1.

INDUSTRIAL RELATIONS

1.1 Industrial Relations

Meaning – Nature and Various Approaches to Industrial Relations

✓ The concept of IR means the relationship between employees and management in the
day-to- day working of industry.
✓ At wider sense, IR is a “set of functional interdependence involving historical, economic,
social psychological, demographic, technological, occupational, political, and legal
variables.”
✓ According to “ILO”, “Industrial relations deal with either the relationship between the state
and employers’ and workers organization or the relation between the occupational
organizations themselves.”
✓ According to Dale Yoder “The term industrial relations refers to the relationship between the
management and employees or among employees and their organization that arise out of
employment.
✓ Relationship between employers and employees or trade unions is called industrial relations
✓ Eg. IR and joint consultation btw employers and the workers at the place of work, ✓
Eg. collective relationship between employers and employees or TU

IR involves 2 parties
- Employers
- Employees, without whom these relations cannot exist

➢ Main purpose is to maintain harmonious relationship btw management and labour ➢ Every
IR system creates a complex set of rules, regulations, procedures to govern the workplace
➢ Dynamic and developing concept

Parties

1. Employers and their organizations

2. Employees and their organizations
3. Government

CHARACTERISTICS
IR is outcome of employment relationship in an industrial enterprise.
IR develops the skills and methods of adjusting to and cooperating with each other. IR system
creates complex rules and regulations to maintain harmonious relations. The government
involves shaping the IR through laws, rules, agreements etc. The important factors of IR are:
employees and their organizations, employer and their associations and government.

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FACTORS AFFECTING IR

1. Institutional factors
2. Economic factors
3. Technological factors
4. Social and cultural factors
5. Political factors
6. Government factors

SCOPE OF IR

1. Relationship among employees, between employees and their superiors or managers 2.

Collective bargaining between trade unions and management ( UNION MANAGEMENT
RELATIONS)
3. Collective relations among trade unions, employers association and govt.

CONTRAST BETWEEN HRM AND IR

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PARTIES : EMPLOYEE AND EMPLOYER PARTIES: EMPLOYER, EMPLOYEES, TU,
GOVT. Implementation of HRM policies
results in IR

Formulation of objectives, policies, procedures of

hr and implements them

Individual employee contacts with the immediate Employees even can contact the top management
superior as a group

Grievance and disciplinary procedures are resorted Collective bargaining and forms of industrial
to solve the employer- employee conflicts conflicts are resorted to, to solve the problems

OBJECTIVES OF IR

1. To promote and develop congenial labour management relations

2. To enhance the economic status of the worker by improving wages, benefits, and by
helping the worker in evolving sound budget
3. To regulate the production by minimizing industrial conflicts through state control 4. To
socialize industries by making the government as an employer
5. To provide an opportunity to the workers to have a say in the management and decision
making
6. To improve workers strength with a view to solve their problems through mutual
negotiations and consultation with management
7. To encourage and develop TU in order to improve workers strength
8. To avoid industrial conflict and their consequences
9. To extend and maintain industrial democracy

PRINCIPLES OF INDUSTRIAL RELATIONS

► Recognition of the dignity of the individual and of his right to personal freedom and equality
of opportunity.
► Mutual respect, confidence, understanding, goodwill and acceptance of responsibility on the
part of employer, management and workers and their representatives in the exercises of the
rights and duties in the operation of the industry.
► There has to be an understanding between the various organisations of employers and
employees who represent the management and workers.

FUNCTIONS OF INDUSTRIAL RELATIONS

1. Communication is to be established between workers and the management in order to

bridge the traditional gulf between the two.
2. To establish a rapport between managers and the managed.
3. To ensure creative contribution of trade unions to avoid industrial conflicts, to safeguard
the interests of workers on the one hand and the management on the other hand, to
avoid unhealthy, unethical atmosphere in an industry.
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 4. To lay down such considerations this may promote understanding, creativity and
cooperativeness to raise industrial productivity, to ensure better worker’s participation.

APPROACHES TO IR

• Human relations approach

• Gandhian approach
• Dunlop’s System approach
• Unitary
• Pluralistic
• Marxist perspective of industrial relations
HUMAN RELATION APPROACH

► The Human relations approach is propounded by Elton Mayo, who is a humanist and believes
in the positive nature of the employees.
► Douglas McGregor’s defines Human relations approach explains the behavior of individuals
and groups at the work place and suggests the ways to utilize or modify that behavior to
achieve the objectives of the organization and to fulfill aspirations of the workers

Important contribution to human relations by management philosophers

► Robert Owen- in 1800, he was the first one to emphasize the importance of the needs for
human relations for employees like, improved working conditions.
► F.W Taylor- Father of Scientific Management is responsible for improved conditions and
productivity of industrial workers.
► Elton mayo- He was the one who gave a status to human relations. i.e., the key to workers
morale, high productivity and industrial peace lies in quality of human relations

Main Focus of the Human Relations

• Work in a group activity.

• Informal groups within workplace exercise strong social controls.
• The attitudes and effectiveness of the worker are conditioned by social demands. • The
human relations highlight certain policies and techniques to get better employee morale,
efficiency and job satisfaction.
• The approaches helps in effective communication
• Need for attention
• Social interaction Individual achievement
• If management pays attention to these, worker productivity will increase

Flow Chart on H.R

Work Factors → Satisfaction for higher order needs→Job Satisfaction→Productivity

How to avoid disputes

Management must learn and know the basic needs of the man and should always try to win the
people. Because these are the employees who can run or ruin the business, THEY Can Make You

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 or Break You.

Two types of human needs

o Economic needs
Which include basic needs for food shelter and clothing for oneself. And can be satisfied by
increasing the wages
o Psychological needs
Needs for security from life hazards and uncertainties created by new challenges and new
relationships. These destroy employee’s peace of mind.

Criticism of human relations approach

1. Encouraged dependency
2. Discouraged individual development
3. Ignored the importance of technology and culture in the industry.

GANDIAN APPROACH

1. This was developed by Mahatma Gandhi.

2. Fundamental principles are truth, non-violence and non-possession.
3. Gandhi meant a peaceful co-existence of capital and labour.
4. Trusteeship implies co-operation between capital and labour.
5. The trusteeship theory implies that there is no room for conflict of interests between the
capitalist and the labourer.
6. Conflict shall be resolved through non violent non cooperation.
7. Workers have the right to strike.

Gandhian rules to resolve industrial conflicts:

1. Workers should seek redressal of reasonable demands through collective action. 2. Trade
unions should seek authority from all workers and remain peaceful and use non violent
methods.
3. Workers should avoid strikes to the possible extent.
4. Mutual respect, recognition of equality and strong labour unions are pre-requisites for
healthy industrial relations.
5. Formation of trade unions should be avoided in philanthropical organisations.
THE SYSTEM APPROACH

One of the significant theories of industrial labour relations was put forth by John Dunlop in the
1950’s.
Dunlop regarded industrial relations system as a subsystem of society, subject to three
environmental constraints- the market, distribution of power in society and technology. Each
subsystem closely affects the other and is collectively responsible for certain results. The system is
comprised of certain core elements which binds the industrial relations systems together.

ACTORS
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There are three groups of actors, who decide the working of the organization. They take part in the
rule making process of the enterprise. These are:
i) Workers and their organisation
ii) Managers and their organisation.
iii) Government agencies
Each of these three actors has a role to play in the industrial relations drama.

CONTEXTS
Contexts or determinants are very significant in any industrial relations. It comprises of factors such
as technology, market constraints, power relations. The technological characteristics of the work
place and the work community have far- reaching consequences on an industrial relations system.

IDEOLOGIES
These are set of ideas and beliefs commonly held by the actors of the industrial relation system
.Every organization have its own ideology or shared understandings.

RULES
A body of rules are framed to govern the actors at the workplace. These rules may take a variety of
forms in different systems.
Eg: Agreements, awards, orders, regulations, customs and practices.
Dunlop’s model can be mathematically expressed as follows:
IR = f {a,t,m,p,i}
where, a = actors, employers, workers and the government
t = technological context
m = market context
P = power context
i = ideological context

Major Focus of System Theory

In the system theory of Dunlop’s, the actors are bound together by a set of common ideas,
perceiving the set of role for each other and interacting to fabricate rules and verdicts at the
workplace.
The emphasis further in the model is on the structure and the rule, and not on the functional
aspects so that the actors are expected to follow prescribed yardstick of behaviour consistent with
the ideology.
There is a general de- emphasis on conflict as the system’s output.
▪ A set of interrelated and interdependent parts arranged in a manner that produces a unified
whole.
▪ Industrial relations system is a sub-system of the wider society or the total social system. ▪ It is
a mixture of traditions, customs, actions, reactions, and interactions between the parties.
▪ It may be conceived at different levels- workplace, industrial, regional or national. ▪ A system
is basically a combination of parts (subsystem). Each part may have various sub parts.

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THE FOUR PARTS OF A SYSTEM

► Inputs – are people, money, information, equipment, and materials required to produce and
organizations goods or services.
► Output – the products, services, profits, loses , employee, satisfaction or discontent, and the
like that are produced by the organization.
► Transformation Process- the organizations capabilities in management and technology that
are applied to converting inputs into outputs.
► Feedback- information about the reaction of the environment to the outputs that affects the
inputs.

CLASSIFICATION OF SYSTEMS

OPEN SYSTEMS
An open system actively interacts with its environment. By interacting with other systems, it tries
to establish exchange relationships.
CLOSED SYSTEMS
A closed system is self contained and isolated from the environment. It is a non- adaptive system. It
does not receive inputs often from other systems and does not trade with the outside world.

Criticism of Dunlop’s System Theory

Omits behavioural variables

The theory eliminates behavioural variables as human motivations, perceptions and attitudes. •
Fails to recognize the importance of profits for negotiation
• Unpractical
It cannot be easily and directly applied to practical problems

1.2 Unitary, Pluralistic, and Marxist Perspectives of Industrial Relations

UNITARY APPROACH

• In Unitary, the organisation is perceived as an integrated and harmonious system viewed as

one happy family.
• The management, staff and all members of the organization share the same objectives,
interest and purposes; thus working together, hand-in-hand , towards the shared mutual
goals.
• Unitary follows a Paternalistic Approach and expects the loyalty of employees.

Work organizations are viewed as:

1. Unitary in structure
2. Unitary in purpose
3. Having single source of authority
4. Having cohesive set of participants
From employee point of view, unitary approach means that:

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 • Working practices should be flexible.
• There should be good communication between groups of staff and the company. • The
emphasis is on good relationships and sound terms and conditions of employment. • Employee
participation in workplace decisions is enabled. So team work, innovation,
creativity, discretion in problem-solving, quality and improvement groups etc. • Employees
should feel that the skills and expertise of managers supports their endeavours.

From employer point of view, unitary approach means that:

• Staffing policies should try to unify effort, inspire and motivate employees. • The organization’s
wider objectives should be properly communicated and discussed with staff.
• Reward systems - secure loyalty and commitment.
• Line managers should take ownership of their team/staffing responsibilities. •
Staff-management conflicts - lack of information, inadequate presentation of management’s
policies.
• The personal objectives of every individual employed in the business should be discussed with
them and integrated with the organization’s needs.

Neo –unitary Approach is a variant of the unitary approach

It builds on existing unitary concepts but it is more sophisticated in the ways it is articulated and
applied within enterprises.
❑ Employee Commitment to quality production
❑ Job flexibility
❑ Employee loyalty
❑ Customer satisfaction
Harmonization of terms and conditions

Goodbye to Strikes and Lockouts

It is goodbye to strikes and an end to bitter negotiations at the Alwar factory of Eicher Tractors. The
employees union has given up its right to negotiate its wages voluntarily. The management is free
to fix annual remuneration for workers. In return, workers can look forward to a fair treatment from
the management
Workers productivity as was stated above has gone up considerably. Not just productivity the work
culture has undergone metamorphosis. The workers are highly motivated and they who needed
supervisors to meet targets did it without them. There is fair treatment, mutual trust, transparency
and open communication
The environment of the work place is so pleasant that the union leaders have to work to earn their
salaries, so uncommon in industries.
Source: Based on The Economic Times. 20th March. 1998.
PLURALIST APPROACH OF INDUSTRIAL RELATION

WHAT IS PLURALISM?
Pluralism is a belief in the existence of more than one ruling principle , giving rise to a conflicts of
interests.
A plural society has to accommodate to different divergent pressure groups to enable social and
political changes to take place constitutionally.
This is achieved through negotiation, concession and compromise between pressure groups and
between many of them and the government.

PLURALISTIC APPROACH

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 Industrial pluralistic relation approach derived from the political pluralism. In pluralism the
organization is perceives as being made up of powerful and divergent subgroups. Each with its own
legitimate loyalties and with there own set of objectives and leaders. In particular the two
prominent subgroups in the pluralistic perspective are the management and trade union.

The trade union are the legitimate representatives of the employees interest The pluralistic
approach to IR accepts conflicts as inevitable but containable through various institutional
arrangements.

THE PLURALIST APPROACH CAN BE EXPRESSED THROUGH AN EQUATION; r =

f(b) or r = f(c)
Where,
r = the rule governing industrial relation
b = collective bargaining
c = conflict resolved through collective bargaining

FEATURES OF PLURALIST APPROACH

GENERAL PHILOSOPHY
An enterprise contains people with a variety of different interest, aims and aspirations. Power is set
to be diffused among the main bargaining group in such a way that no party dominates other

THE NATURE OF EMPLOYMENT RELATIONS

The employment relationship is open-ended and indeterminate, creating an underlying structural
antagonism that has the potential to produce conflicts in both the labour market and workplace.

ROLE OF MANAGEMENT
Management should not expect blind obedience or suppress any ideas or aims that conflicts with
its own. The aim is to reconcile conflicting opinions and keeping the conflicts within acceptable
bounds so that the conflict does not destroy the enterprise

UNION
Unions are viewed as the legitimate representatives of employee interests at work with the right to
challenge the right to manage, but also with the responsibility to seek compromise.

INDUSTRIAL CONFLICT
Conflict is an inevitable and legitimate consequence of the variety of interest in the workplace.
CRITICISM
1. This approach can be criticized on the ground that it is too narrow to provide a
comprehensive framework for analysing IR problems
2. It overemphasizes the significance of the political process of collective bargaining and gives
insufficient weight to the role of the deeper influences in the determination of roles 3.
Institutional and power factors are viewed as of paramount importance, while variables such as
technology, market, status of the parties and ideology are not given any prominence.

MARXIST APPROACH

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Marxist approach is proposed by Karl Max.
He is born in 1818 kingdom of Kingdom of Purssia-Germany
Died in 1883 in London
According to him “Profit equals to motivation which equals to incentive to improve”. Marxists
argue that industrial relation is a relation of clashes of class interest between capital and labour.
Trade unions are seen both as labour reaction to exploitation by capital, as well as a weapon to
bring about a revolutionary social change.
For the Marxists, all strikes are political.
To Marxists, the pluralist approach is supportive of capitalism, the unitary approach is
anathema.

Features of Marxist Approach

Faith in Dialectical Materialism.

Faith in Historical Materialism.
Faith in Economic Determinism.
Faith in Revolution.

1.3 Current Industrial Scenario in India – Problems and Remedies

In today’s dynamic business environment, every organization wants to be a successful organization.

It cannot be possible without Human Resource (HR). The most important asset i.e. Human Resource
(man power) is known as life blood of any organization. The success of any organization depends
upon the performance of their Human Resource. If question arises to find out the most important
difference between ordinary organization and successful organization, the answer would be their
HR. The organization also wants quality people. The greatest challenge before every organization is
to recruit right people in right place. HR is the factors. Employee and Employer both are important.
They are the two sides of the same coin. One cannot operate without the services of the other. The
paper presents an incisive account of emerging issues and challenges that pose roadblocks for
labour reforms in India and imperatives for enhancing labour productivity and lowering labour cost
without compromising international labour standards.

Industrial Relations Environment

Industrial Relations studies the relationship between employer and employee in paid employment:
the ways in which employees are rewarded, motivated, trained and disciplined, together with the
influences of these process on the major institutions involved, namely: management, trade unions
and the State. In its wider connotation Industrial Relations means the organization and practice of
multipronged relationships between workers and management, unions and workers and the unions
and management in an industry. Industrial Relations environment, therefore, is the resultant state
of interaction amongst composites forces operating within and outside the organizations. The need
for looking at Industrial Relations in a broader context has been recognized in academic as well as
business circles. While absence of strikes, lockouts, indiscipline, individual and collective grievances
and restrictive practices have been attributed to existence of Industrial Relations system in an
enterprise, these constituted however the negative indicators of Industrial Relations environment.

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The positive indicators of healthy relationship amongst various internal stakeholders in the
organization ought to be productivity, morale, commitment, constructive discipline and heightened
sense of belongingness and identity with the vision and values of the organization amongst the
employees.

Challenges
Concerns for Industrial Relations cannot be limited to the maintenance of industrial harmony at
enterprise level but also to prevailing issues of socioeconomic conditions prevailing in the country
at the macro level. Industrial Relations systems and practices therefore must be directed towards
responding major challenges surfacing in the new economic order. Healthy industrial relation
cannot be maintained unless broader developmental issues are addressed. Some of the challenges
impacting on Industrial Relation can be stated as follows:- India figures at the bottom of the
10newly industrialized countries in terms of the competitiveness of its• human resources according
to the World Competitiveness Report. The World Competitiveness Report examines the competitive
advantage of human resources on the basis of skills, motivations and flexibility, age structure and
health of the people. The criteria included in this factor are: population, employment, vocational
training, and public expenditure on education, management quality, income levels and health
factors. India‟s rank is one of the lowest-134 out of a total of 160 countries in terms of Human
Development according• to the 1992 UNDP Report on Human Development. The index takes into
account 3 parameters i.e. longevity(life expectancy),knowledge(adult literacy) and decent standard
of living(per capital income).

India scored 14 points and obtained medium freedom ranking(11 to 30 points) in terms of Human
Freedoms Index(UNDP,1992),covering 40 indicators of freedom to exercise choices in cultural,
social, economic and Although there has been significant reduction in the proportion of
people•political affairs.(Venkatratnam,1994) below poverty line, the magnitude is still very large. As
compared to many developing countries, India‟s performance in terms of human resources is not
satisfactory. Although the literacy has increased to 52% in 1991, the no. of illiterates has increased
from 301.9millon in 1981 to 328.9million in 1991.

Changing Nature of Work

In terms of work itself, the term „workers‟ seems increasingly inappropriate. “In the more modern
and technologically sophisticated industries, the workers watch panels, push buttons, pull levers
and turn a valve or two. Process industry pays them to exercise discretion, not to flex muscle. Their
work is becoming increasingly difficult to distinguish from that of supervisors and lower managers.
It is no wonder that process industry does not employ workers any longer. It employs operators and
technicians.”

Changing Profile Of Workers

A social wave is sweeping across our country. The declining power of trade unions, improving pay
packets, the willingness of management to accommodate conflicting growing stature of workers in
society, their increased levels of education and the emergence of process industries which has
changed the very definition of work, have together caused a revolution of perception and
aspiration. The social profile of industrial workers is changing rapidly. Unlike in the early years of our
independence, not many come from a background of hardship and deprivation. Workers in the
organized sector earn well and like to live well. Their aspirations for their children are no different
from those of the middle class. Their eyes are set on upward mobility. Within industry itself,
workers are pushing towards status equality. With a changing social profile, workers are becoming
more assertive with their union bosses. They are also demanding more egalitarian treatment at the
work place. Executive dining rooms are giving way to common canteens. There is growing demand

11
that manager at least those who are compensated in some form for extra hours should punch the
clock. The reluctance to perform lowly jobs. The search for fancy status giving designations -we
have „security guards‟ and „sanitary staff‟ in place of chowkidars and sweepers. The desire for
promotion as supervisor or officer even on lower pay.
Case 1: See Attachment

2. INDUSTRIAL DISPUTES

2.1Industrial Disputes Act 1947: Objects of the Act & Important Definitions

Industrial disputes are the disputes which arise due to any disagreement in an industrial relation.
Industrial relation involves various aspects of interactions between the employer and the
employees. In such relations whenever there is a clash of interest, it may result in dissatisfaction for
either of the parties involved and hence lead to industrial disputes or conflicts. These disputes may
take various forms such as protests, strikes, demonstrations, lock-outs, retrenchment, dismissal of
workers, etc Industrial Disputes Act, 1947 provides machinery for peaceful resolution of disputes
and to promote harmonious relation between employers and workers. The Act is a benign measure
which seeks to pre-empt industrial tensions, provide the mechanics of dispute resolutions and set
up the necessary infrastructure so that the energies of partners in production may not be dissipated
in counterproductive battles and assurance of industrial may create a congenial climate. The Act
enumerates the contingencies when a strike or lock-out can be lawfully resorted to, when they can
be declared illegal or unlawful, conditions for laying off, retrenching, discharging or dismissing a
workman, circumstances under which an industrial unit can be closed down and several other
matters related to industrial employees and employers. Under the Act various Authorities are
established for Investigation and settlement of industrial
disputes. They are Works Committee; Conciliation Officers; Boards of Conciliation; Court of Inquiry;
Labour Tribunals; Industrial Tribunals and National Tribunals. The knowledge of this legislation is a
must for the students so that they develop a proper perspective about the legal frame work
stipulated under the Industrial Disputes Act, 1947.

OBOBJECT AND SIGNIFICANCE OF THE ACT

The Industrial Disputes Act, 1947 makes provision for the investigation and settlement of industrial
disputes and for certain other purposes. It ensures progress of industry by bringing about harmony
and cordial relationship between the employers and employees. Definitions of the words ‘industrial
dispute, workmen and industry’ carry specific meanings under the Act and provide the framework
for the application of the Act. This Act extends to whole of India. The Act was designed to provide a
self-contained code to compel the parties to resort to industrial arbitration for the resolution of
existing or apprehended disputes without prescribing statutory norms for varied and variegated
industrial relating norms so that the forums created for resolution of disputes may remain
unhampered by any statutory control and devise rational norms keeping pace with improved
industrial relations reflecting and imbibing socio-economic justice. This being the object of the Act,
the Court by interpretative process must strive to reduce the field of conflict and expand the area of
agreement and show its preference for upholding agreements sanctified by mutuality and
consensus in larger public interest, namely, to eschew industrial strife, confrontation and
consequent wastage (Workmen, Hindustan Lever Limited v. Hindustan Lever Limited, (1984) 1 SCC
728). The Act applies to an existing and not to a dead industry. It is to ensure fair wages and to
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prevent disputes so that production might not be adversely affected. It applies to all industries
irrespective of religion or caste of parties. It applies to the industries owned by Central and State
Governments too (Hospital Employees Union v. Christian Medical College, (1987) 4 SCC 691).

IMPORTANT DEFINITIONS

(i) Industry
“Industry” means any business, trade, undertaking, manufacture or calling of employers and
includes any calling service, employment, handicraft, or industrial occupation or avocation of
workmen. [Section 2(j)]

(ii) Industrial Dispute

“Industrial Dispute” means any dispute or difference between employers and employers, or
between employers and workmen, or between workmen and workmen, which is connected with
the employment or non-employment or the terms of employment or with the conditions of labour,
of any person. [Section 2(k)] The above definition can be analysed and discussed under the
following heads:

(i) There should exist a dispute or difference;

(ii) The dispute or difference should be between:

(a) Employer and employer;
(b) Employer and workmen; or
(c) Workmen and workmen.

(iii) The dispute or difference should be connected with

(a) The employment or non-employment, or

(b) Terms of employment, or
(c) The conditions of labour of any person;

(iv) The dispute should relate to an industry as defined in Section 2(j).

(iii) Workman

“Workman” means any person (including an apprentice) employed in any industry to do any
manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward,
whether the terms of employment be expressed or implied and for the purposes of any proceeding
under this Act in relation to an industrial dispute, includes:

(a) any such person who has been dismissed, discharged or retrenched in connection with, or as a
consequence of that dispute, or

(b) any person whose dismissal, discharge or retrenchment has led to that dispute,
but does not include any such person:

(i) Who is subject to the Army Act, 1950, or the Air Force Act, 1950 or the Navy Act, 1957; or (ii)
Who is employed in the police service or as an officer or other employee of a prison; or
(iii) Who is employed mainly in a managerial or administrative capacity; or (iv) Who is employed in a
supervisory capacity drawing more than Rs. 1,600 per month as wages; or
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(v) Who is exercising either by the nature of the duties attached to the office or by reason of the
powers vested in him, functions mainly of a managerial nature. [Section 2(s)]

2.2Types of Industrial Disputes

Strike

“Strike” means a cessation of work by a body of persons employed in any industry acting in
combination, or a concerted refusal, or a refusal under a common understanding of any number of
persons who are or have been so employed to continue to work or to accept employment. [Section
2(q)] Strike is a weapon of collective bargaining in the armour of workers. The following points may
be noted regarding the definition of strike:

(i) Strike can take place only when there is a cessation of work or refusal to work by the workmen
acting in combination or in a concerted manner. Time factor or duration of the strike is immaterial.
The purpose behind the cessation of work is irrelevant in determining whether there is a strike or
not. It is enough if the cessation of work is in defiance of the employers authority. Proof of formal
consultations is not required. However, mere presence in the striking crowd would not amount to
strike unless it can be shown that there was cessation of work.

(ii) A concerted refusal or a refusal under a common understanding of any number of persons to
continue to work or to accept employment will amount to a strike. A general strike is one when
there is a concert of combination of workers stopping or refusing to resume work. Going on mass
casual leave under a common understanding amounts to a strike. However, the refusal by workmen
should be in respect of normal lawful work which the workmen are under an obligation to do. But
refusal to do work which the employer has no right to ask for performance, such a refusal does not
constitute a strike (Northbrooke
Jute Co. Ltd. v. Their Workmen, AIR 1960 SC 879). If on the sudden death of a fellow-worker, the
workmen acting in concert refuse to resume work, it amounts to a strike (National Textile Workers’
Union v. Shree Meenakshi Mills, (1951) II L.L.J. 516).

(iii) The striking workman must be employed in an “industry” which has not been closed down.

(iv) Even when workmen cease to work, the relationship of employer and employee is deemed to
continue albeit in a state of belligerent suspension. In Express Newspaper (P) Ltd. v. Michael Mark,
1962-II, L.L.J. 220 S.C., the Supreme Court observed that if there is a strike by workmen, it does not
indicate, even when strike is illegal, that they have abandoned their employment. However, for
illegal strike, the employer can take disciplinary action and dismiss the striking

Types of Strike
(a) Stay-in, sit-down, pen-down or tool-down strike

In all such cases, the workmen after taking their seats, refuse to do work. Even when asked to leave
the premises, they refuse to do so. All such acts on the part of the workmen acting in combination,
amount to a strike. Since such strikes are directed against the employer, they are also called primary
strikes. In the case of Punjab National Bank Ltd. v. All India Punjab National Bank Employees’
Federation, AIR 1960 SC 160, the Supreme Court observed that on a plain and grammatical
construction of this definition it would be difficult to exclude a strike where workmen enter the
premises of their employment and refuse to take their tools in hand and start their usual work.
Refusal under common understanding not to work is a strike. If in pursuance of such common
understanding the employees enter the premises of the Bank and refuse to take their pens in their
hands that would no doubt be a strike under Section 2(q).

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(b) Go-slow

Go-slow does not amount to strike, but it is a serious case of misconduct. In another case, it was
observed that slow-down is an insidious method of undermining the stability of a concern and
Tribunals certainly will not countenance it. It was held that ‘go slow’ is a serious misconduct being a
covert and a more damaging breach of the contract of employment (SU Motors v. Workman 1990-II
LLJ 39). It is not a legitimate weapon in the armoury of labour. It has been regarded as a
misconduct.

(c) Sympathetic strike

Cessation of work in the support of the demands of workmen belonging to other employer is called
a sympathetic strike. This is an unjustifiable invasion of the right of employer who is not at all
involved in the dispute. The management can take disciplinary action for the absence of workmen.
However, in Ramalingam v. Indian Metallurgical Corporation, Madras, 1964-I L.L.J. 81, it was held
that such cessation of work will not amount to a strike since there is no intention to use the strike
against the management.

(d) Hunger strike

Some workers may resort to fast on or near the place of work or residence of the employer. If it is
peaceful and does not result in cessation of work, it will not constitute a strike. But if due to such an
act, even those present for work, could not be given work, it will amount to strike (Pepariach Sugar
Mills Ltd. v. Their Workmen).

(e) Work-to-rule
Since there is no cessation of work, it does not constitute a strike. DE

Lock-out FINITIONS
“Lock-out” means the temporary closing of a place of employment, or the suspension of work, or
the refusal by an employer to continue to employ any number of persons employed by him.
[Section 2(l)]
In lock out, the employer refuses to continue to employ the workman employed by him even
though there is no intention to close down the unit. The essence of lock out is the refusal of the
employer to continue to employ workman. Even if suspension of work is ordered, it would
constitute lock out. But mere suspension of work, unless it is accompanied by an intention on the
part of employer as a retaliation, will not amount to lock out. Locking out workmen does not
contemplate severance of the relationship of employer and the workmen. In the case Lord Krishna
Sugar Mills Ltd. v. State of U.P., (1964) II LLJ 76 (All), a closure of a place of business for a short
duration of 30 days in retaliation to certain acts of workmen (i.e. to teach them a lesson) was held
to be a lock out. But closure is not a lock out.

(vi) Lay-off

“Lay-off” (with its grammatical variations and cognate expressions) means the failure, refusal or
inability of an employer to give employment due to following reasons, to a workman whose name
appears on the muster-rolls of his industrial establishment and who has not been retrenched:

(a) shortage of coal, power or raw materials, or

(b) accumulation of stocks, or
(c) break-down of machinery, or
15
(d) natural calamity, or
(e) for any other connected reason. [Section 2(kkk)]

Explanation: Every workman whose name is borne on the muster rolls of the industrial
establishment and who presents himself for work at the establishment at the time appointed for
the purpose during normal working hours on any day and is not given employment by the employer
within two hours of his so presenting himself shall be deemed to have been laid-off for that day
within the meaning of this clause.
Provided that if the workman, instead of being given employment at the commencement of any
shift for any day is asked to present himself for the purpose during this second half of the shift for
the day and is given employment, then, he shall be deemed to have been laid-off only for one-half
of that day.
Provided further that if he is not given any such employment even after so presenting himself, he
shall not be deemed to have been laid-off for the second half of the shift for the day and shall be
entitled to full basic wages and dearness allowance for that part of the day. From the above
provisions, it is clear that lay-off is a temporary stoppage and within a reasonable period of time,
the employer expects that his business would continue and his employees who have been laid off,
the contract of employment is not broken but is suspended for the time being. But in the case of
M.A. Veirya v. C.P. Fernandez, 1956-I, L.L.J. 547 Bomb., it was observed that it is not open to the
employer, under the cloak of “lay-off”, to keep his employees in a state of suspended
animation and not to make up his mind whether the industry or business would ultimately continue
or there would be a permanent stoppage and thereby deprive his employees of full wages. In other
words, the lay-off should not be mala fide in which case it will not be lay-off. Tribunal can adjudicate
upon it and find out whether the employer has deliberately and maliciously brought about a
situation where lay-off becomes necessary. But, apart from the question of mala fide, the Tribunal
cannot sit in judgement over the acts of management and investigate whether a more prudent
management could have avoided the situation which led to lay-off (Tatanagar Foundry v. Their
Workmen, A.I.R. 1962 S.C. 1533). Further, refusal or inability to give employment must be due to (i)
shortage of coal, power or raw materials, or (ii) accumulation of stock, or (iii) break-down of
machinery, (iv) natural calamity, or (v) for any other connected reason. Financial stringency cannot
constitute a ground for lay-off (Hope Textiles Ltd. v. State of MP, 1993 I LLJ 603). Lastly, the right to
lay-off cannot be claimed as an inherent right of the employer. This right must be specifically
provided for either by the contract of employment or by the statute (Workmen of Dewan Tea Estate
v. Their Management). In fact ‘lay-off’ is an obligation on the part of the employer, i.e., in case of
temporary stoppage of work, not to discharge the workmen but to lay-off the workmen till the
situation improves. Power to lay-off must be found out from the terms of contract of service or the
standing orders governing the establishment (Workmen v. Firestone Tyre and Rubber Co., 1976 3
SCC 819). There cannot be lay-off in an industrial undertaking which has been closed down. Lay-off
and closure cannot stand together.

Difference between lay-off and lock-out

(1) In lay-off, the employer refuses to give employment due to certain specified reasons, but in
lock-out, there is deliberate closure of the business and employer locks out the workers not due to
any such reasons.

(2) In lay-off, the business continues, but in lock-out, the place of business is closed down for the
time being.

(3) In a lock-out, there is no question of any wages or compensation being paid unless the lock out
is held to be unjustified.

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(4) Lay-off is the result of trade reasons but lock-out is a weapon of collective bargaining. (5)

Lock-out is subject to certain restrictions and penalties but it is not so in case of lay-off.

However, both are of temporary nature and in both cases the contract of employment is not
terminated but remains in suspended animation.

(vii) Retrenchment
“Retrenchment” means the termination by the employer of the service of a workman for any
reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does
not include:

(a) Voluntary retirement of the workman; or

(b) Retirement of the workman or reaching the age of superannuation if the contract of
employment between the employer and the workman concerned contains a stipulation in that
behalf; or
(bb) termination of the service of the workman as a result of the non-renewal of the contract of
employment between the employer and the workman concerned on its expiry or of such contract
being terminated under a stipulation in that behalf contained therein.

(c) Termination of the service of workman on the ground of continued ill-health.

Thus, the definition contemplates following requirements for retrenchment:

(i) There should be termination of the service of the workman.

(ii) The termination should be by the employer.
(iii) The termination is not the result of punishment inflicted by way of disciplinary action. (iv) The
definition excludes termination of service on the specified grounds or instances mentioned in it.
[Section 2(oo)]

The Supreme Court laid down following principles with regard to retrenchment:

1. The management can retrench its employees only for proper reasons, which means that it must
not be actuated by any motive of victimization or any unfair labour practice.

2. It is for the management to decide the strength of its labour force, and the number of workmen
required to carry out efficiently the work in his industrial undertaking must always be left to be
determined by the management in its discretion.

3. If the number of employees exceeds the reasonable and legitimate needs of the undertaking, it is
open to the management to retrench them.

4. Workmen may become surplus on the ground of rationalisation or on the group of economy
reasonably and bona fide adopted by the management or of other industrial or trade reasons.

5. The right of the employer to effect retrenchment cannot normally be challenged but when there
is a dispute in regard to the validity of the retrenchment, it would be necessary for the tribunal to
consider whether the impugned retrenchment was justified for proper reasons and it would not be
open to the employer either capriciously or without any reason at all to say that it proposes to
reduce its labour for no rhyme or reason.

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2.3 Reference of Disputes to Boards, Courts, or Tribunals

Authorities under the act and their duties

The Act provides for following Authorities for Investigation and settlement of industrial disputes: (i)
Works Committee.
(ii) Conciliation Officers.
(iii) Boards of Conciliation.
(iv) Court of Inquiry.
(v) Labour Tribunals.
(vi) Industrial Tribunals.
(vii) National Tribunal.

(i) Works Committee

Section 3 of the Act provides that the appropriate Government may by general or special order
require the employer to constitute in the prescribed manner a Works Committee in industrial
establishments, where 100 or more workmen are employed or have been employed on any working
day in the preceding 12 months. The Works Committee will be comprised of the representatives of
employers and workmen engaged in the establishment. It shall be the duty of the Works Committee
to promote measures for securing and preserving amity and good relations between the employer
and workmen and, to that end, to comment upon matters of their common interest or concern and
endeavour to compose any material difference of opinion in respect of such matters [Section 3(2)].

(ii) Conciliation Officers

With the duty of mediating in and promoting the settlement of industrial disputes, the appropriate
Government may, by notification in the Official Gazette, appoint such number of Conciliation
Officers as it thinks fit. The Conciliation Officer may be appointed for a specified area or for
specified industries in a specified area or for one or more specified industries and either
permanently or for a limited period. The main objective of appointing the Conciliation Officers, by
the appropriate Government, is to create congenial atmosphere within the establishment where
workers and employers can reconcile on their disputes through the mediation of the Conciliation
Officers. Thus, they help in promoting the settlement of the disputes. (Section 4)

(iii) Boards of Conciliation

For promoting the settlement of an industrial dispute, the appropriate Government may, as
occasion arises, constitute by a notification in the Official Gazette, a Board of Conciliation. A Board
shall consist of a Chairman and two or four other members as the appropriate Government
thinks fit. It shall be the duty of Board to endeavour to bring about a settlement of the dispute and
for such purpose it shall, without delay, investigate into the dispute and all matters affecting the
merits and the right settlement. The Board may also do all such things which may be considered fit
by it, for including the parties to come for a fair and amicable settlement of the dispute. In case of
settlement of the dispute, the Board shall send a report thereof to the appropriate Government
together with a memorandum of settlement signed by all the parties to the dispute. In case no
settlement is arrived at, the Board shall forward a report to appropriate Government enlisting
therein the steps taken by the Board for ascertaining the facts and circumstances related to the
dispute and for bringing about a settlement thereof. The Board will also enlist the reasons on
account of which in its opinion a settlement could not be arrived at and its recommendations for
determining the disputes. (Section (iv) Courts of Inquiry

According to Section 6 of the Act, the appropriate Government may as occasion arises, by
notification in the Official Gazette constitute a Court of Inquiry into any matter appearing to be

18
connected with or relevant to an industrial dispute. A Court may consist of one independent person
or of such number of independent persons as the appropriate government may think fit and where
a Court consists of two or more members, one of them shall be appointed as the Chairman. It is the
duty of such a Court to inquire into matters referred to it and submit its report to the appropriate
Government ordinarily within a period of six months from the commencement of the inquiry. The
period within which the report is to be submitted is not mandatory and the report may be
submitted even beyond the period of six months without affecting the legality of the inquiry.

(v) Labour Courts

Under Section 7, the appropriate Government is empowered to constitute one or more Labour
Courts for adjudication of industrial disputes relating to any matter specified in the Second
Schedule and for performing such other functions as may be assigned to them under the Act.

A Labour Court shall consist of one person only to be appointed by the appropriate Government. A
person shall not be qualified for appointment as the presiding officer of a Labour Court unless –

(a) He is, or has been, a judge of a High Court: or

(b) He has, for a period not less than three years, been a district Judge or an Additional District
Judge; or

(c) He has held any judicial office in India for not less than seven years; or

(d) he has been the presiding officer of a Labour Court constituted under any provincial Act or State
Act for not less than five years. When an industrial dispute has been referred to a Labour Court for
adjudication, it is the duty of the Labour Court to (i) hold its proceedings expeditiously, and (ii)
submit its award to the appropriate Government soon after the conclusion of the
proceedings. No time period has been laid down for the completion of proceedings but it is
expected that such Courts will hold their proceedings without going into the technicalities of a Civil
Court. Labour Court has no power to permit suo motu the management to avail the opportunity of
adducing fresh evidence in support of charges. Provisions of Article 137 of the Limitation Act do not
apply to reference of dispute to the Labour Court. In case of delays, Court can mould relief by
refusing back wages or directing payment of past wages

(vi) Tribunals

(1) The appropriate Goverment may by notification in the Official Gazette, constitute one or more
Industrial Tribunals for the adjudication of industrial disputes relating to any matter whether
specified in the Second Schedule or the Third Schedule and for performing such other functions as
may be assigned to them under this Act.

(2) A Tribunal shall consist of one person only to be appointed by the appropriate Government.

(3) A person shall not be qualified for appointment as the presiding officer of a Tribunal unless: (a)
He is, or has been, a Judge of High Court; or
(b) He has, for a period of not less than three years, been a District Judges or an Additional District
Judge.

(4) The appropriate Government may, if it so thinks fit, appoint two persons as assessors to advise
the Tribunal in the proceedings before it. Further, the person appointed as a Presiding Officer
should be an independent person and must not have attained the age of 65 years. (Section 7-A).

19
The Industrial Tribunal gets its jurisdiction on a reference by the appropriate Government under
Section 10. The Government can nominate a person to constitute a Tribunal for adjudication of
industrial disputes as and when they arise and refer them to it. The Tribunal may be constituted for
any limited or for a particular case or area. If appointed for a limited period, it ceases to function
after the expiry of the term even when some matters are still pending (J.B. Mangharam & Co. v.
Kher, A.I.R. 1956 M.B.113). Further, when a Tribunal concludes its work and submits its award to the
appropriate Government, it does not extinguish the authority of the Tribunal nor does it render the
Tribunal functus officio. The Government can refer
to it for clarification on any matter related to a prior award (G. Claridge & Co. Ltd. v. Industrial
Tribunal, A.I.R. 1950 Bom.100). The duties of Industrial Tribunal are identical with the duties of
Labour Court, i.e., on a reference of any industrial dispute, the Tribunal shall hold its proceedings
expeditiously and submit its award to the appropriate Government.

(vii) National Tribunals

(1) Under Section 7-B, the Central Government alone has been empowered to constitute one or
more National Tribunals for the adjudication of industrial disputes which (a) involve questions of
national importance or (b) are of such a nature that industrial establishments situated in more than
one State are likely to be interested in or affected by such disputes.
(2) A National Tribunal shall consist of one person only to be appointed by the Central Government.

(3) A person shall not be qualified for appointment as the Presiding Officer of a National Tribunal
unless: he is, or has been, a Judge of a High Court; or(4) The Central Government may, if it so thinks
fit, appoint two persons as assessors to advise the National Tribunal in the proceeding before it.
Section 7-C further provides that such a presiding officer should be an independent person and
must not have attained the age of 65 years.

Duties

When a matter has been referred to a National Tribunal, it must adjudicate the dispute
expeditiously and submit its award to the Central Government.

2.4 Procedure for Dispute Resolution

Section 10-A makes the following provisions:

(i) Where any industrial dispute exists or is apprehended and the same has not yet been referred
for adjudication to a Labour Court, Tribunal or National Tribunal, the employer and the workmen
may refer the dispute, by a written agreement, to arbitration specifying the arbitrator or arbitrators.
The presiding officer of a Labour Court or Tribunal or National Tribunal can also be named by the
parties as arbitrator. Where an arbitration agreement provides for a reference of the dispute to an
even number of arbitrators, the agreement shall provide for the appointment of another person as
umpire who shall enter upon the reference, if the arbitrators are equally divided in their opinion,
and the award of the umpire shall prevail and shall be deemed to be the arbitration award for the
purposes of this Act.

(ii) An arbitration agreement referred to in sub-section (1) shall be in such form and shall be signed
by the parties thereto in such manner as may be prescribed.

20
(iii) A copy of the arbitration agreement shall be forwarded to appropriate Government and the
Conciliation Officer and the appropriate Government shall within one month from the date of the
receipt of such copy, publish the same in the Official Gazette. According to Section 10-A(3A), where
an industrial dispute has been referred to arbitration and the appropriate Government is satisfied
that the persons making the reference represent the majority of each party, the appropriate
Government may, within the time referred above, issue a notification in such manner as may be
prescribed; and when any such notification is issued, the employer and workmen who are not
parties to the arbitration agreement but are concerned in the dispute, shall be given an opportunity
of presenting their case before the arbitrator or arbitrators.
(iv) The arbitrator or arbitrators shall investigate the dispute and submit to the appropriate
Government the arbitration award signed by the arbitrator or all arbitrators, as the case may be.

(v) Where an industrial dispute has been referred to arbitration and a notification has been issued,
the appropriate Government may, by order, prohibit the continuance of any strike or lock out in
connection with such dispute which may be in existence on the date of the reference.

(vi) Nothing in the Arbitration Act, 1940 shall apply to arbitrations under this Section.

Procedure and powers of authorities

Section 11 provides that

(1) Subject to any rules that may be made in this behalf, an arbitrator, a Board, Court, Labour Court,
Tribunal or National Tribunal shall follow such procedure as the arbitrator or other authority
concerned may think fit.

(2) A Conciliation Officer or a member of a Board or Court or the Presiding Officer of a Labour
Court, Tribunal or National Tribunal may for the purpose of inquiry into any existing or apprehended
industrial dispute, after giving reasonable notice, enter the premises occupied by any establishment
to which the dispute relates.

(3) Every Board, Court, Labour Court, Tribunal and National Tribunal shall have the same powers as
are vested in Civil Court under the Code of Civil Procedure, 1908 when trying a suit, in respect of
the following maters, namely:

(a) enforcing the attendance of any person and examining him on oath;
(b) compelling the production of documents and material objects;
(c) issuing commissions for the examination of witnesses;
(d) in respect of such other matters as may be prescribed.

Further, every inquiry or investigation by such an authority shall be deemed to be a judicial

proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code.

(4) A Conciliation Officer may enforce the attendance of any person for the purpose of examination
of such person or call for and inspect any document which he has ground for considering to be
relevant to the industrial dispute or to be necessary for the purpose of verifying the
implementation of any award or carrying out any other duty imposed on him under this Act, and for
the aforesaid purposes, the Conciliation Officer shall have the same powers as are vested in a Civil
Court under the Code of Civil Procedure, 1908, in respect of enforcing the attendance or compelling
the production of documents.
(5) A Court, Labour Court, Tribunal or National Tribunal may, if it so thinks fit, appoint one or more

21
persons having special knowledge of the matter under consideration, as assessor or assessors to
advise it in the proceeding before it.

(6) All Conciliation Officers, members of a Board or Court and the Presiding Officers of a Labour
Court, Tribunal or National Tribunal shall be deemed to be public servants within the meaning of
Section 21 of the Indian Penal Code.

(7) Subject to any rules made under this Act, the costs of, and incidental to, any proceeding before a
Labour Court, Tribunal or National Tribunal shall be in the discretion of that Labour Court, Tribunal
or National Tribunal and the Labour Court Tribunal or National Tribunal, as the case may be, shall
have full power to determine by and to whom and to what extent and subject to what conditions, if
any, such costs are to be paid, and to give all necessary directions for the purposes aforesaid and
such costs may, on application made to the appropriate Government by the person entitled, be
recovered by that Government in the same manner as an arrear of land revenue.

(8) Every Labour Court, Tribunal or National Tribunal shall be deemed to be Civil Court for the
purposes of Section 345, 316 and 348 of the Code of Criminal Procedure, 1973. Thus, we see that
Section 11(1) gives wide powers to various authorities. However, power to lay-down its own
procedure is subject to rules made by the appropriate Government. The Industrial Disputes
(Central) Rules, 1957 has prescribed a detailed procedure which these authorities are required to
follow. (See Rules 9 to 30). The authorities are not bound to follow the rules laid down in Civil
Procedure Code, 1908 or the Indian Evidence Act. However, being quasi-judicial bodies, they should
use their discretion in a judicial manner without caprice and act according to the general principles
of law and rules of natural justice.

Powers to give appropriate relief in case of discharge or dismissal

According to Section 11-A, where an industrial dispute relating to the discharge or dismissal of a
workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and, in
the course of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the
case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its
award, set aside the order of discharge or dismissal and direct reinstatement of the workman on
such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including
the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the
case may require. According to the proviso to Section 11-A, in any proceeding under this Section
the Labour Court, Tribunal or National Tribunal, as the case may be, shall rely only on the materials
on record and shall not take fresh evidence in relation to the matter. Before the enactment of
Section 11-A, there was no provision circumscribing the perimeter of the jurisdiction of the Tribunal
to interfere with the disciplinary action of discharge or dismissal for misconduct taken by an
employer against an industrial workman.
2.5 Discussion on Unfair Labour Practices

I. On the part of employers and trade unions of employers

1. To interfere with, restrain from, or coerce, workmen in the exercise of their right to organise,
form, join or assist a trade union or to engage in concerted activities for the purposes of collective
bargaining or other mutual aid or protection that is to say:
(a) threatening workmen with discharge or dismissal, if they join a trade union. (b)
threatening a lock-out or closure, if a trade union is organised;
(c) granting wage increase to workmen at crucial periods of trade union organisation, with a view to
undermining the efforts of the trade union at organisation.

22
2. To dominate, interfere with or contribute support, financial or otherwise to any trade union, that
is to say:
(a) an employer taking an active interest in organising a trade union of workmen; and (b) an
employer showing partiality or granting favour to one of several trade unions attempting to
organize his workmen or to its members, where such a trade union is not a recognised trade union.

3. To establish employer sponsored trade unions of workmen.

4. To encourage or discourage membership in any trade union by discriminating against any

workmen, that is to say:
(a) discharging or punishing a workman, because he urged other workmen to join or organise a
trade union;
(b) discharging or dismissing a workman for taking part in any strike (not being a strike which is
deemed to be an illegal strike under this Act);
(c) changing seniority rating of workmen because of trade union activities; (d) refusing to promote
workmen to higher posts on account of their trade union activities; (e) giving unmerited promotions
to certain workmen with a view to creating discord amongst other workmen, or to undermine the
strength of their trade union;
(f) discharging office-bearers or active members of the trade union on account of their trade union
activities.

5. To discharge or dismiss workmen:

(a) by way of victimization;
(b) not in good faith, but in the colourable exercise of the employers rights; (c) by falsely implicating
a workman in a criminal case on false evidence or on concocted evidence;
(d) for patently false reasons;
(e) on untrue or trumped up allegations of absence without leave;
(f) in utter disregard of the principles of natural justice in the conduct of domestic enquiry or with
undue haste;
(g) for misconduct of a minor or technical character, without having any regard to the nature of the
particular misconduct or the past record of service of the workman, thereby leading to a
disproportionate punishment.

6. To abolish the work of a regular nature being done by workmen, and to give such work to
contractors as a measure of breaking a strike.

7. To transfer a workman mala fide from one place to another under the guise of following
management policy.

8. To insist upon individual workmen, who are on a legal strike to sign a good conduct bond, as a
precondition to allowing them to resume work.

9. To show favouritism or partiality to one set of workers regardless of merit.

10. To employ workmen as “badlis”, casuals or temporaries and to continue them as such for years,
with the object of depriving them to the status and privileges of permanent workmen.

11. To discharge or discriminate against any workman for filling charges or testifying against an
employer in any enquiry or proceeding relating to any industrial dispute.

12. To recruit workmen during a strike this is not an illegal strike.

23
13. Failure to implement award, settlement or agreement.

14. To indulge in acts of force or violence.

15. To refuse to bargain collectively, in good faith with the recognised trade unions. 16.

Proposing or continuing a lock-out deemed to be illegal under this Act. II. On the part

of workmen and trade unions of workmen

1. To advise or actively support or instigate any strike deemed to be illegal under this Act.

2. To coerce workmen in the exercise of their right to self-organisation or to join a trade union or
refrain from joining any trade union, that is to say:

(a) for a trade union or its members to picketing in such a manner that non-striking workmen are
physically debarred from entering the work places;
(b) to indulge in acts of force or violence or to hold out threats of intimidation in connection with a
strike against non-striking workmen or against managerial staff.

3. For a recognised union to refuse to bargain collectively in good faith with the employer.
4. To indulge in coercive activities against certification of bargaining representative.

5. To stage, encourage or instigate such forms of coercive actions as wilful go slow, squatting on the
work premises after working hours or gherao of any of the members of the managerial or other
staff.

6. To stage demonstrations at the residences of the employers or the managerial staff members. 7.

To incite or indulge in willful damage to employers property connected with the industry.

8. To indulge in acts of force of violence to hold out threats of intimidation against any workman
with a view to prevent him from attending work.

3. TRADE UNIONS AND PARTICIPATIVE MANAGEMENT

3.1 Trade unions: Objectives & Importance

Trade Union means "any combination, whether temporary or permanent, formed primarily for the
purpose of regulating the relations between workmen and employers or between workmen and
workmen or between employers and employers, or for imposing restrictive conditions on the
conduct of any trade or business, and includes any federation of two or more trade unions".

Trade union is a voluntary organization of workers pertaining to a particular trade, industry or a

company and formed to promote and protect their interests and welfare by collective action. They
are the most suitable organizations for balancing and improving the relations between the
employer and the employees. They are formed not only to cater to the workers' demand, but also
for inculcating in them the sense of discipline and responsibility.

Every registered Trade Union shall be a body corporate by the name under which it is registered,
24
and shall have perpetual succession and a common seal with power to acquire and hold both
movable and immovable property and to contract, and shall by the said name sue and be sued. In
this lesson, students will be acclimatized with the legal frame work stipulated under the Trade
Unions Act, 1926.

Trade Unions Act, 1926 deals with the registration of trade unions, their rights, their liabilities and
responsibilities as well as ensures that their funds are utilised properly. It gives legal and corporate
status to the registered trade unions. It also seeks to protect them from civil or criminal prosecution
so that they could carry on their legitimate activities for the benefit of the working class. The Act is
applicable not only to the union of workers but also to the association of employers. It extends to
whole of India.

3.2Trade Unions Act 1926- Discussion on Rights &Liabilities of Registered Trade Unions in India

Sec 15. Objects on which general funds may be spent

Act lays down the activities only on which a registered trade union can spend its funds. These
activities include:
Salaries to be given to the office-bearers.
The cost incurred for the administration of the trade union.
Compensation to the workers due to any loss arising out of any trade dispute.
Expenses incurred in the welfare activities of the workers.
Benefits conferred to the workers in case of unemployment, disability, or death.
The cost incurred in bringing or defending any legal suit.
Publishing materials with the aim of spreading awareness amongst the workers.
Education of the workers or their dependents.
Making provisions for medical treatment of the workers.
Taking insurance policies for the welfare of the workers.

Section 16: Constitution of a Separate Fund for Political purposes

Section 16 provides that a trade union, in order to promote the civic and political interests of its
members can constitute a separate fund from the contributions made separately for the said
purposes. No member of the union can be compelled to contribute to the fund.

Section 17: Criminal conspiracy in Trade Disputes

Section 17 of the Act states that no member of a trade union can be held liable for criminal
conspiracy mentioned under subSection 2 of Section 120B regarding any agreement made between
the members of the union in order to promote lawful interests of the trade union.

Section 18: Immunity from civil suits in certain cases

Section 18 of the Act immunes the members of trade union from civil or tortious liabilities arising
out of any act done in furtherance or contemplation of any trade disputes. For example. in general,
a person is subject to tortious liability for inducing any person to breach a contract. But, the trade
unions and its members are immune from such liabilities provided such inducement is in
contemplation or furtherance of any trade disputes. Further, the inducement should be awful and
should not involve any aspect of any violence, threat or any other illegal activity.

Section 19: Enforceability of agreement

According to Section 25, any agreement in restraint of trade is void. But under Section 19 of the
Trade Unions Act, 1926 any agreement between the members of a registered trade union in
restraint of trade activities is neither void nor voidable. However such right is available only with the
registered trade unions as the unregistered trade unions have to follow the general contract law.

25
Section 20: Right to inspect the books of Trade Union
According to Section 20 of the Act, the account books and the list of the members of any registered
trade union can be subjected to inspection by the members of the trade union at such times as may
be provided under the rules of the trade union.

Section 21: Rights of minors to membership of Trade Union

Section 21 provides that a person who is above 15 years of age can be a member of any trade union
and if he becomes a member he can enjoy all the rights conferred upon the members of the trade
union subject to the conditions laid down by the trade union of which he wants to be a part of.

Section 21-A: Disqualifications of office-bearers of Trade Union

Section 21A of the Act lays down the conditions the fulfillment of which disqualifies a person from
being a member of the trade union. The conditions laid down in the Act are as follows: If the
member has not attained the age of majority
If he has been convicted by any of the courts in India for moral turpitude and has been sentenced
to imprisonment unless a period of five years has elapsed since his release.

Section 22: Proportion of office-bearers to be connected with the industry

Section 22 of the Act mandates that not less than half of the members of the trade union should be
employed in the industry or work with which the trade union is connected. For example trade union
is made for the welfare of the agricultural labourers then, as per this Section half of the members of
such a trade union should be employed in agricultural activities.

Section 23: Change of name

Section 23 states that any registered union is free to change its name provided it does so with the
consent of not less than 2/3rd of its members and subject to the fulfilment of the conditions laid
down in Section 25 of the Act.

Section 24: Amalgamation of Trade Unions

Section 24 lays down that two or more trade unions can join together and form one trade union
with or without dissolution or division of the fund. Such amalgamation can take place only when
voting by half of the members of each trade union has been effectuated and that sixty per cent of
the casted votes should be in favour of the proposal.

Section 25: Notice of change of name or amalgamation

A notice in writing of every change of name and of every amalgamation which is duly signed by the
Secretary and by seven members of the Trade Union changing its name, and, in the case of an
amalgamation, by the Secretary and by seven members of each and every Trade Union which is a
party thereto, should be sent to the Registrar.
If the Registrar feels that the proposed name is identical with the name of any other existing Trade
Union or, it so nearly resembles such name as it is likely to deceive the public or the members of
either Trade Union, the Registrar may refuse to register the change of name. If the Registrar of the
State in which the head office of the amalgamated Trade Union is situated is satisfied that the
provisions of this Act have complied with the amalgamation shall be given effect from the date of
such registration.

Section 27: Dissolution

Section 27 of the Act talks about the dissolution of a firm as follows:
If a registered trade union has been dissolved, a notice of such dissolution which must be signed by
seven members and by the Secretary of the Trade Union should be served to the registrar within 14
days of such dissolution and if the registrar is satisfied that the dissolution has been effected in

26
accordance with the rules laid down by the trade union may register the dissolution.
Where a union has been dissolved but its rules do not lay down the way in which the fund is to be
distributed after its dissolution, the registrar may distribute the funds in any prescribed manner.

Section 28: Returns

Section 28 provides that each trade union should send the returns to the registrar annually on or
before such a day as may be prescribed by the registrar. The return includes: General statement

Audit report
All the receipts and expenditure incurred by the trade union
Assets and liabilities of the firm on the 31st day of December
Sub-Section 2 of the Section provides that along with the general statement a copy of the rules of
the trade union corrected up to the date of dispatch thereof and a statement indicating all the
changes made by the union in the year to which the statement is referred to be sent to the
registrar.
Whenever any registered trade union alters its rules, such alterations should be conveyed to the
registrar in a period of not less than 15 days from making such alterations.

Regulations
Section 29 to Section 30 of Chapter 4 of the Act lays down the regulations which shall be imposed
on the trade union. Section 29 of the Act confers the right on the appropriate government to make
provisions in order to ensure that the provisions of the Act are fairly executed. Such regulations may
provide for any or all of the matters, which are as follows:
The manner in which a trade union or its rules shall be registered; The manner in which the
registration of a trade union has to be transferred which has changed its head office; The manner of
appointment and qualification of the person who shall audit the accounts of the registered trade
union; Circumstances under which the documents kept by the registrar shall be allowed to be
inspected and also the fees that shall be levied in lieu of the inspection so made.

Section 30: Publication of Regulations

The power of making regulations conferred to the government is subject to the condition that such
regulation has been made after the previous publication.; The date from which the regulation shall
be given effect shall be specified in accordance with clause (3) of Section 23 of the General Clauses
Act, 1897, and the date should not be less than three months from the date on which the draft of
the proposed regulations was published for general information; The regulations which are made
must be specified in the official gazette of India and it shall have the effect of an enacted law.

Penalties and Procedure

Section 31 to Section 33 of the Trade Union Act lays down the penalties and the procedure of its
application upon a trade union which is subject to such penalty.

Section 31: Failure to submit returns

If any trade union was required to send any notice, statement or any document to the registrar
under the Act and if the rule did not prescribe a particular person in the union to provide such
information then in case of default each member of the executive shall be imposed with the fine
extendible to five rupees. In case of continuing default, the fine may be extended to five rupees a
week.
If any person willfully makes or causes to be made any false entry or omission in the general
statement required under Section 28 of the Act shall be punishable with fine extendible to 500
rupees.
Section 32: Supplying false information regarding Trade Unions
Any person who in order to deceive a member of any trade union or any other person who
purports to be the part of the trade union, Gives a copy of the document with the pretext of it
27
containing the rules of a trade union. Which he knows or has reason to believe that it is not a
correct copy of such rules and alteration and, Any person with the like intent give the copy of any
document purporting it to be a copy of the rules of a registered trade union which in reality is an
unregistered union, Shall be imposed with fine which may extend to two hundred rupees.

Section 33 : Cognizance of offences

Section 33 contains the provisions with respect to the cognizance of offence. It says that no court
which is inferior to presidency magistrate or magistrate of the first class shall try an offence under
the Act. courts can take cognizance of the offences under the Act only in the following cases: When
the complaint has been made with the previous sanction of the registrar When a person has been
accused under Section 32 of the Act, he shall be tried within six months of the commission of the
alleged offence.

3.3 Participative Management

A situation where workers representatives are, to some extent, involved in the process of
management decision making – Ian Clegg
Union management cooperation represents joint decision making in matters of admittedly common
interests – Chamberlain
Art 43A requires the state to take steps by suitable legislation or nay other way, to secure the
participation of workers in the management of undertakings, establishments or other organizations
engaged in any industry.

Goals of Participative Management

Means of increasing production
Means of promoting industrial democracy
Means of avoiding conflicts / frictions
Degrees of Management-Labour Cooperation
Information sharing
Problem sharing
Joint Consultation
Workers’ Participation in Management

Schemes for WPM

Works Committee (1947)
Joint Management Council (1958)
Board level participation (1970)
Shop Council/Joint Council (1975)
Unit Councils and Joint Councils in commercial and service orgs in PSU (1977)
Institutions of employees’ Participation in PSU (1983)
Joint Councils in Government service
3.4 Process of Negotiation
Collective Bargaining
Collective bargaining denotes ‘Group Bargaining’.
Is the term used to describe the bargaining between an employer or group of employers and a
bona fide Labour Union. Procedure in which two parties ,namely, workers and management reach
an agreement about wage rate & basic condition of employment. When an agreement is reached,
the resulting “collective bargaining agreement,” or “CBA,” becomes the contract governing
employment issues.

According to International Labour Association(ILO) : “a negotiation about working condition &

terms of employment between an employer, a group of employers or one or more employers
organization, on the one hand and one or more representative workers on the other, with a view of

28
reaching an agreement”.

Effective Collective Bargaining pre-supposes the existence of two competent agencies (1) Stable
management (2)organized trade unions and that too with an open mind to understand and
appreciate the stand of each other.
On the basis of structural arrangements , collective bargaining may be broadly classified into two
categories :

(1) Single Employer Bargaining : This takes place between one company & either one union or more
than one union where there are several unions at different plants.

(2) Multiple Employer Bargaining : Between employer federation & and workers of an industry
represented by the federation of all the trade unions.

Features of CB

It is the attempt in achieving & maintaining discipline in industry. It is a comprehensive process, It is

a collective process , It is a continuous process . It is a group process

Bipartite in nature: Main parties are employees, employers & their association. Negotiation is an
important aspect in CB It always has the objective to come to an agreement.

CB involves series of steps.

It refers to evolving to an agreement with negotiations, discussions, exchange of facts & ideas
rather than confrontation.
It is a socio-economic process and not merely an economic process.
It is not a competitive process, it is a complementary process.
It is dynamic and not static.
It is an art which shows the advanced form of human relations.

Objectives of CB
Good relationship between management and the worker.
Settling dispute relating to wages & working condition.
Safeguard the interest of workers : Wages and allowances, working hours, bonus and profit sharing,
promotion, transfer, PF, gratuity, educational & training scheme ,retirement benefit Labour welfare
schemes
Method of performance appraisal.
Terms and conditions of service.
Effective grievance handling procedure
Participation on workers in management
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Maintain discipline in the industry
Industrial democracy.
Essentials of successful CB
Strong & stable union
Recognition of trade unions
Permanent bargaining machinery
Mutual accommodation
Political climate
Bargainers’ authority
Importance of CB
1. To the employees
It increases the bargaining strength of employees
Develops a sense of self respect and responsibility among employees
It increases the morale & productivity of the employees.
Unilateral actions by management are discouraged
It strengthens the trade union movement
It protects the economic and non economic interest of the employees
It provides the feeling of job security to employees.

2. To the Employers
It improves the industrial relations between labor and the management. It increases the efficiency
and productivity of labor and in-turn improves the industry. Increases the sense of job security
among the employees and thereby reduces the cost of labor turnover. Reduces the chance of strike
and lockouts. It open ups the channel of communication between the top and bottom levels of the
organization. It establishes industrial democracy. Develops coordination and corporation between
employees and between employer and employee.

3. To the Society

Promotes industrial peace and better productivity

It makes the implementation of labor law easy
It helps to introduce the civil rights in industry
It helps to reduce labor problems
Protect employees from exploitation.

Growth of Collective Bargaining

The term CB was coined by Sydney & Beatrice Webb in 1897.
The growth of CB is closely associated with the growth of trade unionism in England during the
early years of twentieth century .
It is also an important element of IR system in USA.
CB occur at several levels : At the shop floor level it may take place between the shop steward and
plant manager called workplace bargaining or plant bargaining ,at company level between manager
and union called company bargaining , as national bargaining with union or federation of union and
employers association or its federation.

Obstacles to CB in India
The major emphasis of both union & employer is to settle the disputes through adjudication rather
than sorting out the issues among themselves, so CB is not very encouraging.

30
(a) Multiple union (b) Non recognition
(c) Political union (d) Defective laws
Mediation by political leaders.

Suggestions for Effective CB/ Prerequisites to CB

(a) Strong stable union (b) Recognition of representative

(c) Political leadership in trade union should be replaced internal work leadership (d) Political
leaders should not interfere in the industrial relation (e) Both the parties should have faith in CB
(f) Strike/ lockouts should be resorted in the ultimate analysis.

3.5Tripartite and Bipartite bodies

Tripartite : The principals and policies of the tripartite body have been a machinery of consultancy
at the industrial and national levels. The tripartite body was established to make peace and improve
relations between management and unions, and maintain smooth functioning of union
management relations. Representatives of employers, labor and government to meet regularly

Purpose of Tripartite
Bring the aggravated parties together for mutual settlement of differences, and encourage a spirit
of cooperation and goodwill.
b. Promote uniformity in labor laws and legislation.
c. Discuss all matters of All India importance as between employers and employees. d.
Determine a plan for settlement for all disputes.
Bipartite: Groups like Works Committee and Joint Management Council
Representatives from Employers and Employess.
Joint Management Council (1958)
Industrial Policy Statement 1956 stated “In a socialist democracy, labour is a partner in the common
task of development and should participate in it with enthusiasm. There should be joint
consultation and workers and technicians should, wherever possible, be associated progressively in
management. PSUs should set an example in this regard

Objectives
Promoting cordial relations between management and workers
Developing understanding and trust
Augmenting productivity substanially
Securing better welfare facilities
Training workers to understand and share the responsibilities of management
Composition of JMC
Equal number of reps of management and employees not exceeding 12 in all
Union (s) to make employee representation
Not more than 25% out side rep
Chairman either fixed or rotating
Meeting during office hours
Decisions through consensus

Functions of JMC
Consultative function (i) General administration of Standing Orders and their amendment (ii)
introduction of new methods of production (iii) closure, reduction in or cessation of operations
Suggestion making (i) General economic situation in the concern (ii) Org & gen running of the
concern (iii) state of the market, production and sales program (iv) circumstances affecting the
economic position of the concern (v) annual balance sheet, P & L statement (vi) long tern plans for
expansion, redeployment Admin function (i) admin of welfare measures (ii) supervision of safety

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measures (iii) operation of vocational / apprentice training (iv) working hours, breaks and holidays
(v) payment of rewards for suggestions from employees

Board level participation (1970)

Workers; participation at Board level in PSUs and nationalized banks Did not achieve any significant
contribution because conflict with other members in the Board of Directors

4. LABOUR LAWS I
Employee Provident Fund (EPF)

•Provident fund is a welfare scheme for the benefits of the employees. Under this scheme both the
employee & employer contribute their part but whole of the amount is deposited by the employer.
•Employer deducted the employee share from the salary of the employee. The interest earned on
this investment is also credited in pf account of the employees.
•At the time of retirement, the accumulated amount is given to the employees, if certain
conditions are satisfied.

Definitions

"contribution" means a contribution payable in respect of a member under a Scheme

"employer" means-
(i) in relation to an establishment which is a factory, the owner or occupier of the factory, including
the agent of such owner or occupier, the legal representative of a deceased owner or occupier and,
where a person has been named as a manager of the factory under clause (f) of sub-section (1) of
section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and
(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate
control over the affairs of the establishment, and where the said affairs are entrusted to a manager,
managing director or managing agent, such manager, managing director or managing agent;]
"employee" means any person who is employed for wages in any kind of work, manual or
otherwise, in or in connection with the work of [an establishment], and who gets his wages directly
or indirectly from the employer, [and includes any person-
(i) employed by or through a contractor in or in connection with the work of the establishment; (ii)
engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of
1961), or under the standing orders of the establishment;]

Short title, extent and application

This Act may be called the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. It
extends to the whole of India except the State of Jammu and Kashmir. to every establishment which
is a factory engaged in any industry specified in Schedule I and in which twenty or more persons are
employed
2A. Establishment to include all departments and branches
For the removal of doubts, it is hereby declared 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.

Employees Provident Funds Scheme

The Central Government may, by notification in the Official Gazette, frame a Scheme to be called
the Employees' Provident Funds Scheme for the establishment of provident funds under this Act for
employees or for any class of employees and specify the [establishments] or class of
[establishments] to which the said Scheme shall apply [and there shall be established, as soon as
may be after the framing of the Scheme, a Fund in accordance with the provisions of this Act and

32
the Scheme.
Is it Compulsory for the all the employees to contribute to the Provident Fund ? Employees drawing
basic salary up to Rs 6500/- have to compulsory contribute to the Provident fund and employees
drawing above Rs 6501/- have an option to become member of the Provident Fund.

Provident Fund Contribution

The provident fund contributions consist of contribution both by Employee and by Employer.

Employee Contribution
Provident fund contribution is recovered @ 12% of wages from employees who earn up to a
maximum wage of Rs.6,500/- p.m. However, employees can contribute more than this statutory
maximum which will be considered as Voluntary Contribution.
Employer Contributions
Employer is also required to contribute towards provident fund; the deduction rate is same as
employee’s contribution i.e. 12% of the wages.
Of this 12%, 3.67% goes to Provident Fund and the balance of 8.33% goes to Pension Fund.

Voluntary Contribution
An employee can contribute voluntarily over and above the stipulated rate of PF contribution by
opting for Voluntary PF scheme at any rate as he / she desires i.e up to 100% of Wages. However,
the contribution to VPF should be a certain % of wages and not a fixed amount. But the employer is
not bound to contribute at the enhanced rate.
It is suggested that the enhancement can be done at the beginning of the financial year for comfort
level of calculation.

Employees' Provident Fund Schemes .- The Central Government may, by notification in the Official
Gazette, frame a Scheme to be called the Employees' Provident Fund Scheme for the establishment
of Provident Funds under this Act for employees or for any class of employees and specify the
[establishments] or class of [establishments] to which the said Scheme shall apply and [there shall
be established, as soon as may be after the framing of the Scheme, a Fund in accordance with the
provisions of this Act and the Scheme.
The Fund shall vest in, and be administered by, the Central Board constituted under section 5-A.
(1-B) Subject to the provisions of this Act, a Scheme framed under sub-section (1) may provide for
all or any of the matters specified in Schedule II.
(2) A Scheme framed under sub-section (1) may provide that any of its provisions shall take effect
either prospectively or retrospectively on such date as may be specified in this behalf in the
Scheme.

6-A. Employees' Pension Scheme .-(1) The Central Government may, by notification in the Official
Gazette, frame a Scheme to be called the Employees' Pension Scheme for the purpose of providing
for-
(a) superannuation pension, retiring pension or permanent total disablement pension to the
employees of any establishment or class of establishments to which this Act applies; and (b) widow
or widower's pension, children pension or orphan pension payable to the beneficiaries of such
employees.
(2) Notwithstanding anything contained in section 6, there shall be established, as soon as may be
after framing of the Pension Scheme, a Pension Fund into which there shall be paid, from time to
time, in respect of every employee who is a member of the Pension Scheme,- (a) such sums from
the employer's contribution under section 6, not exceeding eight and one third per cent., of the
33
basic wages, dearness allowance and retaining allowance, if any, of the concerned employees, as
may be specified in the Pension Scheme;
(b) such sums as are payable by the employers of exempted establishments under sub-section (6) of
section 17;
(c) the net assets of the Employees' Family Pension Fund as on the date of the establishment of the
Pension Fund;
(d) such sums as the Central Government may, after due appropriation by Parliament by law in this
behalf, specify.
(3) On the establishment of the Pension Fund, the Family Pension Scheme (hereinafter referred to
as the ceased Scheme) shall cease to operate and all assets of the ceased Scheme shall vest in and
shall stand transferred to, and all liabilities under the ceased Scheme shall be enforceable against,
the Pension Fund and the beneficiaries under the ceased Scheme shall be entitled to draw the
benefits, not less than the benefits they were entitled to under the ceased Scheme, from the
Pension Fund.
(4) The Pension Fund shall vest in and be administered by the Central Board in such manner as may
be specified in the Pension Scheme.
(5) Subject to the provisions of this Act, the Pension Scheme may provide for all or any of the
matters specified in Schedule III.
(6) The Pension Scheme may provide that all or any of its provisions shall take effect either
prospectively or retrospectively on such date as may be specified in that behalf in that Scheme. (7) A
Pension Scheme, framed under sub-section (1), shall be laid, as soon as may be after it is made,
before each House of Parliament, while it is in session, for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of the
session immediately following the session or the successive sessions aforesaid, both Houses agree
in making any modification in the Scheme or both Houses agree that the Scheme should not be
made, the Scheme shall thereafter have effect only in such modified form or be of no effect, as the
case may be; so however, that any such modification or annulment shall be without prejudice to the
validity of anything previously done under that Scheme.]

6-C. Employees' Deposit-Linked Insurance Scheme .

(1) The Central Government may, by notification in the Official Gazette, frame a Scheme to be called
the Employees' Deposit-Linked Insurance Scheme for the purpose of providing life insurance
benefits to the employees of any establishment or class of establishments to which this Act applies.
(2) There shall be established, as soon as may be after the framing of the Insurance Scheme, a
Deposit-Linked Insurance Fund into which shall be paid by the employer from time to time in
respect of every such employee in relation to whom he is the employer, such amount, not being
more than one per cent. of the aggregate of the basic wages, dearness allowance and retaining
allowance (if any) for the time being payable in relation to such employee as the Central
Government may, by notification in the Official Gazette, specify.
Explanation.-For the purposes of this sub-section, the expressions, "dearness allowance" and
"retaining allowance" have the same meanings as in section 6.

(4)(a) The employer shall pay into the Insurance Fund such further sums of money, not exceeding
one-fourth of the contribution which he is required to make under sub-section (2), as the Central
Government may, from time to time, determine to meet all the expenses in connection with the
administration of the Insurance Scheme other than the expenses towards the cost of any benefits
provided by or under that Scheme.
(5) The Insurance Fund shall vest in the Central Board and be administered by it in such manner as
may be specified in the Insurance Scheme.
(6) The Insurance Scheme may provide for all or any of the matters specified in Schedule IV. (7) The
Insurance Scheme may provide that any of its provisions shall take effect either prospectively or
retrospectively on such date as may be specified in this behalf in that Scheme.

34
4.2Employees State Insurance Act 1948

1. Short title, extent, commencement and application

This Act may be called the Employees' State Insurance Act,1948.
It extends to the whole of India . It shall apply, in the first instance, to all factories (including
factories belonging to the government)

Wage ceiling for coverage – 10000 to 21000

Financial Contribution from employer and employee

Social benefits in case of sickness, maternity and employment injury
3. Establishment of Employees’ State insurance Corporation
4. Constitution of Corporation
5. Term of office of members of the Corporation – 4 yrs
Contribution
Employer contribution is 3.25 percent of the total wage
Employees contribution is 0.75 percent of his wages
Employee less than Rs.50 daily is exempted

Benefits
Sickness Benefit
Maternity Benefit
Disablement Benefit
Dependants Benefit
Medical Benefit
Funeral Expenses – 15000 (for insured person)

4.3Payment of Gratuity Act 1972

1.Short title, extent, application and commencement.-
(1) This Act may be called the Payment of Gratuity Act, 1972.
(2) It extends to the whole of India:
Provided that in so far as it relates to plantations or ports, it shall not extend to the State of Jammu
and Kashmir.
Objectives
The Payment of Gratuity Act, 1972 envisages to provide a retirement benefit to the workmen who
have rendered long and unblemished service to the employer, and have thus contributed to the
prosperity of the employer. Gratuity is a reward for long and meritorious service. The significance of
this Act lies in the acceptance of the principle of gratuity as a compulsory, statutory retrial benefit.

Some Basics about Gratuity

Gratuity Act is applicable to all establishments, where number of employees, are 10 or more in any
day of the preceding 12 months.
Charitable institutes and hospital are also covered under the act.
It includes both commercial and non commercial establishment like educational institutes etc. Only
Basic and Dearness allowance should be considered as wages for the purpose of Gratuity

3.Controlling authority
The appropriate Government may, by notification, appoint any officer to be a controlling authority,
who shall be responsible for the administration of this Act and different controlling authorities may
be appointed for different areas.

35
4. Payment of gratuity
Gratuity shall be payable to an employee on the termination of his employment after he has
rendered continuous service for not less than five years
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease;
Provided that the completion of continuous service of five years shall not be necessary where the
termination of the employment of any employee is due to death or disablement : Provided further
that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if
no nomination has been made, to the heirs.

Calculation
If an employee leave company after 10 years and his last Basic + Dearness allowance is 10000 then
his gratuity will be paid as per following formula.

(10000/26)*15* 10

Please note that above formula will remain same irrespective of employee working in 5 days a
week establishment.

Tips
In case an employee gratuity amount is more than 10 L then company is bound to pay max 20 L. In
case company want to pay more than 10 L then company can pay it as performance bonus or ex
gratia.
Up to 20L you get tax exemption
Even if company is not doing financial well, company is bound to pay gratuity amount.

5. LABOUR LAWS II

5.1Factories Act, 1948

This Act may be called the Factories Act, 1948. It extends to the whole of India . It shall came into
force on the lst day of April, 1949.

"factory" means any premises including the precincts thereof

whereon ten or more workers are working, or were working on any day of the preceding twelve
months, and in any part of which a manufacturing process is being carried on with the aid of power,
or is ordinarily so carried on, or
(ii) whereon twenty or more workers are working, or were working on any day of the preceding
twelve months, and in any part of which a manufacturing process is being carried on without the
aid of power, or is ordinarily so carried on,
but does not include a mine

"manufacturing process" means any process for-

(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking
up, demolishing, or otherwise treating or adapting any article or substance with a view to its use
sale, transport, delivery or disposal, or
(ii) pumping oil, water, sewage or any other substance; or
(iii) generating, transforming or transmitting power; or
(iv) composing types for printing, printing by letter press, lithography, photogravure or other
similar process or book binding; [or]
36
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; [or]
preserving or storing any article in cold storage

"adult" means a person who has completed his eighteenth year of age;

"adolescent" means a person who has completed his fifteenth year of age but has not completed
his eighteenth year;

"calendar year" means the period of twelve months beginning with the first day of January in any
year;

"child" means a person who has not completed his fifteenth year of age;

"competent person", in relation to any provision of this Act, means a person or an institution
recognised as such by the Chief Inspector for the purposes of carrying out tests, examinations and
inspections required to be done in a factory under the provisions of this Act

"young person" means a person who is either a child or an adolescent;

"day" means a period of twenty-four hours beginning at midnight;
"week" means a period of seven days beginning at midnight on Saturday night or such other night
as may be approved in writing for a particular area by the Chief Inspector of Factories;

HEALTH

11.Cleanliness : Every factory shall be kept clean and free from effluvia arising from any drain, privy
or other nuisance. Effective means of drainage shall be provided and maintained. Repainted or
revarnished at least once in every period of five years.
12.Disposal of wastes and effluents.
13.Ventilation and temperature
14.Dust and fume
15.Artificial humidification
16.Overcrowding (9.9/14.2 cubic meters of space per worker)
17.Lighting(glazed windows, prevention of glare and formation of shadows) 18.Drinking water(shall
be legibly marked "drinking water" in a language understood by majority of the workers. No such
point shall be situated within six meters of any washing place, urinal, latrine, spittoon. Cooling
water for more than 250 workers)
19.Latrines and urinals: Separate enclosed accommodation shall be provided for male and female
workers.
20.Spittoons:Whoever spits in contravention of sub-section (3) shall be punishable with fine not
exceeding 5 rupees.

SAFETY

21.Fencing of machinery
22.Work on or near machinery in motion(No woman or young person shall be allowed to clean,
lubricate or adjust any part of a prime mover or of any transmission machinery) 23.Employment of
young persons on dangerous machines
24.Striking gear and devices for cutting off power
25.Self-acting machines (45 cm from fixed structure)
26.Casing of new machinery
27.Prohibition of employment of women and children near cotton-openers
28.Hoists and lifts (examine once in 6 months by a competent person
29.Lifting machines, chains, ropes and lifting tackles (examine once in 12 months)
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30.Revolving machinery
31.Pressure plant
32.Floors, stairs and means of access
33.Pits, sumps, openings in floors, etc.
34.Excessive weights (state govt should mention the max weight)
35.Protection of eyes
36.Precautions against dangerous fumes, gases, etc.
36A.Precautions regarding the use of portable electric light(24 volts inside any chamber, tank,pit…)
37.Explosive or inflammable dust, gas, etc
38.Prescautions in case of fire
39.Power to require specifications of defective parts or tests of stability.
40.Safety of buildings and machinery
40A.Maintenance of buildings
40B.Safety Officers (1000 or more workers)

PROVISIONS RELATING TO HAZARDOUS PROCESSES

41A.Constitution of Site Appraisal Committees

the Chief Inspector of the State who
shall be its Chairman.
41B.Compulsory disclosure of information by the occupier
WELFARE

42.Washing facilities
43.Facilities for storing and drying clothing
44.Facilities for sitting
45.First-aid appliances- not be less than one for every one hundred and fifty workers. In every
factory wherein more than five hundred workers there shall be provided and maintained an
ambulance room of the prescribed size, containing the prescribed equipment and in the charge of
such medical and nursing staff as may be prescribed.
46.Canteens- more than 250
47.Shelters, rest rooms and lunch rooms – more than 150 workers
48.Creches-30 women workers. Also a trained women
49.Welfare officers – 500 and more

WORKING HOURS OF ADULTS

51.Weekly hours- not more than 48 hrs a week

52.Weekly holidays - No adult worker shall be required or allowed to work in a factory on the first
day of the week
53.Compensatory holidays
54.Daily hours-not more than 9 hrs- not more than 5 hrs.30 min break
56.Spreadover-not more than 10 ½ hrs inclusive of intervals
57.Night shifts
58.Prohibition of overlapping shifts
59.Extra wages for overtime – if more than 48/week and 9/day should get twice of his ordinary
wages

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60.Restriction on double employment

Daily hours
Subject to the provisions of section 51, no adult worker shall be required or allowed to work in a
factory for more than nine hours in any day:
Provided that, subject to the previous approval of the Chief Inspector, the daily maximum hours
specified in this section may be exceeded in order to facilitate the change of shifts.

Intervals for rest

The periods of work of adult workers in a factory each day shall be so fixed that no period shall
exceed five hours and that no worker shall work for more than five hours before he has had an
interval for rest of at least half an hour.
The State Government or, subject to the control of the State Government, the Chief Inspector, may,
by written order and for the reasons specified therein, exempt any factory from the provisions of
sub-section (1) so however that the total number of hours worked by a worker without an interval
does not exceed six.

Weekly holidays
No adult worker shall be required or allowed to work in a factory on the first day of the week
(hereinafter referred to as the said day), unless-
(a) he has or will have a holiday for a whole day on one of the three days immediately before or
after the said day, and
(b) the manager of the factory has, before the said day or the substituted day under clause (a),
whichever is earlier,-
(i) delivered a notice at the office of the Inspector of his intention to require the worker to work on
the said day and of the day which is to be substituted, and
(ii) displayed a notice to that effect in the factory:

Spreadover
The periods of work of an adult worker in a factory shall be so arranged that inclusive of his
intervals for rest under section 55, they shall not spreadover more than ten and a half hours in any
day:
Provided that the Chief Inspector may, for reasons to be specified in writing, increase the
spreadover up to twelve hours

57. Night shifts

Where a worker in a factory works on a shift which extends beyond midnight,- (a) for the purposes
of sections 52 and 53, a holiday for a whole day shall mean in his case a period of twenty-four
consecutive hours beginning when his shift ends;
(b) the following day for him shall be deemed to be the period of twenty-four hours beginning
when such shift ends, and the hours he has worked after midnight shall be counted in the previous
day.

Prohibition of overlapping shifts

Work shall not be carried on in any factory by means of a system of shifts so arranged that more
than one relay of workers engaged in work of the same kind at the same time. The State
Government or subject to the control of the State Government, the Chief Inspector, may, by written
order and for the reasons specified therein, exempt on such conditions as may be deemed
expedient, any factory or class or description of factories or any department or section of a factory
or any category or description of workers therein from the provisions of sub section

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Extra wages for overtime
Where a worker works in a factory for more than nine hours in any day or for more than forty eight
hours in any week, he shall, in respect of overtime work, be entitled to wages at the rate of twice
his ordinary rate of wages
For the purposes of this sub-section, in computing the earnings for the days on which the worker
actually worked such allowances, including the cash equivalent of the advantage accruing through
the concessional sale to workers of food grains and other articles, as the worker is for the time
being entitled to, shall be included but any bonus or wages for overtime work payable in relation to
the period with reference to which the earnings are being computed shall be excluded

Restriction on double employment

No adult worker shall be required or allowed to work in any factory on any day on which he has
already been working in any other factory, save in such circumstances as may be prescribed.

Employment Of Young Persons

Prohibition of employment of young children .-No child who has not completed his fourteenth year
shall be required or allowed to work in any factory.
Certificates of fitness
(1) A certifying surgeon shall, on the application of any young person or his parent or guardian
accompanied by a document signed by the manager of a factory that such person will be employed
therein if certified to be fit for work in a factory, or on the application of the manager of the factory
in which any young person wishes to work, examine such person and ascertain his fitness for work
in a factory.
(2) The certifying surgeon, after examination, may grant to such young person, in the prescribed
form, or may renew-
(a) a certificate of fitness to work in a factory as a child, if he is satisfied that the young person has
completed his fourteenth year, that he has attained the prescribed physical standards and that he is
fit for such work;
(b) a certificate of fitness to work in a factory as an adult, if he is satisfied that the young person has
completed his fifteenth year, and is fit for a full day's work in a factory:

Working hours for children

No child shall be employed or permitted to work, in any factory-
(a) for more than four and a half hours in any day;
(b) during the night.

Restrictions on employment of women

(1) The provisions of this Chapter shall, in their application to women in factories, be supplemented
by the following further restrictions, namely:-
(a) no exemption from the provisions of section 54 may be granted in respect of any woman; (b) no
woman shall be [required or allowed to work in any factory] except between the hours of 6 a.m.
and 7 p.m.
Provided that the State Government may, by notification in the Official Gazette, in respect of [any
factory or group or class or description of factories], vary the limits laid down in clause (b), but so
that no such variation shall authorise the employment of any woman between the hours of 10 p.m.
and 5 a.m.
(c) there shall be no change of shifts except after a weekly holiday or any other holiday. (2) The State
Government may make rules providing for the exemption from the restrictions set out in
sub-section (1), to such extent and subject to such conditions as it may prescribe, of women
working in fish-curing or fish-canning factories, where the employment of women beyond the hours
specified in the said restrictions is necessary to prevent damage to, or deterioration, in any raw
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material.
(3) The rules made under sub-section (2) shall remain in force for not more than three years at a
time

Annual Leave With Wages

(1) Every worker who has worked for a period of 240 days or more in a factory during a calendar
year shall be allowed during the subsequent calendar year, leave with wages for a number of days
calculated at the rate of-
(i) if an adult, one day for every twenty days of work performed by him during the previous
calendar year;
(ii) if a child, one day for every fifteen days of work performed by him during the previous calendar
year.
Explanation 1-For the purpose of this sub-section-
(a) any days of lay-off, by agreement or contract or as permissible under the standing orders; (b) in
the case of a female worker, maternity leave for any number of days not exceeding twelve weeks;
and
(c) the leave earned in the year prior to that in which the leave is enjoyed, shall be deemed to be
days on which the worker has worked in a factory for the purpose of computation of the period of
240 days or more, but he shall not earn leave for these days.
Explanation 2.-The leave admissible under this sub-section shall be exclusive of all holidays whether
occurring during or at either end of the period of leave.

5.2 Issue of Social Dumping

Social dumping is a practice of employers to use cheaper labour than is usually available at their
site of production or sale. In the latter case, migrant workers are employed; in the former,
production is moved to a low-wage country or area. The company will thus save money and
potentially increase its profit
Major issues of social dumping

Employees in exporting countries

Child labor in exporting countries
Industry and environment in exporting country
Employees in importing countries
Healthy and safety
Discrimination in employment

Increased labour immigration has led to problems with social dumping in some industries.social
dumping is a necessary evil in today’s world. Strict regulation’s have to be followed.

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