate
compensation for injuries suffered. Court also emphasizes the obligation on the
employer to provide safety measures to the workers
 Court asks the employers not to rely on manual work and hire machines. Secondly,
compulsory insurance of Rs 1 lakhs. Thirdly, discontinuing the practice of engaging
contractors. Also, when a person is required to manually work in sewerage, he should
be wearing adequate safety gear.
EPF ACT
Provident Fund – state will say that employer and employees will contribute to a provident
savings account and you cannot withdraw from that account unless you reach a certain age.
Separate account for each employee. How is Provident funds different from State insurance
Act? Here every single employee has a separate account which is maintained. But in State
insurance, everything is pooled together. Under State insurance Act, you get benefits in case
of death, disablement, injury, etc. You cannot withdraw in case of ESI. But in provident
funds, you can withdraw when you reach a certain age. Not only retirement, but other triggers
also in which amount can be withdrawn. Also, threshold is 15,000 – if salary is above it,
employer would not be liable to contribute.
Three benefits – EPF, pension and deposit linked insurance scheme.
Problems - Lots of scholars have commented that there should be a uniform rule of numerical
threshold for applicability of the social security enactments. They have questioned that why
should a person who is covered by ESI not be protected by the EPF Act. There is no logical
reason why there is a peculiar rule. Peculiarity of Indian social security legislation.
Section 2(g) of the Act defines factory here, unlike other Acts. It means any premises,
including the precincts thereof, in any part of which a manufacturing process is being carried
on or is ordinarily so carried on, whether with the aid of power or without the aid of power.
Under the ESI Act, “manufacturing process” is linked to the Factories Act. The definition of
“manufacturing process” under the Factories Act is much broader in comparison to the
definition under the EPF Act, thereby, narrowing the scope. But the Code of Social security
resolves this issue by providing a common definition of “manufacturing process”.
Section 2A also provides that where an establishment consists of different departments or has
branches, whether situate in the same place or in different places, all such departments or
branches shall be treated as parts of the same establishment.
 Andhra University v. Regional Provident Fund Commissioner of Andhra
Pradesh, 1985 SC
 Printing press being run as industry – EPF Commissioner issues notice to University
to make contributions for PF.
 Uni – its an educational institution, the press is only for the members, so not industry
– as no manufacturing process. Plus, already a PF scheme similar to EPF.
 Also they said – larger establishment needs to be seen – wings and departments not
separable. Court rejected, said they can be separated for the purposes of the Act. 2A
doesn’t mean that all have to be looked at together. Also, beneficial legislation
argument.
 Management of Pratap Press v Secretary, Delhi Press Workers Union, Supreme
Court, 1960
 Workers demand all establishments to be considered part of same establishment. As
seen individually, organizations are running into losses, therefore low bonus would be
paid owing to the losses. While employer claimed that they shouldn’t be clubbed
together.
 Court – difference in ownership wrt each newspaper. So not part of same
establishment.
 But if conditions are complex, we have to see whether workers and management are
same, how accounts are maintained, etc.
 Noor Niwas Nursery Public School v Regional Provident Fund
 It highlights functional integrity – whether one unit can reasonably and conveniently
exist without another, and whether unity in terms of finance and employment is
present. This is slightly different in comparison to the “functional integrity” test
applied by the Court in the Pratap Press case.
 Here both tests satisfied – mainly parents would want children to go to same school
where they wen for nursery schools. Also, the organisation runs 30 schools, why
would it run one school separately from other schools with 4 employees?
 Constructions Company v. Regional Provident Fund Commissioner
 A contractor entered into contract with Punjab State Electricity for power supply and
supply of manpower. The PF commissioner asked payment of PF contributions for the
persons engaged. PF commissioner passed order for contributions. Question is
whether contribution is to be paid by the contractor or the establishment.
 Contractor – three arguments – employer under Act means person who has ultimate
control over affairs of establishment. And employee in section 2(f) includes any
person employed by or through contractor. The control rests with the establishment.
In nay case, ultimate employer has to make contribution first, which can be recovered
later.
 Herein, code number was allotted to the contractor, which showed he was an
employee [each employee given a code number]. All that the contractor is required to
do is to manage the establishment and machinery therein. Therefore, the ultimate
control lies with the contractor and not the establishment.
 Wage was also being paid by the contractor.
 When no code number, then PE pays, so that employees don’t suffer.
 Saheli Marbles Pvt Ltd, Udaipur v, Assistant PF Commissioner, Udaipur, 2015,
Delhi HC
 Thus, where a person is employed for wages, an employer-employee relationship is
pre-supposed and to discharge the said burden material should be produced by the
person seeking exemption to show that there was no employer-employee relationship,
rather the person was controlling and managing the affairs of the establishment. This
burden was not fulfilled by the directors in the present case.
 Directors in a dual capacity. Relied in ESIC v. Apex Engineering – director doing
work connected to the factory etc.
 The Officer In-charge, SubRegional Provident Fund Office and Ors. Vs.
Godavari Garments Limited
 Persons stitch the cloth at home by taking materials home. The materials are provided
by company. But the persons stitching cloth at home have their own machinery. These
persons do not need to show up at specific hours for collecting the raw materials.
Some piece-rate wages are provided.
 Before SC, Court noted that definition is an inclusive one. All that is required is direct
or indirect work in connection to the establishment. Here, all raw materials were
provided, there was right to reject the product. Although their own tools were
provided, it was not relevant.
 The Court in the Godavari case held that the definition of “employee” in the ESI Act
specifically mentions about “supervision”. But this is not applicable here as section
2(f) of EPF Act does not mention supervision. Thus, the Court essentially held that
 the person may be considered to be an employee for the purpose of the EPF Act but
not for the ESI Act.
 P.M. Patel and Sons and Ors. Vs. Union of India (UOI) and Ors.
 Three categories of workers for manufacturing beedis – workers directly engaged by
manufacturer, through contractors but direct relationship with manufacturer, and
through ICs who treated workers as their own employees.
 The home workers have to present themselves in specific hours to collect the raw
materials, and a register is also maintained, where how much raw material is given to
each home worker is noted. Moreover, the rejection/acceptance of the final product
also takes place in front of them.
 Whether they were entitled to EPF benefits?
 Right to reject beedis enough, no need for personal service – amounts to enough
supervision and control
 Beedi workers – no such retirement age, can be considered when service is terminated
– thus, they can withdraw earlier also.
 Pawan Hans Limited and Ors. Vs. Aviation Karmachari Sanghatana and Ors.
 A company is owned 51% by central government and 49% by ONGC. It provides
helicopter services for tourism and offshore excavation. 840 employees – 570 regular
and 270 contractual.
 Whether contractual employees should also get PF protection?
 Section 16 of the EPF Act excludes Government controlled establishments from the
purview of EPF Act.
 No contractor in between, just that workers were hired on contractual basis, wage paid
by company itself.
 PF Trust Regulations – contractual employees [engaged through a contractor] are
excluded. But under EPF Act, very wide definition.
 Court notes that persons are working since more than 20 years, and they are not
engaged through contractors. Therefore, the same provisions applicable to regular
employees should also be applicable to them.
 If the scheme is not applicable at all, then company should be governed by EPF Act.
But Court still didn’t apply the EPF Act but the scheme to ensure the uniformity in the
conditions of service of all employees.
 But court held EPF Act would apply to them, although Government employees, but
no other scheme was applicable to them.
 Bridge & Roof Co. Ltd. v UOI
 Issue is whether production bonus should be considered part of basic wages.
 Dearness allowance, bonuses etc are excluded.
 If bonus has been excluded from definition, production bonus should also be
excluded. But this cannot be the case as even dearness allowance was excluded from
section 2(b) and later included in section 6.
 Regarding bonus, Court says that there were bonuses other than profit bonus which
existed before 1962, and intention of legislature could not have been to limit its
meaning to profit bonus. Also, if intention was to only exclude profit bonus, they
would have said profits for the particular year, or simply profit bonus. Thus, intention
 is to exclude only those things which are not payable to all employees of
establishments or not payable by all establishments.
 Production bonus excluded.
 Jay Engineering Works Ltd.
 Two bases set – quota and norm.
 Employers were mandatorily required to produce the quota. Norm was much higher
than quota and production under the norm would invoke disciplinary action and be
considered as go-slow tactics. Court held that the piece rate payments made for
production between the quota and norm would be considered as part of basic wages,
and only the payment for production above norm would be considered as production
bonus and excluded from basic wages.
 Till production up to quota, some minimum wages and dearness allowance is given to
workers, and after that, they are given production bonus. However, it was argued that
this is not production bonus, as workers were not only required to meet the quota, but
were obligated to produce the norm, as otherwise it would be considered go-slow and
disciplinary action would be taken.
 Basic wages cannot be hidden under the garb of bonus.
 Manipal Academy of Higher Education
 Question is whether the amount received by encashing the earned leave is part of
basic wages under section 2(b) of EPF Act. Appellant contended that Bridge and Roof
Company case provides the settled position in this regard.
 Court noted the principles laid down in Bridge Roof case: 1. Where the wage is
universally, necessarily and ordinarily paid to all across the board such emoluments
are basic wages. 2. Where the payment is available to be specially paid to those who
avail of the opportunity is not basic wages. For instance, overtime allowance, though
it is generally in force in all concerns is not earned by all employees of a concern. It is
also earned in accordance with the terms of the contract of employment but because it
may not be earned by all employees of a concern, it is excluded from basic wages. 3.
Conversely, any payment by way of a special incentive or work is not basic wages
 It is to be noted that any amount of contribution cannot be based on different
contingencies and uncertainties. The test is one of universality. In the case of
encashment of leave the option may be available to all the employees but some may
avail and some may not avail. That does not satisfy the test of universality.
 The Management of Reynold’s Pens India Pvt. Ltd.
 A common question that arises for consideration in all the 10 writ petitions is that
Whether various allowances paid by the Petitioners to their employees under different
heads, such as conveyance, educational allowances, food concessions, medical,
special holidays, night shift incentives, city compensatory allowances were amounting
to wages within the meaning of the term 'basic wage' as per Section 2(b) of the PF Act
covered for deductions towards the Provident Fund.
 Cannot contract out of basic wages – if something to be included under the statute,
will be – no exception.
 Shree Changdeo Sugar Mills
 Dues of around 1.23 crores were there, which were decided to be settled at 1.1 crores
as full and final amount by employers to employees. It was decided that no other
 payments would be made apart from this. Basic wages, seasonal wages, retrenchment
compensation and gratuity were provided for in this final payment.
 PF Commissioner asked for PF payments on these amounts – company said not wages
as work was closed for years, and this was final settlement.
 Court said that even if employees were not working, they were on deemed duty. This
situation is similar to that of a lockout. It is not the fault of the employee and he is
supposed to get wages for the period. If business was not running smoothly, it was not
fault of employees, as they were still in the books of the employers. Thus, the
payments received by them would be wages.
 Also, statute cannot be contracted out of.
 Vivekanand Vidyamandir
 Question is whether special allowances paid to employees over and above the basic
wages and other allowances form part of basic wages.
 If there is any link to extra amount of work put in, it would not be included, but here,
there is no linkage to extra work, or claim by some employees. It is paid to all
employees. Court notes that the test is that it should be paid to all establishments, and
to all employees in the particular category of employees. Thus, narrowing down of
test is done but the reasoning is not provided
 The wage structure and the components of salary have been examined on facts, both
by the authority and the appellate authority under the Act, who have arrived at a
factual conclusion that the allowances in question were essentially a part of the basic
wage camouflaged as part of an allowance so as to avoid deduction and contribution
accordingly to the provident fund account of the employees.
In the Code on Social Security, a major change has been made. Rather than all employees of
all concerns, a numerical threshold test has been laid down in section 2(88) in definition of
wages. The proviso states that total amount of wages is calculated, and if payment made from
(a) to (i) exceeds 50% of all remuneration, the amount exceeding shall be deemed as
remuneration and added in wages under this clause.
MINIMUM WAGES ACT, 1948
Always use Express Newspapers case.
Wages – fixed in return for any kind of work.
Minimum Wages Act – criminal liability if not followed – very strict.
Three types of wages – minimum wages, fair wages and living wages [living wages in Art. 43
of the Constitution].
Fair wages – dependant upon type of work done, capability or economic capacity of the
employer, cost of living (food, place to stay, accommodation, education etc.).
When it goes beyond sustenance, it forms a part of “fair wages”. Starvation wages is the
minimum that you get to live.
Sweated labour – work for which very limited payment.
In India, minimum wage wrt specific sectors.
Living wages – must be able to provide for food, clothing, shelter and measures of comfort.
Imp Provisions
Appropriate government depends on the industry. 2 (i) defined employee. 2 (e) defines
employer.
Manager deemed employer, else occupier – thus the legislation itself lifts the corporate veil.
2 (h) wages – very imp.
Fixing of wages – Section 3 – revision at 5 years.
Section 4 – minimum rate of wages may consist of a basic rate of wages and a special
allowance, a basic rate of wages with/without the cost of living allowance [and cash value of
concessions in respect of essential commodities at concessional rates, or an all-inclusive rate
comprising of basic wage, cost of living allowance and cash value of the concessions.
Control and Supervision test and hire and reward test imp for this legislation.
Minimum wage to be paid under all conditions. Minimum wages are calculated on the basis
of the Cost-of-Living index. Minimum wages are a statutory mandate. Need to pay minimum
wages irrespective of whether the company gets profit or loss.
Starvation Wages; fair wages; minimum wages; floor wage.
In notification method, if appropriate government has adequate information about the
industry and employment, it notifies the minimum wages for that employment. Based on that,
government fixes minimum wages. In company method, if adequate information about the
sector is not there, then a committee of employers, employees, etc. is constituted and it
determines the minimum wages.
The minimum wages, once fixed, cannot be changed. They are revised every 5 years. The
minimum wages have to be paid not only for time work (say 8 hours a day), but also for piece
work (for completing a particular piece of work). Different wages can be fixed for different
types of employees, and different classes of employees, and for children, adolescents, and
adults.
While calculating minimum wages, do you think skill matters? It doesn’t matter for minimum
wages. Skill may matter for fair wages depending on the discretion of the person calculating
it.
Saturation wage -> Minimum Wages -> Fair Wages -> Living Wages. New Labour Code also
provides for flow wages.
Factors that are used to distinguish between fair wages and living wages:- a) Productivity of
workers b) Prevailing wages c) Level of National Income d) Economy of a specific region.
 Unichoyi
 Petitioner argued that the minimum rates established in the notification are much
higher than the rates ought to be. The minimum rates are beyond the financial
capacity of the industry. The notification has fixed fair wages and not minimum
 wages and hence the employers must be consulted. While fixing a statutory minimum,
the employer’s ability to pay must be taken into account. [Tile industry]
 The committee stated that it must not identify the bare minimum wages but also a rate
which ensures subsistence and efficiency of workers.
 The committee followed the Dr. Aykroyd formula and considered the planning
commission’s findings in the cotton industry. It took into account food needs, family
subsistence, and other needs such as rent, education, medical aid etc.,
 The Act contemplates that minimum wage rates should be fixed in the scheduled
industries with the dual object of providing sustenance and maintenance of the worker
and his family and preserving his efficiency as a worker.
 Kamani Metals and Alloys v. Their Workmen
 Hierarchy provided – minimum, fair and living wages.
 In questions of this type it is first desirable to consider what amount is necessary to
maintain and even improve the workers' standard of living, how wages of the workers
concerned compare with those paid to workers of similar grade and skill by other
employers in similar or other industries in the region and what wages the
establishment or industry can afford to pay.. These are the fundamental principles
which have to be borne in mind.
 Broadly speaking the first principle is that there is a minimum wage which, in any
event, must be paid, irrespective of the tent of profits, the financial condition of the
establishment or the availability of workmen on lower wages. This minimum wage is
independent of the kind of industry and applies to all alike big or small.
 It sets the lowest limit below which wages cannot be allowed to sink in all humanity.
 The second principle is that wages must be fair, that is to say, sufficiently high to
provide a standard family with food, shelter, clothing, medical care and education of
children appropriate to the workman but not at a rate exceeding his wage earning
capacity in the class of establishment to which he belongs.
 A fair wage is thus related to the earning capacity and the workload. It' must,
however, be realised that 'fair wage' is not 'living wage' by which is meant a wage
which is sufficient to provide not only the essentials above-mentioned but a fair
measure of frugal comfort with an ability to provide for old age and evil days.
 Fair wage lies between the minimum wage, which must be paid in any event, and the
living wage, which is the goal. As time passes and prices rise, even the fair wage
fixed for the time being tends to sag downwards and then a revision is necessary.
 To a certain extent the disparity is made up by the additional payment of dearness
allowance. This allowance is given to compensate for the rise in the cost of living. But
as it is not advisable to have a 100%. neutralisation test it lead to inflation, the
dearness allowance is often a little less than 100% neutralisation. In course of time
even the addition of the dearness allowance does not sufficiently make up the gap
between wages and cost of living and a revision of wages and/or dearness allowance
then becomes necessary. This revision is done on certain principles. These principles
have been stated in more than one case of this Court. 
 Revision principles - Location of the industry (Cottons grieves case talks fairness of
wage is calculated through two means: - an industry is be considered or region is
considered – If nature of industry is large in the region, then industry will be
considered. If comparable number of industries in a region is small, then region is
 considered. If Industry is considered three factors: Kind of protection, type of
production and competition in the area. If region is considered, then factors
considered is cost of living index (policy issue is not imp).
 The Management of Reptakos Brett and Co. Ltd.
 How to figure out Dearness Allowance?
 The arguments of the industry were first: a) They were paying a fair wage which over
neutralizes the impact of inflation. b) The wages and the system was no long
accomdatable for the industry. They wanted to reduce.
 Same classification made – fair wage, living wage and minimum wage.
 Five norms to define minimum wage - In calculating the minimum wage, the standard
working class family should be taken to consist of 3 consumption units for one earner;
the earnings of women, children and adolescents should be disregarded, Minimum
food requirement should be calculated on the basis of a net intake of calories, as
recommended by Dr. Akroyd for an average Indian adult of moderate activity,
clothing requirements, rent under Government’s Industrial Housing Scheme, fuel
lighting etc., and a sixth criteria added by the court - children education, medical
requirement, minimum recreation including festivals/ceremonies and provision for old
age, marriages etc. should further constitute 25% of the total minimum wage.
 An employer who cannot guarantee this cannot be a part of the industry.
 It is, therefore, for the management, which is seeking restructuring of DA scheme to
the disadvantage of the workmen to prove to the satisfaction of the tribunal that the
wage structure in the industry concerned is well above minimum level, and the
management is financially not in a position to bear the burden of the existing wage
structure.
 Express Newspapers v. Union of India
 Three wages – fair, living and minimum.
 Living – food, clothing, shelter and frugal comfort.
 It will be seen from this summary of the concepts of the living wage held in various
parts of the world that there is general agreement that the living wage should enable
the male earner to provide for himself and his family not merely the bare essentials of
food, clothing and shelter but a measure of frugal comfort including education for the
children, protection against ill-health, requirements of essential social needs, and a
measure of insurance against the more important misfortunes including old age
 Many others, however,.... consider that a minimum wage should also provide for
some other essential requirements such as a minimum of education, medical facilities
and other amenities. We consider that a minimum wage must provide not merely for
the bare sustenance of life but for the preservation of the efficiency of the worker. For
this purpose, the minimum wage must also provide for some measure of education,
medical requirements, and amenities.
 The statutory minimum wage however is the minimum which is prescribed by the
statute and it may be higher than the bare subsistence or minimum wage, providing
for some measure of education, medical requirements and amenities, as contemplated
above.
 It will be noticed that the "fair wage" is thus a mean between the living wage and the
minimum wage and even the minimum wage contemplated above is something more
than the bare minimum or subsistence wage which would be sufficient to cover the
 bare physical needs of the worker and his family, a wage which would provide also
for the preservation of the efficiency of the worker and for some measure of
education, medical requirements and amenities
 It must however be remembered that whereas the bare minimum or subsistence wage
would have to be fixed irrespective of the capacity of the industry to pay, the
minimum wage thus contemplated postulates the capacity of the industry to pay and
no fixation of wages which ignores this essential factor of the capacity of the industry
to pay could ever be supported.
 The certain principles considered by a wage board while discussing the definition of a
minimum wage: a) The case deals with minimum wages regardless of the fact that
workers would work for starvation wages. Workers working for starvation wages, is
against the constitutional provisions of India i.e., a social welfare state. b) The Normal
needs of a worker in a civilized society have to be met.
 The Express Newspaper case comes to the conclusion that the goal of India as a social
welfare country is to not just provide subsistence plus wage, but the goal is to provide
living wage. Minimum wage is way towards living wage. It is calculated using
subsistence plus other things. .
 b) The minimum wage should have a frugal standard for comfort based on human
needs and assurance against evil days. c) A few factors that must necessarily
considered – Food, Clothing, frugal comfort, expenditure for self-development (very
rarely considered by our national legislations).
 The ILO’s components for living wage: 1) Amount must be sufficient for basic
subsistence. 2) Amount will be sufficient for health and decency 3) Amount will be
sufficient for comfort
 Bijay Cotton Mills v. State of Ajmer
 While appeal was pending before appellate tribunal, a committee was formed which
submitted its report and recommended increment in minimum wages to Rs 56. While
the appellate tribunal remanded the matter back to industrial tribunal, and the tribunal
recommended wages of Rs. 35.
 “It can scarcely be disputed that securing of living wages to labourers which ensure
not only bare physical subsistence but also the maintenance of health and decency, is
conducive to the general interest of the public. This is one of the Directive Principles
of State Policy embodied in article 43 of our Constitution.” If the labourers are to be
secured in the enjoyment of minimum wages and they are to be protected against
exploitation by their employers, it is absolutely necessary that restraints should be
imposed upon their freedom of contract and such restrictions cannot in any sense be
said to be unreasonable.
 Employer is also involved in fixing of minimum wages – cannot later disagree.
 6 factors in Express case looked at.
 In the committees or the advisory bodies the employers and the employees have an
equal number of representatives and there are certain independent members besides
them who are expected to take a fair and impartial view of the matter. These
provisions in our opinion, constitute an adequate safeguard against any hasty or
capricious decision by the "appropriate Government.
 Kartikere Gram Panchayat
 Role of the contract between the employer and employee; time period of work and
does it bear a factor on the quantum of the minimum wages.
 Whether minimum wage to be paid if the worker works for only 1 hr.
 Not necessary that the person should still be employed in the same place to bring a
case – only 6 months limitation prescribed.
 If you have made a claim under the minimum wages act, you can raise similar dispute
under Section 15 of payments Act and Section 33 of Industrial Disputes Act.
However, the court clarified that it is preferable that you should ideally raise the claim
under minimum wages Act.
 He is entitled to minimum wages.
 FCI v. Prime Securities
 Two minimum wage notifications – centre and state – which one will be followed?
 Looked at definition of appropriate Government.
 On keen reading of Section-2(b) of the Minimum Wages Act, 1948, it surfaces
unambiguously that the minimum wages as determined by the Central Government
Board will be applicable in the case of the workmen working under the Food
Corporation of India in as much as the petitioner is a Corporation established by a
Central Act and by the Central Government.” So, when the question is which
notification will apply, the Court held that one must look at who is the principal
employer. Since the workers are working primarily under the FCI, which is a Central
government entity, so the notification by the Central government will apply.
 Hence, the independent contractor will pay the minimum wages at the state
notification level but the difference between the state notification and central
notification will be paid by the FCCAI. In effect, the FCCAI will be paying the
minimum wages as per the Central Government’s notification
 Surya Rau
 Courts held that there cannot be 2 employers for the purpose of a social security
legislation. The question of employer comes into place. On whom will the liability be
imposed?
 Under contract labour regulation act (CLRA), independent contractors have the
obligation of paying wages. At the same time, under CLRA, there is a duty imposed
on the principal employer. Where the IC fails to pay the amount, the principal
employer has to make sure it is paid.
 The Court held that if the IC does not pay the minimum wages, then the principal
employer has the liability to pay the minimum wages. Liability wrt minimum wages
falls on both the principal employer as well as the IC. With regard to minimum
wages, there are two employers defined.
 A conjoint reading of the definition of employer and employee under the Minimum
Wages Act, therefore, makes it clear that every employer, including a contractor who
engages labourers for others who owns the establishment/factory etc. is bound by the
provisions of the Act, to complay with the requirement of maintaining Registers, etc.
No other view is possible.
 The MWA does not distinguish between principal employer and contractor, unlike the
CLRA
 Sanjit Roy v. State of Rajasthan
 The state employed a large number of workers for the construction of a road to
provide them relief from drought and scarcity conditions prevailing in their area.
Their employment fell under the Rajasthan Famine Relief Works Employees
(Exemption from Labour Laws) Act, 1964. The people employed for the work were
paid less than the minimum wage, which was allowed in the Exemption Act.
 Mainly the female workers were getting disadvantaged. Court held that any labour
done and payments below the minimum wages if given for the labour will be deemed
to be “forced labour”. The fact that there is a drought/famine will not have any
bearing on the quantum of minimum wages. Minimum wage is a statutory mandate
which has to be followed by all scheduled establishments.
PAYMENT OF WAGES ACT, 1936
 AVD Costa
 The appellant was working on daily wages, as a daily rated casual labourer and was
paid a fixed amount of wages per day – claimed absorption as monthly-rated
permanent employee.
 SC said – authority under Section 15 is a tribunal of limited jurisdiction – cannot
determine any issue which goes beyond the ambit of the Act itself.
 Here there was no allegation of delay in payment of wages nor there was any
allegation of illegal deduction. The only grievance was for payment of wages for an
enhanced post – something the petitioner claimed should have been given to him.
 Authority only has potential to decide actual wages under subsisting contracts – and
not future/potential wages.
 Indian Statistical Institute v. State of West Bengal
 ISI is an industrial establishment – production activities going on and significant
number of labourers employed. Not a “factory” but some production going on, so
establishment.
 Ex-employee can make a claim under PWA
 Rupendra Swain v. Calcutta Dock Board
 Whether Calcutta Dock Labour Board an industrial establishment under PWA? •
Here, the board’s purpose was to regulate the supply of registered dock works to the
registered dock employers. • Court held that Board is not an establishment under the
Act because it does not carry any work of the nature referred to in this Act – it only
regulated certain matters connected to employment
 Employer-employee relationship only existed between dock workers and registered
employers, merely facilitator.
 Qasim Larry
 New wage structure formulated by an award of the industrial court – whether part of
“wages”?
 Court – yes, old contractual structure becomes inoperative and replaced by the new
structure – later amendment made to clarify the same.
 Manager, General Motor Owner’s Association, Washim
 Payment of wages to dismissed worker.
 It is clear from Ss. 15 and 2(vi) of the Payment of Wages Act that in order that an
amount should be granted by the Authority under the Payment of Wages Act, it must
 first of all fall within the definition of "wages" and that means that there must be an
employer and it must be an amount payable to a person employed in respect of his
employment or of work done in such employment. Now, when the employee is
dismissed and the dismissal is merely declared to be an illegal change, the utmost that
that order can imply is that the dismissal was wrong, it cannot imply that the
employee is once again in the service of his employer.
 PWA doesn’t have authority to decide the question.
 State of WB v. Bachu Mondal
 The employee was working as a durwan in a Polio Clinic – and brought claim
regarding payment of overtime wages.
 In this case, by government notification, the applicability of the Act was extended to
industrial establishment which were defined to be a workshop or other establishment
in which articles are produced, adapted, or manufactured, with a view to their use,
transport or sale.
 In the clinic, medicinal mixtures and prepared, and x-ray is taken for their use – thus
covered under the above definition of industrial establishment.
 Bachu Mondal
 Whether overtime part of wages?
 Court held that you can claim the same provided that the employer asks for the
overtime. Any overtime done as a part of the employment towards the production in
the establishment done towards implicit/explicit terms of employment.
 Ganpatlal Moolchandji Joshi
 Whether maternity benefit part of wages?
 Court held that it is in the nature of compensation. Maternity benefit is given at a
point when no work is being done by the person. If it is in the nature of compensation,
it cannot form a part of wages, so you cannot come before the Payment of Wages
Authority. Remuneration forming a part of “Wages” must be necessarily against some
work done by you. No claim for maternity benefit under PWA. Can be claimed under
the Maternity Benefit Act.
 Divisional Engineer v. Mahadeo Raghu
 Facts – employee of the railways was given a Housing Accommodation Allowance
(HAA). Later, railways constructed buildings and asked employees to come and stay
there – this employee refused and asked the railways to keep giving him the HAA.
[HAA is basically a subsidy given on the rent for accommodation].
 Holding – HAA is not a right under the PWA. There is a difference between House
Rent Allowance (HRA) and HAA. HRA can be claimed under the PWA if it is
provided in the terms of employment. But HAA cannot be claimed. [In HAA, certain
amounts are deducted from wages if accommodation is given in the place of
employment while HRA is an allowance which can help pay the rent for an employee
when he finds accommodation elsewhere. HAA is specifically excluded from the
ambit of “wages”].
 Hindustan Steel Bhilai v. Presiding Officer
 Facts – extremely poor living conditions in the premises where labourers were
staying. Tribunal held that the rent was too high considering the conditions.
  Holding – the court cannot go into the question of determining a fair rent or a standard
level of accommodation that must be made available to the labourers; these are
extrinsic factors.
 BN Elias v. Payment of Wages Authority
 Facts – Because of partition, lack of raw material, and hence, retrenchment happened.
Retrenchment compensation to be paid. Retrenchment compensation delayed. Can
Payment of Wages Authority determine the claim?
 Holding – Yes, because retrenchment compensation is an implied term in the contract
of employment, as it is statutorily provided in the ID Act. Hence, it forms a part of
wages, since it is a compulsory payment upon termination of employment.
 Anusuya Vithal v. JH Mehta
 Issue – whether lay-off compensation if part of “wages” under the PWA?
 Holding – No, because during the period of lay-off, the employer and employee have
no mutual obligation towards each other; the employer is not obligated to pay any
compensation to the employee. There is no statutory obligation to pay lay-off
compensation, and it lay-off compensation doesn’t arise upon the fulfilment of terms
of employment. Also, the legislature could have mentioned “wages” instead of
“compensation” in the ID Act, if they intended it to be in the nature of wages. Hence,
it is not wages. However, of layoff is illegal, then it can come within the ambit of
“wages’.
 Balmer Lawrie Workers Union
 Deductions from wages are mentioned in the PWA – they are exhaustive and no
deductions can be made which are not authorised or provided for under the Act. In
this case, the majority TU agreed for certain deductions under a settlement with the
employer; held that the deduction would be allowed as it was a result of an
understanding between two parties, even though not legally authorised by the Act.
Further, the decision of the majority TU would be binding on all minority TUs as
well, because the settlement was for the benefit of all the employees, and the
deduction could be looked at as a price to pay for such benefits.

PAYMENT OF GRATUITY ACT

There are three types of retirement benefits – Payment of Gratuity is one of them. It is a one-
time lump sum payment made immediately on retirement.
Section 4 – when gratuity to be paid – on superannuation, retirement or resignation, or
death/disablement due to accident or disease.
(2) For every completed year of service or part thereof in excess of six months, the employer
shall pay gratuity to an employee at the rate of fifteen days wages based on the rate of wages
last drawn by the employee concerned:
If employment contract provides for less than 15 days? Won’t stand, as it would be to the
detriment of the workers.
 Beed District Central Cooperative Bank v. State of Maharashtra
 Scheme for gratuity based on 26 days of salary instead of 15 days statutorily
provided. It is significant that in the event the amount of gratuity is calculated at the
 rate of 26 days' salary for every completed year of service, vis-a-vis, 15 days5 salary
therefor, the tenure of an employee similarly situate will vary. Whereas in the former
case an employee may receive the entire amount of gratuity while working for a lesser
period, in the latter case an employee drawing the same salary will have to work for a
longer period. While-reserving his right to opt for the beneficent provisions of the
statute or the agreement, he has to opt for either of them and not the best of the terms
of the statute as well as those of the contract. He cannot have both.
 [Basically, the workman wanted the benefit of the scheme (26 days gratuity) and
ceiling limit from the statute (which was more than what was fixed under the
scheme)].
 YK Singla v. PNB
 Bank Manager retired – gratuity and other retirement benefits withheld because
criminal proceedings pending against him. He was later acquitted – given these
benefits but he wanted interest due to delayed payment; PNB said interest only from
date of acquittal. Whether the provisions of the Gratuity Act can be extended to the
appellant, so as to award him interest under sub-Section (3A) of Section 7 of the
Gratuity Act.
 On the basis of Section 4 of the Gratuity Act, that an employee has the right to make a
choice of being governed by some alternative provision/instrument, other than the
Gratuity Act, for drawing the benefit of gratuity. If an employee makes such a choice,
he is provided with a statutory protection, namely, that the concerned employee would
be entitled to receive better terms of gratuity under the said provision/instrument, in
comparison to his entitlement under the Gratuity Act. The benefit of interest enuring
to an employee, as has been contemplated under section 7(3A) of the Gratuity Act,
cannot be denied to an employee, whose gratuity is regulated by some
provision/instrument other than the Gratuity Act. This is so because, the terms of
payment of gratuity under the alternative instrument has to ensure better terms, than
the ones provided under the Gratuity Act.
 So, interest has to be given even if the Regulations governing his gratuity did not
mention about interest – the Gratuity Act will apply, since it has overriding effect u/s
14.
MATERNITY BENEFIT CASE
 Women should be provided leave before and after child birth. It is also important for
development of child
 The Act applies to mines, factories and plantations in first instance, along with places
of equestrian, acrobatic and other performances.
 The legislation clearly states that the Act is not applicable to establishments where
ESI Act is applicable, as ESI Act also deals with maternity benefits.
 Does the Maternity benefit act provide leave only when you give birth to a child? No,
it also gives leave to surrogate mother, adopted mothers. There is also provision for
the expected mother to ask for light work under S. 4.
 Employer test – supervision and control.
 Section 4 provides that women are not to be asked to work during 6 weeks
immediately following the date of delivery or miscarriage. And on the request of the
 woman, she would not be required to do any arduous work during the period of 1
month immediately preceding the date of expected delivery.
 Thus, it is a choice of woman to work or not during her pregnancy. But after
pregnancy, there is mandatory leave for 6 weeks.
 Section 5 provides right to payment of maternity benefit. Woman shall be entitled for
average daily wage for the period of absence for the period of her actual absence
immediately preceding and including the day of her delivery and for the six weeks
immediately following that day.
 B Shah v. Presiding Officer
 Sup Court held that Sundays are included in the computation of a ‘week for payment
under MB Act. Uses literal meaning of ‘week’; notes that beneficial construction must
be given plus, legislative intent clear in usage of ‘period’ (meaning continuous
running of time) of actual absence and NOT ‘working days’ falling within period
thus, would include all holidays and Sundays falling within the period for
computation.
 A. Arulin Ajitha Rani
 Whether maternity benefit to educational institutions?
 Cause of action- Film student not allowed to give exam as she was falling short on
attendance because pregnancy. • Court held- S. 2. Proviso of MB Act states that the
State Government may extend Act to other establishments beyond those in S. 2 of the
Act; NOT DONE in this case for educational institutions etc. Essentially a ‘policy’
question. • Court observed that even IF Act were applicable, student only missed 18
days of classes and attended classes in both, pre and post-delivery periods thus,
clearly not missed classes due to pregnancy and even if days added, she would still
fall short of attendance criteria.
 Ruksana v. State of Haryana
 She had 2 children out of first marriage. Then she had a divorce. She joined the
government service and had first child out of second marriage. She wanted maternity
leave but was denied because of Note 4 to the Rule 8 of Punjab Civil Services Rules,
which stated that maternity leave shall not be admissible to a female government
employee having more than two living children.
 Section 27 is relevant here. The provisions of this Act shall have effect
notwithstanding anything inconsistent therewith contained in any other law or in the
terms of any award, agreement or contract of service, whether made before or after
the coming into force of this Act.
 Thus, there cannot be Rules which grant lesser benefits. Discussion on the ambit of
maternity benefit act- Court argues that the Act nowhere provides any specific
threshold that if there are 2 children, then the woman in case of a 3rd child will be
denied maternity benefit.
 Court upholds the reasonable classification, referring Javed v. State of Haryana.
However, the Act does not allow to provide lesser benefits than the MBA. At that
time, MBA didn’t have any distinction between women having two or more children
or less than two children.
 Thus, provision cannot be upheld and woman would be entitled to maternity leave in
the same manner as any woman having less than two children. Although the Rules are
 valid as per Article 14, but the Rules cannot restrict or provide lesser benefits than
those provided under MBA.
 P. Geetha v. Kerala Livestock Development Board Ltd
 Baby born through surrogacy. Petitioner here is the genetic mother i.e., did not have
to delivery baby. Petitioner has not undergone any pre-natal phase.
 Court held that no maternity leave can be validly granted here. May apply for
extraordinary leave or leaves under other categories and have all other applicable
post-delivery maternal and child benefits EXCEPT leave.
 Staff Rules did not permit for leave on maternity grounds except under ‘normal
circumstances’. Staff rules also do not give any leave as a matter of right and the
authority has the discretion of not granting leave.
 Saumya Tiwari v. State of UP
 A student failed an exam and had to appear for repeat exam. She couldn’t attend
repeat because of childbirth and resulting complications. University says we have
rules with regards to leave, and UGC doesn’t require us to have maternity benefit
provisions.
 Court here frames 3 questions, and looks at it from perspective of Article 21. Whether
woman has the autonomy to take maternity decisions, and if yes, what are its
implications.
 Court refers Suchitra Srivastava where it is held that right to choose whether to have a
child is inherent to right to privacy and bodily integrity, and right to liberty and
dignity. The fact that she chooses to have a child is important, and nobody should be
allowed to decided for the woman when to have a child. There should be an
institutional support system for women who decide to have children – Mini Bedi.
 Court here said that right to privacy and bodily autonomy are Article 21 rights.
Therefore, we cannot hide behind the fact that legislature has not legislated in this
regard. Legislature is always going to lag behind. Therefore, Courts have to undertake
a gap-filling right. Since this is a fundamental right, discrimination cannot be justified
on the ground that there is no legislation. In para 65, 66 and 66, various directions are
provided. 14, 15(3) and 21 are violated by not providing maternity benefit. Also,
maternity benefit only being provided to PG students is a violation of article 14 and
15(3). UGC is asked to frame regulations in regard to UG and PG students.
 Student allowed to write exams.
POSH ACT
 aims to safeguard women against sexual harassment at work. Additionally, it aims to
raise awareness of the problem of sexual harassment and offer victims the required
legal recourse.
 The POSH Act of calls for the creation of Internal Complaints Committees (ICCs) &
external member for posh in organisations to resolve sexual harassment claims and
foster a secure work environment for female employees
 Workplace – wide – any place visited for employment.
 ‘sexual harassment’ is any unwelcome sexual behaviour, whether directly expressed
or implied, and includes the cases of physical contact and advances, or a sexual favour
demanded or requested, or making remarks with sexual overtones, or showing
 pornography or other offensive material, or acting in an unwelcome sexual manner
through physical, verbal, or non-verbal means.
 The POSH Act defines sexual harassment as either direct or implied conduct,
regardless of whether it is physical, verbal, or written. The distinctive feature of this
type of behaviour is that it is undesirable and unwelcome. Among the forms of sexual
harassment is quid pro quo sexual harassment, which is a form of sexual blackmail.
 In addition to creating an intimidating working environment, the definition also refers
to creating a hostile working environment. For example, a work environment in which
a woman employee feels embarrassed because she gets unwelcome comments about
her body type. The burden of determining whether the harassment suffered by the
victim amounts to a hostile work environment rest on the internal committee because
there is no fine line test specified under the Act.
 Vishakha v. State of Rajasthan
 Bhanwari Devi was a social worker was gangraped at her workplace. It was realised
that there were no regulations to protect women from harassment at workplace.
Article 14, 15, 21, 42, 51, etc. were violated. Whether the field is actually empty –
Court says since there is no legislation, international treaties can be referred and read
into the laws. Court incorporated CEDAW, etc.
 Various guidelines issued – 15 years till POSH came into place.
 Apparel Export Promotion Council v AK Chopra
 Respondent allegedly tried to molest an employee woman, who was working as a
clerk. At the time she didn’t have training for her work. Unwelcome touch despite
objections. Tried to molest the woman in an elevator. The High Court had held that
since the respondent did not "actually molest" Miss X but only "tried to molest" her
and, therefore, his removal from service was not warranted rebel against realism and
lose their sanctity and credibility. The Court held sexual harassment is a form of sex
discrimination, projected through unwelcome touch, request for sexual favours, etc,
whether directly or by implication. It unreasonably interferes with her work
performance and creates a hostile environment for her. Removal of the respondent
from service upheld. Further held that HCs cant dispute the facts that have been
established by ICs.
 Arvind v UOI
 Accused was a Constable of CISF. Removed from service, no department remedies,
approaches HC through writ. he contacted a female Sub- Inspector ("the
complainant") through his personal mobile phone, on as many as 8 occasions to
befriend her despite her previous rebuffs and having been requested not to do so by
her brother in the past. Accused prays that removal is not proportional to the offense.
 Para 7 of the case sums up facts and judgment. The primary allegation against the
petitioner is that he made unwanted and persistent advances towards a female member
of the force. Court refused to condone the man’s actions because he is young, says
“boys will be boys” attitude not ok. Court says “It is, therefore, that a male employee
enters the prohibited "harassment zone" once he presses his attentions beyond the
point of acceptance upon the female co- employee, even if in his own eyes, it may
simply be romantic pursuit.”
 Shashi Bala
 Shashi Bala was an employee in the Respondent’s School and she has filed an FIR
against him for sexually harassing her, she also filed a complaint in the Internal
Complaint Committee of the School , in the recommendation of ICC it was held that
the complaint of Miss Shashi Bala was false and malicious , Shashi Bala claimed in
the court that the enquiry was conducted without her, she also filed a complaint in the
Internal Complaint Committee of the School , in the recommendation of ICC it was
held that the complaint of Miss Shashi Bala was false and malicious , Shashi Bala
claimed in the court that the enquiry was conducted without her consent and the
recommendation is in utter violation of natural justice, the court held that the
allegations by Miss Shashi are vague and since now her complaint has been proved as
malicious this is the last resort she is taking to save herself. The High Court also
deprecated the practice of challenge to proceedings being made before conclusion, at
interim stage, and which results in derailing and delaying of the original proceedings.
The victim’s appeal was dismissed.
 We may also note that the appellant in this proceeding is not entitled to, on the one
hand state that she did not want to proceed under the Sexual Harassment Act and on
the other hand, challenge the findings of the Internal Complaints Committee
constituted under the said Act. The counsel for the appellant agreed that for such
challenge to the findings of the Internal Complaints Committee under the said Act, the
remedy of appeal was / is available and which had not been availed. Moreover, now
the respondent No.1 School itself has stated that the inquiry now initiated against the
appellant shall be uninfluenced by the findings of the said Committee.
 Medha Kotwal Lele
 A PIL was filed for the Compliance of guidelines of SH at workplace as
implementation of order passed in Vishaka and Ors. vs. State of Rajasthan and Ors,
was not adhered to by organizations and there were numerous instances of harassment
of workplace. This PIL was filed to insist the government to enact proper legislation,
which will provide a safe, harassment and violence free working environment for all
women in India.
 The Hon’ble Supreme Court held that appropriate new laws be enacted by Parliament
and the State Legislatures to protect women from any form of indecency, indignity
and disrespect at all places (in their homes as well as outside), prevent all forms of
violence – domestic violence, sexual assault, Sexual Harassment at the workplace,
etc; and provide new initiatives for education and advancement of women and girls in
all spheres of life. After all they have limitless potential.
 Lip service, hollow statements and inert and inadequate laws with sloppy enforcement
are not enough for true and genuine upliftment of our half most precious population –
the women and enabling working women to work with dignity, decency and due
respect and opined that if there were any non-compliance to guidelines, orders of
present Court following above matter and directions, it would be open to aggrieved
persons to approach respective High Courts.
 The Supreme Court directed that State functionaries and private and public-sector
undertakings/organisations/bodies/institutions, etc. shall put in place sufficient
mechanism to ensure full implementation of Vishaka guidelines.
 Jaya Kodate v. Rashtrasant Tukdoji Maharaj Nagpur University
 Female employee of the University complained to the IC. IC held that the incident
had happened outside the defined boundaries of the campus, hence won't be covered
by “workplace” under the Act.
 The Bombay High Court pointed out that the definition of ‘workplace’ is inclusive
and deliberately kept wide by the Parliament to ensure that any area where women
may be subjected to sexual harassment is not left unattended or unprovoked for.
 The Bombay High Court held that an IC which does not have at least two members
(who are either dedicated to the cause of women or have experience in social work or
have legal knowledge), would be illegal and contrary to the provisions of the POSH
Act. In that judgement, the court also re-emphasized that it is employer’s
responsibility to constitute proper IC. Employers need to genuinely be concerned with
the safety of women at workplace rather than staging a farce of compliance under the
POSH Act.
 Nisha Bharati v. UOI
 A senior RAW official attempted suicide PMO’s officer in protest of mishandling her
harassment complaint by RAW. During her posting at RAW she had filed harassment
complaint against complaint of one of the RAW officials. The ICC was conducted
after 3 months, did contain any third party or NGO (as required under Vishakha
Guideline). She protested against non-compliance of procedure. In the meantime,
PMO, through the Press Information Bureau, released a press note stating that the
appellant was in a ‘disturbed state of mind’ and suffering from psychiatric ailment.
She was immediately made to retire.
 The scheme of the 2013 Act, Vishaka Guidelines and CEDAW predicates that a non-
hostile working environment is the basic limb of a dignified employment.
 The approach of law as regards the cases of sexual harassment at workplace is not
confined to cases of actual commission of acts of harassment, but also covers
situations wherein the woman employee is subjected to prejudice, hostility,
discriminatory attitude and humiliation in day to day functioning at the workplace…
In this case, the complaint was handled with lack of sensitivity.
 The time taken to process the stated complaint and improper constitution of the ICC
was in violation of the Vishaka Guidelines, constitute an appalling conglomeration of
undignified treatment and violation of the fundamental rights of the petitioner, more
particularly Articles 14 and 21 of the Constitution.
 She awarded compensation for violation of her right to lift and dignity.
 Ultimately, the SC noted that the ambit of discrimination has to be broader having
regard to the facts and circumstances of the case; objective of the Act has to be looked
into; reason and philosophy of enacting the law has to be understood; no matter
whatever action takes place in a workplace- anything which is hostile or detrimental
to her being would be sexual harassment.
 Ramesh Pal Singh v. Union of India
 Petitioner was a constable driver with RAP, a branch of CRPF – married a female
constable – while previous marriage was subsisting – charged under CRPF rules
because this was a violation of the CRPF rules – Petitioner was then dismissed from
service.
 Issue with quantum of punishment.
 Usually, role of administrative authority in determining quantum of punishment is
primary, and the courts play only a secondary role. • However, in this case, there had
been a long delay in time for the disciplinary proceedings to conclude, and in such
rare cases, the Court can substitute its own view as to the quantum of punishment.
Logic being that remanding the case back to the authority will again lead to passage
of time.
FACTORIES ACT, 1948
 Health, safety and regularisation of working conditions of workers. Like essential to
maintain toilets in the premises.
 2 (m) – definition of factory – premise or precinct, manufacturing process, and
number of workers employed.
 Ardeshir Hormosji Bhiwandiwala
 The appellant was convicted of an offence under S. 92 of the Factories Act, 1948, for
working a salt works (which extended over an area of about 250 acres’) without
obtaining a licence. The only buildings on this land were temporary shelters for the
resident labour and for an office; at some places, there where pucca platforms for
fixing the water pump where required to pump water from the sea.
 Contentions: (i) The salt works was not a factory as defined in S. 2(m); (ii) The word
“premises” in the definition of factory did not include open land, and (iii) In
converting sea water into salt the appellant was not carrying on any manufacturing
process as defined in S. 2(k).
 This expression “premises including precincts” does not necessarily mean that the
premises must always have precincts. The word “including” is not a term restricting
the meaning of the word “premises” but is a term which enlarges the scope of the
word “premises”.
 The word “place” is again a general word which is applicable to both open land and to
buildings and its use in this section indicates that the Act can be applied to works
carrying on a manufacturing process on open land. There is thus internal evidence in
the Act itself to show that the word “premise” is not to be confined in its meaning to
buildings alone.
 The process of converting sea water into salt carried on the Salt Works comes within
the definition of “manufacturing process” in S. 2(k) inasmuch as salt was
manufactured from sea water by a process of treatment and adaptation. By this
process sea water, a non-commercial article, was converted into a different thing salt,
a commercial article.
 V.P. Gopala Rao v. Public Prosecutor
 The Appellant was essentially the Manager of a tobacco Company’s premises in Eluru
where sun-cured country tobacco leaves were purchased from the local producers and
were further collected, processed, stored and transported to the main factory at
Bombay. It was an established fact that there were easily over 20 workers at the
premises in Eluru.
 At the Company’s premises at Eluru, sun cured tobacco leaves were subjected to the
process of moistening, stripping and packing. Hence, the Court held that such
treatment of the tobacco leaves constituted a Manufacturing process u/S. 2(k)(i) and
the premises constituted to be a Factory u/S. 2(m) as there was prima facie evidence
 showing the relationship of employment between the Occupier and the Workers as the
former admitted to the employment of more than 20 workers.
 Lal Mohammed
 Construction Railway workers want to become permanent workmen of railways.
 No matter the treatment was at par with regular employees, the project could not have
been described as factory. These employees were not regular employees of
establishment. The relationship with employees would end as soon as the work ends.
When the workmen is employed for a particular project then the services of project
employees come to an end as soon as the project is over and they cannot be given
permanent status
 Jethalal Chelabhai Patel
 In an accident case, while greasing the spur gear wheel of an oil mill, one of the hands
of a workman got caught and had to be amputated. It appeared that at the time of the
accident, the cover of the spur gear wheel was not there. The respondent, the manager
of the mill was prosecuted under S. 92 of the Factories Act for having failed to
comply with S. 21(1)(iv)(c) of the Act.
 The workman said that the cover had been removed by the respondent for repairs,
while the case of the respondent was that the workman had himself removed it.
 It was held that the mere fact that someone else had removed the safeguard without
the knowledge, consent or connivance of the occupier or manager does not provide a
defence to him, it would be for him to establish that notwithstanding this he was not
liable. Even where the occupier or manager could establish that somebody else had
removed the fence, he had further to prove that he exercised due diligence to see that
the fence, which under S. 21(1)(iv) was his duty to see was kept in position all along,
had not been removed. A statute does not require an impossibility of a person.
However, the respondent has given no evidence whatever to show what he had done
to carry out his duty to see that the guard was kept in position when the machine was
working. The onus to prove that was on him because his defence depended on it.
 Parimal Chandra Raha
 Appellants are canteen employees of the Corporation and working in the canteens
managed by LIC.
 (i) Whether the appellants are or should be deemed to be the regular employees of the
respondent-Corporation, and if the answer is in the affirmative, (ii) What pay-scales
and other service conditions should be made available to them.
 The Court observed that the broad distinction between a workman and an independent
contractor lies in this that while the former agrees himself to work, the later agrees to
get other persons to work. Whether a particular facility or service has become
implicitly a part of the service conditions of the employees or not, will depend, among
others, on the nature of the service/facility, the contribution the service in question
makes to the efficiency of the employees and the establishment, whether the service is
available as a matter of right to all the employees in their capacity as employees and
nothing more, the number of employees employed in the establishment and the
number of employees who avail of the service, the length of time for which the
service has been continuously available, the hours during which it is available, the
nature and character of management, the interest taken by the employer in providing,
maintaining, supervising and controlling the service, the contribution made by the
 management in the form of infrastructure and funds for making the service available
etc.
 So employees can be held as regular as part of the establishment, as canteen incidental
to the factory process.
 [There can be a statutory requirement to provide a canteen as well. In such cases, they
are employees. In case no such explicit obligation, the above tests to be seen].
 Indian Petrochemicals Corporation Ltd. v. Shramik Sena
 It is clear from this definition that a person employed either directly or by or through
any contractor in a place where manufacturing process is carried on, is a `workman'
for the purpose of this Act. Section 46 of the Act empowers the State Government to
make rules requiring any specified factory wherein more than 250 workers are
ordinarily employed to provide and maintain a canteen by the occupier for the use of
the workers. It is not in dispute, pursuant to this requirement of law, the management
is providing canteen facilities wherein the respondent employees are working. Hence,
it is fairly conceded by the learned counsel for the management that the respondent
workmen by virtue of the definition of the `workman' under the Act, are the
employees of the appellant-management for purposes of the Act.
 The question however is: does this status of a workman under the Factories
Act confine the relationship of the employer and the employees to the requirements of
the Factories Act alone or does this definition extend for all other purposes which
include continuity of service, seniority, pension and other benefits which a regular
employee enjoys. The Factories Act does not govern the rights of employees with
reference to recruitment, seniority, promotion, retirement benefits etc. These are
governed by other statutes, rules, contracts or policies. Therefore, the workmen's
contention that employees of a statutory canteen ipso facto become the employees of
the establishment for all purpose cannot be accepted
 The Court discerned that the person involved in the canteen where the same people
employed at the inception of the institution. The administration, control was carried
out by the institution. Hence, institution could be called employer, and the workers in
canteen where employees. Since the Corporation had a dominating effect on the
contract and could continue or terminate the contract and also to modify and dictate
the new terms of the contract with the employees of the canteen, the workers of the
canteen would be employees under the corporation subject to certain conditions
 Basically, in this case, they were employees for all purposes.
 H.S. Sharma v. M/s Artificial Limbs Manufacturing Corporation
 The canteen was run by contractors with whom the Artificial Limbs Manufacturing
Corporation used to enter into contracts. At the time of the case the canteen was run
by the contractor Aditya Shukla. The appellants claimed that they were employed by
several of the contractors, both past and in the present and had been working in the
canteen for a long time. The appellants raised a claim that they were workers of
Artificial Limbs while their contract with Aditya was on-going.
 The Court found that although Artificial Limbs had agreed to provide the contractor
with the basic infrastructure, the actual running of the canteen was the responsibility
of the contractor alone and the contractor had the sole authority to employ, dismiss
employees and thereby held that the canteen workers were not employees of Artificial
Limbs. On whether the employees of a canteen established under the statutory
 obligation of S. 46 become employees of the factory despite being employed by a
contractor, the Court held that there was nothing mentioned in the statute that
provides for the manner in which a factory must set up a canteen and employees of
contractors who were in no way supervised by the establishment, would not become
the employees of Artificial Limbs.
 In this case, no statutory requirement.
 John Douglas Keith Brown
 Issues: Whether the “occupier” defined under S. 20(n) could be liable for the violation
of the provisions of S. 52, which were violated by the manager of the mills. Judgment:
It was held that both the manager and the occupier were liable for the violation of the
provisions, as the occupier had the full knowledge of the conduct of the manager
 Clothing Factory, National Workers v. Union of India
 The workers of the factory are divided into two categories, namely, (i) day workers
and (ii) piece-rated workers. The piece-rated workers are paid on actual out-put or
production calculated on the basis of time required for making the item by
multiplying the same by the hourly rate worked out by dividing the mean of the time
scale by monthly working hours.
 There was no dispute that if S. 59 was applied workers were entitled to overtime
wages for work done beyond normal hours and upto 48 hours. That would naturally
depend on relevant service rules since S. 59 stricto sensu applies to cases of overtime
work done beyond 9 hours a day or 48 hours week. In the present case, grant of
overtime wages for period in excess of normal working hours of 44-3/4 per week and
upto 48 hours is governed by relevant departmental rules and S. 59(1) comes into play
only if piece worker has worked beyond 9 hours in a day or 48 hours in week and not
otherwise. Further, piece workers are denied overtime wage for these 3 hours of work
in week because this factor is taken care of in calculation of piece rate.
 SM Datta v. State of Gujarat
 Inspector came and took notice of the due diligences in the factory whether they were
followed in a proper manner. Inspector lodged an FIR. Because of the faulty FIR, it
was disregarded. Court held that nature of the FIR is not to be looked into; intent of
the maker of the report is to be looked into. Proper working conditions, safety
conditions- court has to see whether the report looks into the same. Objective has to
be seen; not the procedure.
CONTRACT LABOUR (REGULATION & ABOLITION) ACT, 1970
 An Act to regulate the employment of contract labour in certain establishments and to
provide for its abolition in certain circumstances and for matters connected therewith.
 To prevent such activities, the first method was to expand the scope of employees
under the Acts themselves, such as the EPF or ESIC Acts. However, question
regarding permanency, seniority and wages payment remained. As a result, CLRA
came and permitted contract labour in some cases, while prohibited them in some.
Also, security, permanency, etc. provisions were made for contract labour.
 Workman is defined under section 2(i) as any person employed in or in connection
with the work of any establishment to do any skilled, semi-skilled or un-skilled
manual, supervisory, technical or clerical work for hire or reward, whether the terms
of employment be express or implied.
 Contract labour is defined in section 2(b). A workman shall be deemed to be
employed as “contract labour” in or in connection with the work of an establishment
when he is hired in or in connection with such work by or through a contractor, with
or without the knowledge of the principal employer.
 Section 2(c) defines contractor as a person who undertakes to produce a given result
for the establishment, other than a mere supply of goods of articles of manufacture to
such establishment, through contract labour or who supplies contract labour for any
work of the establishment and includes a sub-contractor
 Air India Statutory Corporation v. United Labour Union
 S. 10 of the Act- request from the appellant that discretion should be left with
management for absorption of contract labourers cannot be accepted.
 (1) Notwithstanding anything contained in this Act, the appropriate Government may,
after consultation with the Central Board or, as the case may be, a State Board,
prohibit, by notification in the Official Gazette, employment of contract labour in any
process, operation or other work in any establishment.
 Court – when contract labour abolished u/s 10, then automatic absorption and direct
employer employee relationship is established.
 Constitutional arguments – the object of the Act is not to deprive the workers of their
livelihood opportunities.
 Intention is to regularise, even though Section 10 may not mention the same.
 Heavily criticised case - Regularization was not the norm even before the statute came
into picture. Thus, when it is clear that legislature didn’t intend to speak about
regularization, this is imposing words on the legislature, which cannot be permitted.
Two other points are raised. First, in regard to government services, many aspects
such as permanency, reservations, seniority, etc. have to be taken into account. If
regularization is allowed, these considerations wouldn’t be fulfilled. Second, if earlier
there was a contractor for 5 years. His tenure ends, new contractor comes for 2
months and then notification is issued. In such case, it would be unjust to regularize
workers who worked only for 2 months.
 Steel Authority of India
 The Steel Authority of India is a central government company and the workmen of the
company were hired as contract labourers working for the company. The Government
of WB issued a notification under the CLRA, prohibiting the employment of contract
labourers in four specific stockyards of the company. The union of the workers
demanded that the contract labourers should be absorbed into the company as regular
employees.
 (i) What is the true and correct meaning of the expression “appropriate government”
defined in the CLRA? (ii) Whether the contract labour working in an establishment
would be automatically absorbed as regular employees upon the issuance of a valid
notification under the CLRA?
 SC reiterated that in view of the new definition of appropriate government under the
Industrial Disputes Act, for any company or undertaking that is carried on or by the
authority of the Central Government, the appropriate government would be the central
government. As the CLRA is a beneficial legislation, it needs to be construed liberally
in favour of the class for whose benefit it is intended i.e. the contract labourers. S. 10,
under which the notifications had been passed, did not refer to or imply that the
 contract labourers would be automatically absorbed. However, it found that when the
employment of contract labourers is a mere camouflage and in reality, the labourers
were the employees of the principal employer, they would be absorbed.
 A.P. State Road Transport Corporation v. G. Srinivas Reddy
 The Andhra Pradesh State Road Transport Corporation, first appellant, (for short 'the
Corporation'), issued a Circular dated 1.9.1988 containing the guidelines for
absorption of persons employed on casual basis/consolidated pay/piecemeal rate/work
charged establishment, whose services had been ordered to be dispensed with, under
an earlier Circular dated 2.7.1987. The said guidelines provided, inter alia, that such
absorption shall be only against sanctioned vacancies, and that the benefit was to be
extended only to those who had been engaged for more than one year. The Circular
made it clear that benefit thereof will not extend to persons engaged by its contractors
at Bus Stations and certain other categories of persons detailed therein.
 In Haryana State Electricity Board (supra), this Court following Air India, had held
that where the work for which contract labour is employed, was perennial in nature
(as contrasted from seasonal), contract labour system should be abolished by issuing a
notification under section 10 of CLRA Act, so as to render the contract labourers, the
direct employees of the principal employer. On the facts of the case, it was also held
that the contract system prevailing in the Electricity Board (appellant herein) was not
genuine, but a mere camouflage (to deprive workers, of the benefits under various
labour enactments) and therefore, the court can pierce the veil and visualize the direct
relationship between the Board and the contract labour. Consequently, this Court
upheld the relief of reinstatement granted to Safai Karamcharis by the High Court.
 In Steel Authority of India Ltd. & Ors. v. National Union Waterfront Workers & Ors.
[2001 (7) SCC 1], a Constitution Bench of this Court overruled the decision in Air
India (supra) and held that where contract labour are engaged in connection with the
work in an establishment and employment of such contract labour is prohibited by
issue of a notification under Section 10(1) of the CLRA Act, there was no question of
automatic absorption of the contract labour working in the establishment and the
principal employer cannot be required to absorb the contract labour. This Court also
held that on a contractor engaging contract labour in connection with the work
entrusted to him by the principal employer, it does not culminate into a relationship of
'master and servant' between the principal employer and the contract labour. This
Court held that whether the contract labour system was genuine or a mere camouflage
has to be adjudicated only by the Industrial Tribunal/court and not by the High Court
in its writ jurisdiction.
 In this case, there was no notification under section 10(1) of CLRA Act, prohibiting
contract labour. There was also neither a contention nor a finding that the contract
with the contractor was sham and nominal and the contract labour working in the
establishment were, in fact, employees of the principal employer himself. In view of
the principles laid down in Steel Authority, the High Court could not have directed
absorption of respondents who were held to be contract labour, by assuming that the
contract labour system was only a camouflage and that there was a direct relationship
of employer and employee between the corporation and the respondents. If
respondents want the relief of absorption, they will have to approach the Industrial
Tribunal/Court and establish that the contract labour system was only a
 ruse/camouflage to avoid labour law benefits to them. The High Court could not, in
exercise of its jurisdiction under Article 226, direct absorption of respondents, on the
ground that work for which respondents were engaged as contract labour, was
perennial in nature.
 Gammon India v. UOI
 CLRA constitutionality challenged.
 The Act was passed to prevent the exploitation of contract labour and also to
introduce better conditions of work. The underlying policy of the Act is to abolish
contract labour wherever possible and practicable and where it cannot be abolished
altogether the policy of the Act is that the working conditions of the contract labour
should be so regulated as to ensure payment of wages and provision of essential
amenities. S. 10 of the Act deals with abolition while the rest of the Act deals mainly
with the regulation.
 Balwant Rai Saluja v. Air India
 The appellants are workers who claim to be the deemed employees of the
management of Air India on the grounds, inter alia, that they work in a canteen
established on the premises of Air India and that too, for the benefit of the employees
of Air India
 (i) Whether workers, engaged on a casual or temporary basis by a contractor (HCI) to
operate and run a statutory canteen, under the provisions of the Act on the premises of
a factory Air India, can be said to be the workmen of the said factory or corporation?
(ii) Whether the workmen engaged in statutory canteens, through a contractor, could
be treated as employees of the principal establishment?
 The court observed that the relevant factors to be taken into consideration to establish
an employer-employee relationship would include, inter alia, Who appoints the
workers, who pays the salary/remuneration, who has the authority to dismiss, who can
take disciplinary action, whether there is continuity of service, extent of control and
supervision, i.e. whether there exists complete control and supervision. HCI is a
separate legal entity incorporated under the Act, 1956 and the said Articles of
Association of the HCI, in no way give control of running the said canteen to the Air
India. The functions of appointment, dismissal, disciplinary action, etc. of the canteen
staff, are retained with the HCI. Thus, the exercise of control by the HCI clearly
indicated that the said respondent No. 2 is not a sham or camouflage created by
respondent No. 1 to avoid certain statutory liabilities. Air India merely has control of
supervision over the working of the given statutory canteen. Issues regarding
appointment of the said workmen, their dismissal, payment of their salaries, etc. are
within the control of the HCI. It cannot be then said that the appellants are the
workmen of Air India and therefore, are entitled to regularization of their services.
 Secretary, State of Karnataka v. Umadevi
 Supreme Court’s Constitution Bench considered the common practice of hiring casual
workers in government organisations and enterprises, keeping them for a long time,
and then regularising them. Such behaviour was widely condemned, with the
argument that all public jobs must be subjected to the norms of equality enshrined in
Articles 14 and 16 of the Constitution. Any interaction that does not involve an open
competition will violate these rules. Merely because a temporary employee or a casual
wage worker is continued for a time beyond the term of his appointment, he would
 not be entitled to be absorbed in regular service or made permanent, merely on the
strength of such continuance, if the original appointment was not made by following a
due process of selection as envisaged by the relevant rules.
 Durgapur Casual Workers Union v. FCI
 Whether the demand of Durgapur Casual Workers Union for absorption of 49 casual
workmen as per list enclosed by the management of FCI, Durgapur is justified? If not,
what relief they are entitled to?
 It is always open to the employer to issue an order of retrenchment on the ground that
the initial appointment of the workman was not in conformity with Articles 14 and 16
of the Constitution of India or in accordance with rules. Even for retrenchment on
such ground, unfair labour practice cannot be resorted and thereby workman cannot
be retrenched on such ground without notice, pay and other benefits in terms of
Section 25F of the Industrial Disputes Act, 1947, if continued for more than 240 days
in a calendar year. However, in other cases, when no such plea is taken by the
employer in the order of retrenchment that the workman was appointed in violation of
Articles 14 and 16 of the Constitution of India or in violation of any statutory rule or
his appointment was a backdoor appointment, while granting relief, the employer
cannot take a plea that initial appointment was in violation of Articles 14 and 16 of
the Constitution of India, in absence of a reference made by the appropriate
Government for determination of question whether the initial appointment of the
workman was in violation of Articles 14 and 16 of the Constitution of India or
statutory rules. Only if such reference is made, a workman is required to lead
evidence to prove that he was appointed by following procedure prescribed under the
Rules and his initial appointment was legal.
EQUAL REMUNERATION ACT, 1976
 Fundamental principle- Look into the facts of the case; equal pay for equal kind of
work The Act incorporates article 39 which provides for equal work for equal pay,
and prevention of discrimination on grounds of sex. Here, the Act silent on the
numerical threshold for the applicability of the Act. This is different from other Acts.
This widens the applicability of the Act.
 Also, section 4 provides for equal remuneration for either gender. Thus, it is gender
neutral. No employer shall pay to any worker, employed by him in an establishment
or employment, remuneration, whether payable in cash or in kind, at rates less
favourable than those at which remuneration is paid by him to the workers of the
opposite sex in such establishment or employment for performing the same work or
work of a similar nature.
 Wage – everything included – no exclusion.
 Section 2(h) defines same work or work of a similar nature as work in respect of
which the skill, effort and responsibility required are the same, when performed under
similar working conditions, by a man or a woman and the differences, if any, between
the skill, effort and responsibility required of a man and those required of a woman
are not of practical importance in relation to the terms and conditions of employment.
 Mackinnon Mackenzie & Co. Ltd. v. Audrey D’Costa
 Female stenographers as a class were paid less than male stenographers- work of
‘confidential lady stenographer’- not based on sex of employee as is case for
 airhostesses and thus, no discrimination permissible. Settlement happened here. • S.
4(1) applies here and NOT S. 4(3) of ER Act as there was previously only one scale
of pay and 4(3) applies only where in an establishment there were multiple rates of
remuneration available, the highest remuneration would be applicable to all and thus,
Section 4(3) Proviso held inapplicable. • Practically no difference in kind of work
done by female and male stenographers, mere distinction of post is irrelevant where
the same has no relation with gender. Settlement accepting lower wages cannot
override the Act itself. Payment not dependant on ability of employer to pay same
amount of money.
 In making comparison the Authority should look at the duties generally performed by
men and women. Where however both men and women work at inconvenient times,
there is no requirement that all those who work e.g. at night shall be paid the same
basic rate as all those who work normal day shifts. Thus, a woman who works days
cannot claim equality with a man on higher basic rate for working nights if in fact
there are women working nights on that rate too, and the applicant herself would be
entitled to that rate if she changed shifts.
 Thus, three tests: i. Broadly. ii. Actual performance of duties. iii. General performance
by men and women should be looked at.
 it is not the case that there can be no discrimination at all between men and women in
the matter of remuneration. There are some kinds of work which women may not be
able to undertake. Men do work like loading, unloading, carrying and lifting heavier
things which women cannot do. in such cases there cannot be any discrimination on
the ground of sex. Discrimination arises only where men and women doing the same
or similar kind of work are paid differently. Wherever sex discrimination is alleged,
there should be a proper job evaluation before any further enquiry is made. If the two
jobs in an establishment are accorded an equal value by the application of those
criteria which are themselves non-discriminatory (i.e., those criteria which look
directly to the nature and extent of the demands made by the job) as distinct from
criteria which set out different values for men and women on the same demand and it
is found that a man and a woman employed on these two jobs are paid differently,
then sex discrimination clearly arises.
 Same remuneration has to be paid irrespective of the place of work unless it is shown
that women are not fit to do the work of the male stenographers.
 Nergesh Meerza
 There are two different categories of employees created – air hostesses (female) and
assistant flight personnel (males). Contractual conditions – within the first 4 years of
services, air hostesses cannot marry. While air flight personnel do not have any such
requirement. They also have different ages of retirement. Also, the moment air
hostess has a child, she has to leave the service. But there is no such condition for air
flight personnel. Air India extended the retirement age, but it was still lower than the
air flight personnel.
 They basically perform the same work. AHs argue that there is no separate class but
Air India argues that AHs and Afs are separate class as at the time of recruitment, air
hostesses only require assessment certificate, and being unmarried. While AFCs
require to pass a test, and require a degree and 3 years course. Also, there is no
requirement of them being unmarried. Men have greater avenues of promotion
 available than women. With regard to retirement benefits, women were getting lesser
benefits. This was sought to be justified on the ground that men were putting in more
number of years of service. Court then notes the conditions of service. For prohibition
of marriage in the first 4 years of service, Court tries to justify it by focussing on
family planning programmes, age of marriage, etc. This is discriminatory as same
restrictions are not imposed on men As legislature has decided that women can get
married at 18, the legislature’s wisdom cannot be questioned. Regarding leaving duty
in case of conceiving a child, Court says that it is unjustified as it would affect their
ability to carry on their jobs. Also, burden of childcare is only placed on women, and
not on men. Court removes the bar in case of first pregnancy. Court discusses section
16 of ERA which states that if the government is satisfied that discrimination in
remuneration is based on a factor other than sex, it can make a declaration in this
regard, and such different treatment would be allowed.
 Based on factual background, held that women and men can be treated differently and
distinction between them can be allowed even if they are basically performing the
same kind of functions. Thus, based on this, some benefits can be given. But Court
does not tell what would be the consequence of this.
 It noted, first, that under Section 16 of the Equal Remuneration Act, it was stated
that  “where the appropriate Government is, on a consideration of all the
circumstances of the case, satisfied that the differences in regard to the remuneration,
or a particular species of remuneration, of men and women workers in any
establishments or employment is based on a  factor other than sex, it may, by
notification, make a declaration to that effect, and any act of the employer
attributable to such a difference shall not be deemed to be a contravention of any
provision of this Act.” In this case, the government had passed a notification under
Section 16. The Court held that “the declaration by the Central Government,
therefore, completely concludes the matter.”
 AIR INDIA CABIN CREW ASSOCIATION V. YESHAWINEE MERCHANT
 Post Nergesh Meerza case, for recruits after 1997, there was a negotiation, and AHs
were allowed to fly till the age of 50. They would not be cabin crew anymore. But
they would be ground crew and they entered into a settlement agreement for lesser
pay. Whether any of the settlement agreements do not abrogate any of the rights
provided by the Statute.
 This was challenged in SC. It was argued that majority of workmen negotiated for
these conditions, and it was considered discriminatory only by minority. Court said
that for pre-1997 recruits, Nergesh holds the field, and cannot be nullified. Working
till age of 58 is only applicable for post1997 recruits. Any discrimination between pre
1997 recruits cannot be allowed.
 Court looked into S. 15 of the Equal Remuneration of the Act. Allows beneficial
changes to be made which can override the Act. Can dilute the provisions of the
statute only if beneficial treatment is given. (IMP) Age of Retirement from flying
duties of Air hostesses at the age of 50 years with option to them to accept post for
ground duties after 50 and upto the age of 58 years; Early age retirement policy of air
hostesses in Air India does not contravene S. 5 of the Equal Remuneration Act and
otherwise, it is saved by S. 15(a) and 15(b)(ii) of the ER Act.
  Also, Nergesh Mirza is overruled by Navtej Singh Johar. Court says that
discrimination based on sex+other factors being permissible is incorrect. Also,
stereotypical distinctions between men and women which are sought to be justified
are incorrect, and cannot be considered as a reasonable classification.
 This was challenged in SC. It was argued that majority of workmen negotiated for
these conditions, and it was considered discriminatory only by minority. Court said
that for pre-1997 recruits, Nergesh holds the field, and cannot be nullified. Working
till age of 58 is only applicable for post1997 recruits. Any discrimination between pre
1997 recruits cannot be allowed.
 JANTA SHIKSHAN PRASARAK MANDAL
 Two women sweepers were employed in girls hostel after the death of their husbands
on compassionate grounds. They claimed that they were being provided lesser
remuneration than their husbands. Employer claimed that appointment of women was
temporary. Also, the employer for them was different.
 Employees argued that their work was similar to their male counterparts. Also, there
were no fixed hours, and since there were no other sweepers, they were doing all the
work. Also, section 3 comes into picture which gives overriding effect to ERA.
 Court finds there is a violation of the Act. Work of male workers was similar to that
of female workers. Also, their appointment as temporary workers was irrelevant.
Thus, court held that payment ought to be same. Question was not with respect to the
benefits but the remuneration which was being paid.
 THE COOPERATIVE STORE LTD. SUPER BAZAR
 There was different in positions, but the job was similar. Women were appointed as
packing cleaners, while men were appointed as packers. They were paid different
wages.
 The argument was that the designation and position was different. Since male and
female workers were working at different positions, different wages were to be paid.
But the Court held that designation does not matter. If nature of work is similar,
designation is irrelevant. Court also observed that gendered distinction between
employees is not permissible. Court held that designation would be immaterial and
irrelevant if it is proved that both the categories are doing the similar kind of work.

MATERNITY BENEFIT ACT

Gender-neutral
Deemed adoptive mother – when surrogate mother has to give her own egg.
POSH Act – gender-neutral, IC not supposed to not disclose the basis of their findings (issue
of transparency), whether woman chairman imp, limitation period.
 In Re Problems and Miseries of Migrant Labourers
 Registration of unorganised/migrant workers on the e-shram portals at the earliest.
 Distribution of extra foodgrains for migrant workers.
 One Nation One Ration Card at the earliest.
 Include them within National Food Security Act.
 Community kitchens at prominent places.
 Migrant Worker Act 1979 to be followed in letter and spirit.